See IRM 4.36.1.1.1, Background.

IRC 6405 requires review of certain cases by the Joint Committee on Taxation.

See IRM 4.36.1.1.3, Roles and Responsibilities.

See IRM Exhibit 4.36.1-1, Acronyms Used Throughout 4.36, for a list of commonly used acronyms.

Joint Committee topics may be found on the IRS Knowledge Management website at: Joint Committee Virtual Library. This site contains a wealth of information about all the various aspects of a Joint Committee case, including frequently asked questions, job aids, contact information, and JC forms. It is a place to visit for valuable tools and resources.

The examination group is responsible for identifying all Joint Committee cases in their inventory, based on either the return information submitted by the taxpayer or when the case qualifies for JCT review as the result of an examination. The examination group must ensure that all returns (both source and carryback years) in the case file have project code 0077 on ERCS/AIMS to indicate that the case is subject to JCT review. Joint Committee cases with project code 0077 may only be surveyed after assignment or examined; these cases are not allowed to be surveyed before assignment. All surveyed after assignment and examined cases must be reviewed by the JCT. If during an examination an examiner determines a case no longer meets the JC refund thresholds, the examiner is to submit a request to the manager to remove project code. Project code 0077 takes precedence over all other project codes that may be applicable to the case. See IRM 4.36.2.4 for guidance in determining the jurisdictional amount.

Where a case is under examination or has been examined but not closed by the examination team and the taxpayer files a claim for refund or application for tentative allowance sufficient to bring the case within the jurisdiction of the JCT, the examination will be extended to include such source year. Certain cases can be closed and reported to the JCT prior to the resolution of all issues. See IRM 4.36.3.7.2 for the procedures and criteria for tentative allowances from unexamined source years and IRM 4.36.3.7.3 for the procedures and criteria for claims from unexamined source or refund years.

Upon discovery that an overpayment in excess of $2 million ($5 million for C corporations) has been refunded without a report to the JCT, the examiner will notify the manager and the JCR team. The JCR team will coordinate with the Office of Chief Counsel, Procedure and Administration, Branch 3 or 4 on the appropriate steps to take on a case-by-case basis.

When a case that requires reporting to the JCT was inadvertently not reported, the examination team that concluded the examination of the case will be responsible for securing the files and preparing the case for Joint Committee review. The normal guidelines will be followed, even though the examination has been completed and closed.

All pertinent years (both refund and source years) must be covered in a current examination or survey after assignment action, even if one or more of the refund years has been previously surveyed or examined. All prior audit or survey reports pertaining to such years must be included in the case file.

If the refund or credit is for a year that was previously examined, that year should not be reexamined unless such action is necessary under reopening criteria, also known as case return criteria.

Upon completion of the examination, the examination team will solicit an agreement to the findings and inform the taxpayer that a report to the JCT is necessary and additional processing time will be required. The examination team should also advise the taxpayer to expect written notification when the report has been forwarded to the JCT. The examination team should answer any taxpayer questions about Joint Committee procedures. Letter 1573 (P) is a letter Joint Committee Review prepares to be sent to the taxpayer when the JC Report is sent to the JCT.

Joint Committee cases are considered "Excepted Agreed Cases" and as such the reopening procedures do not apply. IRM 4.10.8.4 states that Form 870, Waiver of Restriction on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, will be used along with Form 4549-A in all Joint Committee cases.

Form 870 must not contain any restricted language.

A qualified Form 870 will not be accepted for Joint Committee cases.

If the taxpayer signs an unqualified Form 870 and the net overassessment is less than $2 million ($5 million for C corporations), the overassessment (and deficiency, if any) may be processed prior to reporting the IRC 6405(b) refund (tentative allowance) to the JCT. This only applies if there is sufficient time open on the statute of limitations to follow deficiency procedures.

Adjustments due to carrybacks will result in restricted interest. Even if there is no tax change to a carryback year, there may be a net interest assessment or abatement. The restricted interest provisions should be explained to the taxpayer.

