8.21.6  Statute Information on TEFRA Cases

Manual Transmittal

September 24, 2012

Purpose

(1) This transmits revised IRM 8.21.6 Appeals Statute Responsibility- Statute Information on TEFRA Cases

Material Changes

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

Effect on Other Documents


This supersedes IRM 8.21.6 dated June 18, 2010.

Audience

Appeals

Effective Date

(10-01-2012)

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

8.21.6.1  (08-17-2007)
General Rules For IRC Section 6229

  1. The enactment of the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 partnership rules resulted in a code section relating to the statute of limitations for TEFRA entities. IRC section 6229 provides a minimum period for assessment of any deficiencies resulting from partnership items.

    Note:

    S corporations are covered under the TEFRA rules for certain tax years. Coverage under the TEFRA rules began for tax years beginning after December 31, 1982. Effective for tax years beginning after December 31, 1996, S corporations are no longer covered by the TEFRA rules.

  2. Partnerships and S Corporations are generally not taxable entities. Assessments are generally made at the investor level. Before the TEFRA unified proceedings were enacted, it was necessary to secure statute extensions for each investor. This created a heavy administrative burden for the Service, especially for returns that had more than ten investors or had pass-thru investors.

  3. The TEFRA unified proceedings did not alter the principle that the assessments were made at the investor level. It created a means to reduce the administrative burden caused by the need for individual statute extensions. IRC section 6229 allows for a single extension to be secured at the TEFRA key case level. In contrast, a statute extension must still be secured from each investor in a non-TEFRA key case.

  4. The general assessment provisions of IRC section 6501 continue to control the statute of limitations for investors. IRC section 6229 enhances the IRC section 6501 statute by setting forth a minimum period for assessment of the tax at the investor level. IRC section 6229 provides:

    1. a minimum period for assessment based upon the filing of the key case return;

    2. rules for the extension by agreement of the minimum period for assessment;

    3. a minimum period for assessment after the conversion of partnership items to non-partnership items;

    4. rules for the suspension of the minimum period of assessment; and

    5. rules that extend the minimum period for assessment in special circumstances (i.e., fraud, substantial omission, no return, or unidentified partner).

  5. The IRC section 6229 statute should be used as if it were the only statute. This fosters protection against expired statutes. If the IRC section 6229(a) statute has expired with respect to partnership items, but the IRC section 6501 period remains open for one or more investors, contact associate area counsel to determine whether the proceeding may continue.

    Caution:IRC section 6629(b)(3)requires that any agreement to extend the statute under IRC section 6501(c)(4) must expressly provide that the agreement applies to tax attributable to partnership items. The Service should rely on the IRC section 6501 statute only when the investor return is in its original statute period, unless the extension includes special language specifically including the adjustments flowing through from TEFRA entities.

  6. The TEFRA unified procedures must still be followed if the statute is open under IRC section 6501 but not IRC section 6229. For example, a Notice of Beginning of Administrative Proceeding (NBAP) must be issued, and a Notice of Final Partnership Administrative Adjustment (FPAA) or Final S Corporation Administrative Adjustment (FSAA) must be issued if the investors do not enter into settlement agreements.

8.21.6.1.1  (08-17-2007)
Exceptions to General Rule for IRC Section 6229

  1. IRC section 6229 provides for an extended statute in special circumstances.

    1. IRC section 6229(c)(2) extends the statutory period of limitations for assessments from 3 years to 6 years if the TEFRA entity omits from gross income more than 25 percent of the amount that was reported.

    2. If no TEFRA entity return is filed, the tax attributable to that year's partnership/S Corporation items may be assessed against the partners/shareholders at any time pursuant to IRC section 6229(c)(3).

    3. If the Service files a substitute for return for the TEFRA entity under IRC section 6020, it is treated as if no return was filed ( IRC section 6229(c)(4)).

  2. In case of fraud, IRM section 6229(c)(1) sets out two different statutes.

    1. If any investor has, with the intent to evade tax, signed or participated directly or indirectly in the preparation of a TEFRA entity return that includes a false or fraudulent item, any assessment for partnership or S corporation items may be made at any time with respect to that investor.

    2. In the case of all other investors in that TEFRA entity, the statutory period of limitations will be 6 years instead of the normal 3 years.

8.21.6.1.2  (08-17-2007)
Partnership Items Converted to Non-partnership Items

  1. In certain situations, partnership items are converted to non-partnership items. The conversion removes the assessment of tax attributable to partnership items from the purview of IRC section 6229(a). (See IRM 8.19.1.6.6.4, IRC section 6229(a) Statutory Period of Limitations-Key Case).

  2. The statute of limitations on converted partnership items is governed by IRC section 6229(f).

    1. The period for assessing any tax attributable to partnership items or any affected items will not expire before one year from the date of the conversion. This statute may be extended.

    2. For partial settlements executed after August 5, 1997, the period for assessment shall be determined as if the agreement had not been entered into. See IRC section 6229(f)(2).

    Caution: Regarding 2(a) above, a defaulted FPAA/FSAA or a court decision does not convert partnership items to non-partnership items. The statute on the investor returns is governed by IRC section 6229(d).

8.21.6.1.3  (08-17-2007)
Suspension of the Statute by FPAA/FSAA

  1. The statutory period of limitations for assessments of tax attributable to partnership/S corporation items is suspended when the Secretary mails an FPAA/FSAA to the Tax Matters Partner/Tax Matters Person (TMP) (IRC section 6229(d)). The statute is suspended for the period in which a petition may be filed (150 days) and, if a petition is filed, until the decision of the Court is final (including the period for appeal), and for one year thereafter.

  2. Prior to the Taxpayer Relief Act of 1997 (TRA 97), the IRC section 6229(a) statute was not suspended in the case of untimely petitions. TRA 97 changed IRC section 6229(d) to provide for suspension of the statute in the case of an untimely petition. The amendment is effective for partnership/S Corporation taxable years for which the statute had not expired as of August 5, 1997.

8.21.6.2  (08-17-2007)
Statute Procedures for TEFRA Key Cases

  1. IRC section 6229 provides a minimum period for assessment at the investor level of any deficiencies resulting from partnership items. IRC section 6229 also allows for a single extension to be secured at the TEFRA key case level.

  2. For a complete discussion of the statute of limitations for TEFRA entities, see IRM 8.19.1.6.6.

8.21.6.2.1  (10-01-2012)
Account and Processing Support (APS) Statute Responsibility for TEFRA Key Cases

  1. Account and Processing Support (APS) statute responsibility for TEFRA key cases is the same as covered in IRM 8.21.2. Whenever a TEFRA key case consent is signed by a POA, a notation should be made in the notes section of the Case Summary Card (CSC) alerting the ATM and the Appeals Technical Employee of this fact.

  2. The statute of limitations must be verified on new case receipts. There must be at least 180 days remaining on the statute of non-docketed TEFRA key cases before Appeals will accept them.

  3. If the Appeals Technical Employee submits an ACDS Update Request Form to correct the statute of a newly assigned case, or provides a copy of an executed statute extension and requests an update, the statute date or code on both ACDS and on AIMS is changed. To make the change on AIMS, use CC: AMSTUB. This automatically changes PCS. See IRM 8.21.3.1.3 for information covering the submission of the ACDS Update Request Form by the Appeals Technical Employee.

