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8.4.3.10
(11-02-2007)
Appeal of U.S. Tax Court Decision
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A Tax Court decision on a tried case can be appealed by either the petitioner or the U.S. Government. Counsel holds tried
case files for 90 days after the Tax Court decision is issued. Guidance is provided for procedures to be followed if an appeal
is filed within that 90-day period.
8.4.3.10.1
(11-02-2007)
Assessment of Deficiency Determined by the U.S. Tax Court
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If the case goes to the Court of Appeals (Appellate Court), the deficiency determined by the U.S. Tax Court can be assessed
and collected unless the petitioner files an "appeal bond"
(also called a review bond) with the U.S. Tax Court. The appeal bond must be in an amount fixed by the Court on or before
the time the notice of appeal is filed. No assessment is made if the bond is filed.
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The recomputations for cases on remand are prepared by Appeals. See IRM Exhibits 8.4.1-1, 8.4.1-2, and 8.4.1-3.
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An appeal bond is not the same as the cash bond discussed in IRM 8.20.6. The appeal bond is an irrevocable, open-ended promise
by the taxpayer to pay the tax, additions to tax, and interest determined to be due. The taxpayer will provide security for
the bond, which is not posted to the taxpayer's account.
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The docket attorney from Counsel’s field office has the responsibility to ensure prompt assessment of the tax generally within
60 days after the decision of the Tax Court becomes final. Counsel will notify Appeals when the decision becomes final (after
the case is finished in the Court of Appeals and/or Supreme Court). See CCDM 35.9, Post Opinion Activities, CCDM 36.1, Guiding Principles for Appeals, and CCDM 36.2, Appeal/Certiorari Recommendations, for specific guidelines.
8.4.3.10.2
(11-02-2007)
Refund or Credit While Case is Pending
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The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) gives the federal courts jurisdiction to order
a refund of certain amounts while an appeal of a Tax Court decision is pending.
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If the Tax Court determines both an overpayment and a deficiency, the Service may refund or credit the uncontested portion
of the overpayment while the appeal is pending.
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If the Service does not refund or credit the uncontested portion to the overpayment, taxpayer may bring an action in Tax Court,
District Court, or the United States Court of Federal Claims to recover that amount.
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If Appeals receives a letter from Counsel directing that an uncontested overpayment should be refunded or credited to the
taxpayer, Appeals should manually process this credit or refund and retain the litigation freeze code on the taxpayer’s account
unless a bond was filed as outlined below.
8.4.3.10.3
(11-02-2007)
Appeal Filed by Petitioner, Bond Filed
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Counsel will notify APS if a petition was filed in Appeals Court and if a bond was filed. If a bond was filed, take the following
action:
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Enter action code APPEALED and the TODATE on the update case/returns screen. Offices that wish to further identify the case as an appealed Tax Court case may enter
a local action code and local to date.
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File the copy of the notification (Form 2237 or CATS transmittal) in the office file.
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Once the Counsel attorney receives notification that the decision has become final, he/she will notify Appeals and request
an assessment.
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The Counsel attorney will hand carry (or send via courier) the administrative file to Appeals, using Form 1734, Transmittal
Memorandum with an annotation, "Tax Court Case/Assessment must be made before [date]."
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The PTM is responsible for ensuring that APS requests the assessment.
8.4.3.10.4
(11-02-2007)
Appeal Filed by Petitioner, No Bond Filed
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If the petitioner files a notice of appeal but does not file a bond, the tax must be assessed. Assessment should be made even
if the tax is paid.
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The attorney will contact the PTM and hand carry (or send via courier) the administrative file using Form 1734, Transmittal
Memorandum, noting, "Appealed Tax Court Case/Assessment must be made."
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APS is responsible for preparing Form 5403, Appeals Closing Record, and processing a partial assessment of the tax. (See IRM
8.20.6.4 for preparation of Form 5403.)
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The earliest assessment statute is 60 days after the Tax Court decision becomes final. The Tax Court decision becomes final
after the Appeals Court case (or Supreme Court case) has been completed. Therefore, a quick assessment is not necessary unless
notification has been received that the Tax Court decision has become final (the IRC 6213(a) paragraph will not be on this
decision so there is no agreement date).
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After the Form 5403 is prepared and the statute is computed, process the administrative file as follows:
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Verify that the amount of deficiency and/or penalty reflected in the decision agrees with the amounts in Item 12 of Form 5403.
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Forward a copy of the first page of the return, together with Form 5403, to APS for an interim assessment.
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If it is a master file return, prepare Form 3177 or 3177–A, Notice of Action for Entry on Master File, with TC 521 Closing
Code 72 (which will reverse the TC 520 closing code 72 and initiate collection activity.) Process Form 3177 using CC REQ77/FRM77.
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Enter action code INTERIM and the date sent to APS for assessment (TODATE) on the update case/returns screen.
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When verification is received enter the date in the FROMDATE on the update case/returns screen.
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Send the administrative file and verification of the assessment (transcript with posted assessment – not a pending assessment)
back to Counsel for the taxpayer’s appeal. Note on the transmittal the verification of the assessment is attached and needs
to be forwarded to Assistant Chief Counsel. Enter action code APPEALED and the TODATE on the update case/returns screen. On the returns screen, change the statute code from DOCKT to ASESD. Offices that wish to further identify the case as an appealed tax court case can enter a LACTION and LTODATE.
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