General Overview - This section provides specific information for excise managers and excise examiners who refer excise cases to Appeals. A taxpayer has the right to appeal an IRS decision in an independent forum that allows for a fair and impartial administrative appeal.

Purpose - This section explains the referral process for excise cases to Appeals.

Audience - This section is for Excise Tax Examination managers and excise examiners who refer excise cases to Appeals.

Policy Owner - Director, Examination - Speciality Policy is responsible for the administration, procedures and updates related to the referral of excise cases to Appeals.

Program Owner - Director, Examination - Specialty Examination owns Excise Tax Examination.

Primary Stakeholders - Appeals, Counsel, Field and Specialty Exam Quality (FSEQ) and Specialty Examination are the primary stakeholders for this section.

Prior to forwarding and closing an Excise Tax Examination or claim to Appeals, the excise examiner must confirm the completeness of the case file. There must be sufficient documentation to establish that:

Excise cases closing to Appeals for the first time require at least 365 days on the SOL when they are received in Appeals. Additionally:

For purposes of excise case processing, the excise examiner should be aware of the 365 day requirement and plan accordingly when issuing a Letter 950-E, 30 Day Letter - Straight Deficiency or Over-Assessment for Excise Tax Examination Case, which is a written communication issued to the taxpayer reporting Excise Tax Examination findings. If the excise case has 240 days or more remaining on the SOL, the excise examiner should follow the guidance under IRM 4.24.20.3.4, Unagreed Excise Reports, which includes issuing the 30 Day Letter, if the taxpayer has not expressed agreement. If the excise case is to go forward unagreed and the taxpayer wants to exercise their appeal rights, the taxpayer will need to sign a statute extension that allows for sufficient time for preparing the rebuttal, shipping and processing the excise case in Tech Services and allowing for 365 days on the SOL when it is projected to be received in Appeals. If the excise case has less than 240 days remaining on the statute, the report should be issued with Letter 5153-E, Examination Report Transmittal - Statute, or Letter 5153-A, Examination Report Transmittal - Statute Less Than 240 Days (Claim), whichever is applicable.

If a valid Form 872-B, Consent to Extend the Time to Assess Miscellaneous Excise Taxes, is not received, the excise case will be processed based on the proposed changes as an unagreed excise case not eligible for consideration by Appeals. Refer to IRM 4.24.21.5.4, Closing Procedures for Unagreed Excise Examinations Not to be Forwarded to Appeals.

Situational facts and circumstances, such as sufficient time being available on the SOL to allow Appeals to review an excise case, determine the appropriate letter to issue with the Excise Tax Examination report.

Refer to Exhibit 4.24.10-2, Excise Tax - Letter Table According to Situational Facts and Circumstances, to identify the appropriate letter(s) to issue to the taxpayer.

Refer to Exhibit 4.24.10-3, Excise Tax - Letter Table with Letter Numbers and Descriptions, for a list of the letter number and description (catalog name) for those letters itemized under Exhibit 4.24.10-2.

Generally, Appeals procedures for unagreed income tax cases are applicable to excise cases, with the exception of the statutory notice provisions, which do not apply.

Unless specifically excluded from Appeals consideration, all excise cases are eligible to be forwarded to Appeals on the condition that the taxpayer submits an "adequate" protest (when a formal written protest is required) or a small case request that includes the information required under Pub 5, Your Appeal Rights and How to Prepare a Protest If You Disagree.

The following is a list of cases that are excluded from Appeals consideration:

When the taxpayer requests an Appeals conference, excise examiners must follow the applicable procedures in Exhibit 4.24.10-4, Steps and Procedures When a Taxpayer Requests an Appeals Conference.

Unless specifically excluded from Appeals consideration, all excise cases are eligible for an Appeals conference if the taxpayer submits an "adequate" written protest (when required) or a small case request.

To qualify as "adequate" the taxpayer’s written protest must comply with requirements identified in Pub 5, Your Appeal Rights and How To Prepare a Protest if you Disagree.

When a rebuttal is needed, the excise examiner will prepare a Form 886-A, Explanation of Items. The following areas must be addressed:

The protest should be returned to the taxpayer if it does not comply with the requirements as outlined under Pub 5 and additional time should be granted to perfect the protest. Use Letter 1025-E, Letter of Protest - Excise Tax, or Letter 1025-A, Letter of Protest (Claims), for this purpose.