8.21.6.2.1.1  (08-17-2007)
Settlement Agreements

  1. APS has statute responsibility for the investor statutes for agreement forms executed in the Appeals office until an acknowledged Form 3210, Document Transmittal, is received from the Campus TEFRA Function (CTF).

  2. If the TEFRA key case is not controlled on PCS and Appeals executes the agreement forms, APS has statute responsibility for the investor statutes until an acknowledged Form 3210 is received from the IRS function with jurisdiction of the investor returns.

  3. APS should monitor the Forms 3210 transmitting TEFRA settlement agreements to the CTF or the IRS function with jurisdiction over the investor return until the acknowledged Form 3210 is received.

8.21.6.2.1.2  (08-17-2007)
Issuing an FPAA/FSAA

  1. If Appeals issues a Final Partnership Administrative Adjustment (FPAA) or a Final S Corporation Administrative Adjustment (FSAA) to the TMP, update ACDS as provided in IRM 8.19.5.9.3.1, Updating ACDS Controls.

  2. If the CTF issues an FPAA/FSAA to the TMP, monitor the FPAA/FSAA as explained in IRM 8.19.5.9.3.1, Updating ACDS Controls. After receiving verification of the acknowledged Form 3210 and a copy of the Certified Mailing List from the key case CTF that the FPAA/FSAA has been mailed to the TMP, follow the instructions in IRM 8.19.5.9.3.1, Updating ACDS Controls.

    1. Statute responsibility for the TEFRA key case statute where the CTF issues the FPAA/FSAA remains in APS until receipt of the acknowledged Form 3210 and a copy of the Certified Mailing List.

8.21.6.2.1.3  (08-17-2007)
Defaulting an FPAA/FSAA

  1. Monitor the docket lists using the Docketed Inventory Management System (DIMS). If a petition has not been identified within 180 days, APS will default the case, following the procedures in the following IRM sections:

    1. IRM 8.19.5.12, Defaulted Cases

    2. IRM 8.19.5.12.1, Preparing Key Case Administrative File for Default

    3. IRM 8.19.5.12.2, Updating ACDS

    4. IRM 8.19.5.12.3, Mailing Default Package to Key Case Campus TEFRA Function (CTF)

    5. IRM 8.19.5.12.4, Processing and AIMS Closure.

  2. Statute responsibility for the investor cases whose deficiencies are determined by the defaulted FPAA/FSAA remains in APS until the acknowledged Form 3210 has been received from the key case CTF or IRS function with jurisdiction over the investor return.

8.21.6.2.1.4  (08-17-2007)
FPAA/FSAA Petitioned

  1. APS responsibilities for an FPAA/FSAA petitioned to the Tax Court are detailed in IRM 8.19.5.9.4, Notification When Petitioned to the Tax Court.

    1. After the decision of the Tax Court becomes final (generally 90 days after the Tax Court entered the decision) follow the procedures in IRM 8.19.5.15, After Final Tax Court Decision or Counsel Settlement.

    2. When a Tax Court decision is appealed to the circuit courts, after the decision becomes final, follow the procedures in IRM 8.19.5.16, After Final Decision from the Appeal of a Tax Court Decision.

  2. Follow the case processing instructions in IRM 8.19.5.17.7, Final Appeal or Final Decision, when a decision of a Federal District Court, U.S. Court of Federal Claims or other court becomes final and the Department of Justice returns the case to Appeals to notify the CTF.

8.21.6.2.1.5  (08-17-2007)
Additional IRM Sections on Statutes

  1. For additional information on consents secured for non-docketed TEFRA key cases see IRM 8.19.5.4, Non-Docketed Case File.

  2. IRM 8.19.5.3.1, AAR Statute of Limitations and IRM 8.19.7.2.7, Statutes - Period of Limitations - AAR, explain the statute of limitations for Administrative Adjustment Request (AAR) cases received in Appeals.

  3. IRM 8.19.5.7, Statute of Limitations, discusses the general statute of limitations and the forms which may be used to extend the statute.

8.21.6.2.2  (10-01-2012)
Appeals Technical Employees Statute Responsibility for TEFRA Key Cases

  1. Appeals Technical Employees’ statute responsibility for TEFRA key cases is the same as covered in IRM 8.21.3.1, General Guidelines for Appeals Technical Employees.

  2. Refer to IRM 8.19.3.4, Statute of Limitations, for guidelines in determining the expiration date for the statute of limitations. The Appeals Technical Employee is responsible for verifying the accuracy of the statute determination on the ACDS generated CSC within 5 workdays of receipt of the case.

  3. The Appeals Technical Employee makes an entry in the Case Activity Record (CAR) stating that statute verification was made and the CSC is accurate or the CSC is inaccurate. When the statute of limitations on the CSC is inaccurate, provide the correct statute date(s) to Account and Processing Support (APS) by generating and sending the ACDS Update Request Form following the procedures below:

    1. Send the ACDS Update Request Form by secure email to the Processing Team Manager (PTM) responsible for the location. The ACDS Update Request Form located on APGOLF must be used.

      Note:

      The ACDS Update Request Form is only used to correct statute dates. Do not use it to update the statute when a consent is received. See IRM 8.21.3.1.3.4 for procedures to follow when updating the statute because of a consent

      .

    2. The PTM forwards the e-mail to the Tax Examiner assigned to correct ACDS.

    3. Once the request is complete, the Tax Examiner e-mails the requestor and PTM. If the error is not corrected within 72 hours, the PTM makes the correction and notifies the requestor and Tax Examiner that it is complete.

    4. The PTM files the completed e-mail along with the request document, in an offline e-mail subfolder entitled "ACDS Updates."

    5. If the correction is not completed within 72 hours, the requester contacts the same PTM who was sent the original ACDS Update Request Form.

  4. A TEFRA key case should not be accepted in Appeals unless there are at least 180 days remaining on the statute.

8.21.6.2.2.1  (08-17-2007)
Protecting the Statute during Appeals Consideration

  1. Guidelines for protecting the statute of limitations for TEFRA key cases are the same as covered in IRM 8.21.3.1.3.1, Protecting Statutes, General Guidelines. However, an FPAA or an FSAA is prepared instead of issuing an Statutory Notice of Deficiency (SND). Also a work request for preparation of an FPAA/FSAA should be withdrawn if a settlement agreement is secured from all partners or shareholders remaining in the TEFRA proceeding.

  2. IRM 8.19.1.6.6, Statute of Limitations for TEFRA Entities, provides guidelines for determining the statute of limitations. IRM 8.19.1.6.6.8, Statute Extensions-Partnership/S Corporations, contains information on extending the statute of limitations and IRM 8.19.1.6.6.8.1, Entity Level Extensions, explains the forms which may be used to extend the statute of limitations.

    Caution: The preferred way to extend a statute from a TEFRA partnership or TEFRA S corporation is for the TMP (Tax Matters Partner for a TEFRA partnership or the Tax Matters Person for a TEFRA S corporation) and the Service to execute the appropriate consent form. Refer to IRM 8.19.1.6.6.8.1.2 for guidelines when a non-TMP will be executing the consent.

