8.6.2  Appeals Case Memo Procedures

Manual Transmittal

September 25, 2013

Purpose

(1) This transmits revised IRM 8.6.2, Conference and Settlement Practices, Appeals Case Memo (ACM) Procedures.

Material Changes

(1) Made minor changes to example in IRM 8.6.2.1.1 (2) and IRM 8.6.2.5.2 for clarification.

(2) Updated IRM 8.6.2.2.4 to exclude cases worked outside IMS (in addition to cases outside the ATCL Operations) from the requirement for routing Form 5402 and ACM feedback to the LB&I Outlook mailbox. This change is consistent with AP-08-1211–04, Interim Guidance for Appeals' Use of Issue Management System (IMS). Added hyperlink to Appeals' BSP website for information about IMS.

(3) Updated IRM 8.6.2.4(1) to remove reference to Form 9394 (now obsolete) and to state that a brief narrative is available on APGolf.

(4) Removed requirement from IRM 8.6.2.6(2) to include copy of ACM in local office file because Appeals no longer maintains closed office files.

(5) Revised language IRM 8.6.2.6 (5) to reflect Appeals' policy not to raise a new issue in a docketed case. See AP-08-0713-03, Implementation of the Appeals Judicial Approach and Culture (AJAC) Project, dated July 18, 2013.

(6) Made editorial changes and added/corrected links and references.

Effect on Other Documents

IRM 8.6.2, Conference and Settlement Practices, Appeals Case Memo (ACM) Procedures, dated August 14, 2012, is superseded.

Audience

Appeals

Effective Date

(09-25-2013)


Susan L. Latham
Director, Policy, Quality and Case Support

8.6.2.1  (03-21-2012)
Introduction to Appeals Case Memos (ACMs)

  1. This section explains how Appeals Technical Employees (ATEs), (as defined in IRM 8.1.1-1 ) prepare an Appeals Case Memo (ACM). Information on preparing ACMs for large Appeals Team Case Leader (ATCL) cases is found in IRM 8.7.11, Working Appeals Team Cases.

    Note:

    See IRM 8.22 for information on preparing ACM attachments for Collection Due Process (CDP) Notice of Determination or Decision Letters.

  2. The ACM is a report prepared by the ATE to adequately explain and support the basis on which a work unit is disposed. Every Appeals work unit requires one. The exception to this general rule is where disposition of the case can be explained in a brief comment. In this situation, it is acceptable to place the brief comment in the Remarks Section of Form 5402, Appeals Transmittal and Case Memo.

  3. The ATE should prepare the ACM, using "plain language." See IRM 8.6.2.1.3."Plain language" is described as follows:

    1. A spoken style - using ordinary words, personal pronouns, active voice, contractions, a variety of punctuation, and relatively short sentences.

    2. A clear organization - starting with the main point.

    3. An obvious layout - using short paragraphs, headings, and bullet lists.

  4. The ACM should include information and any follow up action for Compliance personnel or for Counsel to prepare for trial and to evaluate the settlement proposal.

  5. The ATE should include information received (during Appeals' consideration) in the administrative file, as prescribed in IRM 8.2.1, Agreed Pre-90-Day Income Tax Cases.

  6. Separately frame each new issue raised by the taxpayer, following the procedures in IRM 8.6.1.6.4, New Issues Raised by Taxpayer.

  7. When transferring a case to Counsel jurisdiction, include conference notes in the file so Counsel is aware of conference activity. Explain the recommended settlement. In cases where there has been little or no cooperation from the taxpayer or representative, briefly explain efforts to resolve the case. Document the taxpayer’s failure to supply requested information, attend offered conferences, or cooperate in resolving the case. Explain any Appeals findings or observations that may be helpful to Counsel.

  8. Prepare consolidated ACMs covering the key case and all related cases to avoid unnecessary duplication of information.

  9. ACMs should address the taxpayer's position, the government's position and Appeals' analysis and final determination. The final Appeals determination and resolution should reflect the conclusion reached by the employee with ultimate responsibility for the case, including "review and concurrence" requirement and management approval.

