4.24.10  Appeals Referral Procedures

Manual Transmittal

February 11, 2016

Purpose

(1) This transmits a revision to IRM 4.24.10, Excise Tax Examination Reports, Case Closing, and Appeals Procedures. This IRM Section has been renamed Appeals Referral Procedures. New content was added and existing content was reorganized for clarity. Report Writing Guide for Excise Tax Examiners has been moved to IRM 4.24.20. Case Closings has been moved to IRM 4.24.21.

Background

IRM text pertains to Excise Tax appeals and settlement procedures. This IRM provides direction, which is Excise Tax specific.

Material Changes

(1) This Section has been extensively rearranged and updated to comprehensively address the steps and procedures in the Appeals referral process. Content was restructured to be more cohesive, current, and accurate.

(2) This Section incorporates Interim Guidance Memorandum (IGM) SBSE-04-0615-0041, IGM Statute of Limitations for Appealed Excise Tax Cases, dated June 12, 2015.

(3) Editorial changes have been made throughout this IRM such as updating electronic hyperlinks and IRM references. Some content relating to exam procedures was moved to IRM 4.24.20, Report Writing Guide for Excise Tax Examiners, and to IRM 4.24.21, Case Closings. Existing content was restructured to be more cohesive. The table below identifies the significant changes in content based on prior IRM numbering.