The tax computation specialist (TCS) is responsible for the preparation of Part I of Form 2285, Concurrent Determinations of Deficiencies and Overassessments in Cases Involving Restricted Interest Provisions of the Internal Revenue Code. For estate tax, use Form 1366, Tax Analysis Worksheet of Overassessment of Estate Tax Involving Restricted Interest. Form 2285 is required if there are tax changes from current year adjustments and at least one carryback year, or changes from two or more carryback years without any current year adjustments. The examination team should review the computations with the TCS.

If all of the tax adjustments to a year are due to an increase or decrease of just one carryback year, the Form 3198, Special Handling Notice for Examination Case Processing, needs to have this information. Form 2285 will not be required for this year.

Due to the time required to process a Joint Committee case, the examiner will not solicit Form 2297, Waiver of Statutory Notification of Claim Disallowance, in an agreed claim case involving the disallowance in full or in part of a claim for refund or credit. Such action disadvantages the taxpayer by prematurely starting the running of the two-year period for filing suit. On Joint Committee cases, Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, should be secured in addition to Form 870, if there are no adjustments other than the claim.

The examiner should indicate on Form 3198 (or other special handling form) that a statutory notice of claim disallowance should be issued after release from the JCT.

The Joint Committee electronic case reviews are conducted remotely by Joint Committee Review with the examination team’s participation, as needed, for all of LB&I’s Joint Committee cases except for the International Individual Compliance (IIC) organization. The instructions to request the mandatory Joint Committee review are at: JC Electronic Referral Reviews.

To initiate a Joint Committee review, the Joint Committee Electronic Referral form is required to be prepared and submitted by the examination team. The form can be accessed electronically on the IRS Knowledge Management website at: JC Electronic Referral Form .

A physical case review is conducted after the JC case has been forwarded from the examination team to Joint Committee Review. Joint Committee Review is responsible for statute controls, controlling the case on ERCS, and closing the case to Centralized Case Processing (CCP) upon clearance of the JC case from the JCT. See IRM 4.36.3.8 for submission procedures.

Joint Committee Review conducts a focused review of the case which includes the RAR, JC spreadsheet, and other supporting documentation. This JC review and the preparation of the report to JCT take place at the JC Specialist’s post-of-duty.

When the clearance letter or staff review memorandum is received from the JCT, Joint Committee Review will prepare and mail Letter 1574(P) indicating JCT clearance to inform the taxpayer and authorized representative, if applicable. See Exhibit 4.36.3-4 for case closing instructions to LB&I examination teams.

There must be sufficient documentation in the examiner’s case file to justify that an examination is not warranted. If the reason, economic or otherwise, for the overassessment is not readily available from the return or file, attempts should be made to obtain the necessary information from public sources (e.g., annual report, Security Exchange Commission’s filings, Moody’s, Standard and Poor’s, etc.) or directly from the taxpayer.

Examination’s request for retained copies of the taxpayer's tax returns, prior RARs, or information otherwise available from public sources is within the confines of a survey action. If the taxpayer is contacted, the examination team should point out that the Service proposes to accept the return as filed; that such action is subject to review by the JCT; and that certain additional information is needed to properly prepare the report. See the IRS Knowledge Management website at: Joint Committee Forms for an example of a pro-forma survey contact letter and information document request for survey cases.

However, if examination makes an inspection of any portion of the taxpayer's books and records (except as provided in this section) or discusses any potential issues with the taxpayer, the return may not be surveyed under this procedure.

All returns will be surveyed using Form 1900, Income Tax Survey After Assignment. The survey form will fully explain the reasons for the survey and include references to pertinent portions of the examiner's case file.

Each year must be shown separately on the survey form. Entries for the tentative allowance column are from Form 1139 or Form 1045. Entries for the claim amount column are from Form 1120X or Form 1040X. The form requires both the examiner's and team manager's signature.

All pertinent years (the refund years and the source years i.e., NOL, credit, etc.) not currently being examined must be covered in the survey action, even though one or more of the refund years may have been previously closed either by survey or examination. Also, all prior examination reports pertaining to such years must be included in the case file.