8.6.2.1.1  (03-21-2012)
Four Major Sections of an Appeals Case Memo (ACM)

  1. Summary and Recommendation: The Summary and Recommendation is the first section of your narrative and is required in all ACMs. It briefly summarizes the issue and the recommendation. This section should contain enough information to cover all the most important matters, yet still be concise enough that the reader doesn’t feel bogged down in details.

    1. If the issue is simple, this section may be all that is needed. Include a summary and brief analysis of what the taxpayer and examiner did or said. Briefly state the rationale for the recommendation. Include the litigating hazards facing the government and how these hazards affect the settlement.

  2. Brief Background: This is an optional section, used to describe anything general to the entire issue. Think of this section as a way to give just the basic facts to the reader. Save other facts for later, and put them where the reader needs them. This section does not include controversial statements. It simply says enough to give context for what follows.

    Example:

    John Sample and Jay Bird incorporated under the name "SB Corporation" . Each shareholder owned 50% of the corporation. "SB Corporation" is in the business of veterinary medicine. The examiner is completing Jay Bird’s case separately; therefore, it is not associated with this file in Appeals.

  3. Discussion and Analysis: This is the main section for a detailed discussion of the issue. Along with the "Schedule of Adjustments" and the initial framing of the issue, this section also serves as a rough draft ACM. Make this section clear and concise by providing a blueprint or outline of the discussion to follow. In a complex issue discussion, good structure is essential.

  4. My Evaluation: This section serves as a recap of the relevant factors and the weight assigned to each. This analysis clearly illustrates the settlement rationale and is particularly important on complex issues and those with hazards of litigation settlements.

8.6.2.1.2  (03-21-2012)
Types of Appeals Case Memos (ACMs)

  1. The Appeals Case Memo (ACM) is the ATE's summary of the issue(s) and the employee's recommended resolution. It should persuade the Appeals Team Manager (ATM) that the ATE considered and analyzed all the important facts, arguments, and law. However, the ACM is a flexible document. Depending on whether the issues are agreed or unagreed, simple or complex, your ACM can take a number of formats. The following are the four ways to communicate the results of a case:

    1. Form 5402, Appeals Transmittal and Case Memo. This form is part of all ACMs, and sometimes is all that is needed. Write the case explanation in the remarks section for very simple cases, or when the taxpayer concedes in full. See IRM 8.6.2.2.

    2. Schedule of Adjustments. This schedule is part of all ACMs, when just using a Form 5402 is not enough. Think of it as a summary. Use brief phrases to list the issues and columns to show the following: (1) the Examiner’s adjustments, (2) Appeals changes to the adjustments, and (3) the revised Appeals adjustment. When a narrative is not needed, the "Schedule of Adjustments" (combined with Form 5402) is the entire ACM. See IRM 8.6.2.3.

    3. Schedule of Adjustments with a Brief Narrative. Sometimes a simple explanation is needed along with the Schedule of Adjustments. See IRM 8.6.2.4.

    4. Schedule of Adjustments with a Longer Narrative. A longer narrative might be necessary if the case is unagreed, involves a hazard settlement, or contains complex legal or factual issues. The longer narrative has quite a bit of flexibility. It could include four major sections; but only the first one (Summary and Recommendation) is required. The longer narrative tells the full story of an issue. See IRM 8.6.2.5.

8.6.2.1.3  (03-21-2012)
Introduction to "Plain Language" Writing

  1. "Plain language" writing has widespread acceptance, and it should be used in all Appeals writings. If a document is prepared for use by the public, the Plain Writing Act of 2010 requires federal agencies to prepare written communication that the public can understand and use.

  2. Consider the intended audience, when preparing the Appeals Case Memo (ACM). The primary reader is usually the Appeals Team Manager (ATM), so tailor the discussion to the ATM's needs.