  3. Solicit a statute extension no later than 150 days before the statutory period will expire.

  4. Make timely follow-ups to ensure the consent is received at least 120 days before the statute expires. If no consent is secured within 120 days before statute expiration, initiate preparation of an FPAA/FSAA.

  5. When the statute consent form is executed by Appeals, send a copy to APS along with a request to update the statute. This should be done within five (5) days of execution. See IRM 8.21.2.5 for a discussion of actions taken by APS.

  6. APS updates the statute on ACDS and AIMS within 5 workdays of the receipt of the executed consent from the technical employee.

  7. If the statute is not updated on ACDS and AIMS within 10 workdays of the notification, the Appeals Technical Employee is responsible for notifying the ATM in writing that the statute on ACDS is not accurate.

  8. Once the consent form has been executed by all parties, attach a copy to the reverse side of the first page of each affected tax return.

    If ... And ... Then ...
    The taxpayer is a partnership the Tax Matters Partner signs the consent form attach only the executed consent to the reverse side of the first page of each affected tax return. See Note below.
    The taxpayer is an S Corporation the Tax Matters Person signs the consent form attach both the executed consent AND a copy of Letter 967
    The taxpayer is either a partnership or an S Corporation the authorized representative signs the consent form on the taxpayer's behalf attach both the executed consent AND a copy of the Letter 967 that was sent to the taxpayer.

  9. For partnerships, it is no longer a requirement to attach Letter 967 to each affected return since the taxpayers' notice of rights is located directly above the signature lines of the consent form. However as explained in (10) below, the letter must be attached if the Power of Attorney signs the consent on behalf of the taxpayers. The notice of rights are not on the consent forms for S corporations so you must continue to attach a copy of the Letter 967 that was sent to the taxpayer as verification they received their notice of rights.

  10. When the designated individual shown on the Power of Attorney signs the consent form on behalf of the taxpayers, attach a copy of the Letter 967 mailed to the taxpayer to the returns along with the executed consent form. Retaining a copy of the letter in this situation shows the taxpayers were provided their rights.

  11. Annotate the Case Activity Record (CAR) that the consent form, Letter 967 and Publication 1035, (Extending the Tax Assessment Period) were sent to the taxpayer and representative, if applicable.

8.21.6.2.2.2  (08-17-2007)
Settlement Agreements

  1. The Appeals Technical Employee has statute responsibility for the investor statutes for settlement agreements executed in the Appeals office, until they are executed by the ATM (if applicable). If the Appeals Technical Employee executes the settlement agreements in accordance with Delegation Order 4–19, the Appeals Technical Employee is responsible for the investor statutes until the case is submitted to APS.

  2. When unexecuted settlement agreements are received in the Appeals office, the Appeals Technical Employee will follow the procedures in IRM 8.19.3.8.5.2, Agreements Received at Appeals Office, for key cases without penalties or other affected items and the procedures in IRM 8.19.3.9, Settlement Agreements with Penalties or Other Affected Items, for key cases with penalties or other affected items.

8.21.6.2.2.3  (08-17-2007)
Issuing an FPAA/FSAA

  1. When the Appeals Technical Employee determines that issuance of an FPAA/FSAA is necessary, the Appeals Technical Employee will submit a request for preparation of an FPAA/FSAA to a Tax Computation Specialist (TCS).

  2. After completion by the TCS, the Appeals Technical Employee will submit the package to the ATM (if applicable), or to APS requesting issuance of the FPAA/FSAA.

  3. The responsibility for the TEFRA key case statute remains with the Appeals Technical Employee until the case is submitted to the ATM (if applicable) or when APS receives the request for issuance of the FPAA/FSAA with the proper statute in ACDS and on the Form 5402, Appeals Transmittal and Case Memo.

  4. If the TEFRA key case statute will expire in less than 180 days, the Appeals Technical Employee should flag the case (using Form 10364-A, Statute Expiration Case Notice, or a red folder with Form 10364, Statute Expiration Case Notice) to indicate to the ATM (if applicable) and APS that the return has a short statute.

8.21.6.2.2.4  (08-17-2007)
Final Tax Court Decisions

  1. When Counsel settles a case or the decision of the Tax Court becomes final (generally 90 days after the Tax Court enters the decision) APS will update the statute on ACDS and return the case to the Appeals Technical Employee.

  2. The Appeals Technical Employee is responsible for verifying the statute on the updated Case Summary Card as noted in IRM 8.21.3.1.1, New Receipts and Transfers.

    1. Follow the procedures in IRM 8.19.3.14.7.3, Closing Cases After Final Tax Court Decision or Counsel Settlement, to notify the CTF or IRS function with jurisdiction over the investor that a decision of the court is final.

    2. The statute responsibility for the investor deficiencies remains with the Appeals Technical Employee assigned the TEFRA key case until an acknowledged Form 3210, notifying of a final court decision, is received from the key case CTF or IRS function.

  3. If the Appeals Technical Employee is no longer available, APS will give the case to the ATM. The statute responsibility for the investor deficiency remains with the ATM of the unavailable Appeals Technical Employee assigned the TEFRA key case until an acknowledged Form 3210, notifying of a final court decision, is received from the key case CTF or IRS function.

  4. If the case was never assigned to an Appeals Technical Employee, APS will give the case to an ATM or other designated technical employee located on-site. The statute responsibility for the investor deficiency remains with the ATM or designated technical employee until an acknowledged Form 3210, notifying of a final court decision, is received from the key case CTF or IRS function.

  5. When a Tax Court decision is appealed to the circuit courts, after the decision becomes final, follow the procedures in IRM 8.19.3.14.7.5, Closing Cases After Final Decision from Appeal of Tax Court Decision.

8.21.6.2.2.5  (08-17-2007)
U.S. Court of Federal Claims or a District Court of the United States

  1. If the Department of Justice returns a case to Appeals after a decision of a federal district court, the U.S. Court of Federal Claims or other court is final, APS will update the statute on ACDS and return the case to the Appeals Technical Employee.

  2. The Appeals Technical Employee is responsible for verifying the statute on the updated CSC as noted in IRM 8.21.3.1.1, New Receipts and Transfers.

  3. Follow the procedures in 8.19.3.14.7.6, Closing Cases Petitioned to or Appealed from District Court or the U.S. Court of Federal Claims, to notify the CTF or IRS function with jurisdiction over the investor that a decision of the court is final. The statute responsibility for the investor deficiencies remains with the Appeals Technical Employee assigned the TEFRA key case until an acknowledged Form 3210, notifying of a final court decision, is received from the key case CTF or IRS function.

  4. If the Appeals Technical Employee is no longer available, APS will give the case to the ATM. The statute responsibility for the investor deficiencies remains with the ATM of the unavailable Appeals Technical Employee assigned the TEFRA key case until an acknowledged Form 3210, notifying of a final court decision, is received from the key case CTF or IRS function.

  5. If the case was never assigned to an Appeals Technical Employee, APS will give the case to an ATM or other designated technical employee located on-site. The statute responsibility for the investor deficiency remains with the ATM or designated technical employee until an acknowledged Form 3210, notifying of a final court decision, is received from the key case CTF or IRS function.

