The Division Counsel and Associate Chief Counsel offices have successfully coordinated significant cases in the United States Tax Court for many years. Extrapolating from this experience, the procedures in this chapter focus on principles essential to successful case management and extend these principles to litigating cases in other federal courts and providing legal advice to IRS divisions in nondocketed cases.

In every case, it is the role of the Office of Chief Counsel to ensure the uniform application of the tax laws. It is, therefore, important that Division Counsel and Associate Chief Counsel, individually and collectively, ensure the fulfillment of that objective. The role of the Associate Chief Counsel will be the interpretation of the Code and the development of technical positions of the Internal Revenue Service for use in published guidance and in the development and litigation of cases consistent with published guidance. The role of Division Counsel will be the development and execution of the litigation strategy that implements those positions to ensure that the position taken in specific cases is one that is reasonable, based on the facts of the case, and contributes to sound tax administration.

In nondocketed cases, Division Counsel will be responsible for providing legal advice relating to case development to their respective IRS client divisions that is consistent with Service position as reflected in published guidance of the Service and well established case law. To the extent that a regulation or ruling does not provide clear guidance on the position to be taken in litigation, or the position of the Internal Revenue Service is not clear from existing case law or the unambiguous language of the Code, Division Counsel must coordinate with the Associate Chief Counsel concerning the position of the Service. In addition, where there is a statutory change or a new regulation, or there are no reported opinions, or when published guidance is pending, or there is a significant new court opinion, Division Counsel, in coordination with the Associate Chief Counsel, must ensure that the advice provided to their respective IRS client divisions or the position they intend to take in litigation is consistent with the Service’s position on the law. The advice of the IRS client divisions will be sought concerning the need for published guidance in lieu of individual case development and litigation.

In docketed cases, there must be an active working partnership between the Division Counsel and Associate Chief Counsel offices. This partnership must span the entire process of significant case coordination from initial case planning and development through pretrial practice, trial preparation, trial of the case, submission of briefs, and appellate consideration. Every person and every office involved in the case must be encouraged to contribute to the entire process. Executives in both the Division Counsel and Associate Chief Counsel offices must be directly engaged in all significant cases within the scope of their respective roles. Executives will be expected to participate in the development of substantive legal positions, decisions about litigation tactics and strategy, and substantive review of significant pleadings, motions, and briefs. Their involvement must go well beyond traditional notions of management review and oversight. Litigation decisions, such as whether to try or settle a case, whether to use mediation/arbitration, or whether to employ an expert witness, should be made by Division Counsel after appropriate coordination with the Associate Chief Counsel offices. In addition, Division Counsel offices must keep their respective IRS client divisions apprised of the status of docketed significant cases through consultation and the use of pertinent information from the Significant Tax Court and Department of Justice Cases Bi-Monthly Reports, described in CCDM 31.2.1.5.5 Significant Litigation Cases Bi-Monthly Reports.

In both nondocketed and docketed cases, coordination should occur as early in the process as is practicable and should continue through case development, litigation, and resolution, as appropriate. In most cases, informal coordination and advice should be sufficient.

Any disagreements between Division Counsel and Associate Chief Counsel offices, or between the Office of Chief Counsel and the Department of Justice, should be resolved through existing reconciliation procedures.

Overview of Procedures. This chapter incorporates these basic principles into specific procedures for the management of significant cases. These procedures do not mandate a set of rules to be rigidly followed in every case. Rather, they establish an overall framework for dealing with significant cases and, within this framework, suggest general guidelines for actions in each case.

Because of their day-to-day involvement with the LMSB operating division, Associate Area Counsel are uniquely positioned to identify nondocketed cases that are approaching litigation and would constitute docketed significant cases as defined in CCDM 31.2.1.2 in paragraph (5) above. Accordingly, Associate Area Counsel will regularly screen their nondocketed cases in order to identify potential docketed significant cases that are near the stage at which a statutory notice of deficiency or FPAA may be issued to the taxpayer; likely to be litigated as refund, bankruptcy, or summons cases; or are under consideration for designation for litigation. One aspect of consideration is whether the case merits assistance from or assignment to a Special Trial Attorney.