  3. There could be important secondary readers. If a case is unagreed, consider providing additional information in the ACM that is helpful to Counsel. However, the focus of the ACM must remain with the primary reader.

  4. There are techniques for preparing documents using "plain language." This brief introduction summarizes some of those techniques for developing style, organization, and layout.

  5. When possible, refrain from using acronyms in the ACM so that the reader can understand fully what is being communicated. Define an acronym or abbreviation the first time it is used. Common IRS acronyms include the following: ACM, CDP, OIC, etc. Consider whether the use of acronyms makes it easier for your users.

8.6.2.1.4  (03-21-2012)
Style of Writing in Appeals Case Memos (ACM) and ACM Attachments to Determination / Decision Letters

  1. The term "Plain Writing" (also referred to as "Plain Language" ) means writing that is clear, concise, well-organized, and follows other "best practices" appropriate to the subject or field and intended audience. This writing style encourages individuals to write the way they talk. Ask the question, "How would I say the words if my reader were standing in front of me?" Then use those words when writing.

  2. There is some concern that a conversational tone is inappropriate for professional writing. The tone used in some conversations is inappropriate. But if the same tone is used in writing - that is used in speaking face-to-face, the tone is generally appropriate.

  3. Use these techniques to write in a conversational style:

    1. Ordinary words. Be comfortable with a "speaking vocabulary." When writing, use "did" instead of "accomplished" and "set up" instead of "implemented. "

    2. Personal pronouns. Use "I" to refer to yourself and "we" to refer to Appeals. Use personal pronouns with the same frequency used when talking. They’re some of the most common words in our language, yet old-style business writing avoids them.

    3. Active voice. Say "I found" instead of "it was found." Writers who rely on passive voice unwittingly create great confusion for their readers. An easy way to write in active voice is to use personal pronouns. Using them makes passive voice much harder to write.

    4. Contractions. Say, "The taxpayer didn’t" or "I’m certain" instead of "The taxpayer did not" and "I am certain." The difference in these examples is small, but the value of contractions is great. People who avoid contractions usually slip back into bureaucratic writing. They avoid not only contractions, but also (unconsciously) active voice, ordinary words, and all the other characteristics of plain language. Contractions help us write plain language.

    5. A variety of punctuation. Use the dash, colon, and question mark. Writers who restrict themselves to the period and comma usually write in a monotone. As a result, they have trouble showing "what’s important" and "what isn’t."

    6. Relatively short sentences. Poor writers tend to write sentences that are all about the same length - two or three lines. Those sentences are often too long. The goal is to look carefully at any sentence that is longer than two lines. It may be fine, especially if using dashes or colons.

  4. Write narratives - using a professional tone. As Appeals employees, facts and evidence are objectively reviewed. Never make disparaging remarks about the taxpayer or the examiner. Rather than saying, "It is ludicrous that anyone would raise this issue," say, "The issue is without merit."

    Note:

    For additional information, visit www.irs.gov for Plain Language at IRS.

8.6.2.1.5  (10-18-2007)
Organizing the ACM

  1. Consciously strive to keep the "main point" in front of the reader. It is best to have the main message up front and to provide breaks in the text that point out each new main message.

  2. Keep the message impossible to overlook. The prescribed format for ACMs helps emphasize the main points.

8.6.2.1.6  (03-21-2012)
Layout of the ACM

  1. A "good layout" shows the reader "good organization." A "good layout" labels topics and uses white space to show subordination and new sections.

  2. Use the following techniques for your ACM layout:

    • Headings

    • Bullet lists

    • Short paragraphs

  3. Graphic designers use the "dollar bill rule." You should be able to put a dollar bill vertically on any page of a well-designed document; and the bill will cover headings, a list, or some other significant white space.

8.6.2.2  (10-01-2012)
Customized Form 5402

  1. The Appeals Centralized Database System (ACDS) is a computerized system used to control and track cases throughout the appeal process. See IRM 8.20.3. The Appeals Generator of Letters and Forms (APGolf) is an ACDS sub-system.

