part4-19
- 4.2.3.1
Furnishing Advice to Taxpayers - 4.2.3.2
Taxpayers Request for Determination Letters - 4.2.3.3
Securing Advice for Compliance Personnel - 4.2.3.4
Technical Advice Memorandum - 4.2.3.5
Technical Expedited Advice Memorandum - 4.2.3.6
Technical Coordination Reports
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Oral advice given to taxpayers should correctly reflect the position
of the Service.
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Employees who give advice and assistance to taxpayers will observe the
following guidelines:-
Ensure that there is a clear understanding of the facts involved in the
transaction under discussion and that the applicable principles of law are
identified and explained so the taxpayer understands the facts and law as
discussed. -
Advice should not be given until there is a clear understanding of the
facts and applicable law. If the facts are not clear, clarify areas of doubt
and request additional information as needed. If the applicable law is not
clear, follow through with necessary research to ascertain the correct answer
before replying fully to the request.
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In furnishing advice to taxpayers on the filing of claims for refund
and answering questions on the appeal rights of taxpayers, the employee should
explain the Services position and recite the law and regulations regarding
the filing of a timely claim or an individuals appeal rights. No attempt
should be made to dissuade the taxpayer from making a claim. This will avoid
subsequent assertions that, if the Service had not
“refused
to accept”
the claim, the taxpayers interest would have been protected
and other similar assertions.
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Determination letters will be issued by each directors office in response
to taxpayer requests. Specific guidance related to the issuance/submission
of determination letters is found in the first revenue procedure issued each
year. This revenue procedure is updated annually, but may be modified or amplified
during the year. -
Definitions:
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Determination Letter: A
“determination letter”
is
a written statement issued by a director that applies the principles and precedents
previously announced by Headquarters to a specific set of facts. It is issued
only when a determination can be made based on clearly established rules in
the statute, a tax treaty, the regulations, or based on a conclusion in a
revenue ruling, opinion, or court decision published in the Internal Revenue
Bulletin that specifically answers the questions presented. -
Director: any reference to director or field office refers to the Director,
Field Operations, LMSB; the Area Director, Field Compliance, SB/SE; or the
Director, Compliance, W&I and their respective offices.
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Directors issue determination letters in response to taxpayers written
requests on completed transactions that affect returns over which they have
examination jurisdiction. -
A director may issue a determination letter on the replacement, even
though not yet made, of involuntarily converted property under IRC §
1033, if the taxpayer has filed an income tax return for the year in which
the property was involuntarily converted.
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Directors normally do not issue determination letters on the tax consequences
of proposed transactions. -
A Director will not issue a determination letter in response to any
request if —-
It appears that the taxpayer has directed a similar inquiry to Headquarters;
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The same issue involving the same taxpayer or a related taxpayer is pending
in a case in litigation or before an area office; -
The determination letter is requested by an industry, trade association,
or similar group; or -
The request involves an industry-wide problem.
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Under no circumstances will a director issue a determination letter
unless it is clearly shown that the request concerns a return that has been
filed or is required to be filed and over which the director has, or will
have, examination jurisdiction.
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The first revenue procedure issued each year (i.e., Rev. Proc. 2003-1)
contains specific information on requesting a determination letter. This section
will provide an overview of the information needed to request a determination
letter. -
Certain information is required in all requests for a determination
letter:-
Names, addresses, telephone numbers, and taxpayer identification numbers
of all interested parties; -
The annual accounting period, and the overall method of accounting for
maintaining the accounting books and the filing of federal income tax returns,
of all interested parties; -
A description of the business reasons for the transaction; and
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A detailed description of the transaction.
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Copies of all contracts, wills, deeds, agreements, instruments, other
documents, and foreign laws.