IRM Section Number I Description of Change
4.24.10.1 Procedure at Conclusion of Examination Changed title to Purpose. New content added for clarity. Existing content updated and moved to 4.24. 20.1 and 4.24.21.3.3.
4.24.10.2 Overview of Excise Examination Reports Changed title to Appeals Process. New content provided for guidance on applications specific to Excise Tax. Existing content updated and moved to 4.24.20.1.
4.24.10.2.1 Excise Report Guidelines Changed title to Excise Letter Chart - Letter Numbers and Descriptions. New content added for specific letters pertaining to Excise Tax. Existing content moved to “My SB/SE Web Page - Job Aids.”
New 4.24.10.2.2 Added title Docketed Examination Assistance. New content provided for guidance on docketed examination assistance.
4.24.10.3 Publications to Include with Audit Reports Changed title to Appeals Referral Process. Moved content from 4.24.10.7 and edited for clarity. Information about ex parte communications and Appeals Pre-Conference Procedures added. Existing content updated and moved to 4.24.20.3.3.
New 4.24.10.3.1 Added title Case Routing Procedures for Unagreed Excise Tax Cases Going to Appeals. Content moved from 4.24.10.7.1.
New 4.24.10.3.2 Added title Ex Parte Communications. Content moved from 4.24.10.7(1) and some new content added for clarity.
New 4.24.10.3.3 Added title Appeals Preconference Procedures. New content added for clarity.
4.24.10.4 Separate Reports for Different Types of Taxes Changed title to Fast Track Settlement (FTS). Moved content from 4.24.10.7.1.2 and updated information. Existing content updated and moved to 4.24.20.3.2.
New 4.24.10.4.1 Added title Determining Eligibility for Fast Track Settlement. New content added for clarity.
New 4.24.10.4.2 Added title Initiating Fast Track Settlement Process. New content added for clarity.
New 4.24.10.4.3 Added title Fast Track Settlement Sessions. New content added for clarity.
New 4.24.10.4.4 Added title Withdrawal or Termination of Fast Track Settlement. New content added for clarity.
New 4.24.10.4.5 Added title FTS Closing Procedures. New content added for clarity.
4.24.10.5 Excise Reporting and Case Closing Situations Changed title to Closing Agreements and Appeals to Tax Court. Moved content from 4.24.10.8 and updated for clarity. Existing content updated and moved to 4.24.20.1.
4.24.10.5.1 Survey of Excise Tax Cases Removed subsection. Existing content updated and moved to 4.24.21.4.1.
4.24.10.5.1.1 Paperless Survey of Excise Tax Return Removed subsection.
4.24.10.5.1.2 Survey of Return and Subsequent Pick Up of a Later Period Removed subsection. Existing content updated and moved to 4.24.21.4.1.1.
4.24.10.5.2 Audit Reconsideration and Reopening Reports Removed subsection. Existing content will be moved to a new IRM Section - Audit Reconsiderations for Excise Tax that is under development.
4.24.10.5.3 Information Reports Removed subsection. Existing content updated and moved to 4.24.20.2.5.
4.24.10.5.4 Agreed Case Report Removed subsection. Existing content updated and moved to 4.24.20.2.1.
4.24.10.5.4.1 Agreed Report Forms, Letters and Closing Procedures Removed subsection. Existing content updated and moved to 4.24.21.4.2.
4.24.10.5.5 Unagreed Report Forms, Letters, and Closing Procedures Removed subsection. Existing content updated and moved to 4.24.20.2.4 and 4.24.21.4.4.
4.24.10.5.5.1 Extension of Time to Respond Removed subsection. Existing content updated and moved to 4.24.20.3.7.
4.24.10.5.6 Excepted Agreed and Partial Agreed Report Removed subsection. Existing content updated and moved to 4.24.20.2.2.
4.24.10.5.6.1 Excepted and Partial Agreed Report Forms, Letters and Closing Procedures Removed subsection. Existing content updated and moved to 4.24.21.4.2.1.
4.24.10.5.7 No Change Report Removed subsection. Existing content updated and moved to 4.24.20.2.3.
4.24.10.5.7.1 No Change Report Forms - Filed Return, Letters and Closing Procedures Removed subsection. Existing content updated and moved to 4.24.21.4.3.
4.24.10.5.7.2 No Change Report-Non-Filed Return Report Forms, Letters and Closing Procedures Existing content updated to reflect IGM SB/SE 04-0315-0021 and IGM SB/SE 04-0315-002 and moved to 4.24.21.4.5.
4.24.10.6 Soliciting Exam Deficiency Payments Changed title to Appeals Feedback Procedures for Excise Tax Examination Cases. Content moved from 4.24.10.7.1.3 and updated for clarity. Existing content updated and moved to 4.24.20.5.
4.24.10.7 Appeals Procedure Removed subsection. Existing content updated and moved to 4.24.10.3.
4.24.10.7.1 Case Routing Procedures for Unagreed Excise Cases Going to Appeals Removed subsection. Existing content updated and moved to 4.24.10.3.1.
4.24.10.7.1.1 Fast Track Mediation (FTM) Dispute Resolution Program Removed subsection. Existing content deleted.
4.24.10.7.1.2 Fast Track Settlement (FTS) Dispute Resolution Program Removed subsection. Existing content moved to 4.24.10.4.
4.24.10.7.1.3 Appeals Feedback Procedures for Excise Tax Examination Cases Removed subsection. Existing content moved to 4.24.10.7.
4.24.10.8 Closing Agreements and Appeals to Tax Court Removed subsection. Existing content updated and moved to 4.24.10.5.
4.24.10.9 Case Closing Guidelines Removed subsection. Existing content updated and moved to 4.24.21.1, and 4.24.21.2.
4.24.10.9.1 20 Day Time Frame for Closing Agreed and No Change Cases Removed subsection. Existing content updated and moved to 4.24.21.2.1.
4.24.10.9.2 Time Frame for Closing Agreed Cases with Unpaid Deficiencies of $100,000 and Greater Removed subsection. Existing content updated and moved to 4.24.21.2.2.
4.24.10.9.3 Time Frame for Closing Unagreed Cases Removed subsection. Existing content was updated and moved to 4.24.21.2.3.
4.24.10.10 Form 5344 Examination Closing Record Removed subsection. Existing content updated and moved to 4.24.21.3.4.
4.24.10.11 Form 3198 Special Handling Notice for Examination Case Processing Removed subsection. Existing content updated and moved to 4.24.21.3.3.
Exhibit 4.24.10-1 Instructions for Completing Forms 5384 and 5385 Changed exhibit to Excise Tax - Letter Chart According to Situation to reflect the Appeals letters specific to Excise Tax situations and to add clarity to instruction. Existing content updated and moved to Exhibit 4.24.20-1.
Exhibit 4.24.10-2 Exhibit Cadre Appeals Officer Listing Changed exhibit to Excise Tax - Letter Numbers and Descriptions to identify letters appropriate to specific situations by letter number and description. Existing content updated and moved to an electronic link displayed in 4.24.10.3.1.

Effect on Other Documents

This material supersedes IRM 4.24.10 dated October 25, 2011, IGM SBSE-04-0315-0021, Reissue Interim Guidance Procedures for Closing Excise No Liability Substitute for Return (SFR) Non-Filer Cases, dated March 9, 2015, IGM SBSE-04-0315-0022, Reissue Additional Interim Guidance Procedures for Closing Excise No Liability Substitute for Return (SFR) Non-Filer Cases, dated March 9, 2015, and IGM SBSE 04-0615-0041, Interim Guidance Memo Statute of Limitations for Appealed Excise Tax Cases, dated June 12, 2015.

Audience

This section contains guidelines and instructions for SB/SE Excise Tax Specialty Program employees.