  2. The "Customized Form 5402" was designed to address Appeals’ needs for data accuracy, more comprehensive case closing instructions for the Account and Processing Support (APS) employee, and information gathering for feedback to the operating divisions. The Appeals employee must complete the customized Form 5402 on APGolf.

    Note:

    It is no longer acceptable for an ATE to use a non-customized Form 5402

    .

  3. The customized form must be prepared and submitted with every completed case and with every premature referral. The Appeals employee should carefully prepare Form 5402 to ensure that the information is complete for each case. This includes the completion of required fields, where the APGolf program forces the Appeals employee to make an entry. The program would not force an entry, if a premature referral code has been entered.

  4. The Appeals employee must use the Customized Form 5402 to return a premature referral where Appeals releases jurisdiction of the case. The Appeals employee must identify the reason for releasing jurisdiction, which includes selection of a Premature Referral Code on the Customized Form 5402. The employee could use Form 10467, Appeals Division Feedback Report and Transmittal Memorandum in addition to the Customized Form 5402. However, Form 10467 does not replace Form 5402.

  5. There are variations of the customized Form 5402 for differing types and categories of cases considered in Appeals. The form is a tool that eliminates much of the guesswork previously involved in preparing the form. Each variation is programmed with up-to-date information presented in easy to follow drop-down menus and lists with boxes to check.

  6. For every case that requires the use of Form 5402, a new customized Form 5402 must be generated from APGolf in order for the case data to be stored on Appeals Centralized Database System (ACDS). Case data is stored from the last generated Form 5402. All entries on the final version of the customized Form 5402 must be generated and completed simultaneously on APGolf before it is submitted for closing. It is not acceptable to revise a saved copy of the customized Form 5402 using Microsoft Office Word or any other software. It is not acceptable to use a saved copy of the customized Form 5402 for use with other taxpayers.

    Example:

    The ATE completes the Form 5402, ACM, and Form 870-AD and saves these documents - pending return of the executed agreement form. The taxpayer notifies Appeals the tax is not correctly computed, requiring a new tax computation. It is not acceptable to correct the revised tax on the saved Form 5402. The ATE must complete a new Form 5402 on APGolf. All entries on the final version of the customized Form 5402 must be generated and completed simultaneously. This makes certain the final case data stored on ACDS is correct.

8.6.2.2.1  (03-21-2012)
Accessing the Customized Form 5402

  1. Form 5402 is found on ACDS in APGolf under the name "5402 – Customized" . The non-customized version is no longer acceptable because it does not record and save information for sharing with the operating divisions. Also, it is not pre-programmed with the most up-to-date processing instructions for the APS employees.

  2. The Utilities menu on ACDS contains instructions for completing each variation of the Form 5402. A link to a list of "Customized Form 5402 contacts" is posted on the ACDS page of the Appeals website at http://appeals.web.irs.gov/BusinessSystemPlanning/acds.htm.

  3. When selecting "5402 – Customized," the APGolf forms generator recognizes the category, type, source, and feature codes - and opens a form specifically tailored for the selected case.

  4. The form automatically loads with the taxpayer's name, address, TIN, tax periods, feature codes, project code, category code, type code, and any other relevant information contained in the ACDS case record.

  5. After opening the form, conduct a data accuracy check of all information automatically loaded into the form. Data accuracy is an important component of the customized Form 5402. Data errors or missing data may cause an incorrect variation of the Form 5402 to open.

    Note:

    See IRM 8.10.3, Appeals Inventory Validation Process, for the Appeals employee’s responsibility for ensuring that data reflected in the ACDS database is accurate.

  6. "Type codes" and "feature codes" are important. If there are errors in the data or if a "type code" or "feature code" is missing, follow established procedures. Make all updates that you are authorized to make yourself through CARATS or the Validation Tracking System; otherwise, request that APS make the update or correction. All data errors must be corrected before preparing and submitting the final Form 5402.