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All material facts and documents must be included in the taxpayers
initial request or in supplemental letters. These facts must be accompanied
by an analysis of their bearing on the issue or issues, specifying the provisions
that apply. -
The request must state whether, to the best of knowledge of both the
taxpayers and the taxpayers representative, the same issue is in an earlier
return of the taxpayer. -
The request must state whether the same or similar issue was previously
ruled on or requested, or is currently pending. -
The request must state whether it involves an interpretation of a substantive
provision of an income or estate tax treaty. -
The request must state if the taxpayer advocates a particular conclusion,
an explanation of the grounds for that conclusion and the relevant authorities
to support it must be included. -
The request should inform the Service about, and discuss the implications
of, any authority believed to be contrary to the position advanced by the
taxpayer. -
The request should identify any pending legislation that may affect
the proposed transaction. -
The request must be signed and dated by the taxpayer or the taxpayers
authorized representative. A stamped signature is not permitted. -
The request and any subsequent change submitted must be accompanied
by the following declaration:
“Under penalties of perjury, I
declare that I have examined this request, including accompanying documents,
and, to the best of my knowledge and belief, the request contains all the
relevant facts relating to the request, and such facts are true, correct,
and complete.”
The declaration must be signed and dated by the taxpayer,
not the taxpayers representative. A stamped signature is not permitted. -
A request for a determination letter must be accompanied by a statement
indicating the deletions desired. Because the text of the determination letter
is open to public inspection under IRC § 6110, the Service makes deletions
required by IRC § 6110(c) from the text before it is available for inspection.
If the deletions statement is not submitted with the request, the request
will be closed within 21 days. -
A request generally requires only copy to be submitted.
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SB/SE and W&I taxpayers should send their determination letter requests
to their local SB/SE office. Appendix D of the first revenue procedure issued
each year contains the addresses for the appropriates SB/SE offices. -
LMSB taxpayers should send their request for a determination letter
to the following address:Internal Revenue Service
Attn: Manager, Office of Pre-Filing Services
Large
and Mid-Size Business DivisionC:LM:PFT:PF
Mint Building, 3rd Floor
801 9th Street N.W.
Washington, D.C. 20002-4503
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Fees are required to be paid with determination letter requests. See
Appendix A of the first revenue procedure issued each year for the required
fee amount. Also see IRM 4.8.8.6, Involuntarily Converted Property.
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Compliance employees who handle the determination letter requests need
to ensure that a careful distinction is made between requests for determination
letters and general information requests. If it appears to be a request for
general information, treat it as such and do not apply these provisions. A
general information response should clearly state that it is providing general
information only.
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Examination compliance personnel have various types of assistance that
can be requested to assist them in performing their job duties.
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Area Counsel is the legal advisor to the Area Director. Generally, examiners
are entitled to advice or guidance for any technical or procedural matter
related to the tax liability of any taxpayer. Area Counsel may provide for
advice through consultation or by memorandum. Written advice is generally
first requested through Technical Services (Exam).
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Examples of types of assistance that may be requested from Area Counsel
through Technical Services (TS) include but are not limited to the following:-
Meaning, enforceability, and effect of legal terms in a contract;
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Application of State laws to the elements of a contract;
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Information regarding applicable State statutes, which relate to corporate
existence and the status of transferee assets; -
Review of a case to ascertain favorable points, factual weaknesses, and/or
adverse circumstances to the governments case in order to determine whether
the Services position on the issue would be fairly presented in court; -
Evaluation of primary or secondary evidence in a case, which would be
useful in litigation; -
Documentation of evidence;
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Review of proposed statutory notices of deficiency under the provisions
of IRM 4.14; and -
Advice related to the issuance and enforcement of summons per IRM 25.5.10.4.3.
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When a quick response is required, Technical Services (TS) will contact
Area Counsel informally for assistance. The subject matter must be limited
to relatively routine and simple concepts. This informal procedure should
not be used as a substitute for more formal advice, where such advice is appropriate. -
Area Counsel will limit their assistance to advice and recommendation.
This assistance will not give orders or directions. It may not be cited as
authority to effect a closing.
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The examiner should research the issue in question before seeking legal
advice. The case should then be discussed with the group manager. The group
manager should ensure that all the facts are fully developed and documented.
Either the examiner or the group manager should discuss the issue with Area
Technical Coordinator or directly with Area Counsel per procedures established
in the Area. -
Once the decision is made to request legal advice, the examiner should
prepare a formal memorandum requesting advice. The memorandum should fully
detail the facts and circumstances of the issue. Additionally, pertinent documents
should be included as attachments to the memorandum. The examiner must include
his/her contact number in the event Area Counsel needs additional information. -
The memorandum should be directed to the Area Counsel for the appropriate
operating division (i.e., SB/SE, LMSB, etc.) through the group manager and
the Area Technical Coordinator in Technical Services (TS). The Area Technical
Coordinator is responsible for screening oral and written requests to ensure
that they are properly directed.
