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8.7.1.8
(11-06-2007)
Appeals Procedures on Refund Suits
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This section explains procedures for handling Refund Suits in various scenarios. It provides information on the following:
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When to issue the notice of claim disallowance.
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What to do if the case involves an application to reconsider a claim previously disallowed.
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What information should go in the Appeals Case Memorandum.
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What to do before issuing a statutory notice of deficiency on the suit years.
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What happens if the taxpayer files a petition with the Tax Court.
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How to handle related cases that are in Appeals for consideration.
8.7.1.8.1
(11-06-2007)
Refund Suits with No Deficiency in Appeals Cases
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After notice that a suit has been filed in an Appeals case involving no deficiency, issue the notice of claim disallowance
(if required) and prepare Form 5403, Appeals Closing Record (which identifies the case as a court case).
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Forward the return to Appeals Processing Section (APS) for processing. APS completes action and assigns a new DLN, then promptly
sends the administrative file, including the return, to Counsel.
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However, if the Campus maintains a follow-up control on the Refund Litigation file, forward the administrative file to the
Campus, referring in the transmittal to the Campus's Refund Litigation control number.
8.7.1.8.2
(11-06-2007)
Refund Suits with Disposition of Pending Claims
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If a claim has not previously been disallowed or Form 2297, Waiver of Statutory Notification of Claim Disallowance, was not
signed by the taxpayer, issue a statutory notice of claim disallowance.
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If the case involves an application for reconsideration of a claim previously acted upon, prepare Form 5403 to transmit the
return to APS and enter the date the notice of claim disallowance was issued or the date Form 2297 was filed. Finally, advise
the taxpayer that, because of filing suit, the case is under jurisdiction of the Department of Justice and Appeals will give
no further consideration to the case.
8.7.1.8.3
(11-06-2007)
Refund Suits with Deficiency in Appeals Cases
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If there are proposed deficiencies before Appeals for years involved in the suit, Form 5402 and accompanying ACM used to
forward the return to Appeals Processing Section must include the following:
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the amount of the proposed deficiency;
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the basis for determination;
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if possible, an expression of Appeals' views on whether a statutory notice of deficiency is issued; and
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date of expiration of statutory period of limitations.
8.7.1.8.4
(11-06-2007)
Refund Suits with Statutory Notice of Deficiency Issued
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When issuing a notice of deficiency on the suit years, consult with the Department of Justice through Counsel, for advice
and concurrence. If the Department of Justice concludes a notice of deficiency should be issued, they notify Counsel, who
notifies the appropriate Appeals office.
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If the notice of deficiency raises an issue under a specific Internal Revenue Code section or Tax Court Rule 142 that places
the burden of proof on the Government with respect to the issue, consider sending the proposed notice to Counsel for consideration.
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However, there is no need to consider sending the proposed notice to Counsel if the burden of proof issue involves only IRC
7491. Also notify Counsel if you have information the taxpayer will petition the Tax Court after receiving a notice of deficiency.
8.7.1.8.5
(11-06-2007)
Refund Suits When Petition is Filed with US Tax Court
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If the Tax Court acquires jurisdiction, process the case the same as other docketed cases. Chief Counsel notifies the Department
of Justice that a petition was filed. See IRM 8.4.1, Appeals Docketed Cases.
8.7.1.8.6
(11-06-2007)
Refund Suits on Related Appeals Cases
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Appeals may have pending cases related to issues in suit involving either the same or different taxpayers. Use Form 5402
to transmit the years in suit, indicating the related cases is pending before Appeals, the issue involved, and the relationship
with the years in suit. Also request prompt advice on disposition of the years in suit.
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If further consideration of related cases appears warranted, ask Counsel to determine whether the Department of Justice has
any objection to adjusting the nonsuit year(s). Before taking final action on any related case covering the nonsuit year(s),
ask Counsel to determine if the Department of Justice has any objection to the proposed disposition. If the Appeals case covering
the nonsuit year(s) is docketed in the Tax Court, Counsel (rather than Appeals) coordinates action with the Department of
Justice.
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For Department of Justice cases (or related issues or cases) involving closing agreements, see IRM 8.13.1, Closing Agreements.
8.7.1.8.7
(11-30-2001)
Settlements by Department of Justice (DOJ)
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This section covers the different settlements handled by the Department of Justice, specifically those where the settlement
affects cases pending in Appeals.
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If the Department of Justice receives a proposal of settlement in a case previously considered by Appeals that affects only
years in suit, Counsel does not refer the proposal to the Appeals office for comment unless circumstances warrant coordination.
8.7.1.8.7.1
(11-06-2007)
DOJ Settlements Affecting Appeals Cases
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If the proposal of settlement affects cases pending before Appeals, other than docketed cases, Counsel refers the proposal
directly to the Appeals office for comment. Comments furnished to Counsel must be limited to adequacy of the proposal. If
there is an issue in the Appeals case not present in the years in suit and not covered by the proposal of settlement, call
the issue to the attention of Counsel. Also, mention any other factor which might cause problems with acceptance of the proposal.
Do not enter into further settlement negotiations with the taxpayer without specific authorization.
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Delegation Order 155, as revised, delegates authority to Chief Counsel and the Associate Chief Counsels, to sign recommendation
letters to the DOJ concerning settlement offers for years or parties not in suit, but related to pending refund suits for
other years or parties.
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In exercising this authority, consider the advice of the Area Director of the Appeals office with jurisdiction over the nonsuit
years or parties.
8.7.1.8.7.2
(11-06-2007)
Disposition Based Upon Department of Justice Settlement
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When Counsel notifies Appeals a settlement is accepted by the Department of Justice, dispose of the case for the nonsuit year(s)
in the usual manner. Counsel disposes of the refund suit years. Resolve issues not covered in the settlement using normal
procedures. Avoid entering into any agreement before the settlement of the years in suit is effective.
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