Surveys of tax returns may be made on the basis of the taxpayer's retained copies. However, care must be taken to ensure that the tax shown on the copies agrees with current transcripts (no more than 30 days old at time of submission).

The documentation requirements of IRM 4.36.3.6 are applicable.

Form 3198 or other special handling form will be completed and marked "Mandatory Review" and "Joint Committee Case" .

Form 5351, Examination /Non-Examined Closings, will be signed by the manager and included in the case file.

Form 5344, Examination Closing Record, is required where there are unpaid survey claims (Form 1120X or 1040X).

The case file should contain a detailed explanation justifying the survey action. An explanation of the reason for the overassessment and prior audit history should also be included.

Form 5231, Joint Committee Case Check List, must be prepared.

If an inquiry from the JCT cannot be resolved without taxpayer contact, Joint Committee Review should contact the JCT Refund Counsel to discuss any problems that exist. All inquiries from JCT are Congressional Inquiries subject to disclosure rules.

If the Refund Counsel and the Service believe the requested information is critical, the taxpayer's returns will be examined only to the extent necessary to respond to the inquiry. The examination may take the form of a telephone call to the taxpayer, perhaps coupled with a letter of explanation to the taxpayer or representative, or limited in scope to an in-process examination of specific portions of the taxpayer's books and records that are relevant to respond to the inquiry. Therefore, survey procedures are no longer applicable and a RAR is required.

Absent formal instructions to the contrary, requests by the JCT for additional documentation in specific cases will not be considered precedents for similar documentation in other cases involving the same issue.

Restricted consents will not be used in Joint Committee cases since it would restrict the rights of the JCT to perform their oversight function.

The statute date of the carryback years should be updated on AIMS and ERCS with the correct alpha code when the regular statute has expired or is about to expire. See IRM Exhibit 25.6.23-3 for instructions on updating the statute.

For unpaid claims, replace the day field with AA. The month and year do not change.

When the claim or tentative allowance has already been paid, BB (NOL) and DD (credits) replace the day. The month and year will be changed to those of the earliest source year return.

The examination team is required to comply with IRM 25.6, Statute of Limitations.

Form 895, Notice of Statute Expiration, must be placed on the outside of the case folder on top of all other documents, whenever a statute will expire within 180 days.

For a Joint Committee electronic case review, the examination team retains the case files and closes the case to CCP. The examination team is responsible for maintaining the required statute controls.

For a Joint Committee physical case review, Joint Committee Review retains the case files and closes the case to CCP. Joint Committee Review will maintain statute controls under existing procedures throughout the review and reporting process. Occasionally, a case may need to be sent back to the examination group to close out to CCP.

A Form 5231, Joint Committee Case Checklist, must be completed by the examination team for each case. An RAR will be prepared for all examined cases, and will include all of the following:

Per IRM 4.10.8.14.3.3, Reports After a Tentative Refund or Credit, when there are tentative NOL carrybacks, the RAR should show the correct net operating loss deduction (NOLD) amount. If the NOLD is allowed in full, the entire NOLD would be shown as an adjustment. If the NOLD is not allowed, the adjustment would be zero. The taxable income should be before the NOL carryback. The total corrected tax liability should be shown as follows:

Closing agreements must not be executed on behalf of the Government until reviewed by the JCT. See IRM 4.36.4.7.

Except as explained below, if a case requires the execution of a closing agreement and must be reported to the JCT, the case files should be provided to Joint Committee Review with the closing agreement not executed on behalf of the IRS. Upon receipt of the clearance letter, the examination team will be responsible for execution of the closing agreement. The examination team will close the case to CCP after the closing agreement has been signed by the appropriate official.