8.6.2.2.2  (10-18-2007)
Using Form 5402 as the Appeals Case Memo (ACM)

  1. Sometimes all comments about the case could fit into the Remarks Section of the Form 5402. In these instances, the Form 5402 serves as the entire ACM. Three examples are described below.

    1. Very simple agreed case:

      Example:

      The taxpayer submitted receipts for $550 of the $745 adjustment to charitable contributions. The revised deficiency is less than $50. I conceded the issue in full.

    2. Full concession by the taxpayer:

      Example:

      The taxpayers conceded this case in full. See the attached examination report for a discussion of the issues.

    3. Full resolution by Exam upon re-involvement with the case:

      Example:

      The examining officer was re-involved with this case and resolved all the unagreed issues. I concur with the findings. See the examiner's workpapers in the administrative file.

8.6.2.2.3  (10-18-2007)
Using Form 5402 as an Alert

  1. Always use Form 5402 to alert the ATM and/or APS employee of significant items in the case that need to be addressed promptly. "Alerts" could include the following:

    1. Imminent statute date.

    2. Court jurisdiction, if appropriate.

    3. Special processing instructions.

    4. Special assessment instructions.

8.6.2.2.4  (09-25-2013)
Routing Form 5402 and ACM Feedback to LB&I for Cases Worked Outside ATCL Operations

  1. For cases worked outside the Appeals Team Case Leader (ATCL) Operations and the Issue Management System (IMS), the Appeals Team Managers (ATM) will forward ACMs and Form 5402 via encrypted E-mail to a centralized point of contact within LB&I. The Outlook mailbox set up by LB&I to receive the documents is: lbi.acm.distribution@irs.gov. The ATM will also forward copies of the documents via encrypted E-mail to the LB&I Team Manager. The encrypted E-mail sent to the LB&I Outlook mailbox and the LB&I Team Manager will include in the subject line the Appeals Work Unit Number (WUNO) assigned to the case. The feedback to LB&I must be completed within 10 business days of case closing and the ATM will document the case activity record that the feedback was timely sent to LB&I.

    Note:

    LB&I cases worked by ATCL operations will follow a separate procedure, which is described in IRM 8.7.11.

    Note:

    See Appeals BSP Website for information about the Issue Management System (IMS).

    Note:

    When a closing agreement is secured that may require follow-up action by the operating division, IRM 8.13.1.5.2.3 requires a copy be provided to the operating division.

  2. APGolf Form 5402 will automatically populate for Primary Business Codes 301 - 399 with routing information for ATCL and non-ATCL feedback routing instructions to LB&I.

8.6.2.3  (10-18-2007)
Preparing a Schedule of Adjustments

  1. The Schedule of Adjustments is part of an ACM that involves a proposed tax liability. There are two versions: Form 9393 or the ACDS computer macro. The schedule acts as a summary of the case.

  2. Occasionally the Schedule of Adjustments, combined with Form 5402, is the entire ACM when everything is explained with ACM codes. See IRM 8.6.2.3.7.

  3. Large and complex cases may need more information than shown on the standard Schedule of Adjustments. Information relating to large team cases is found in IRM 8.7.11, Appeals Team Cases.

8.6.2.3.1  (03-21-2012)
Issue Numbers in the Schedule of Adjustments

  1. List issues in an order that makes sense for the case. For example, start with the most significant issue, or group related issues.

  2. The Schedule of Adjustments frequently serves as the instructions to the Tax Computation Specialist. It is important to list all issues shown on the examiner's report, even if they were not protested. The examiner's index (on Form 4318 or Form 4700) provides a list of the examiner's adjustments, including statutory adjustments.

8.6.2.3.2  (10-18-2007)
Describing the Issues in the Case

  1. Specifically describe the issue as illustrated in the following examples.

    1. Passive activity loss

    2. Exemption (Brian)

  2. Use this section to identify unusual items such as:

    1. A new issue [See IRC 8.6.1.6.]

    2. An alternative issue, as shown in the example below

      Issue Number Description Tax Period Examiner's Adjustment Appeals Change to Adjustment Appeals Adjustment ACM Code
                   
      21 Horse Racing IRC 183 2008 10,000 0 10,000  
        I          
      Alternatively, are the claimed amounts allowable under IRC 162?
                   