If such a case is identified, the Associate Area Counsel will complete an LMSB Significant Case Approaching Litigation form and forward it to the Associate Area Counsel (Strategic Litigation) (AAC(SL)). The form will be accompanied by an Executive Summary for each significant issue. The Executive Summary will set forth clearly and succinctly: a) a brief discussion of the issue; b) a statement of the issue’s significance; c) a brief summary of coordination that has occurred to date, whether with an Associate Chief Counsel office, Industry Counsel, Technical Advisor, or other field personnel working similar issues; and d) anticipated expert witness needs. The coordination summary will also reference prior written advice (e.g., PLR, TAM, formal request for legal advice, Coordinated Issue Paper) and will be accompanied by copies of such advice, if feasible, and key email messages relating to the issue.

The LMSB Significant Case Approaching Litigation form will include the identity of the court in which it is anticipated the case will become docketed and the time frame for such docketing. If the case is one that is near the stage at which a statutory notice of deficiency or FPAA may be issued to the taxpayer, the form will also include the Associate Area Counsel’s recommendation that the case be: a) transferred to a Strategic Litigation group for statutory notice review; b) assigned to a Special Trial Attorney for joint statutory notice review with the Associate Area Counsel attorney; c) assigned to a Strategic Litigation group after the case becomes docketed in the United States Tax Court; or d) retained by the Associate Area Counsel. Upon docketing, refund, bankruptcy, or summons enforcement cases are generally handled by Associate Area Counsel.

Upon receipt of an LMSB Significant Case Approaching Litigation form, the AAC(SL) will forward the form to the Area Counsel and the Division Counsel. If the case involves an industry issue relevant to another Area Counsel, the AAC(SL) also will provide a copy to the other Area Counsel and the AAC(SL) for that Area. The AAC (SL) will evaluate the case and the Associate Area Counsel’s recommendations, and forward his or her recommendations for case assignment together with the form. In addition to determining case assignment, if the Area Counsel and Division Counsel agree that the case is a significant case approaching litigation, the Associate Area Counsels and Associate Area Counsel (SL) will be so notified, and the case will be added to the Significant Cases Approaching Litigation Monthly Report.

The LMSB Significant Case Approaching Litigation form is contained in Exhibit 31.2.1–2.

Because of their day-to-day involvement with the SB/SE operating division, Associate Area Counsel are uniquely positioned to identify nondocketed cases that are approaching litigation and would constitute docketed significant cases as defined in CCDM 31.2.1.2 in paragraph (5) above. Accordingly, Associate Area Counsel will regularly screen their nondocketed cases in order to identify potential docketed significant cases that are near the stage at which a statutory notice of deficiency or FPAA may be issued to the taxpayer; likely to be litigated as refund, bankruptcy, or summons cases; or are under consideration for designation for litigation.

If such a case is identified, the Associate Area Counsel will complete an SB/SE Significant Case Approaching Litigation form and forward it to the Area Counsel and Tax Litigation-Examination Manager. The form will be accompanied by an Executive Summary for each significant issue. The Executive Summary will set forth clearly and succinctly: a) a brief discussion of the issue; b) a statement of the issue’s significance; c) a brief summary of coordination that has occurred to date, whether with an Associate Chief Counsel office or other field personnel working similar issues; and d) anticipated expert witness needs. The coordination summary will also reference prior written advice (e.g., PLR, TAM, formal request for legal advice, Coordinated Issue Paper) and will be accompanied by copies of such advice, if feasible, and key email messages relating to the issue.

The SB/SE Significant Case Approaching Litigation form will include the identity of the court in which it is anticipated the case will become docketed and the time frame for such docketing. Upon docketing, Tax Court, refund, bankruptcy, or summons enforcement cases are generally handled by Associate Area Counsel.

Upon receipt of an SB/SE Significant Case Approaching Litigation form, the Area Counsel and Tax Litigation-Examination Manager will evaluate the case and the Associate Area Counsel’s recommendations. If the Area Counsel and Tax Litigation-Examination Manager agree that the case is a significant case approaching litigation, the Associate Area Counsel will be so notified for inclusion in the Significant Cases Approaching Litigation Monthly Report.

The SB/SE Significant Case Approaching Litigation form is contained in Exhibit 31.2.1–3.

Because of their day-to-day involvement with the TEGE operating division, TEGE Area and Deputy Area Counsel and national office branches are uniquely positioned to identify nondocketed cases that are approaching litigation and would constitute docketed significant cases as defined in CCDM 31.2.1.2 at paragraph (5) above. Accordingly, TEGE Area and Deputy Area Counsel, and national office branch managers, will regularly screen their nondocketed cases in order to identify potential docketed significant cases that are near the stage at which a statutory notice of deficiency or FPAA may be issued to the taxpayer, likely to be litigated as refund, bankruptcy, summons or declaratory judgment cases; or are under consideration for designation for litigation.