In those situations where an issue is resolved early in the examination, such as Fast Track Settlement or Early Referral to Appeals, and it is known or likely that the case will require a report to the JCT, the examination team may request an advanced review of the closing agreement by the JCT prior to the case closing. If the examination team wishes to pursue this option, the examination team will prepare a cover memo and forward a copy of the closing agreement and any relevant supporting documents to Joint Committee Review (JCR). JCR will forward the documents to the JCT. After review by JCT, the agreement can be signed by the appropriate Service official. (See Exhibit 4.36.3-3.)

When the examination is still in process, there is a disclosure issue in sending a closing agreement to the JCT. The examination team will solicit written authorization from the taxpayer to provide the closing agreement to the JCT. If the taxpayer refuses, a redacted copy will be sent.

At the conclusion of a Compliance Assurance Process review, if it is determined that the filed tax return will result in a JC refund claim, JC procedures will apply. Closing agreements in these cases must be submitted to the JCT prior to being signed by the Service.

For a Full Acceptance return, once the post-filing review is complete, the Account Coordinator will prepare the necessary documents for submission to Joint Committee Review.

For a Partial Acceptance return, once all of the remaining issues have been fully resolved, the report will be sent to the JCT.

Additional information relative to required documentation for CAP cases is located on the LB&I Joint Committee Review website at Case Procedures for CAP Cases.

Form 4665, Report Transmittal, (also known as the transmittal letter or T-Letter) will explain the cause or causes of the overassessments. If the overassessments result from a net operating loss, the economic reason for such loss must be briefly explained.

Information concerning the financial history and changes in capital structure of corporations will be furnished in every case. This should include:

If an issue arises as to the proper carryback period of losses or credits of a newly acquired member of a consolidated group, the report will state whether the newly acquired corporation was organized by or for a preexisting member of the consolidated group.

Spreadsheets for regular tax and Alternative Minimum Tax (AMT) must be included with the case. Joint Committee spreadsheets can be found on the IRS Knowledge Management website at: Joint Committee Virtual Library, for individual, corporate, and life/non-life insurance groups.

Additional Joint Committee spreadsheets should be prepared if the taxpayer has credits carried from numerous years. Separate spreadsheets should also be prepared for foreign tax credits involving different categories or baskets.

The examination team must check the transcript against information in the case file to ensure that all deficiencies, overassessments, claims paid, and refunds or credits, including tentative allowances and abatements, are properly reflected in the tax computation for the RAR and JC spreadsheets.

Copies of Form 3115, Change of Accounting Method, and approval memorandum from Counsel will be included in the case file.

Upon completion of the examination, if the taxpayer is entitled to an IRC 6405(a) refund, and there are unagreed issues, the case may be a "minimum refund" case.

A minimum refund is an amount that the taxpayer is due to receive after offsetting any potential unagreed deficiency. The taxpayer would receive the net minimum refund amount regardless of the outcome of the unagreed issues.

A minimum refund may be processed before the case is sent to Appeals if:

If the minimum refund exceeds $2 million ($5 million for C corporations), and the taxpayer has indicated agreement with the examination team’s findings by signing Form 870, Joint Committee Review must report the refund to the JCT before releasing the unagreed issues to Appeals. The supplemental report will be made by the office that makes the final determination of the taxpayer’s liability (that includes agreed or unagreed issues) for the year(s) previously reported to the JCT.

Once JCT clearance is received on the minimum refund report, the examination team must process the minimum refund and ensure that the overassessment posts to the master file before the unagreed issues can be forwarded to Appeals. The case file must be clearly documented and verification included in the case file that the minimum refund has been issued to the taxpayer.

A minimum refund may also apply when there are unfinished flow-thru entity examinations. See IRM 4.36.4.11 for TEFRA and non-TEFRA flow-thru suspense procedures.

A case can be submitted to Joint Committee Review with tentative allowances from unexamined source years, if:

When an NOL, capital loss, or credit carryback is allowed subject to future examination of the subsequent year, the examination report, (Form 4549-A) should contain the following statement:
"The net operating loss (or capital loss or credit) carryback from the year ending XX/XX/XXXX, reflected herein, is subject to correction upon examination of the tax return from which it originated."

