8.6.3  Appeals Rulings

Manual Transmittal

August 13, 2012

Purpose

(1) This transmits revised IRM 8.6.3, Conference and Settlement Practices, Appeals Rulings.

Material Changes

(1) Revised IRM to reflect new organizational titles resulting from Appeals 2012 Alignment Project.

(2) IRM 8.6.3.3 - Updated address for submitting TAM requests.

Effect on Other Documents

IRM 8.6.3, Conference and Settlement Practices, Appeals Rulings, dated July 15, 2010 is superseded.

Audience

Appeals

Effective Date

(10-01-2012)


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

8.6.3.1  (10-01-2012)
Definition of Revenue Rulings

  1. A revenue ruling is an official interpretation by the IRS of the tax laws, related statutes, treaties, and regulations published in the Internal Revenue Bulletin. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Each Associate office within the Office of Chief Counsel issues revenue rulings on issues under their subject matter jurisdiction.

  2. Revenue rulings provide information and guidance for taxpayers, IRS employees, and others. They help taxpayers voluntarily comply with the tax laws and help IRS employees apply the tax laws correctly and uniformly. Revenue rulings do not have the force and effect of Treasury Regulations, but they may be used as precedents.

  3. However, when applying revenue rulings, consider the effect of subsequent legislation, regulations, court decisions, revenue rulings, and revenue procedures. Appeals personnel are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.

  4. Obtain information on the status of certain issues, which may be under active consideration in the Office of Chief Counsel for publication as a revenue ruling, from the Appeals Director Policy, Quality and Case Support.

8.6.3.2  (10-26-2007)
Actions on Decisions

  1. See IRM 8.6.4.1.6, Case Evaluation for Settlement Purposes, for information concerning Actions on Decisions.

8.6.3.3  (10-01-2012)
Request for a Technical Advice Memorandum (TAM)

  1. Technical Advice Memorandums (TAM) is advice furnished by an Associate office in the Office of Chief Counsel to an IRS field office in response to a request for assistance concerning an interpretation or proper application of the tax law, tax treaties, regulations, revenue rulings or other precedents published by the Office of Associate Chief Counsel to a set of specific facts involving a specific taxpayer.

  2. TAMs are submitted under Revenue Procedure 2010-2, 2010-1 IRB 90, or its successor. The IRS updates this revenue procedure annually as the second revenue procedure of the year, but the revenue procedure may be modified or amplified during the year. Also, see Rev. Proc. 2010-5, 2010-1 IRB 165 (or its successor), for procedures for requesting a TAM regarding issues in the employee plans area (including actuarial matters) and exempt organization area.

  3. Appeals determines whether to request a TAM on any non-docketed case under its jurisdiction. Request a TAM when a lack of uniformity exists on the disposition of the issue or the issue is unusual or complex enough to warrant consideration by the Office of Chief Counsel. Because TAM requests often result in the issuance of revenue rulings or other published guidance, Appeals is responsible for bringing appropriate issues to the attention of the Office of Chief Counsel through the TAM process. See Rev. Proc. 2010-2, 2010-1, IRB 90 (or its successor), for further information and background on the TAM request procedures. Do not request a TAM for any issue if the same issue is involved in a docketed case for any taxpayer for any taxable year. Instead, request legal advice from field Counsel. See section 4.06 of Rev. Proc. 2010-2.

  4. Appeals determines whether to request a TAM on any non-docketed case under its jurisdiction. A taxpayer may request that an issue under Appeals jurisdiction be referred for a TAM. The request may be denied, however, if Appeals determines the referral to the Office of Chief Counsel is not warranted. The procedures for denial of technical advice are contained in section 5 of Rev. Proc. 2010-2. At the discretion of the reviewer of the proposed denial of technical advice for Policy, Quality and Case Support, information will be submitted either by encrypted e-mail or expedited mail or both.