If such a case is identified, the Area or Deputy Area Counsel or branch manager will complete a TEGE Significant Case Approaching Litigation form and forward it to the Division Counsel/Associate Chief Counsel. The form will be accompanied by an Executive Summary for each significant issue. The Executive Summary will set forth clearly and succinctly: a) a brief discussion of the issue; b) a statement of the issue’s significance; c) a brief summary of coordination that has occurred to date, whether with an Associate Chief Counsel office, Industry Specialist, or other field personnel working similar issues; and d) anticipated expert witness needs. The coordination summary will also reference prior written advice (e.g., PLR, TAM, formal request for legal advice, Coordinated Issue Paper) and will be accompanied by copies of such advice, if feasible, and key email messages relating to the issue.

The TEGE Significant Case Approaching Litigation form will include the identity of the court in which it is anticipated the case will become docketed and the time frame for such docketing. Upon docketing, Tax Court, refund, bankruptcy, or summons enforcement cases are handled by Associate Area Counsel. The form will also include any recommendation that a) informal TEGE national office branch assistance be sought in statutory notice review; b) the case be assigned to a specific senior trial attorney with greater expertise in the subject matter area involved; or c) a request for a Special Trial Attorney should be considered if the case becomes docketed in the United States Tax Court.

Upon receipt of a TEGE Significant Case Approaching Litigation form, in addition to determining case assignment, if the Area Counsel and the Division Counsel/Associate Chief Counsel agree that the case is a Significant Case approaching litigation, the Area or Deputy Area Counsel or branch manager will be so notified for inclusion in the Significant Cases Approaching Litigation Monthly Report.

The TEGE Significant Case Approaching Litigation form is contained in Exhibit 31.2.1–4.

The LMSB HQ Management Analyst will generate the Significant Cases Approaching Litigation Monthly Report based on the information provided by the Division Counsel offices. The report will be distributed to all Executives in the Office of Chief Counsel and to the Assistant Attorney General for Tax at the Department of Justice (with taxpayer identifying information redacted).

The Associate offices will screen all Tax Court petitions that present issues within their jurisdiction with contested deficiencies or FPAAs in excess of $1,000,000, and all complaints in Court of Federal Claims cases, as provided below.

The Docket, Records & User Fee Branch of the Office of Associate Chief Counsel
Procedure & Administration will identify and provide copies of all Tax Court petitions to all Associate offices and to Division Counsel Headquarters (LMSB and SB/SE) within five business days of the date the petition or amended petition is served. The Disclosure & Litigation Support Branch of the Office of Associate Chief Counsel (Procedure & Administration) will provide copies of all Court of Federal Claims complaints to all Associate offices and to Division Counsel Headquarters (LMSB and SB/SE) within five business days of the date the complaint is served.

Tax Court petitions and Court of Federal Claims complaints will be screened by each Associate Chief Counsel office to identify and consider for coordination those issues in the case that are within the subject matter jurisdiction of that office.

For each Tax Court petition screened, the Associate Chief Counsel office will determine whether the case should be classified as a Significant Case (National, Division, or National Project) or excluded. For each Court of Federal Claims complaint screened, the Associate Chief Counsel office will determine whether the case should be classified as a Significant Case, or excluded.

In Tax Court cases, for each proposed National or National Project Significant Case, and in each Court of Federal Claims Significant Case, the Associate Chief Counsel will personally approve the proposal.

In Tax Court cases, for each proposed National or National Project Significant Case, and in each Court of Federal Claims Significant Case, the Associate Chief Counsel office will designate a Principal Associate Attorney for the issues under the jurisdiction of that Associate office.

Within five business days after a determination that a case should be classified as a Significant Case, the Associate Chief Counsel office will so notify the affected Division Counsel Headquarters office. That headquarters office will be responsible for notifying the appropriate Division Counsel personnel.

If the Associate Chief Counsel office believes that the Tax Court petition or the Court of Federal Claims complaint cannot adequately be screened because of an inadequate description or explanation of the issues involved, the Associate Chief Counsel office will contact the Division Counsel attorney to determine whether Service files can provide information to determine the significance of the issues. If the significance cannot be determined within the initial screening period, by agreement of the Associate Chief Counsel office and the affected Area Counsel, screening may be deferred for a period of 30 days. This period of time may not be further extended. Under such circumstances, the case will temporarily be classified as "deferred" for purposes of the monthly report described below. The case will be re-screened in the following month, with the benefit of greater knowledge of the significance of the issue, and a determination made whether the case should be classified as a Significant Case.