8.21.6.2.3  (08-17-2007)
Appeals Team Manager (ATM) Responsibility for TEFRA Key Case Statutes

  1. ATM’s responsibility for TEFRA key cases is the same as covered in IRM 8.21.4, Appeals Management Statute Responsibility. However, unlike a Statutory Notice of Deficiency (SND), an FPAA or an FSAA cannot be rescinded, therefore the guidelines in IRM 8.21.4 do not apply to TEFRA key cases.

  2. While the Appeals Technical Employee is primarily responsible for the statute on the TEFRA key case until it is submitted to APS, the ATM should generally monitor TEFRA key cases with a statute on ACDS of less than 90 days to ensure that a timely FPAA/FSAA is issued or that the CTF or IRS function with jurisdiction of the investor is notified of a final court decision.

8.21.6.2.3.1  (08-17-2007)
Settlement Agreements

  1. If the ATM executes the settlement agreements, the Appeals team manager has statute responsibility for the investor statutes until the case is submitted to APS.

8.21.6.2.3.2  (08-17-2007)
Issuing an FPAA/FSAA

  1. If the ATM signs the FPAA/FSAA letters, the ATM has statute responsibility for the investor statutes until APS receives the request for issuance of the FPAA/FSAA with the proper statute in ACDS and on the Form 5402.

8.21.6.3  (08-17-2007)
Statute Procedures For TEFRA Investor Cases

  1. Generally the returns of investors in TEFRA partnerships and S corporations (TEFRA investor cases) are not sent to Appeals with the TEFRA key case return. The investor cases are held in suspense and are controlled at the key case Campus TEFRA Function (CTF). Ogden is generally the key case CTF for LMSB cases while Brookhaven is generally the CTF for SB/SE cases.

  2. Many times the returns of investors are examined for other (non-TEFRA) issues, and come to Appeals when issues are not resolved in Compliance.

  3. For CIC (Coordinated Industry Case) corporations, Joint Committee, or other corporate specialty cases, tax computations, assessments, and statute controls on the TEFRA linkages are the responsibility of Appeals if Appeals has jurisdiction over the investor case (i.e., for non-TEFRA issues).

    Note:

    Other corporate specialty cases are: (a) Forms 1120 followed by a letter (for example, Form 1120L (life insurance company); however, Form 1120A, Form 1120S, and Form 1120X are not corporate specialty cases; and (b) All corporations with AIMS activity codes of 219 or higher.

  4. If Appeals has jurisdiction over the investor case and the case is not a CIC corporation, Joint Committee, or other corporate specialty case, the investor CTF has the responsibility for tax computations, assessments, and statute controls on the TEFRA linkages.

    Note:

    Appeals does not have jurisdiction over the investor case for statute control purposes if the case is received under the early referral, fast-track mediation, or fast-track settlement Appeals Dispute Resolution (ADR) programs.

8.21.6.3.1  (08-17-2007)
APS Responsibility for TEFRA Investor Cases

  1. Upon receipt of an income tax case (other than a case referred to Appeals under the early referral, fast-track mediation, or fast-track settlement ADR programs), the APS employee will check the AMDIS and/or AMDISA to determine if there is a PICF Code 5 on the Partnership Control System (PCS), indicating a TEFRA partnership or TEFRA S corporation linkage. See IRM 8.19.5.19.4.2, Partnership Inventory Control File (PICF) Indicator.

    1. The Partnership Control System (PCS) is a separate data base for flow-through entity information. PCS interfaces with Master File and AIMS.

    2. Information in PCS includes TEFRA and non-TEFRA information for linked flow-through entities and their investors. See IRM 8.19.5.19, Partnership Control System (PCS), for an overview of PCS and references to complete PCS information.

  2. If there is a PICF Code 5 and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, APS will obtain a TSUMYI to determine if there is an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date). The one-year statute date field appears in the column with the heading "1YR-ST/P" .

  3. If TSUMYI reflects "11111111" in the one-year statute date field, the assessment has been made and that TEFRA partnership or TEFRA S corporation linkage will not need to be input on ACDS.

  4. If the TSUMYI reflects an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date), the TEFRA partnership or S corporation will be input on ACDS as a REF (reference) return to the case and a Case Summary Card (CSC) will be generated.

    1. Refer to IRM 8.19.6.17.1.1, Carding in Investor Cases with Open TEFRA Linkage, for instructions for carding TEFRA investor cases with an open TEFRA linkage.

    2. If there is an open TEFRA linkage, the APS employee will also input type code TEFRAI for the TEFRA investor case on ACDS. A sample CSC for a REF return is shown in IRM Exhibit 8.19.6-5.

  5. The APS employee will include the CSC on the case, together with the AMDIS or AMDISA and the TSUMYI and any REF CSCs on the open TEFRA linkages, along with the case file when it is forwarded to the ATM.

  6. Appeals generally will not accept a case with less than 180 days remaining on the statute, including a one-year statute date for a TEFRA investor. If the case is either a CIC corporation, Joint Committee, or other corporate specialty case, and there is an eight digit date in the "1YR-ST/P" field of the TSUMYI that has less than 180 days remaining, or the eight digit date has expired, the APS employee will notify the ATM by secure e-mail on the same day as the statute information is discovered.

    1. The e-mail should include the name of the taxpayer, the tax years, the number of linkages, the one-year statute date(s), and the Employee Group Code (EGC) of the case.

    2. If the ATM decides to accept the case in Appeals, the reply e-mail will be included in the case file along with the CSC, the AMDIS or AMDISA, the TSUMYI, and the REF CSCs when the case is forwarded to the Appeals Technical Employee.

    3. If the ATM decides to return the case to Compliance, the reply e-mail will also be included in the case file, which will be returned to Compliance no later than the next workday (using Form 3210, Document Transmittal). The TEFRA one-year statute date(s) will be clearly identified on a transmittal memorandum to the Case Manager/Team Manager.

  7. If APS receives notification from an Appeals Technical Employee to correct a statute date or other information on ACDS, the correction will be made within five (5) workdays.

  8. APS is responsible for the TEFRA one-year statute(s) until the case is received by the ATM (if Appeals will retain the case) or is returned to Compliance (if Appeals will not be retaining the case).

8.21.6.3.2  (08-17-2007)
Appeals Technical Employee Responsibility for TEFRA Investor Statutes

  1. Upon receipt of the case and CSCs from the ATM, review the file to determine that all open TEFRA linkages (the one-year statute date field is either blank or contains an eight digit date) are correctly shown on ACDS, including verifying the accuracy of the CSCs.

    1. The review should include comparing the AMDIS (or AMDISA) and the TSUMYI against the REF CSCs of the TEFRA partnership or S corporation.

  2. If the TSUMYI shows a one-year date of "11111111," and the TEFRA key case was not a no-change, verify that the assessment was made. This will require securing a transcript and reviewing the administrative file for a closing package. The closing package will contain the following items:

    1. Legal document authorizing the assessment (the signed settlement agreement, entered court decision, or defaulted FPAA or FSAA).

    2. Form 4605-A, Examination Changes-Partnerships, Fiduciaries, Small Business Corps. & Domestic Intl. Sales Corp., reflecting the adjustments to the TEFRA partnership or TEFRA S corporation's return.

    3. Form 886-Z(C), Partners' or S Corporation Shareholders' Shares of Income, reflecting each partner's or shareholder's share of the corrected items.