Effective Date

(02-11-2016)



/s/ Alfredo Valdespino
Executive Officer, Specialty Examination Policy
Small Business/Self Employed

4.24.10.1  (02-11-2016)
Purpose

  1. A taxpayer has the right to appeal an IRS decision in an independent forum, which allows for a fair and impartial administrative appeal. This section provides specific information for employees who handle Excise Tax cases for referrals to Appeals. The primary audience is excise managers and excise examiners.

  2. Refer to IRM 4.24.20.2.4, Excise Tax Report Writing Guide, Unagreed Reports, for information about preparing unagreed cases that do not meet the time frame for Appeals eligibility that require at least 365 days on the protection of the statute of limitations period for assessing excise tax (SOL) or where the taxpayer did not file a protest or sign an agreement and the case will be assessed.

  3. Refer to IRM 4.24.21.4.4, Case Closings, Closing Procedures for Unagreed Examinations, for information about closing procedures for unagreed cases that do not meet the time frame for Appeals eligibility that require at least 365 days on the SOL or where the taxpayer did not file a protest or sign an agreement and the case will be assessed.

4.24.10.2  (02-11-2016)
Appeals Process

  1. It is imperative the excise examiner fully understand the appeals process and its impact on compliance functions Service-Wide.

  2. Cases closing to Appeals for the first time on or after September 2, 2014, require at least 365 days on the SOL when they are received in Appeals.

  3. Additionally :

    • There must be at least 210 days remaining on the SOL when a case is received in excise tax, if Appeals returns the case to excise tax for consideration of new information or new issues raised by the taxpayers.

    • There must be at least 180 days remaining on the SOL when a case is received in Appeals, if Appeals previously released jurisdiction of the case and returned it to excise tax for additional work.

  4. For purposes of Excise Tax case processing, excise examiners should be aware of the 365 day requirement and plan accordingly when issuing a Letter 950-E, 30 Day Letter - Straight Deficiency on Over-Assessment for Excise Tax Examination Case (30 Day Letter). If the case has 240 days or more, the excise examiner should follow the guidance under IRM 4.24.20.2.1 , which includes issuing the 30 Day Letter, if the taxpayer has not expressed agreement. If the case is to go forward unagreed and the taxpayer wants to exercise his or her appeal rights, then the taxpayer will need to sign a statute extension that allows for sufficient time for preparing the rebuttal, shipping and processing the case in Technical Services, and allowing 365 days on the statute when the case arrives in Appeals. If the 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, Report Transmittal - Statute < 240 Days (Claim), whichever is applicable.

  5. If a valid Form 872-B, Consent to Extend the Time to Assess Miscellaneous Excise Taxes (Statute Extension), is not received, the case will be processed based on the proposed changes as an unagreed case not eligible for appeals. Refer to IRM 4.24.21.4.4.

4.24.10.2.1  (02-11-2016)
Excise Letter Chart - Letter Numbers and Descriptions

  1. To strengthen administrative control, the facts and circumstances determine the appropriate letter to issue with the report.

  2. Refer to Exhibit 4.24.10-1, Excise Letter Chart, which identifies those letters that are appropriate to issue to the taxpayer depending on the facts and circumstances.

  3. Refer to Exhibit 4.24.10-2, Excise Letter Numbers and Descriptions, which describes the letters found on Exhibit 4.24.10-1.

4.24.10.2.2  (02-11-2016)
Docketed Examination Assistance

  1. Compliance may provide Docketed Examination Assistance (DEA) to Appeals upon request, if new information, issues, or arguments not previously considered by compliance merit additional analysis or investigation in Appeals’ judgment. Refer to IRM 8.4.1, Procedures for Processing and Settling Docketed Cases, for additional guidance.

  2. Appeals retains jurisdiction on DEA cases. Excise examiner’s time is charged to Activity Code 822.

4.24.10.3  (02-11-2016)
Appeals Referral Process

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

  2. If, as a result of the issuance of a 30 Day Letter, the taxpayer requests the Appeals Office to review the case findings, the IRS must abide by that request, if certain requirements are satisfied:

    • There must be at least 365 days remaining on the SOL at the time Appeals receives the case.

    • Under the appeals process, the excise examiner may document whether the taxpayer provided or confirmed the requested information. If the taxpayer later discovers further or additional information he or she wants considered, that information may be provided or confirmed for an impartial, independent review.

    • A request for an appeal may be made using small case procedures, unless if the total amount of proposed additions to tax and penalties, proposed overassessment, or claims refund, credit or abatement for any tax period exceeds $25,000. These procedures require a written request for Appeals consideration, stating the issues and grounds for the disagreement.

    • If the taxpayer does not qualify for the small case procedures, then a formal protest must be prepared by the taxpayer and/or his or her representative.