Within ten days after the end of each month, each Associate Chief Counsel office will provide to the Division Counsel (LMSB) HQ Management Analyst a list of all Tax Court petitions and Court of Federal Claims complaints assigned to that Associate Chief Counsel office for screening during the month, and the proposed classification of each case.

The Associate Office Significant Case Petition or Complaint Review form used to facilitate the screening of Tax Court petitions and Court of Federal Claims complaints is contained in Exhibit 31.2.1–5.

Screening of Tax Court Petitions. All Tax Court petitions will be screened by the assigned Division Counsel office, as provided below. The primary purpose of screening is to determine which of the petitions represent Significant Cases, and to establish whether such a case will be subject to National, Division, or National Project Coordination as defined in CCDM 31.2.1.2 Definitions at paragraph (8) through (10), or excluded. In addition, the screening may be used within the Division Counsel office to determine the best allocation of Division Counsel resources to meet the needs of the case.

Screening of Department of Justice Complaints and Other Actions. All complaints in refund cases initiated in the United States District Courts and Court of Federal Claims, bankruptcy cases involving the merits of a tax liability, declaratory judgment suits, and summons actions recommended for enforcement, will be screened by the assigned Division Counsel office, as provided below. The primary purpose of screening is to determine which of the complaints or recommended summons enforcement actions represent Significant Cases. In addition, the screening may be used within the Division Counsel office to determine the best allocation of Division Counsel resources to meet the needs of the case.

Reconciliation of Case Classifications. Any disagreements between Division Counsel and Associate Chief Counsel offices over docketed case classification should be resolved through existing reconciliation procedures.

Reclassification/Exclusion of Cases. A Tax Court case that is initially excluded from the procedures of this chapter, or initially classified as a National, Division, or National Project case, may later be reclassified if, as the case progresses, it is determined (in accordance with the standards used for initial classification) that such reclassification is appropriate. Likewise, a Tax Court case originally classified as a Significant Case may subsequently be excluded from such treatment (in accordance with the standards used for initial classification) when proposed by either the Division Counsel or Associate Chief Counsel offices. A Department of Justice case that is initially excluded from the procedures of this chapter may later be reclassified if, as the case progresses, it is determined (in accordance with the standards used for initial classification) that such reclassification is appropriate. Likewise, a Department of Justice case originally classified as a Significant Case may subsequently be excluded from such treatment (in accordance with the standards used for initial classification) when proposed by either the Division Counsel or Associate Chief Counsel offices.

The Division Counsel (LMSB) HQ Management Analyst will prepare a Significant Tax Court Cases Monthly Screening Report and a Significant Department of Justice Cases Monthly Screening Report reflecting the results of screening.

The Significant Tax Court Cases Monthly Screening Report and the Significant Department of Justice Cases Monthly Screening Report will compile the information provided by the respective Associate Chief Counsel and Division Counsel offices regarding the petitions, complaints and enforcement actions assigned to them for screening during the previous month. These reports will be distributed to all Associate and Deputy Associate Chief Counsel, all Division and Deputy Division Counsel, and all Area Counsel, Associate Area Counsel (Industry Program), and Associate Area Counsel (Strategic Litigation), not later than 15 days following the close of the month during which the listed petitions, complaints and enforcement actions were screened.

Within ten days after receipt of the Significant Tax Court Cases Monthly Screening Report and the Significant Department of Justice Monthly Screening Report, the respective Associate and Division Offices will advise the Division Counsel (LMSB) HQ Management Analyst of any disagreement with any item in the report, of any additional cases or information that should be included in the report, and of any cases that cannot be properly evaluated pending receipt of the administrative file.

Significant Tax Court Cases Bi-Monthly Report. The Division Counsel (LMSB) HQ Management Analyst will prepare a Significant Tax Court Cases Bi-Monthly Report from APOLLO. The report will contain a section for pending significant Tax Court cases, subdivided by LMSB, SB/SE and TEGE Division Counsel cases. The report will contain the due dates for the Litigation Work Plan, the Associate and Division Counsel signature dates, the case status, issue descriptions, and identifying information for the Lead Division Attorney and Principal Associate Attorney. The report will be distributed to the Chief Counsel, Deputy Chief Counsel, all Associate and Deputy Associate Chief Counsel, all Division and Deputy Division Counsel, and all Area Counsel, Associate Area Counsel (Industry Program), and Associate Area Counsel (Strategic Litigation), not later than 15 days following the close of every other month.