  3. If the TSUMYI shows an eight digit one-year date, any additional tax due must either be assessed by this date (see "Assessing Tax from TEFRA Issue" s below) or the one-year date will have to be extended with a consent (see "Securing and Processing Consents" below).

  4. Corrections to the CSC, including corrections to the TEFRA one-year statute date, must be submitted to APS using the procedures outlined in IRM 8.21.6.2.2(3).

  5. If the case is not a CIC corporation, Joint Committee, or other corporate specialty case, notify APS in writing that Appeals does not have responsibility for the TEFRA aspects and request that the REF records on ACDS be removed.

    1. In making this determination, there may be an "A" or"R" in the RP column of the TSUMYI. RP stands for "Report Package Received" .

    2. An "A" stands for "Appeals" and an "R" stands for "Returned to Compliance Function" . The presence of an "A" or an "R" in the RP column on the TSUMYI means that Appeals is responsible for the TEFRA statutes if Appeals has jurisdiction of the investor case.

      Caution: Absence of an "A" or "R" does not automatically mean that Appeals is not responsible. Often the applicable CTF does not update this column.

  6. In the event that APS does not properly identify a TEFRA investor case, the Appeals Technical Employee should check AMDIS or AMDISA upon the receipt of any income tax case for PICF Code 5. This excludes a case referred to Appeals under the early referral, fast-track mediation, or fast-track settlement ADR provisions.

  7. If there is a PICF Code 5 and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, check TSUMYI to determine if there is an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date) that is presently not controlled on ACDS as a REF return. If so, promptly notify APS to input the linkage on ACDS using the instructions in IRM 8.19.6.17.1.1.

    Note:

    When cases with an open TEFRA linkage are properly carded on ACDS as REF returns, those with an eight-digit one year statute date will appear along with any other cases as part of the Appeals Technical Employee’s monthly statute report that is generated from ACDS.

  8. Refer to IRM 8.19.6.17.1.1(7) for the responsibilities of Appeals Technical Employees upon receipt of a case with a TEFRA linkage. See IRM 8.21.6.3.4. for statute controls on TEFRA investor cases by Appeals Technical Employees.

  9. The Appeals Technical Employee remains responsible for the TEFRA one-year statute until the case is received by the ATM for approval (if applicable); is received by APS for assessment of the tax relating to the issues with the one-year statute; or is sent for final closing of the case to either Counsel or Compliance.

    1. The Appeals Technical Employee must continue to monitor the statutes on the case as long as it remains in his or her jurisdiction on ACDS, including while a case is assigned to an AQMS reviewer.

    2. Follow-up within 20 calendar days should be initiated if a case has been sent to the ATM, APS or another function and no action has been taken on their part to move the case to the next step.

8.21.6.3.3  (08-17-2007)
Appeals Team Manager Responsibility for TEFRA Investor Statutes

  1. Upon receipt of the case from APS, there may be TEFRA one-year statute dates that either have less than 180 days remaining and/or have expired.

  2. When determining whether to accept jurisdiction, the ATM should consider if these TEFRA one-year statute dates have been extended, or if they relate to no-change examinations which Compliance has not updated on PCS.

  3. The Compliance Case Manager/Team Manager as well as the examining agent may need to be contacted before determining whether the case will be retained by Appeals.

    Note:

    If any one-year statute dates need to be updated on PCS, it is strongly recommended that Compliance assume this responsibility.

  4. If a case has one or more one-year statute dates with less than 180 days remaining, the ATM will notify APS by secure e-mail as to whether the case will be retained by Appeals. Any discussions between the ATM and Compliance will be summarized and included in the secure e-mail that is sent to APS. The secure e-mail will be included with the case file when it is assigned to the Appeals Technical Employee.

  5. If the case is not retained by Appeals in whole or in part because of the TEFRA one-year statute date(s), of less than 180 days, APS will return the case to Compliance immediately, no later than the next workday whenever possible (using controlled correspondence).

  6. The ATM will call the Case Manager/Team Manager to alert him/her that the case is being returned. The file should be documented accordingly.

  7. The ATM is responsible for the TEFRA one-year statute dates while the case is assigned to his or her team or group.

8.21.6.3.4  (08-17-2007)
Statute Control by Appeals Technical Employees

  1. Appeals Technical Employees should individually monitor the TEFRA one-year statute dates on cases assigned to them.

  2. Every six months (March and September), research all cases assigned that have TEFRA linkages controlled on ACDS (including cases now in Part III Counsel jurisdiction) and "TFINV" in the STATCD field to determine if a TEFRA one-year statute date appears on the TSUMYI.

    Note:

    The research can be done more often than every six months at the discretion of the Appeals Technical Employee, and periodic research is highly recommended where there are several open TEFRA linkages.

    1. Request that APS generate an Ad Hoc report based on STATCD = TFINV to assist in this determination.

    2. If an open TEFRA linkage appears on the TSUMYI (the one-year statute date field is either blank or contains an eight digit date), which is not controlled on ACDS, a correction to ACDS should be submitted to APS. Within ten (10) workdays from submitting the request, verify if the correction has been made.

    3. If the TEFRA investor case is no longer in Appeals jurisdiction (i.e., it is now in Counsel, the Compliance Field Group, or the Appeals Quality Measurement Staff), follow the procedures contained in IRM 8.21.6.3.4.2., Open TEFRA Linkages on Cases Previously Closed by Appeals, will be followed.

  3. The Appeals Technical Employee will review any PCS statute reports received from the Appeals Area TEFRA Coordinators. When a PCS statute report is received, review the report for accuracy, including securing a current TSUMYI (if desired), and direct any questions about the report to the Appeals Area TEFRA Coordinator.

    1. If it is determined that there is a case on the report with an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date), that is presently not controlled on ACDS as a REF return, promptly notify APS to input the linkage on ACDS using the instructions in IRM 8.19.6.17.1.1.

    2. If the TEFRA investor case is no longer in Appeals jurisdiction (i.e., is now in Counsel, the Compliance Field Group, or the Appeals Quality Measurement Staff), follow the procedures contained in section IRM 8.21.6.3.4.2..

    Note:

    Although the information contained in the PCS statute report is prepared by an Area TEFRA Coordinator, the Appeals Technical Employee is primarily responsible for the TEFRA statutes on any of their cases in Parts I or II, despite what information is reflected in the PCS statute report.

8.21.6.3.4.1  (08-17-2007)
Appeals Area TEFRA Coordinators Assistance

  1. Appeals Area TEFRA Coordinators assist Appeals Technical Employees in identifying one-year statutes on TEFRA investor cases. The reports that are discussed below are provided as a courtesy.

  2. The Appeals Technical Employee remains responsible for any one-year statutes on TEFRA investor cases that are either CIC corporations, Joint Committee cases or other corporate specialty cases. Under no circumstances is the Appeals Area TEFRA Coordinator responsible for one-year statutes on TEFRA investor cases assigned to another Appeals Technical Employee.

  3. Appeals Area TEFRA Coordinators will generate a Partnership Control System (PCS) statute report (Package Indicator: All) on a monthly basis for all the Appeals Office Codes (AOC) in their areas. The PCS statute reports will be checked for cases in Appeals jurisdiction which have TEFRA linkages.