  3. Formal protests are reviewed at the group level, as designated by management, within seven days of receipt to decide whether:

    • The protest is adequate.

    • The case requires further development by the excise examiner.

    • The excise examiner’s report should be modified.

    • The taxpayer’s written protest includes the required documents.

    • A rebuttal needs to be prepared.

  4. The taxpayer’s formal protest must include the following:

    • The taxpayer’s name, address, and daytime telephone number.

    • A statement the taxpayer wants to appeal the excise examiner’s findings to the Appeals Office.

    • A copy of the letter showing the proposed changes and findings being protested or the date and symbols from the letter.

    • The tax periods or years involved.

    • A list of the adjustments with which the taxpayer does not agree and an explanation as to why.

    • A statement of facts supporting the taxpayer’s position on any contested issue.

    • The law or other authority, if any, upon which the taxpayer is relying.

    • A declaration of truth under penalties of perjury. This may be done by adding the following signed declaration to the protest document: "Under penalties of perjury, I declare that I examined the statement of facts stated in this protest, including any accompanying documents and, to the best of my knowledge and belief, they are true, correct, and complete."

  5. If the taxpayer’s representative submits the protest for the taxpayer, the representative may include a substitute for the taxpayer’s declaration described previously. The declaration will state:

    • That the representative prepared the protest and accompanying documents.

    • Whether the representative knows personally the facts contained in the protest and accompanying documents are true and correct.

  6. The protest must be returned to the taxpayer, if incomplete, and additional time must be granted to perfect the document. The case should be returned to the excise examiner for further development, if the protest contains information warranting further consideration. 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 wrong 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 case file before it is sent to Appeals. If a rebuttal is prepared, a copy must be provided to the taxpayer.

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

  8. Managerial involvement is required for all unagreed cases. A written statement must be in the case file that contains evidence of the excise manager’s involvement in the unagreed case and what attempts were made to resolve the disputed issue(s).

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

  10. A case can be transferred to Appeals with a copy of the taxpayer’s return, if:

    • A transcript of account is attached to the copy of the return.

    • The case does not involve fraud, jeopardy assessment, and joint committee cases.

  11. Letter 2280-X, Transfer to Appeals (Letter 2280-X), should be prepared, signed, and dated by the excise manager. Letter 2280-X notifies the taxpayer the case is being transferred to Appeals for consideration. If a rebuttal is prepared, it must be sent to the taxpayer with Letter 2280-X.

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

  13. Refer to IRM 4.10.8.17.6, Report Writing, Taxpayer Appeal Rights, for appeal rights for inadequate taxpayer records cases.

  14. Refer to IRM 8.7.10, Technical and Procedural Guidelines, Excise Taxes and IRA Adjustments, for more information on Appeals procedures for Excise Tax cases.

  15. If Appeals cannot resolve the 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 statutory period of limitations. 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. Federal Court of Claims to recover the tax.

4.24.10.3.1  (02-11-2016)
Case Routing Procedures for Unagreed Excise Tax Cases Going to Appeals

  1. The Office of Appeals has specially trained Appeals Officers (AOs) who handle Excise Tax examination and dyed diesel penalty cases referred to Appeals. For information about using the spreadsheet tool to obtain the proper address to route a case into Appeals refer to https://organization.ds.irsnet.gov/sites/APPEALS-PQCS/APS/SitePages/CaseRouting.aspx “Appeals Account & Processing Support - Case Routing.”

  2. All unagreed examination cases are routed to Appeals via Technical Services.

    • In the “Forward to Technical Services” section of Form 3198, the boxes “Unagreed to Appeals” and “Other” need to be checked.

    • In the “Other” section, the excise examiner will enter the address of the Appeals office based on the information provided by utilizing the Appeals Routing Guide found at the Appeals web page.

4.24.10.3.2  (02-11-2016)
Ex Parte Communications

  1. Rev. Proc. 2012-18, Ex Parte Communications Between Appeals and Other Internal Revenue Service Employees (Rev. Proc. 2012-18), and IRM 8.1.10, Appeals Function, Ex Parte Communications, provide guidance regarding the prohibition of ex parte communications between AOs and other IRS employees, to the extent that those communications appear to compromise the independence of the AOs. An ex parte communication is a communication that takes place between any Appeals employee (e.g., AOs, Settlement Officers, Appeals Case Team Leaders, Appeals Tax Computation Specialists) and employees of other IRS functions, without the taxpayer or taxpayer’s representative being given an opportunity to participate in the communication. Ex parte communications may include oral and written forms of communication. Written communications include those that are manually or electronically generated. If a communication is a prohibited ex parte communication, the taxpayer or the taxpayer’s representative must be given an opportunity to participate in that communication.