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A Technical Advice Memorandum (TAM) is requested according to formal
procedures contained in the second revenue procedure (i.e., Rev. Proc. 2003-2)
issued each year. This revenue procedure is updated annually, but may be modified
or amplified during the year. -
A Technical Advice Memorandum is intended to establish the proper interpretation
and application of the Internal Revenue laws to the facts of a specific case.
A Technical Advice Memorandum is a final determination of the Services position
for a specific case. The examiner must follow the Technical Advice Memorandum
in preparing the report and closing the case. -
The Director determines whether to request technical advice on any issue
being considered. Once an issue is identified, all requests for technical
advice should be made as early as possible. The Directors decision to request
technical advice should not be affected when the issue is raised late. Responses
to technical advice frequently result in publication of revenue rulings and
revenue procedures which promote uniformity in the treatment of tax issues. -
The taxpayer may request technical advice on the grounds that a lack
of uniformity exists regarding an issue, or that the issue is so unusual or
complex that is warrants consideration by Headquarters. (See Policy Statement
P-4-82 in IRM 1.2.1.4.23) -
Each request for a Technical Advice Memorandum is forwarded through
the Area Technical Coordinator in Technical Services (Exam). The Technical
Coordinator reviews and processes the requests for technical advice. (See
IRM 4.8.8.14)
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Technical advice means advice or guidance in the form of a memorandum
furnished by Headquarters in response to any technical or procedural question
that develops during any proceeding on the interpretation and proper application
of tax law, tax treaties, regulations, revenue ruling, notices, or other precedents
published by the national office to a specific set of facts. Such proceedings
include:-
The examination of a taxpayers return;
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The consideration of a taxpayers claim for refund or credit;
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Any matter under examination pertaining to tax-exempt bonds or mortgage
credit certificates; and -
Any other matter involving a specific taxpayer under the jurisdiction
of the territory manager.
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The examiner needs to consider whether the circumstances warrant a request
for technical advice or do not warrant a request.
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Given a specific set of facts, technical advice should be requested
when:-
The law and regulations are not clear on the issue under consideration,
and there is no published precedent for determining the proper treatment of
the issue; -
There is a lack of uniformity regarding the disposition of an issue;
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A doubtful or contentious issue is involved in a number of cases;
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The issue is unusual or complex enough to warrant consideration by Headquarters;
or -
The director believes that securing technical advice from national office
would be in the best interest of the Service.
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The following are instances when a technical advice memorandum should
not be requested:-
Frivolous issues should not be forwarded to Headquarters. A
”
frivolous issue”
is one without basis in fact or law, or that espouses
a position which has been held by the courts to be frivolous or groundless.
See IRM 4.19.1.6, Frivolous Filers, or its successor. -
An identical issue of the same taxpayer that an area office is currently
considering. A director also may not request technical advice on an issue
if the same issue of the same taxpayer is in a docketed case for any taxable
year.
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The second revenue procedure issued each year contains specific information
on requesting a Technical Advice Memorandum. This section will provide an
overview of the information needed to request a Technical Advice Memorandum. -
Certain information is required in all requests for technical advice:
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A completed Form 4463, Request for Technical Advice, to include the signature
of the approving official. -
A clear and complete statement of the issue(s) in controversy to include
a statement of the facts. -
The Areas statement of its position about the issue(s), an analysis of
the applicable law, and the arguments in support of the position.
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If the taxpayer initiates the request for technical advice, the taxpayer
must submit a written statement that includes the facts, the issues, an explanation
of the taxpayers position, a discussion of relevant statutory provisions
and the reasons for requesting technical advice. The taxpayer must also submit
a copy of relevant foreign laws and certified English translations of documents
in a language other than English. -
If the Service initiates the request for technical advice, the taxpayer
is notified that technical advice is being requested and is given a copy of
the arguments being made to support the position of the Service. The taxpayer
is given ten calendar days to indicate, in writing, any factual disagreement.