  4. Appeals Area TEFRA Coordinators will send a PCS statute report to each Appeals Technical Employee that has a TEFRA investor case with an eight digit one-year statute date. A copy of the report will also be sent to the Appeals Technical Employee’s ATM.

  5. There is no particular format for the report as long as it includes information necessary for the Appeals Technical Employee to properly identify the taxpayer, the tax year(s), the linkage information, and the one-year statute date(s). The report may also include a transmittal with generic instructions. All reports sent by an Appeals Area TEFRA Coordinator for a particular month may also be sent to the Area TEFRA Coordinator’s Area Director (or Technical Advisor if so designated).

  6. If it is determined that a case with an eight digit one-year statute date is either: (1) assigned to an Appeals Technical Employee who is no longer an Appeals employee; (2) not yet carded in on ACDS; or (3) carded in on ACDS, but not yet assigned, then the Appeals Area TEFRA Coordinator will send the report to his or her Area Director (or Technical Advisor if so designated) with an brief explanation. The Appeals Area Director (or Technical Advisor) will determine the proper ATM to receive the report.

  7. All PCS statute reports sent to Appeals Technical Employees, ATMs, Area Directors, or Technical Advisors, must be sent by secure e-mail. There is no follow-up required by the Appeals Area TEFRA Coordinator but he/she will promptly respond to any questions that are posed by Appeals Technical Employees about cases appearing in the report.

  8. If a case found on the PCS statute report is erroneously being controlled by another appeals office, or a case needs to be controlled by another Appeals office, the Area TEFRA Coordinator will contact the APS manager for the office that the case is currently in and ask that the AIMS AOC be transferred to the correct office. The APS manager for the transferring office will promptly notify the receiving office of the transfer.

8.21.6.3.4.2  (08-17-2007)
Open TEFRA Linkages on Cases Previously Closed by Appeals

  1. Appeals Technical Employees may learn that a case that was assigned to them and was closed to another function (Counsel, Compliance, a Campus TEFRA Function or Appeals AQMS), now has an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date).

  2. This would most likely occur during the 6-month monitoring requirement (See IRM 8.21.6.3.4.) or by receiving a PCS statute report from an Area TEFRA Coordinator (See IRM 8.21.6.3.4.1).

  3. This section provides guidelines in handling these situations, including notifying the affected function of the open TEFRA linkage.

8.21.6.3.4.2.1  (08-17-2007)
Counsel Jurisdiction

  1. If the TEFRA investor case is a CIC corporation, Joint Committee, or other corporate specialty case with an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date) and was previously transferred to Counsel and it is now in Counsel's jurisdiction (Part III), the Appeals Technical Employee will take the following actions:

    1. Send a secure e-mail to the Counsel attorney notifying him or her of the open TEFRA linkage and Counsel’s responsibility for any tax assessments.

      Note:

      The Counsel attorney is responsible for the TEFRA one-year statute once Appeals sends the secure e-mail.

    2. Follow-up by secure e-mail or a telephone call to the Counsel attorney when the one-year statute date field contains an eight-digit date that will expire within 90 days. The case activity record must be annotated accordingly.

    3. Assist the Counsel attorney in coordinating the assessment of any tax related to the adjustments by: securing the closing package; sending the case to an Appeals Tax Computation Specialist for a tax computation; securing a statute extension, (See IRM 8.21.6.3.5., "Securing and Processing Consents on TEFRA Investor Cases" ); or by sending the file to APS for the assessment (See IRM 8.21.6.3.6., "Assessing of Tax From TEFRA Issues" ).

  2. If a TEFRA investor case is a case other than a CIC corporation, Joint Committee or other corporate specialty case with an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date) and it is now in Counsel’s jurisdiction (Part III), the applicable Campus TEFRA Function (CTF) is responsible for any assessments. However, dialogue may be required between the Appeals Technical Employee and the CTF to coordinate the starting point for any tax computations.

8.21.6.3.4.2.2  (08-17-2007)
Compliance Field Group Jurisdiction

  1. If the TEFRA investor case with an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date) was previously sent back to Compliance because it was determined to be a premature referral, but the case still appears in an Appeals status code because AIMS has not been updated, the Appeals Technical Employee will take the following actions:

    1. Send a secure e-mail to the Compliance Field Group Case Manager/Team Manager notifying him or her of the open TEFRA linkage and that Compliance is responsible for any tax assessment.

      Note:

      Compliance is responsible for the TEFRA one-year statute once Appeals releases jurisdiction of the case. However, as noted above, the Appeals Technical Employee will notify the Case Manager/Team Manager of any open TEFRA linkages where the case has not as yet been updated to Compliance status.

    2. Follow-up by secure e-mail or a telephone call to the Case Manager/Team Manager when the one-year statute date field contains an eight-digit date that will expire within 90 days. The case activity record must be annotated accordingly.

    3. Contact APS to ensure that the status code on AIMS is updated to a Compliance status code and taken out of an Appeals status code.

  2. If a TEFRA investor case is a CIC corporation, Joint Committee, or other corporate specialty case and was previously returned to the Compliance field group because Appeals had completed consideration of all non-TEFRA issues and there were TEFRA linkages where the one-year statute date field was blank, an eight digit one-year statute date now exists, and the case has not been updated on AIMS to a Compliance status, the Appeals Technical Employee will take the following actions:

    1. Send a secure e-mail to the Compliance Field Group Case Manager/Team Manager notifying him or her of the eight digit one-year statute date and that Compliance is responsible for any tax assessment.

      Note:

      Compliance is responsible for the TEFRA one-year statute once Appeals releases jurisdiction of the case. However, as noted above, the Appeals Technical Employee will notify the Case Manager/Team Manager of any one-year statutes where the case has not as yet been updated to Compliance status.

    2. Follow-up by secure e-mail or a telephone call to the Case Manager/Team Manager when the one-year statute date field contains an eight-digit date that will expire within 90 days. The case activity record must be annotated accordingly.

    3. Contact APS to ensure that the status code on AIMS is updated to a Compliance status code and taken out of an Appeals status code.

8.21.6.3.4.2.3  (08-17-2007)
Campus TEFRA Function Jurisdiction

  1. If the TEFRA investor case is not a CIC corporation, Joint Committee, or other corporate specialty case, and was previously returned to the applicable Campus TEFRA Function (CTF) because Appeals had completed consideration of all non-TEFRA issues and there were open TEFRA linkages (the one-year statute date field was either blank or contained an eight digit date) and the case has not been updated on AIMS to the CTF, the Appeals Technical Employee will take the following actions:

    1. Send a secure e-mail to the TEFRA Coordinator at the CTF notifying him or her of the open TEFRA linkages and that the CTF is responsible for any tax assessment.

      Note:

      The CTF is responsible for the TEFRA one-year statute on cases other than CIC corporations, Joint Committee cases, and other corporate specialty cases. However, as noted above, the Appeals Technical Employee will notify the TEFRA Coordinator at the CTF of any open TEFRA linkages where the case has not as yet been updated to the CTF.

    2. Follow-up by secure e-mail or a telephone call to the TEFRA Coordinator when the one year statute date field contains an eight-digit date that will expire within 90 days. The case activity record must be annotated accordingly.