  2. Not all communications are within the scope of the term ex parte communication. To determine whether a communication is an ex parte communication, see the guidelines set forth in IRM 8.1.10.

  3. The prohibition on ex parte communications applies to preconference meeting between Appeals and Examination (Excise Tax). According to Rev. Proc. 2012-18, a preconference meeting could appear to compromise the independence of Appeals. Accordingly, Appeals will hold a preconference meeting only after giving the taxpayer or the taxpayer’s representative an opportunity to participate.

4.24.10.3.3  (02-11-2016)
Appeals Preconference Procedures

  1. After giving the taxpayer or the taxpayer’s representative an opportunity to participate, a preconference meeting may be held between the AO and the excise examiner. This may be about a protested 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.

  2. The purpose of a preconference meeting is to discuss the issue, the protest, and the written rebuttal in a case containing a complex or unusual issue. A frank discussion of the issue will help to identify any additional information that may be needed on that issue. The need for any resources, specialists, or expert witnesses, etc. can be discussed at this preconference meeting. Excise Tax 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 to be used as a vehicle for securing a commitment from Appeals to defend any particular issue, commit to a particular settlement position, or otherwise negotiate the settlement posture of Appeals on a case.

  3. A preconference meetings will take place prior to an Appeals/Taxpayer conference.

  4. If a preconference meeting is requested by the excise examiner and/or the excise manager, the request should accompany the file when it is sent to Appeals. The request will be made in writing in a separate memorandum, which is contained in the case, and signed by the manager.

  5. Review of Taxpayer Protest and Preparation of the Rebuttal in Non-Docketed Cases:

    • Before forwarding the case to Appeals, the excise examiner shall review any new information, new issue, or new arguments raised by a taxpayer or representative in the protest to determine the field office’s position before preparing a written rebuttal. The rebuttal is not intended to restate positions taken in the examination report, but to address any new information or new issues raised in the protest. A copy of the excise examiners’s rebuttal will be provided to the taxpayer and/or representative before sending the case to Appeals for consideration.

    • The protest rebuttal shall reference the request for a preconference meeting and refer to the separate request memorandum from the excise manager. This will alert the AO to look for the preconference meeting request memorandum.

    • Factual differences between the Excise Tax report and the protest will be reconciled. Rebuttals will be secured from specialists, such as engineers, economists, appraisers, etc., who provided background data, assumptions, etc. used to formulate Excise Tax’s position. These reports will be included in the administrative file with the protest and provided to the taxpayer or representative before sending the case to Appeals for consideration.

    • Excise Tax will try to seek technical advice on a novel or unique issue prior to Appeals’ consideration.

    • Changes in the excise examiner’s and the excise manager’s position made during the review process will be clearly reflected in the revised report and include any tax re-computations.

    Note:

    Appeals allows the taxpayer and/or taxpayer’s representative an opportunity to attend a conference call or meeting.  The Excise Tax group should not wait until the taxpayer disagrees to secure technical advice or reports from specialists to prepare for the pre-conference meeting.  This might delay the taxpayer’s appeal and limits the time the taxpayer has to respond. If the IRS has such information, it should be provided to the taxpayer with the 30 Day Letter, so the taxpayer can decide if he or she wants to retain an expert to prepare a rebuttal.

  6. 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.

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

  8. Either party can decline the other’s request for a preconference meeting by submitting a response (including an e-mail) to that effect signed by the AO or excise examiner and submitted to the other party with copies to the respective managers.

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

  10. Participation in a Preconference Meeting:

    • The AO will arrange it

    • Appeals and the operating division will each identify its participants

    • The participants may include other specialists, if determined necessary by Excise Tax

    • The parties will determine the location and method of the preconference on a case-by-case basis

4.24.10.4  (02-11-2016)
Fast Track Settlement

  1. SB/SE and Appeals Fast Track Settlement (FTS) is a jointly administered program offered by the IRS to expedite case resolution at the earliest opportunity. FTS enables taxpayers and IRS to work together in resolving disputed issues while the case remains in SB/SE jurisdiction. FTS is designed to streamline the settlement process of excise cases because the taxpayer, taxpayer’s representative, excise examiner, excise manager, and Appeals mediator actively participate in the outcome. The excise examination team brings its expertise in tax law and specific knowledge of the case to the FTS session and plays an important role in the process of advocating the agency’s position. Refer to IRM 8.26.2, Fast Track Settlement for Small Business/Self Employed (SB/SE) Taxpayers.