    3. Claim amounts - show "date filed" and "adjustment amount." For multiple claims, attach a separate schedule. See the example below.

      Issue Number Description Tax Period Examiner's Adjustment Appeals Change to Adjustment Appeals Adjustment ACM Code
                   
      19 Depreciation 2008 (3,000) (4,000) (7,000)  
      Claim timely filed on 6/15/10 for additional depreciation.
                   

      Note:

      The "Examiner’s Adjustment" is the amount that the examiner allowed ($3,000). The "Appeals Change to Adjustment" is the additional $4,000 amount allowed by Appeals. Thus, in this example, the total reduction allowed (or "Appeals Adjustment" ) is $7,000 (as a result of the claim). This represents the additional depreciation deduction or the increase in the depreciation deduction "shown on the return or the previously adjusted amount."

8.6.2.3.3  (10-18-2007)
Tax Period in the Schedule of Adjustments

  1. Use the "Schedule of Adjustment" for more than one tax period.

8.6.2.3.4  (10-18-2007)
Examiner’s Adjustment

  1. This is an adjustment to an income item, deduction, credit, penalty, or tax. Substitute a word, such as "applies" , if a dollar amount doesn’t work. See IRM 8.6.2.3.5.

  2. The "Examiner’s Adjustment" is generally the only column that can be completed when preparing a rough draft Schedule of Adjustments.

8.6.2.3.5  (03-21-2012)
Appeals Change to Adjustment

  1. This column illustrates the addition or subtraction necessary to get from the " Examiner’s Adjustment " to " Appeals Adjustment ." Show (in brackets) the reductions to the "Examiner’s Adjustments."

  2. If a dollar amount doesn’t work, substitute a word, such as "sustained" or "conceded." See the example below.

  3. If the issue is unagreed, use this column to show the settlement proposal. Footnote the proposed settlements the taxpayer didn’t accept.

            Appeals    
    Issue   Tax Examiner's Change to Appeals ACM
    Number Description Period Adjustment Adjustment Adjustment Code
    4 Misc. Deduction 2007 301 (113) 188 D
        2008 290 (110) 180 D
                 
    5 Accuracy related penalty - Substantial Understatement 2007 applies conceded conceded D
                 
    6 Accuracy related penalty - Negligence 2008 applies sustained sustained A
                 

8.6.2.3.6  (03-21-2012)
Appeals Adjustment

  1. This is the revised adjustment to the return or "previously adjusted return amount" for an income item, deduction, credit, penalty, or tax after Appeals consideration. If a dollar amount doesn’t work, use a word.

8.6.2.3.7  (03-21-2012)
Appeals Case Memo (ACM) Codes

  1. You may use ACM codes instead of narrative explanations for issues in the following situations:

    1. ACM Code A: Taxpayer Now Agrees
      Use when the taxpayer concedes the issue in full after the case is in Appeals.

    2. ACM Code B: Accepted by Examiner
      Use when an examiner reviews and accepts the taxpayer’s verification. Make the examiner’s work papers part of the case file. For example, when an examiner reviews records while the case is in Appeals or when the Campus does a partial abatement after a Statutory Notice of Deficiency is petitioned.

    3. ACM Code C: Taxpayer substantiated
      Use when the taxpayer provides you with cancelled checks, receipts, logs, or other documents to substantiate expenses. Note the nature of the substantiation in the workpapers, and ensure the file contains sufficient information to support the conclusion.

    4. ACM Code D: Computational Adjustment
      Use for "automatic adjustments" or "computational adjustments" that result solely from other issues.

    Note:

    Do not use an ACM Code when the issue is settled based on hazards, new issues are raised (other than computational or automatic adjustments), or if the substantiation is oral testimony. If either situation applies, a narrative explanation is necessary.