    3. Contact APS to ensure that the status code on AIMS is updated to the CTF and taken out of an Appeals status code.

8.21.6.3.4.2.4  (08-17-2007)
Appeals Quality Measurement Staff (AQMS) Jurisdiction

  1. If the TEFRA investor case is a CIC corporation, Joint Committee or other corporate specialty case with a TEFRA linkage that contains a blank one-year statute date field, and the case is selected for AQMS review after being closed, APS will notify the Appeals Technical Employee.

  2. The Appeals Technical Employee remains responsible for any TEFRA one-year statute dates for a CIC corporation, Joint Committee, or other corporate specialty case while the TEFRA investor case is in AQMS jurisdiction.

  3. If a one-year statute date is triggered while the case is being reviewed by AQMS, the Appeals Technical Employee can call the Director AQMS, who will exempt the case from AQMS review and expedite the return of the administrative file to the Appeals Technical Employee by controlled mail.

  4. The Appeals Technical Employee should secure the closing package and have any tax due based on the one-year statute date computed and assessed. A Form 8339, PCS Change, should also be completed an sent for processing to ensure the necessary changes are made to PCS. The Appeals Technical Employee will then have APS either close the case if there are no other blank one-year statute date fields or forward the case to Compliance if there are additional blank one-year statute date fields.

  5. If a TEFRA investor case is other than a CIC corporation, Joint Committee, or other corporate specialty case, the applicable Campus TEFRA Function (CTF) is responsible for any assessments relating to TEFRA linkages. However, dialogue may be required between the Appeals Technical Employee and the CTF to coordinate the starting point for any tax computations.

8.21.6.3.5  (08-17-2007)
Securing and Processing Consents on TEFRA Investor Cases

  1. Depending on what triggered the TEFRA one-year statute date, the TEFRA one-year statute date may be extended. Refer to IRM 8.19.6.17.1.2, Assessment of TEFRA Partnership Issues, for complete guidelines on assessment of issues from TEFRA partnerships or S corporations, including securing consents, updating ACDS with the new statute date, and processing Form 8339 to update the statute on the Partnership Control System (PCS). See IRM 8.19.6.3, Investor Case Statutes.

    Caution: Refer to IRM 8.19.6.3.1.1 for guidelines when a power of attorney will be executing the consent.

8.21.6.3.5.1  (06-18-2010)
Appeals Technical Employee Actions on Consents

  1. The Appeals Technical Employee will determine if a TEFRA one-year statute date requires protection, no later than 150 days before the statutory period for assessment expires.

  2. When statute protection is necessary and it is determined that an assessment will not be made at the present time, a consent will be solicited no later than 150 days before the TEFRA one-year statute date will expire.

  3. For new cases assigned with fewer than 150 days remaining on a TEFRA one-year statute date, a consent (if applicable) will be solicited within five workdays from receipt.

  4. When the TEFRA one-year statute date appears after assignment of the case and there are fewer than 150 days remaining by the time it is discovered, a consent (if applicable) will be solicited within five workdays from the discovery. A follow-up will be made within 20 calendar days, or fewer if the statute dictates.

  5. If no consent is secured within 30 calendar days, or fewer if the statute dictates, the assessment of any tax owed will be initiated (See IRM 8.21.6.3.6., "Assessing the Tax from TEFRA Issues" ).

  6. Timely follow-ups should be made to ensure receipt of the consent within 120 days before statute expiration. Depending on the circumstances, a TEFRA one-year statute date can be extended with a Form 872 (Revision 10-2009), Form 872-A (Revision 10-2009), or Form 872-F, Form 872-I, and Form 872-IA. formerly utilized to extend the statute of limitations are now obsolete.

    1. Form 872 (Revision 10-2009) or Form 872-A (Revision 10-2009) will extend the statute for the investor named on the form, provided it is properly signed by the investor, and is dated and executed by the appropriate IRS official. These consents have been modified to specifically provide that they extend the period for assessment of tax attributable to partnership/S corporation and affected items. See IRM 8.19.1.6.6.8.2, Investor Level Extensions of Partnership Items.

    2. Form 872-I and Form 872-IA are obsolete with the October 2009 revisions of the Form 872 and Form 872-A.

    3. Form 872-F will extend the statute for items that have been converted from partnership items to non-partnership items. It cannot be used to extend the statute for defaulted FPAAs (or FSAAs) or court decisions. See IRM 8.19.1.6.6.8.2, Investor Level Extensions of Partnership Items.

      Note:

      For partnership years beginning after August 5, 1997, interest is suspended 30 days after a settlement agreement is signed. Weigh the risks of the complexities and cost of computing tax resulting from a partnership adjustment against the permanent loss of interest on the assessment from 30 days after settlement until the assessment is made.

  7. When an acceptable, signed consent is received, the Appeals Technical Employee or other delegated individual will execute the consent and forward a copy to APS within five workdays so that the statute can be updated on ACDS.

    Note:

    Normally, faxed signatures are not valid; however, Counsel has advised that in certain circumstances faxed signatures may be valid. Consult Area Counsel if you receive an executed consent via fax.

  8. Form 8339 or Form 8344 should also be completed and submitted to the Area PCS Coordinator (or follow local procedures) for updating the statute on PCS.

    Note:

    PCS currently is not programmed to accept either open-ended statute dates (Form 872-A) or statute dates more than 15 months in the future. In these instances, it is recommended that a statute date no later than 15 months in the future be used for PCS purposes, which will necessarily cause the one-year statute date on PCS to differ from that on ACDS.

  9. A copy of the executed consent must be attached to each affected tax return. Letter 967, Letter Transmitting Consent Extending Period of Limitation, is no longer required to be attached to each affected return since the taxpayer's notice of rights is located directly above the signature lines on the consent form.

    Note:

    When the designated individual shown on the Power of Attorney signs the consent form on behalf of the taxpayers, attach a copy of the Letter 967 mailed to the taxpayer to the returns along with the executed consent form. Retaining a copy of the letter in this situation shows the taxpayers were provided their rights.

  10. The Case Activity Record should be annotated that the consent form, L967 and Publication 1035, Extending the Tax Assessment Period, was sent to the taxpayer and representative, if applicable.

  11. These procedures must be followed each time a consent is solicited.

  12. Consideration should be given to seeking advice from Counsel when unusual or complex consent/statute questions arise, including any questions concerning whether a TEFRA one year statute can be or was properly extended.

8.21.6.3.5.2  (10-01-2012)
Account and Processing Support (APS) Actions on Consents

  1. The APS employee will update ACDS to reflect the receipt of Form 872, Form 872-A, or Form 872-F for any TEFRA one-year statute date that has been extended. See IRM 8.19.6.17.1.2, Assessment of TEFRA Partnership Issues.

  2. Form 8339 or Form 8344 should also be completed and submitted to the Area PCS Coordinator (or follow local procedures) for updating the statute on PCS.

    Note:

    PCS currently is not programmed to accept either open-ended statute dates (Form 872-A) or statute dates more than 15 months in the future. In these instances, it is recommended that a statute date no later than 15 months in the future be used for PCS purposes, which will necessarily cause the one-year statute date on PCS to differ from that on ACDS.