  2. FTS is an expansion of the taxpayer dispute resolution options and does not eliminate or replace other resolution options. A taxpayer who disagrees with proposed adjustments will also be informed of his or her right to the following:

    • Discuss the proposal with the excise examiner’s manager in a manager’s conference.

    • Request a conference with the Appeals Office.

    • Pay a deficiency and file a claim for refund or file a protective claim for refund.

  3. Information about FTS is available at the FTS web site at http://mysbse.web.irs.gov/examination/tip/fts/default.aspx

  4. Under FTS, the AO has the authority to settle a FTS case, including the hazards of litigation, and the ex parte communication rules do not apply.

    Note:

    The prohibition against ex parte communications between AOs and other IRS employees provided by Section 1001(a) of the Internal Revenue Service Restructuring and Reform Act of 1998 does not apply to communications arising in the SB/SE FTS process because the Appeals personnel are facilitating an agreement between the taxpayer and SB/SE and are not acting in their traditional Appeals’ settlement role. Refer to Rev. Proc. 2012-18 for additional guidance on ex parte communications.

  5. The FTS process is confidential with respect to all parties, pursuant to IRC 6103. Therefore, all information concerning dispute resolution communication is confidential and may not be disclosed by any party except as provided under 5 USC 574.

  6. Excise examiners should discuss appeal rights, including alternative dispute resolution, with the taxpayer during the first interview/contact to ensure the taxpayer understands his or her options. Excise examiners should also revisit the FTS option with the taxpayer when the audit is reaching its final stages and the taxpayer does not plan to agree with the examination’s findings and issues. Refer to IRM 8.26.2.

    Note:

    For eligible cases, FTS should be offered prior to the issuance of a 30 Day Letter. If the case is eligible for FTS and the 30 Day Letter has been issued, requests for FTS can still be referred to Appeals for consideration.

  7. The FTS process is estimated to be completed within 60 days.

4.24.10.4.1  (02-11-2016)
Determining Eligibility for Fast Track Settlement

  1. Before FTS is offered as an option to the taxpayer, the excise examiner must establish eligibility. The excise examiner should discuss potential issue(s) and any questions about the application with the excise manager prior to offering FTS to the taxpayer.

  2. SB/SE FTS is generally available for all non-docketed SB/SE cases with no regard to dollar amount. There are, however, cases that are excluded from FTS.

  3. Examples of cases that do not qualify for SB/SE FTS include the following:

    • Docketed cases.

    • Cases with numerous issues, whether simple or complex, which will require longer than 60 days to resolve.

    • Cases where SB/SE or the taxpayer is unable to meet during the 60 day time frame.

    • High profile, sensitive taxpayers or issues.

    • No-Show cases, such as those whereby the taxpayer failed to respond to agency communications and no documentation has been previously submitted for consideration.

    • Frivolous filers.

    • Whipsaw issues.

  4. If the excise examiner and excise manager determine a taxpayer’s request for SB/SE FTS is ineligible because it is excluded from FTS, the reasons for ineligibility should be explained to the taxpayer in writing.

  5. If one issue in a case is determined to be ineligible for SB/SE FTS, all issues in the case are deemed ineligible.

  6. Any request by the taxpayer for FTS that is denied by the SB/SE manager, other than excluded cases, requires review and concurrence by the SB/SE territory manager. A decision by the SB/SE territory manager not to accept a case into FTS is final and the taxpayer will be notified of any such denial by SB/SE.

  7. All unagreed issues must be fully developed prior to being accepted into the FTS program. A case is considered fully developed when:

    • The case can be written up with an unagreed 30 Day Letter.

    • Includes basis in fact and/or law for the conclusion(s) reached.

    • All issues are defined.

    • Contains properly documented lead sheets and workpapers supporting the excise examiner’s position. Facts, procedures, audit techniques, management involvement, applicable law, conclusions, and adjustments should be fully documented.

    • Has all necessary referrals and reports/recommendations generated as a result of those referrals.

    • Has been reviewed by the excise manager.

  8. Before offering a taxpayer FTS, the excise examiner and excise manager should offer a SB/SE manager’s conference. If the taxpayer declines the SB/SE manager’s conference, the following actions must be taken:

    • Document the case file with the reasons why the taxpayer declined the conference.

    • Inform the taxpayer he or she can still apply for FTS and the SB/SE excise manager will be present at the FTS session, if the application is accepted.

  9. The excise examiner should provide Pub 5022, Fast Track Settlement - A Process for Prompt Resolution of SB/SE Tax Issues, upon determining a case is eligible for FTS and unagreed issues are present.

  10. The excise examiner and excise manager may contact the Appeals Team Manager (ATM) for assistance in determining eligibility.

