Procedures for Referral of Docketed Tax Court Cases to Appeals Revised by IRS

The IRS has updated and revised the procedures for the use of Appeals for cases that are docketed before the Tax Court in Revenue Procedure 2016-22, revising Revenue Procedure 87-24.

As most practitioners are aware, cases where the taxpayer files a challenge to the IRS’s proposed assessment with the Tax Court are often referred back to Appeals in an attempt to resolve the matter without a need to go to Tax Court.

The Revenue Procedure provides that the Chief Counsel’s office will generally refer docketed cases that aren’t specifically excluded from such consideration in Sections 3 and 4 of this Procedure to Appeals unless:

·      Appeals issued the notice of deficiency or made the determination that is the basis of the Tax Court’s jurisdiction or

·      The taxpayer notifies Counsel that the taxpayer wants to forego settlement consideration by Appeals.

Specifically excluded for consideration are any cases or issues that have been designated for litigation by the Chief Counsel’s office or, in limited cases, if the Counsel’s office determines that a referral is not in the “interest of sound tax administration.”  As as example of the latter, the Procedure offers:

For example, Counsel may decide not to refer a docketed case to Appeals in cases involving a significant issue common to other cases in litigation for which it is important that the IRS maintain a consistent position or in cases related to a case over which the Department of Justice has jurisdiction.

As well cases will not be referred if:

·      The case was docketed under:

o   §6015(e)(1)(A)(i)(II) (Innocent spouse cases filed with the Tax Court under the “6 month” filing option)

o   §6110 (General requirement for return, statement or list)

o   §§6320 and 6330 (Liens and Levies)

o   §7428 (Declaratory judgments for status and classification of certain exempt organizations)

o   §7476 (Declaratory judgments related to certain retirement plans)

o   §7477 (Declaratory judgments related to the value of certain gifts)

o   §7478 (Declaratory judgments related to the status of certain government obligations)

o   §7479 (Declaratory judgments related to the eligibility of an estate for §6166 installment payments)

o   §7623 (Expenses of detection of underpayment and fraud, etc.)

·      Innocent spouse cases where the issue is first raised in the Tax Court petition

The procedure provides for time frames for assignment of cases to Appeals by Counsel, as well as when the case will be returned to Appeals.  The procedure notes that when a docketed case if forwarded to Appeals, Appeals has the sole authority to resolve the case until it is returned to Counsel.

The ruling also notes:

Notwithstanding any other provision in this revenue procedure, any docketed case may be transferred from Counsel to Appeals or from Appeals to Counsel by agreement between Appeals and Counsel. This authority will be used when such transfer may promote a more efficient disposition of the case.