  5. In an effort to promote expeditious processing of a request for a TAM, confer with field Counsel and the Associate Chief Counsel office with jurisdiction over the subject matter (and in some cases the taxpayer) prior to submitting the request for a TAM to the Associate Chief Counsel office. If the TAM request involves an Appeals Domestic Technical Specialist coordinated or emerging issue, the Appeals Officer must coordinate the request with the Appeals Domestic Technical Specialist before contacting the Associate Chief Counsel office, see section 6.04 of Rev. Proc. 2010-2. If during the preliminary review, it is determined there is a need for a TAM, return the case to the originating function so they may make the request. If subsequent to the preliminary review, it is determined there is a need for a TAM, submit the request as soon as possible and do not return the case to the originating function.

  6. A pre-submission conference is mandatory for all requests. If a request for a TAM is submitted without first holding a pre-submission conference, the Associate Chief Counsel office will return the request for advice. Coordinate all pre-submission conferences requests, regardless of whether a TAM is requested, with filed offices. In this situation, field Counsel assignments are subject to the ex parte rules set forth in section 1001(a)(4) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105–20, and Rev. Proc. 2000-43, 2000-2 CB 404, (or its successor).

  7. Request a pre-submission conference only after determining a request for a TAM is likely. Before requesting a pre-submission conference, Appeals must contact the taxpayer and afford the taxpayer an opportunity to participate in the process by permitting the taxpayer to prepare a statement in accordance with section 6.03 of Rev. Proc. 2010-2. Taxpayer participation in the conference is not required.

  8. Request a TAM at the earliest possible stage of the proceedings. However, the lack of timeliness is not a reason for denying a request.

  9. If Appeals is not in agreement with the conclusion(s) reached in the TAM, submit a written request for reconsideration. Before requesting reconsideration, consult with field Counsel. See Rev. Proc. 2010-2, Section 10.08.

  10. Appeals is bound by a TAM if favorable to the taxpayer. When a TAM is unfavorable to the taxpayer, Appeals may settle the issue under existing authority. However, for procedures to follow when full concession of the issue is recommended without offsetting consideration see the subsequent section entitled, Procedures If Appeals Conclusion is Contrary to Technical Advice. See IRM 8.6.3.4.

  11. Except in rare or unusual circumstances, a holding in a TAM favorable to the taxpayer is applied retroactively. Moreover, because a TAM is issued only with respect to a closed transaction, a holding adverse to the taxpayer is also applied retroactively unless the Associate Chief Counsel with jurisdiction over the TAM exercises the discretionary authority under IRC 7805(b) to limit the retroactive effect of the holding, see sections 13.01 and 14 of Rev. Proc. 2010-2.

  12. Prepare two copies of Form 4463 (with a revision date of July 2009 or later) Request for Technical Advice Memorandum. Field Counsel will submit one copy of the request for a TAM to the address in section 7.08 of Rev. Proc. 2010-2; and one copy of the request to the Chief, Appeals at the following address:

    Chief, Appeals
    Director, Policy, Quality and Case Support - TAM Coordinator
    999 North Capitol Street, NE
    Washington, DC 20003-3903

  13. The field Counsel with whom Appeals coordinated the TAM request submits the request for the TAM to the appropriate Associate Chief Counsel office. See section 7 of Rev. Proc. 2010-2. The field office is responsible for preparing Form 4463. On Form 4463 indicate the mailing address of the Area Director to whom the Associate Counsel office should mail a copy of its reply to the TAM. Also request a copy of the reply be sent to the address in (12) above.

8.6.3.4  (10-01-2012)
Procedures If Appeals Conclusion is Contrary to Technical Advice

  1. If the proposal is to fully concede an issue covered by a TAM without offsetting consideration, and the reason for the concession is other than the same facts from those on which the technical advice was based, notify the Chief, Appeals, Attention: Director, Policy, Quality and Case Support. See IRM 8.6.3.5.2.

8.6.3.5  (10-26-2007)
Requests for Legal Advice

  1. The term "legal advice" , as used in this section, means the advice, comments, or views of a component of the Office of Chief Counsel on substantive questions on interpretation of the Internal Revenue Code, regulations, revenue rulings, revenue procedures, and court decisions. The Office of Chief Counsel furnishes legal advice to assist IRS personnel, including Appeals personnel, to establish and maintain consistent positions in the settlement of cases.