8.6.2.4  (09-25-2013)
Preparing a Brief Narrative

  1. A brief narrative is appropriate for any issue that does not require a lengthy explanation and an ACM code doesn’t apply. Sometimes simple explanations are needed in addition to a Schedule of Adjustments. In that case, use a brief narrative available on APGolf. An unagreed case or a hazard settlement will almost always require a longer narrative.

  2. Don’t use a brief narrative for:

    • A case requiring Joint Committee review; or

    • A return preparer penalty case going to the Office of Professional Responsibility.

  3. The narrative should be brief, yet it needs to include:

    • The taxpayer’s position;

    • The examiner’s position; and

    • The rationale for your settlement.

  4. Identify workpapers - parenthetically, and list workpaper number(s) in the narrative. The administrative file should contain the necessary information to support your conclusion. Don’t increase the volume or content of your workpapers to compensate for the brevity of your narrative.

8.6.2.5  (10-18-2007)
Preparing a Longer Narrative

  1. Sometimes a brief narrative isn’t enough to cover all of the details. This section shows how to write a longer narrative. The longer narrative may have as many as four sections:

    1. Summary and Recommendation - Required

    2. Brief Background - Use only when necessary

    3. Discussion and Analysis - Use only when necessary

    4. My Evaluation - Use only when necessary

8.6.2.5.1  (10-18-2007)
"Summary and Recommendation" in the Appeals Case Memo (ACM)

  1. The Summary and Recommendation is the first section of the narrative and is required in all ACMs. It briefly summarizes the issue and the recommendation. It is important to say enough to cover all the most important matters, yet still be concise enough that the reader doesn’t feel bogged down in details.

  2. If the issue is simple, this section may be all that is needed. Include a summary and brief analysis of what the taxpayer and examiner did or said. Also briefly state the rationale for your recommendation. Include the "hazards of litigation" facing the government and how they affect the settlement.

8.6.2.5.1.1  (10-18-2007)
The Issue and Your Recommendation in the Appeals Case Memo (ACM)

  1. Frame the issue as a question to help you focus your discussion. You don’t always have to answer "Yes" or "No." Sometimes your answer may be qualified. But in any case, before you start the discussion, give your reader the answer. Correctly framing the issue sets up the discussion that follows. Here are some examples:

    Question Answer
    Example 1:  
    Q: Is the taxpayer liable for self-employment tax? A: Based on the hazards of litigation, I proposed conceding 25% of the self-employment tax.
    Example 2:  
    Q: What percent, if any, of his home expense can the taxpayer claim as an office in the home? A: I offered to allow 10%.
    Example 3:  
    Q: Did SB, Inc. file a timely Subchapter S election for 1996? A: Yes-the government should concede the issue.

8.6.2.5.2  (10-18-2007)
"Brief Background" Section of the Appeals Case Memo (ACM)

  1. This is an optional section used to describe anything general to the entire issue. Think of this section as a way to give just the basic facts to your reader. Save other facts for later, and put them where the reader needs them. Notice that there’s nothing controversial in the section. It simply says enough to give context for what follows.

    Example:

    John Sample and Jay Bird incorporated under the name SB Corporation. Each shareholder owned 50% of the corporation, and SB Corporation is in the business of veterinary medicine.
    The examiner is completing Jay Bird’s case separately; therefore, it is not associated with this file in Appeals.

8.6.2.5.3  (03-21-2012)
"Discussion and Analysis" Section of the Appeals Case Memo (ACM)

  1. This is your main discussion, so it needs a clear structure. This is also the section of the ACM that contains the most detail.

  2. This section gives the essence of both sides’ contentions, sets out new information provided at the conference, and analyzes the law and applicable case law arguments. Clearly present each main point. In this way, you will have a blueprint for your discussion.

  3. Present the discussion in an order that is best suited for the issue. Some methods to consider are to:

    1. Start with the taxpayer’s position - if the taxpayer has sufficient arguments of distinguishable point.

      Example:

      The taxpayer’s husband contends that he paid his wife wages and she performed the work of an employee.