If, as a result of the examination, the tentative allowances are reduced below the jurisdictional amount, the examination team will notify Joint Committee Review in writing. Otherwise, these source years and their carrybacks will be submitted for review at the completion of their examination or survey.

If the current examination would not be a Joint Committee case but for those carrybacks, the case should not be submitted to Joint Committee Review for review until the examination action is completed on the subsequent source years.

The Service can issue a conditional refund in excess of $2 million ($5 million for C corporations) prior to the completion of the examination or survey action if:

This procedure is also applicable if the taxpayer files a claim after the due date to correct errors on its original return. An amended return filed before the due date does not require that a report be submitted to the JCT.

A Modified Expedite Refund Report will be prepared by Joint Committee Review and submitted to the JCT.

A Supplemental Report may be required at the completion of the examination.

See Exhibit 4.36.3-2 for the procedures to be followed.

The taxpayer is required to post a bond or other similar security for the amount of the refund as a condition for submitting a modified expedite refund report. The director of field operations (DFO) or area director is responsible for determining the sufficiency of collateral. Refer to IRC 7101, the regulations thereunder and IRM 5.6.1, Collateral Agreements and Security Type Collateral, for further guidance. At the discretion of the DFO or area director, an additional amount of bond or security may be required with respect to interest on the refund in the event all or part of the refund must be repaid. This amount should be measured by the reasonably anticipated time to complete the examination and the interest rate currently in effect under IRC 6621. The posting of the bond must be accomplished prior to the submission of the claim to Joint Committee Review. A copy of the security agreement signed by the taxpayer must accompany the modified expedite refund report. The security agreement will be executed on behalf of the IRS subsequent to the expiration of the 30-day period after the submission of the report. The refunds must not be released until Joint Committee Review notifies the examination team that the appropriate documents may now be executed and such action has been taken.

It is necessary to submit a copy of the executed security or collateral agreement with the modified expedite refund report. The agreement should reflect the amount of the proposed refund, plus previously assessed interest, if any, and estimated refund interest, if required. The agreement must be executed by the taxpayer prior to submission. Upon expiration of the 30-day period after submission of the report, the DFO or area director having jurisdiction over the case should execute the agreement on behalf of the IRS. Coordination with local counsel in the development of the security agreement is required.

Any security or collateral agreement needs to specify that in fully agreed cases the agreement will not terminate until the JCT determines (if required by law) that it has taken no exception to the results of the examination. See Exhibit 4.36.3-1 for a sample security agreement.

All LB&I business units will submit electronic referral reforms to the *LB&I Joint Committee Paperless mailbox. All groups, except for IIC, will keep their cases in status 10 or 12 during the entire JC review process and the JC specialist (JCS) will review the case electronically via email, IMS, or other electronic means. When the case clears Joint Committee, the specialist will email instructions and necessary document files to the examiner, and the groups will close the case through regular processing procedures.

When the exam group is ready for a case to be reviewed by a JCS, the JC Electronic Referral Form must be completed and emailed to *LB&I Joint Committee Paperless mailbox, (as noted on the link on the JC Electronic Referral Form). Examiners should use the JC netting spreadsheet (JC Netting Spreadsheet) to help determine the jurisdictional amount to ensure the case is subject to JC Review (JCR). Survey after assignment and examined agreed closed JC reviews must be requested via the JC paperless mailbox when all field work has been completed.

During the JCR process, the case will remain in ERCS status 10 (survey) or 12 (examined agreed) and the exam group will be responsible for the case and all related statutes.

An Aging Reason Code (ARC) 27, Awaiting Joint Committee Clearance, has been designated for these cases. This ARC indicates that all field work has been completed and the case is now in the JCR process. When the JC Electronic Referral Form is submitted to the JC paperless mailbox, the exam group must update ERCS to reflect ARC 27.

The revenue agent will receive an e-mail from JCR acknowledging receipt of the referral form after it’s been pre-screened. The JC manager will send an e-mail to the revenue agent, team manager and the assigned JCS when the referral is assigned. The e-mail will advise the revenue agent to add the JCS to the case in IMS.