  2. Request legal advice from an Associate Chief Counsel office on novel or significant issues within that Associate office’s subject matter jurisdiction. A request for legal advice is not used when the procedures for requesting technical advice apply.

  3. Legal advice is advisory. The Office of Chief Counsel furnishes legal advice to assist in the evaluation of the settlement potential of the case in relation to the litigating hazards involved. Legal advice is not cited as the basis for closing a case and copies of legal advice are not furnished to taxpayers or their representatives.

  4. Requests for legal advice may be withdrawn.

8.6.3.5.1  (10-01-2012)
Procedures for Requesting Legal Advice

  1. Submit requests for legal advice from an Associate Chief Counsel office, including all attachments, in triplicate, through the Area Director on Form 4368, Transmittal to National Office Appeals, to the Chief, Appeals. The address to use is shown above.

  2. Requests for legal advice must contain the following information:

    1. a complete statement of all facts relating to the issue;

    2. a detailed description and analysis of the issue, citing the pertinent authorities (facts and legal discussion should be included in the request—not merely incorporated by reference);

    3. copies of any material that pertains to the issue; and

    4. a full and precise statement of the reasons why Chief Counsel consideration is requested.

  3. Upon receipt of the request for legal advice, the Director, Policy, Quality and Case Support determines whether it is an appropriate request for legal advice. If it is, the Director, Policy, Quality and Case Support refers it to the appropriate Associate Chief Counsel office. If the request is inappropriate or not fully developed, the Director, Policy, Quality and Case Support returns the request to the Area Director. Some examples of inappropriate requests are as follows:

    1. requests involving factual determinations where uniformity and consistency are not involved;

    2. the issue is not sufficiently widespread to warrant consideration by the Associate Chief Counsel office;

    3. a revenue ruling or acquiescence already covers the situation and there is no reason to believe that such revenue ruling or acquiescence will be revoked or modified; and

    4. the case is not docketed and it concerns an issue for which technical advice is appropriate.

  4. The Associate Chief Counsel office addresses and furnishes the legal advice to the Chief, Appeals. The Director, Policy, Quality and Case Support forwards the legal advice to the requesting Appeals office through the Area Director.

8.6.3.5.2  (10-01-2012)
Procedure If Appeals Conclusion Is Contrary to Service Position

  1. For purposes of this section, the term "Service position" means the conclusion on an issue as expressed in a ruling, or Technical Advice Memorandum (TAM) issued to the taxpayer under consideration, or in revenue rulings.

  2. When Service position is favorable to the taxpayer, Appeals follows it. If Service position is adverse to the taxpayer, Appeals may partially or fully concede the issue depending on the litigating hazards. When full concession of an issue is recommended and is contrary to Service position, without offsetting consideration, request and consider the views of the appropriate National Office function. If the taxpayer’s facts are distinguishable from the facts upon which the Service based its position, the views of the National Office do not have to be obtained.

  3. To obtain the Associate Chief Counsel office’s views required in (2) above, submit two copies of the request using Form 4368, Transmittal to National Office Appeals, and attach a copy of the proposed Appeals Case Memorandum (ACM) which states the issue, facts, law, and contemplated action. If a case involves so many issues that writing a proposed ACM would unduly delay the notification, attach a statement limited to the issue on which the Appeals conclusion is contrary to a Service position. The statement must include the facts, issue, law, and proposed action. The Form 4368 with attachments is sent to the Chief, Appeals, Attention: Director, Policy, Quality and Case Support.

  4. The Chief, Appeals solicits the views of the Associate Chief Counsel office that issued the Service position ("issuing office" ) and transmits those views to the Appeals office. After considering the views of the issuing office, close the case. If the views of the issuing office are not followed, two copies of the final supporting statement stating the reasons why the office’s views are not being followed is sent to the Chief, Appeals at the address in (3) above. The Chief, Appeals forwards one copy to the issuing office.

  5. If there has been a letter ruling or TAM on an employee plan’s qualification, an organization’s exempt status, or foundation classification has been issued, follow the letter ruling TAM or submit the proposed contrary disposition as a request for a TAM.