    2. Begin with a brief paraphrase of the law - if the taxpayer does not have specific arguments.

      Example:

      According to Treasury Reg. section 1.1362-6, for an election to be timely filed for a tax year, a completed Form 2553 must be filed by March 15th of the year. All shareholders of the corporation (at the time of the election) must consent to the election.

  4. If the examiner and the taxpayer have presented case law arguments, it is important for you to distinguish the citations, comparing them and their applicability to the facts of the issue. If you need to analyze an issue or point of law in depth, give your analysis completely - but without unnecessary verbiage.

8.6.2.5.4  (10-18-2007)
"My Evaluation" Section of the Appeals Case Memo (ACM)

  1. Use this section to support the proposed resolution framed in your Summary and Recommendation section. Normally, this section will be necessary for issues which are:

    • Unagreed.

    • Resolved based on hazards of litigation.

    • Factually or legally complicated.

8.6.2.5.4.1  (10-18-2007)
Unagreed Issues in the Appeals Case Memo (ACM)

  1. If the issue is unagreed, focus on the evidence available for presentation as though the case were going to trial. The focus will be on the probative value of the evidence likely to be presented as proof of a fact.

  2. The probative value includes the credibility of a witness' testimony and the availability of a witness. It also includes doubts as to an issue of fact - such as authenticity and admissibility of documents, records, books, and other writing. This helps the Counsel attorney - both in the discovery process and settlement negotiations. This is also a good place for you to give Counsel a settlement range.

8.6.2.5.4.2  (10-18-2007)
Resolved Based on Hazards of Litigation

  1. Discuss the various factors that you considered in arriving at your settlement. The reader should understand why your settlement is appropriate. You should explain the steps you took in your evaluation process as follows:

    1. Summarize the hazards that you identified in the discussion and analysis.

    2. Weigh their strengths and weakness.

    3. Determine the relative strengths of opposing positions.

    4. Convert your verbal evaluation to a percentage or numerical determination.

8.6.2.5.4.3  (10-18-2007)
Factually or Legally Complicated Issues

  1. Bring together your discussion of factually or legally complicated issues in summary form. In a long discussion, the reader has seen a lot of facts or material. Therefore, you may need to do a short summary to bring the reader back to the end result. Don’t use a summary, unless it’s needed; otherwise, your memo will appear repetitive.

8.6.2.6  (09-25-2013)
Settlement Computations as Part of the Appeals Case Memo (ACM)

  1. Except as noted below, whenever adjustments to the prior determination are recommended, the settlement computation is prepared - setting forth the resulting tax liability and the necessary underlying computations.

  2. The settlement computations are attached to - and become part of - the administrative file. A copy is also part of the ACM.

  3. The following forms are used (as needed) in settlement computations:

    1. Form 3610, Audit Statement (as needed).

    2. Form 5278, Statement-Income Tax Changes.

    3. Form 4549, Income Tax Examination Changes.

    4. Form 4549-A, Income Tax Discrepancy Adjustments.

    5. Form 4549-EZ, Income Tax Examination Changes.

    Note:

    See IRM 8.17.2.8 and IRM 8.17.2.9 for details.

  4. A settlement computation is not required in the following situations, unless needed for other computation purposes:

    1. Compliance's findings are sustained in full.

    2. Compliance's findings are completely reversed.

    3. A Statutory Notice of Deficiency was issued - which adequately covers all adjustments.

    4. The determination in the Statutory Notice of Deficiency is "agreed in full."

    5. The only issues in the case involve exempt status, private foundation classifications, or employee plan qualification questions.

  5. Ordinarily, settlement computations are not required in an unagreed docketed case - but if the Government raises in its pleadings a new issue or the ATE concedes an issue, one might be necessary.

  6. For some cases, Form 3623, Statement of Account, is prepared and attached to the settlement computation. See IRM 8.17.3, Preparing a Statement of Account.


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