Significant Department of Justice Cases Bi-Monthly Report. The Division Counsel (LMSB) HQ Management Analyst will prepare a Significant Department of Justice Cases Bi-Monthly Report. The report will contain a section for pending significant Department of Justice cases, subdivided by LMSB, SB/SE and TEGE Division Counsel cases. The report will contain the case status, issue descriptions, and identifying information for the Lead Division Attorney and Principal Associate Attorney. The report will be distributed to the Chief Counsel, Deputy Chief Counsel, all Associate and Deputy Associate Chief Counsel, all Division and Deputy Division Counsel, and all Area Counsel, Associate Area Counsel (Industry Program), and Associate Area Counsel (Strategic Litigation), not later than 15 days following the close of every other month.

National Coordination. Significant Tax Court cases require the highest levels of coordination between Division Counsel and Associate Chief Counsel. Each significant case will be assigned at least one Lead Division Attorney and one Principal Associate Attorney. In the event a case contains multiple separate and distinct coordinated issues, more than one Lead Division Attorney and Principal Associate Attorney may be assigned. For example, if an LMSB case contains both a coordinated international issue and a separate and distinct coordinated corporate issue, Division Counsel may assign different Lead Division Attorneys to each issue. And, regardless of whether there are one or two Lead Division Attorneys, there would be a Principal Associate Attorney for the international issue and one for the corporate issue. On the other hand, if the coordinated issue is primarily an international issue requiring coordination and assistance on the corporate issue, there would be one Principal Associate Attorney for the issue who is responsible for coordination within the National Office.

Work Plan Coordination. The work plan of a significant case must contain all the elements discussed in paragraph (1) of CCDM 31.2.1.6 Development of Litigation Work Plans for Significant Tax Court Cases. The work plan is written by the Lead Division Attorney, in consultation with the Principal Associate Attorney. The Principal Associate Attorney provides technical expertise to ensure that the legal positions in the work plan reflect the position of the Office of Chief Counsel. The Lead Division Attorney must bring to the attention of the Principal Associate Attorney any material changes of fact as the case is developed for trial. The Principal Associate Attorney must notify the Lead Division Attorney of any changes in the position of the Office of Chief Counsel as to the legal issues set forth in the work plan.

Approval of Work Plans. The initial work plan will be due to the Area Counsel (LMSB), Division Counsel (SB/SE) or Division Counsel/Associate Chief Counsel (TEGE) 60 days after the answer is filed. After approval by the appropriate Division Counsel executive and following consultation with the Division Counsel personally, the work plan will be forwarded to the Principal Associate Attorney for the concurrence on the technical position by the Associate Chief Counsel. Such concurrence will occur within 30 days after approval by the Division Counsel executive. After the initial work plan is approved, subsequent work plans are due no later than six months from the respective approval and concurrence by the appropriate Division Counsel executives and the Associate Chief Counsel. The work plan is a dynamic document, subject to change based on significant milestones as the case progresses within the framework of every six months. For example, if case development or other events calls for a change in the technical position within the six month period, the work plan should be updated, approved by the appropriate Division Counsel executive after consultation with the Division Counsel personally and forwarded to the Principal Associate Attorney for the concurrence on the technical position by the Associate Chief Counsel. On the other hand, not every interim updated work plan requires the concurrence of the appropriate Division Counsel executive and the Associate Chief Counsel. Some changes may be accompanied by email alerts to Division Counsel executives and the Principal Associate Attorney, such as, for example, a change in the planned use of an expert witness.

Retention of Work Plans. APOLLO will reflect the most recent, updated work plan. The final work plan will be retained in APOLLO indefinitely. The Principal Associate Attorney is responsible for assuring that the signed original of each approved work plan is returned to the Lead Division Attorney, who will maintain this paper copy in the legal file. If an electronic approval system is adopted, the Lead Division Attorney will print each signed and approved work plan for inclusion in the legal file.

Division Coordination. Division Coordination cases are unique to each division and are coordinated at the discretion of a Division or Area Counsel.

National Project Coordination. Project coordination cases pose significant issues but are not the lead litigation cases. Generally these cases will follow a lead case that will be coordinated under the National Coordination procedures. Each case within a project will be assigned to a Division attorney who will coordinate with the Project Coordinator and Principal Associate Attorney for the project. The project will also have an Area Counsel who, along with the Project Coordinator, will define the parameters of the project work plan. The details of National Project Coordination procedures are contained in Exhibit 31.2.1–1.