8.21.6.3.6  (08-17-2007)
Assessing the Tax from TEFRA Issues

  1. The Appeals Technical Employee will secure a closing package on any TEFRA one-year statute that contains an eight-digit date in the one-year assessment date field as soon as possible.

  2. When Appeals has a case in inventory that has linkages to a TEFRA partnership and/or TEFRA S corporation, and the partnership and/or S corporation case is resolved, Appeals should receive a closing package from the Campus TEFRA Function (CTF) that contains the documents showing the resolution of the TEFRA partnership or TEFRA S corporation issues.

  3. Occasionally the administrative file received from Compliance has one or more closing packages that had been received from the CTF, or were related to a TEFRA partnership or TEFRA S corporation that was assigned to the Appeals Technical Employee.

  4. If there is a TEFRA one-year statute date but no closing package in the file, the package should be requested from the applicable CTF as soon as possible.

  5. The closing package contains the legal document authorizing the assessment (the signed settlement agreement, entered court decision, or defaulted FPAA/FSAA), as well as the Form 4605-A and Form 886Z (C) Form 886Z (C) that reflects the adjustments to the TEFRA partnership or TEFRA S corporation’s return and each partner's or shareholder's share of the corrected items, respectively.

  6. There should be a TEFRA one-year statute date for each closing package. The date will either show "11111111" (assessment has been made) or contain an eight-digit date reflecting the date that the assessment must be made by (or extended by, if applicable).

  7. For each TEFRA one-year statute date that the Appeals Technical Employee determines will not (or cannot) be extended, he/she will request a computation from an Appeals Tax Computation Specialist (TCS) to reflect the tax generated by the TEFRA adjustments from the completed TEFRA proceeding. It will be processed as a partial agreement if there are non-TEFRA issues still under Appeals consideration or if there are other (unresolved) TEFRA issues.

  8. When forwarding a case to a TCS for a tax computation, the TEFRA one-year statute date(s) will be clearly identified on the Form 3608 CG,Request for TCS Service, and the case clearly marked as a "Priority" if it either has a short statute or where interest is suspended because of the applicability of the provisions of IRC section 6601(c).

    1. The TCS will follow the procedures in IRM 8.19.4.10, Investor Cases, to prepare TEFRA tax computations on TEFRA investor cases.

    2. Once the tax computation is completed, the Appeals Technical Employee will submit the case to the Appeals Team Manager (if applicable) or to APS for the assessment to be made.

  9. The Appeals Technical Employee is responsible for the statute, including TEFRA investor one-year statutes, until the statute is identified in writing to the Appeals Team Manager or APS on Form 5402 (or an attachment) and until the statute is updated on ACDS. If the statute is not updated on ACDS within 10 days of the request to APS, the Appeals Technical Employee will notify the Processing Team Manager in writing.

  10. Form 8339 should be completed and provided to APS in order that the statute can be updated on PCS once the assessment has been made.

8.21.6.3.7  (10-01-2012)
Account and Processing Support (APS) Closing TEFRA Investor Cases

  1. Upon receipt of a TEFRA investor case, APS will use the procedures in IRM 8.19.5.18, Processing Investor Income Tax Cases-Account and Processing Support, to make an assessment of the tax from the TEFRA adjustments. The procedures will vary depending on whether the TEFRA issues are being settled prior to the non-TEFRA issues, See IRM 8.19.5.18.3, TEFRA Issues Settled Prior to Non-TEFRA Issues, or the TEFRA issues and the non-TEFRA issues are being settled together, See IRM 8.19.5.18.5, Non-TEFRA & TEFRA Issues Settled Together.

  2. Once the assessment has been made, the Form 8339 that was completed by the Appeals Technical Employee should be submitted to the Area PCS Coordinator (or follow local procedures) in order that the statute can be updated on PCS.

  3. APS has responsibility for the statute, including TEFRA one-year statutes, on a case in APS jurisdiction when the statute is identified in writing on the Form 5402 and updated on ACDS.

  4. A TEFRA investor case may be closed to several different functions. Unless all of the one-year statute dates reflect assessments (the TSUMYI reflects "11111111" for all of the one-year statute dates), the case cannot be fully closed from AIMS. When closing a TEFRA investor case with an open TEFRA linkage (the date is either blank or contains an eight digit date), it is essential that the TEFRA one-year statute date(s) be clearly identified on any transmittals, and precise instructions for protecting the statute(s) be provided.

  5. Procedures will vary depending upon whether the case is being fully closed from AIMS after the assessments are made and whether the case is a CIC corporation, Joint Committee, or other corporate specialty case. Detailed processing procedures are contained in IRM 8.19.5.18.

  6. If the TEFRA investor case will be forwarded to either the Compliance Field Group or a Campus TEFRA Function (CTF) after any assessments are made, see IRM 8.19.5.18.4, Non-TEFRA Issues Settled Prior to TEFRA Issues, the transmittal Form 3210 will clearly identify any remaining open TEFRA linkages (the one-year statute date field is either blank or contains an eight digit date).

  7. If a TEFRA investor case will be forwarded to Counsel when the non-TEFRA issues are unagreed (either upon petition of a notice of deficiency or transmitting a case for trial preparation), and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, the Form 3210 will clearly identify any remaining open TEFRA linkages (the one-year statute date field is either blank or contains an eight digit date).

  8. If a TEFRA investor case will be forwarded to the Appeals Quality Measurement Staff (AQMS), and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, APS will notify the Appeals Technical Employee. (See IRM 8.21.6.3.4.2.4., Appeals Quality Measurement Staff (AQMS) Jurisdiction).

  9. Account and Processing Support is responsible for the TEFRA one-year statute until the tax is assessed (if an assessment is required) or the case is transferred to either Counsel or Compliance. When a case is forwarded to another office or function using a transmittal Form 3210, APS should ensure the case has been acknowledged.

8.21.6.3.7.1  (08-17-2007)
Appeals Technical Employees Closing TEFRA Investor Cases

  1. When closing a TEFRA investor case that is a CIC corporation, Joint Committee case or other corporate specialty case to an ATM (which includes closing for approval of a settlement of non-TEFRA issues), or to APS (which includes processing a partial assessment of the tax related to TEFRA one-year statute dates), the Form 5402 should clearly identify any remaining TEFRA linkages (where the one-year statute date field is blank), and provide instructions for processing the case.

    Note:

    Any TEFRA linkages where the one-year statute date field contains an eight digit date should have any tax assessed and the one-year statute date field updated to 11111111 before closing the case.

  2. The case should be identified on ACDS as type code "TEFRAI" , which will allow the Appeals Technical Employee to generate a Form 5402 that will include special prompts and instructions depending on whether the case will be forwarded to APS, a Campus TEFRA Function (CTF), the Compliance Field Group, or Counsel.

  3. The Appeals Technical Employee is responsible for the statute, including TEFRA investor one-year statutes, until the statute is identified in writing to the ATM (if applicable) or APS on Form 5402 (or an attachment) and until the statute is updated on ACDS. If the statute is not updated on ACDS within 10 days of the request to APS, the Appeals Technical Employee will notify the Processing Team Manger in writing. The Appeals Technical Employee is also responsible for any one-year statutes that arise while the case is in AQMS Jurisdiction.


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