4.24.10.4.2  (02-11-2016)
Initiating Fast Track Settlement Process

  1. To request FTS, see IRM 4.10.7.5.5, SB/SE Fast Track Settlement.

  2. See IRM 8.26.2.4, Initiating SB/SE FTS.

  3. Cases using FTS remain in SB/SE jurisdiction. Do not transfer the full case file to Appeals.

  4. Refer to the procedures in IRM 4.10.7.5.5.1, Determining Eligibility, and IRM 8.26.2.5, Determining Case Eligibility .

  5. Once the case is approved and assigned to Appeals for FTS, the excise examiner should update the case to status code 15 and apply aging reason code 23. Upon completion of the FTS session, the excise examiner should return the case to status code 12.

4.24.10.4.3  (02-11-2016)
Fast Track Settlement Sessions

  1. The excise examiner should bring the case file, workpapers, a copy of the SB/SE FTS application package, computer, and printer to the FTS session.

  2. Form 14000, Fast Track Session Report (FTS Session Report), is required on all SB/SE FTS cases. It is used to assist in planning the SB/SE FTS session and to report on the progress about the issue(s) in dispute. The FTS Session Report is also used to obtain agreement from all parties on the issues in dispute, amounts in dispute, conference dates, and plan of action to be followed throughout the FTS process. The Appeals Official will solicit the taxpayer and/or the representative, if applicable, and SB/SE’s signatures on the report, give all session participants a signed copy, and explain the settlement is not final until the necessary closing documents or waivers are signed.

  3. Excise Tax participates in the FTS process along with the taxpayer and Appeals. The FTS Appeals Official may propose settlement terms for any or all issues. The settlement proposal must be mutually agreed upon by both the taxpayer and Excise Tax. Neither party is obligated to accept the settlement proposal offered by Appeals. The FTS session may include joint sessions with all parties and/or separate meetings as appropriate. The Appeals Official will use various methods and mediation techniques to meet the needs and circumstances of each particular case.

    Note:

    If the SB/SE excise manager or the designee rejects the Appeals Official’s settlement proposal during the FTS session, which has been accepted by the taxpayer, the SB/SE territory manager will have to concur with the rejection in writing. See IRM 4.10.7.5.5.4.3 for more information.

  4. The FTS session is led by Appeals. Appeals does not act in a traditional Appeals role, but uses an interest-based approach to facilitate a settlement of the issues between the parties. Using mediation techniques, Appeals attempts to bring the parties to a mutual resolution of the issues during the FTS session.

  5. If the taxpayer and/or SB/SE presents new information related to the issues in dispute, the Appeals Official will consider postponing or terminating the session until both parties have had adequate time to review and evaluate it.

  6. If the parties are unable to resolve an issue, the taxpayer will retain all of the standard appeal rights and Excise Tax will close the case as unagreed. When Appeals receives an unagreed case after an FTS session, Appeals assigns it to a different AO.

4.24.10.4.4  (02-11-2016)
Withdrawal or Termination of Fast Track Settlement

  1. Both Examination and the taxpayer retain the right to withdraw from FTS throughout the entire process.

  2. A party wishing to withdraw or terminate should provide written notice to the FTS Appeals Official and the other party as described in IRM 8.26.2.8.3,Withdrawal from SB/SE FTS.

4.24.10.4.5  (02-11-2016)
Fast Track Settlement Closing Procedures

  1. Refer to IRM 4.10.7.5.5.5, FTS Closing Procedures, for more information.

  2. If the parties resolve the issues brought forth through the FTS process and the excise manager or SB/SE territory manager agrees with the settlement, Appeals will prepare and execute the appropriate agreement form and a brief Appeals Case Memorandum (ACM). Once the disputed issues are resolved or the decision is made that a resolution cannot be reached; the Appeals Official solicits signatures of the taxpayer and SB/SE representative who participated in the session on the Fast Track Session Report, which lists the issues in dispute, as well as the resolution of the issues. Both parties are given a copy of this report and are also notified the settlement is not final until the necessary closing documents or waivers are signed.

  3. The AO forwards the SB/SE FTS Closing Package to the excise group using Form 3210. Refer to IRM 8.26.2.15.2 for a complete listing of the documents contained in the FTS SB/SE Closing Package. Excise Tax secures appropriate closing documents from the taxpayer and closes the case using standard procedures.

4.24.10.5  (02-11-2016)
Closing Agreement and Appeals to Tax Court

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

  2. The United States Tax Court has no jurisdiction over cases involving the excise taxes reported on Forms 720, 2290, 730, and 11–C. These cases may be litigated in either the United States District Court or the United States Federal Court of Claims after payment of the tax by filing a suit for refund of the tax.