If a rebuttal is not prepared, when closing the case to Appeals, the excise examiner must prepare Letter 2280-X, Transfer to Appeals, to notify the taxpayer the case is being closed to Appeals. The letter must be signed by the excise manager and mailed to the taxpayer.

A taxpayer's protest generally will be reviewed at the group level as designated by management within seven calendar days of receipt to determine whether:

To be considered "adequate," the taxpayer’s formal protest or small case request must contain all information required under Pub 5 (with the exceptions noted in the table under Exhibit 4.24.10-4, Steps and Procedures When a Taxpayer Requests an Appeals Conference.)

A formal written protest is required for a proposed change to the total amount of tax and penalties for any tax period that is more than $25,000 for an increase or decrease in tax and penalties or claimed refund. To meet the Pub 5 "adequacy" requirement, the formal written protest must include:

If the taxpayer’s representative submits the written protest for the taxpayer, the representative must substitute a declaration stating:

If the total amount of tax and penalties is $25,000 or less, the taxpayer may submit a small case request. To meet the Pub 5 "adequacy" requirement, the small case request should include:

"Adequacy" of a protest is generally not determined based on substantive content, such as whether the protest contains sufficient factual or legal support. If a taxpayer submits a formal written protest that includes all the information required by Pub 5 addressing the issues raised in the 30 Day letter, the reasons for disagreement and factual information to support their position on the issues, then the excise case must be forwarded for Appeals consideration. This is regardless whether the excise examiner or excise manager disagrees with the taxpayer’s facts and/or does not consider the taxpayer’s position sufficiently supported.

An incomplete protest, which is one that does not satisfy the requirements listed in Pub 5, must be returned to the taxpayer and additional time granted to perfect the document. If the protest contains information warranting further consideration, the excise case should be returned to the excise examiner for further development. Excise cases returned for additional development should be considered priority work and given expedited consideration.

If the excise examiner or excise manager determines there is something in the protest that does not change the determination but requires further comment or explanation and is not confidential in nature, a rebuttal can be prepared and included in the excise case file before being sent to Appeals. This rebuttal will serve to supplement the information contained within the excise examiner's report and offer a constructive response to the taxpayer's arguments that were presented in the protest. If a rebuttal is prepared, the taxpayer must be provided a copy. Excise examiners should use Letter 5072, Examiner’s Rebuttal, for this purpose.

The excise manager is authorized to meet with the taxpayer to discuss any disputed issues in an attempt to resolve them, obtain taxpayer agreement and limit taxpayer burden.

Appeals has specially trained Appeals Officers (AOs) who handle excise tax cases referrals.

All unagreed excise cases are routed to Appeals via Tech Services.

In an unnamed section on Form 3198 below the "Other" section, check the box for "Forward to Tech Services - Update to Status 21." Enter the "Date Closed to Manager" and "Manager Name."

After the physical excise case file is mailed to Tech Services, the excise examiner will close the case off IMS.

If the taxpayer requests a transfer of jurisdiction for an appeal and the written protest is "adequate," the excise case file will be routed to Appeals.

An excise case can be transferred to Appeals with a copy of the taxpayer’s return, if:

Disposal Code 07 must be used for an unagreed excise case that is transferred to Appeals.

Letter 2280-X, Transfer to Appeals, must be prepared, signed and dated by the excise manager. Letter 2280-X notifies the taxpayer of the excise case transfer to Appeals for consideration.

If a taxpayer is a non-filer and the failure to pay penalty is asserted, Form 13496, IRC Section 6020(b) Certification, for each tax period must be included in case file forwarded to Appeals. For further guidance, refer to IRM 4.24.9.6, IRC Section 6020(b) Certification Procedures for Non-Filed Excise Tax Returns.

Requests from Appeals for additional information for further verification of facts in a protested excise case will be completed expeditiously.

Refer to IRM 4.10.8.15.6, Taxpayer’s Appeal Rights, for guidance concerning appeal rights for inadequate taxpayer records cases.

Refer to IRM 8.7.10.3.1, Routing and Assignment of Cases from SB/SE to the Appeals Case Officer Cadre, for guidance on Appeals procedures for excise cases.