The JCR will be conducted via documents obtained through IMS, email or other electronic submission. The revenue agent must place documents needed for the JCR in IMS as outlined in the Electronic Referral Form. If a document cannot be uploaded into IMS, it may be sent to the JCS in the most efficient manner possible (e-mail, mail, Skype, E-fax, or other means). Large documents not conducive to scanning may be mailed to the JCS. The JCS will contact the revenue agent to secure additional documents as needed. The JCS will input their time and attendance into IMS. The time to conduct the review will be charged to the case.

If the review cannot be completed due to technical, computational, or procedural errors, a Notice of Suspended Referral (NSR) Form will be sent to the revenue agent and team manager. The exam group must update ERCS to remove ARC 27 if a NSR is issued. When the errors have been corrected, the exam group should resubmit the NSR to the JC Paperless mailbox and update ERCS to reflect ARC 27.

Once the JCS has completed the review, the JCS will submit the case(s) to the JCT. When the JCS receives the clearance letter or staff review memorandum (SRM) from JCT, they will advise the revenue agent and team manager, prepare the appropriate letter for the revenue agent to submit to the taxpayer, and upload the JCR documents to IMS SAIN 022. The exam group will remove ARC 27 and then close the case to CCP by placing the following documents at the top of the case file in this order:

Any general JC questions should be submitted to the*LB&I Joint Committee Assistance mailbox if the examination has not yet been concluded or a JCS is not yet assigned to the case.

When the exam group is ready for a case to be reviewed by a JCS, LB&I IIC, SB/SE and TE/GE must complete the JC Electronic Referral Form and email it to the *LB&I Joint Committee Paperless mailbox. LBI IIC, SB/SE and TE/GE cases will be updated to status 21 and the groups will mail the physical case file directly to the assigned JCS as per email instructions from the JC team manager. The examiner will no longer mail the case to JCR in Chicago, IL.

Examiners should use the netting spreadsheet (JC Netting Spreadsheet) to help determine the jurisdictional amount to ensure the case is subject to JCR. Survey after assignment and examined agreed JC case reviews must be requested via the *LB&I Joint Committee Paperless mailbox when all field work has been completed.

The examiner will receive an e-mail from JCR acknowledging receipt of the referral form. The JC manager will send an e-mail to the examiner, team manager and JCS when the referral is assigned to a JCS. The e-mail will include instructions on mailing the case directly to the assigned JCS.

When the case is mailed to the JCS, ERCS should be updated to Status 21, In-transit to Technical Services with the Technical Services Code (TSC) 901, and all RGS records should be archived.

The JCS will update ERCS to Status 26 upon receipt of the case and it will remain in that status during the JCR process.

If the review cannot be completed due to technical, computational, or procedural errors, a Case Return Transmittal (CRT) form will be sent to the examiner and team manager. JCR will update ERCS to status 10 (survey) or status 12 (examined) and mail the case back to the examination group. Upon correction of the errors or if the case no longer needs a JC review, the examiner must resubmit the CRT to the *LB&I Joint Committee Paperless mailbox. On a case-by-case basis, the case file may be retained by the JCS while the errors are corrected.

Once the JCS has completed the review, the JCS will submit the case(s) to the JCT and send Letter 1573P to the taxpayer when the case is sent to JCT. When the JCS receives the clearance letter or SRM from the JCT, the JCS will issue Letter 1574P to the taxpayer, update ERCS to Status 51 and close the case to CCP.

To contact Joint Committee Review for any JC related questions, send an email to the Joint Committee Assistance mailbox at: *LB&I Joint Committee Assistance.

There are two types of inquiries from Joint Committee Review:

See IRM 4.36.4.2 for case return criteria,

If the examination team does not agree with the position of Joint Committee Review or the JCT regarding proposed changes to the RAR and the matter cannot be resolved on a mutually satisfactory basis, the dispute will be elevated.