Every effort should be made to reach agreement on the facts and specific points
at issue. Taxpayers are encouraged to submit a written statement with an explanation
of the taxpayers position and a discussion of the statutory provisions that
support the taxpayers position. -
If applicable, Power of Attorney information must be included. The preferred
form is Form 2848, Power of Attorney and Declaration of Representative. -
Because the text of the Technical Advice Memorandum is open to public
inspection under IRC § 6110, the Service makes deletions from the text
before it is available for inspection. To help the Service make the deletions
required by IRC § 6110(c), the taxpayer must provide a statement indicating
the deletions desired. Whether the request for technical advice is submitted
by the director or the taxpayer, if the taxpayer does not submit the deletions
statement, the national office will make the deletions that the Commissioner
of the Internal Revenue Service determines are required by IRC § 6110(c). -
The area office must submit three copies of the request for technical
advice with two copies designated for Headquarters. The area office must send
one copy of the request for technical advice to: (1) the technical advisor
if the request involves a designated issue or industry under the Office of
Pre-Filing and Technical Guidance, LMSB; and (2) the operating division counsel
that has jurisdiction of the taxpayers tax return. -
Requests for technical advice are mailed to the following address:
Internal Revenue Service
Attn: CC:PA:T
P. O. Box 7604
Ben Franklin Station
Washington, D. C.20044
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The technical advice request package must be assembled and organized
by the examiner. If the package includes a number of attachments, the examiner
should label/index the references. An original and at least three copies of
Form 4463 with applicable attachments must be submitted to the Area Technical
Coordinator. The Technical Coordinator will forward the appropriate copies
to national office.
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Two types of conferences may be held with the taxpayer.
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In an effort to promote expeditious processing of requests for technical
advice, Headquarters will generally meet with the area office representative
and the taxpayer prior to the time when the request for technical advice is
submitted to Headquarters. -
In cases involving very complex issues, the area is encouraged to request
pre-submission conferences. A request for pre-submission conferences should
be made only after the area determines that it likely will request technical
advice and the parties agree that a pre-submission conference should be requested. -
The purpose of the pre-submission conference is to facilitate agreement
between the area office and the taxpayer as to the scope of the request for
technical advice, the factual information to be included, any collateral issues
that should or should not be considered and any other information that should
be considered. -
Requests for pre-submission conferences must be submitted in writing
by the area office. The conferences generally are held in person in Headquarters.
The conference may be held via telephone if one or more of the parties are
unable to travel.
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When the examiner notifies the taxpayer that technical advice is being
requested, the taxpayer will also be told about the right to a conference
in Headquarters if an adverse decision is indicated. The taxpayer will be
asked if a conference is desired. -
If it appears the technical advice adverse to the taxpayer will be given
and a conference has been requested, the taxpayer will be notified of the
time and place of the conference. The notification of the taxpayer is by telephone,
if possible. -
The conference is held within 21 calendar days after the taxpayer is
contacted. An extension of the 21 days is granted only if the taxpayer justifies
it in writing and the associate or assistant chief counsel of the office assigned
to the case approves the extension request. There is no right to appeal the
denial of an extension request.
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Replies to requests for technical advice are addressed to the director
and are drafted in two parts. Each part identifies the taxpayer by name, address,
identification number, and year or years involved. -
The first part of the reply is a transmittal memorandum (Form M-6000).
In unusual cases, it serves as the means to give the area office advice that
need not be discussed with the taxpayer. -
The second part of the reply is the technical advice memorandum, which
contains the following:-
A statement of issues;
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The conclusions of Headquarters;
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A statement of the facts that pertain to the issues;
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A statement of pertinent law, tax treaties, regulations, revenue rulings,
and other precedents published in the Internal Revenue Bulletin, and court
decisions; and -
A discussion of the rationale supporting the conclusions reached by Headquarters.
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The conclusions give direct answers, when possible, to the specific
issues raised by the field office. Headquarters may reframe the issues to
be answered in the technical advice. The discussion of the issues will be
in enough detail so the field will understand the reasoning underlying the
conclusion reached.