4.24.10.6  (02-11-2016)
Appeals Feedback Procedures for Excise Tax Examination Cases

  1. The ATM will forward Appeals Case Memos (ACM) and Form 5402, Appeals Transmittal, via encrypted e-mail to *SBSE Area 214-Appeals Feedback@irs.gov. The e-mail subject line will include the Appeals Work Unit Number (WUNO) assigned to the case.

  2. Excise Policy will monitor the mailbox for any receipt of Form 5402 and ACM.

  3. Excise Policy will monitor the status of all unagreed excise cases in Appeals and follow up on settled cases where no ACM has been received in the mailbox.

  4. Upon receipt of an ACM in the mailbox, Excise Policy will send the ACM along with a brief summary of the issue via encrypted e-mail to the Excise Tax territory manager in the territory where the case originated.

  5. The Subject Matter Experts (SMEs) in Excise Policy will review the ACM and advise the Excise Tax policy manager, Excise Tax territory manager, and Excise Tax group manager responsible for the examination, if they agree or disagree with the Appeals settlement within 30 days of receipt of the ACM. If there is a disagreement with how the 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 8.6.4.1.9, Disagreements to Appeals Determinations. The formal dissent procedures are not intended to replace any informal procedures currently in use. It is expected that local management in Excise Tax and Appeals will continue to address and resolve disagreements over case resolutions at the lowest possible level. The formal dissent procedures are to be used when the informal process results in Excise Tax still having unresolved significant concerns about the Appeals disposition of an issue.

    Note:

    Formal dissents will generally not be appropriate in an Appeals case where “hazards of litigation” were considered in the settlement of the case or in cases resolved by applying "judgment" unless such judgment is clearly erroneous.

  6. Dissents will be prepared by Excise Tax Policy and forwarded to the appropriate Appeals area director, through the Excise Tax policy manager, within 90 days (extensions may be mutually agreed upon) of receipt by Excise Tax of an ACM. See IRM 8.6.4.1.9 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 excise’s dissent procedures.

  7. The Excise Tax program analyst will prepare monthly reports for the Excise Policy manager covering areas such as those issues sustained, SME responses to ACM, formal dissents issued and responses to the dissents, premature referrals, and emerging issues/trends.

Exhibit 4.24.10-1 
Excise Tax - Letter Chart According to Situation

If... And... Send...
TP is eligible for Appeals Statute ≥ 240 days
  • Letter 950-E - Deficiency

  • Letter 569-X - Claim

TP is eligible for Appeals Statute < 240 days
  • Letter 5153-E - Deficiency

  • Letter 5153-A Claim

Previously Sent
  • Letter 950-E

  • Letter 569-X

TP indicated he/she is going to send in a protest but has not yet responded
  • Letter 923-E - Deficiency

  • Letter 923-C - Claim

Previously Sent
  • Letter 950-E and/or Letter 923-E or Letter 686

  • Letter 569-X

Inadequate protest received and/or Letter 907-X has been sent
  • Letter 1025-E - Deficiency

  • Letter 1025-A - Claim

Previously Sent
  • Letter 950-E

  • Letter 569-X

TP sends in additional info
  • Letter 692-E - Deficiency

  • Letter 692-A - Claim

Previously Sent
  • Letter 950-E

  • Letter 569-X

TP requests an extension to respond to 30 Day Letter
  • Letter 686

Case is closed to Appeals Rebuttal prepared
  • Letter 2280-X

Case is closed to Appeals Rebuttal not prepared
  • Letter 2280-X

Exhibit 4.24.10-2 
Excise Tax - Letter Numbers and Descriptions

Letter Description
Letter 569-X Claim Disallowance Letter - Excise
Letter 686 Extension of Time for Certain Actions
Letter 692-A Request for Consideration of Additional Findings - Claim
Letter 692-E Excise Tax - Request for Consideration of Additional Findings - Deficiency
Letter 907-X Request to Extend Assessment Statute Letter - Excise
Letter 923-C Letter Extending Time to File Protest - Claim
Letter 923-E Letter Extending Time to File Protest - Excise
Letter 950-E 30 Day Letter - Straight Deficiency or Overassessment for Excise Examination Cases
Letter 1025-A Letter of Protest - Claims
Letter 1025-E Letter of Protest - Excise Tax
Letter 2280-X Transfer to Appeals
Letter 5153-A Report Transmittal - Statute ≤ 240 days (Claim)
Letter 5153-E Examination Report Transmittal - Statute

More Internal Revenue Manual