8.6.3.6  (10-26-2007)
Assistance from the Director, International (LMSB)

  1. The procedures for obtaining foreign based information are found in IRM 4.60.1.2, Specific Exchange Program.

8.6.3.7  (10-01-2012)
Economic Assistance in IRC 482 Cases

  1. To supplement the legal and accounting skills of Appeals Officers and assist them in coping with the economics underlying many of the problems they may encounter, particularly those in international transfer pricing issue cases, Appeals has economists to assist with issue resolution. See IRM 1.4.28.9, Referrals to Appeals Domestic Operations, International, and TEGE, for a general guide for requesting economic assistance. See also IRM 4.49.1, Overview - Economist Program, for an overview of the Large Business & International (LB&I) economist program.

8.6.3.8  (10-26-2007)
Appeals Request for Legal Opinion

  1. If an Appeals office requires a legal opinion in a case, either docketed or non-docketed, concerning the application of settled principles of law to a specific set of facts, contact the local Associate Area Counsel office. Opinions may be secured for the following items:

    1. meaning, or force and effect of legal terms in a contract;

    2. enforceability of a contract;

    3. the application of State law to a contract;

    4. corporate existence of transferee; or

    5. similar questions.

  2. A direct request by an Appeals office to an Associate Chief Counsel office is not appropriate. The local Associate Area Counsel determines whether the request concerns a matter that should be referred to an Associate Chief Counsel office.

8.6.3.9  (10-26-2007)
Cases Requiring Actuarial Assistance from Division Commissioner, Tax Exempt and Government Entities

  1. This section describes case coordination with the Division Commissioner, Tax Exempt and Government Entities, in cases requiring actuarial assistance.

  2. The Office of the Division Commissioner, Tax Exempt and Government Entities, has the responsibility for providing actuarial assistance to all Service components. The Pension Actuarial Branch, E:EP:PA, provides actuarial assistance on questions relating to employee plans. The General Actuarial Branch, E:EP:GA, provides actuarial assistance outside the employee plans area.

  3. Assistance is provided in response to actuarial questions relating to the following issues:

    1. tax treatment of pension, profit-sharing, stock bonus, annuity, life or accident insurance and health plans;

    2. tax treatment of other benefit and compensation plans and contracts;

    3. taxation of life insurance companies;

    4. determination of unstated interest on certain deferred payments; and

    5. valuation of life estates, remainder interests, contingent assurance, series of payments, and actuarial interests in trusts.

  4. Assistance in these areas is also furnished to the Office of Chief Counsel and the Justice Department (through the Office of Chief Counsel) in the development and presentation of actuarial issues for trial or pre-trial settlement, and may include securing or providing expert witnesses for cases in litigation.

  5. Requests for actuarial assistance may be submitted as a request for technical advice, following the procedures contained in Rev. Proc. 2010-5, 2010-1 IRB 165, or as a request for legal advice. Actuarial assistance is also available telephonically.

  6. For additional guidance concerning actuarial funding/deduction questions, see IRM 8.7.8.3.9, Actuarial Funding and Deduction Issues.

8.6.3.10  (06-01-2010)
Change in Accounting Practice or Method

  1. A taxpayer may request, using Form 3115, Application for a Change in Method of Accounting, to change its method of accounting even if the method to be changed is an issue under consideration by an Appeals office. This provision is effective for taxable years ending on or after December 31, 2001. The request does not affect full consideration of the pending issue in Appeals because the taxpayer’s method change is without audit protection. Rev. Proc. 2008-52, 2008-36 IRB 587, Section 6.04. For years prior to 2001, a taxpayer cannot file an application to change its method if the item is under consideration by Appeals.

  2. Rev. Proc. 2008-52 , 2008-36 IRB 587 (as amplified, clarified, and modified by Rev. Proc. 2009-39, 2009-38 IRB 371) provides procedures under which taxpayers may obtain automatic consent of the Commissioner to change methods of accounting. Similarly, Rev. Proc. 97-27, 1997-1 CB 680 (as modified and amplified by Rev. Proc. 2002-19, 2002-1 CB 696, as amplified and clarified by Rev. Proc. 2002-54, 2002-2 CB 432, as modified by Rev. Proc. 2007-67, 2007-2 CB 1072 and as amplified, clarified, and modified by Rev. Proc.2009-39) provides procedures for obtaining the advance consent of the Commissioner to change a method of accounting.