If Appeals cannot resolve the excise case to the taxpayer’s satisfaction, the taxpayer’s only recourse will be paying the additional tax when assessed and filing a claim for refund within the applicable SOL. Upon disallowance of the claim or six months from the date the claim was filed, the taxpayer may then file suit in the U.S. District Court or the U.S. Court of Federal Claims to recover the excise tax paid.

After giving the taxpayer or the taxpayer’s representative an opportunity to participate, a preconference meeting may be held between the Appeals Officer (AO) and the excise examiner. This may be about a protested excise case addressing an unusual or complex issue. A determination regarding what is an unusual or complex issue will be left to the discretion of the AO and the excise examiner.

The purpose of a preconference meeting is to discuss the issue, the protest and the written rebuttal in an excise case containing a complex or unusual issue. A frank discussion of the issue will help to identify additional information that may be needed on the issue. The need for resources, specialists or expert witnesses, etc., can be discussed at this preconference meeting. Excise Tax Examination is encouraged to share its views on disputed issues, including the assessment of the facts and the law to recommended adjustments on a particular issue. However, the preconference meeting is not for securing a commitment from Appeals to defend a particular issue or settlement position, or otherwise negotiate the settlement posture of Appeals on an excise case.

A preconference meeting will take place prior to an Appeals/taxpayer conference.

If a preconference meeting is requested by the excise examiner and/or the excise manager, the request should accompany the excise case file when sent to Appeals. The request must be conveyed in a written memorandum and signed by the excise manager and must be associated with the excise case file.

Review of taxpayer’s formal protest and preparation of the rebuttal in non-docketed cases:

If a preconference meeting initiated by either party is accepted by the other party, the acceptance need not be in writing, but the acceptance should be communicated expeditiously to the other party.

A request by either party shall address the unusual or complex factual or legal issue warranting the preconference.

Either the AO or excise examiner can decline the preconference meeting request. The declination must be in writing and signed and conveyed to the other party with copies to respective managers.

Despite these preconference meeting procedures, the AO remains responsible for complying with the SOL procedures outlined in IRM 8.21, Appeals Statute Responsibility.

Participation in a preconference meeting:

Appeals will return excise cases to Excise Tax Examination in the following situations (not all-inclusive):

IRM 8.13.1, Processing Closing Agreements in Appeals, contains guidance and instructions regarding closing agreements under IRC 7121, Closing agreements, for all types of taxes.

The United States Tax Court has no jurisdiction over cases involving the excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, Form 2290, Heavy Highway Vehicle Use Tax Return, Form 730, Monthly Tax Return for Wagers, and Form 11-C, Occupational Tax and Registration Return for Wagering. After payment of at least a divisible portion of the excise tax, these cases may be litigated in either the United States District Court or the United States Court of Federal Claims by filing a suit for refund of the excise tax paid.

IRM 8.7.10.4.2(3), Issue Management System (IMS), requires Appeals to work all Excise Tax Examination Field cases in IMS. If the case is not in IMS, Appeals will ask the Appeals Team Manager to search the Account & Processing Support inventory in IMS for cases that are not currently in the Appeals IMS Case Inventory.

The Subject Matter Experts (SMEs) in Excise Tax Policy may review the ACM. If there is a disagreement with how the excise case was resolved/disposed, Excise Tax Policy should provide feedback to Appeals either informally or through the formal dissent procedures. Formal dissent procedures are found in IRM 8.6.4.2.10, Disagreements with Appeals Determinations. The formal dissent procedures are not intended to replace any informal procedures currently in use. It is expected that Excise Tax Examination, Excise Tax Policy and Appeals will continue to address and resolve disagreements over excise case resolutions at the lowest possible level. The formal dissent procedures are used when the informal process results in Excise Tax Examination or Excise Tax Policy continuing to have not resolved significant concerns about the Appeals disposition of an issue.

Dissents will be prepared by Excise Tax Policy and forwarded to the appropriate Appeals area director, through the Excise Tax Policy - Program Manager within 90 days (extensions may be mutually agreed upon) of receipt by Excise Tax Examination of an ACM. Refer to IRM 8.6.4.2.10 for detailed dissent routing guidance. Excise Tax Policy and Appeals may also hold post settlement conferences. The purpose of the post settlement conference is to discuss the settlement reached and its subsequent impact on the taxpayer. The post settlement conference is not intended to be a critique of the settlement nor is it intended to replace dissent procedures.