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The Service has provided a program to streamline the issuance of Technical
Advice Memoranda (TAM). The new advice will be known as a technical expedited
advice memorandum (TEAM). The purpose of the TEAM is to expedite aspects of
the TAM process and to eliminate requirements (taxpayer and field agreement
on facts) that may delay or frustrate the process. -
A TEAM issued under Rev.Proc. 2003-2 will have the same force and legal
effect as a TAM requested under Rev. Proc. 2003-2. The Service will attempt
to issue TEAMs within 60 days of receipt and the field will have 30 days from
the issuance of the TEAM to request reconsideration. -
In general, the same procedures should be used for preparing a TEAM
request that are used for preparing a TAM request. -
All documents will be electronically transmitted by field counsel (followed
by hard copy upon request of the Associate Chief Counsel). The field and the
taxpayer are encouraged to provide electronic versions of a proposed TEAM
containing the taxpayers deletions and legends for the Associate Chief Counsels
use.
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Under the Technical Coordination Report Program, tax abuses, inequities,
and administrative problems in the interpretation and application of tax laws
and regulations are reported to Headquarters. It is essential that Headquarters
be made aware of the scope of tax arrangements that may have the effect of
legally circumventing the statute or regulations. Since examiners in the field
are often in the best position to identify these situations, the initial steps
toward the correction or elimination of the problems frequently originate
in the field. -
The Technical Coordination Report Program was established as a vehicle
for communicating these matters to Headquarters. The program is administered
by the Area Technical Coordinator, who is responsible for establishing and
maintaining an avenue of communication with Headquarterson problem areas encountered,
through the use of Technical Coordination Reports (TCR).
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Technical Coordination Reports need not be case related. They may result
from news items, publications, or other matters encountered in day to day
operations. The use of Technical Coordination Reports, both case and non-case
related, allows Headquarters to utilize the knowledge and experience of field
personnel in improving nationwide operating programs. -
Technical Coordination Reports can include one or more of the following
subject areas:-
Problems or practices that indicate abuses, inequities, or difficulties
in applying the administrative provisions of the Internal Revenue Code and
that may be corrected by reexamination of rules for interpretation and application
of tax law; -
Suggestions for policy statements or interpretative materials on broad
subjects if the guidance would assist in eliminating controversy or in promoting
national uniformity; or -
Suggestions for improvements in tax laws, regulations, tax forms and/or
instructions for tax forms.
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Technical Coordination Reports are classified into two categories: Those
containing significant items which merit the Commissioners attention, and
those which do not merit the Commissioners attention.
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Generally, it should be assumed the Commissioner wants to review matters
having one or more of the following characteristics:-
A large number of taxpayers are affected;
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A large amount of revenue or potential revenue is involved;
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The matter relates to a key policy of the president, the Secretary of
the Treasury, or the Congress; -
The matter is causing or may cause a significant amount of adverse publicity
or public controversy; or -
The matter is creating significant problems in the audit of returns, appeals,
or litigation.
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While the primary focus is on substantive problems, administrative problems
can be submitted under this category if they are of a significant nature.
Problems which might be alleviated by amendment of regulations rather than
legislative enactment may also be included.
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The following situations should be reported to Headquarters through
Technical Coordination Reports:-
Tax Abuses: This area covers all cases in which an apparently lawful method
or device has been used to escape all or a portion of the tax that would be
due. Generally, tax avoidance devices resort to lawful management or manipulation
of the form or timing of an income or loss producing transaction to take advantage
of some relief provision of the law, or to avoid the tax consequences that
would attach to the economic benefits realized. -
Inequities: This area involves situations where the application of some
particular provision of the law to the particular facts and circumstances
results in a substantial disadvantage with other taxpayers. -
Administrative Problems: this area covers situations where an administrative
requirement of the law seems to impose an unnecessary burden on the Service.
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Form 3558, Technical Coordination Report, is used for reporting both
those items that either warrant or do not warrant the Commissioners attention.
Form 3558 is completed in triplicate. -
If the Technical Coordination Report merits the Commissioners attention,
Form 3558 should be clearly marked
“COMMISSIONERS ATTENTION
”
at the top of the form. -
Reports should be directed to the appropriate office (in Headquarters)
as listed in Item 1 of Form 3558. -
The original and applicable copies of Form 3558 should be forwarded
through channels to the Area Technical Coordinator (TS) for review. Technical
coordinators are encouraged to add their comments or additional recommendations
even if they concur with the originator. They must provide comments or an
appropriate explanation if they do not concur with the recommendation. The
package is then processed to Headquarters. -
If it is concluded that a Technical Coordination Report designated
“Commissioners Attention”
does not merit the Commissioners
attention, it will be amended for forwarding to Headquarters office.