  3. A taxpayer's request for a change in method of accounting can only be made in a current year and not retroactively. The applicable revenue procedure is the revenue procedure in effect at the time the request was submitted.

  4. For formal applications:

    • Rev. Proc. 92-20, 1992-1 CB 685 (Forms 3115 filed on or after March 23, 1992); or

    • Rev. Proc. 97-27, 1997-1 CB 680 (Forms 3115 filed on or after May 15, 1997).

  5. For automatic consent applications:

    • Rev. Proc. 99-49, 1999-2 CB 725 (years ending on or after December 27, 1999);

    • Rev. Proc. 2002-9, 2002-1 CB 327 (tax years ending on or after December 31, 2001); or

    • Rev. Proc. 2008-52, 2008-36 IRB 587 (tax years ending on or after December 31, 2007).

  6. If any of the taxpayer’s returns are under consideration by an Appeals office, the taxpayer may not change an accounting method unless the taxpayer secures written agreement from the Appeals Officer that Appeals does not object to the requested change (applicable only to advance consent applications prior to Rev. Proc. 97-27).

  7. Appeals has full authority to incorporate the principles of Rev. Proc. 92-20 and Rev. Proc. 97-27 in the settlement of a case. In addition, an Appeals Officer may resolve an accounting method issue by offering terms and conditions that differ from those ordinarily applicable to a Compliance-imposed accounting method change to appropriately reflect hazards of litigation.

    For example, an Appeals Officer may compromise the year of change (by agreeing to a later year of change) to reflect hazards of litigation, but in no event defer the year of change to later than the taxable year that includes the date of the closing agreement finalizing the change. Rev. Proc. 2002-18, 2002-1 CB 678.

  8. To implement a Service-imposed change in method of accounting, secure a closing agreement under IRC 7121. To resolve an accounting method issue raised by the Service on a non-accounting-method change basis, execute a closing agreement under IRC 7121. See IRM 8.13.1, Closing Agreements and Rev. Proc. 2002-18 (agreements executed on or after July 1, 2002).

  9. Changing a taxpayer’s method of accounting provides notice to the taxpayer that an accounting method is being treated as an accounting method change unless such notice was provided by the examining agent. The notice must be in writing and is satisfied if a closing agreement is executed finalizing the change. The resolution of an accounting method issue does not establish a new method of accounting if the Service does not provide such notice. See Rev. Proc. 2002-18 (effective on or after July 1, 2002).

8.6.3.11  (06-01-2010)
Extension of Time for Making Certain Elections

  1. Section 301.9100-1 of the Procedure and Administration Regulations provides that the Commissioner may grant a reasonable extension of the time fixed by regulations for making elections or applications for relief.

  2. An election made pursuant to section 301.9100-2 for an automatic extension of time is not a letter ruling request and does not require payment of a user fee under Rev. Proc. 2010-1, 2010-1 IRB 1.

  3. A request for an extension of time for making an election or other application for relief under section 301.9100-3 of the Procedure and Administration Regulations is not submitted as a request for a TAM; instead, the request is submitted as a letter ruling request even if the request is submitted after the examination of the taxpayer's return has begun or after the issues in the return are being considered in Appeals or a federal court. Therefore, a section 301.9100-3 request should be submitted pursuant to Rev. Proc. 2010-1, 2010-1 IRB 1 (or its successor), (including the payment of the applicable user fee listed in Appendix A of Rev. Proc. 2010-1). Also see IRM 1.2.53.4, Delegation Order 183 (Rev. 8), where authority to grant relief under section 301.9100-3 is not delegated to Appeals.

  4. Appeals may consider hazards of litigation regarding letter rulings issued under section 301.9100-3 of the Procedure and Administration Regulations when the letter ruling is an issue in a case in Appeals jurisdiction. See IRM 8.6.3.5.2 for the procedure to follow if Appeals conclusion is contrary to the service position.


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