IRS Review and Concurrence Procedures

8.7.3.4  (11-06-2008)
Review and Concurrence Procedures

  1. The review and concurrence requirement is effective at the time an issue is designated an ACI or Compliance issues a Coordinated Issue Paper (CIP) on a Compliance Coordinated Issue. The Technical Guidance ATM provides oversight regarding the review and concurrence determinations of the Technical Guidance Coordinator.

  2. Material involvement of the Appeals TGC, including review and concurrence, is also required for settlements by Appeals Officers on Fast-Track Settlement (FTS) and other alternative dispute resolution cases.

8.7.3.4.1  (11-06-2008)
Review and Concurrence - Technical Guidance Coordinator Responsibility

  1. When contacted by an AO/ATCL either through the referral process or other contact, the Technical Guidance Coordinator -

    1. Discusses the legal authority, pertinent facts, and nationwide impact of the issue;

    2. Gives the AO a copy of the Appeals Settlement Guidelines or Appeals Settlement Position, if approved;

    3. Becomes involved in the settlement negotiations on an as-needed basis;

    4. Avoids the "trade-off" settlement of a coordinated issue. If circumstances compel the trading of a coordinated issue with another issue in a multi-issue case for settlement purposes, the TGC's review and concurrence extends to the consideration of non-coordinated issues traded or settled as part of the settlement of the coordinated issue.

      Note:

      Appeals does not trade penalty issues. Settle the penalties on the merits and the hazards surrounding the penalties.

    5. Reviews the rough draft Appeals Case Memo (ACM) and gives oral approval if the settlement is acceptable;

    6. If the settlement is not acceptable, provides a written response (rebuttal) to the Appeals Officer. If agreement is not reached, the respective managers attempt to resolve the dispute. If the ATMs cannot resolve the dispute, the TGC refers it to the Appeals Area Director and the Director, Technical Guidance. If not resolved at the Area Director level, refers it to the Director, Technical Services for decision.

8.7.3.4.2  (04-20-2009)
Review and Concurrence - Appeals Officers Responsibility

  1. Upon initial review of a case, review the Lists of Compliance Coordinated Issues ( http://appeals.web.irs.gov/ispaci/ispcoord.htm) and Appeals Coordinated Issues ( http://appeals.web.irs.gov/ispaci/apcoordissues.htm) on the Appeals web site.

  2. Before scheduling the initial conference on the coordinated issue make a referral to Technical Guidance following the procedures contained in IRM 1.4.28.9 and IRM 8.2.1.6.

  3. Advise the taxpayer the issue is coordinated and any settlement of the issue requires the review and concurrence of the TGC.

  4. Forward a rough draft of the Appeals Case Memo (ACM) (and any related documents requested by the TGC such as copies of documents, RAR, protest, closing agreements, etc.) to the TGC, whether the TGC is a team member or not. The TGC may waive this requirement after discussing the issue with the AO.

  5. Obtain the TGC's tentative approval of the settlement proposal and/or settlement range before any settlement options are discussed with the taxpayer.

  6. Send the TGC a copy of the portion of the final ACM and Closing Agreement, if any, which discusses the coordinated issue.

  7. When closing the case, note on the Form 5402 that the TGC concurs with the proposed disposition of the coordinated issue.

  8. If the TGC does not concur with the proposed disposition of the coordinated issue, attach a copy of the TGC's memorandum (rebuttal) to the Appeals Case Memorandum. See IRM 8.7.3.4.1. for procedures on how to resolve the dispute.

  9. If the coordinated issue is designated for litigation in a specific case by the Office of Chief Counsel do not consider settlement of that issue in the designated case.

8.7.3.4.3  (12-11-2007)
Review and Concurrence of Coordinated Issues under Delegation Order 4-25 (revised)

  1. Delegation Order 4-25 allows designated Compliance managers to settle coordinated issues at the Compliance level when Appeals Settlement Guidelines or Appeals Settlement Positions (or settlement ranges) are approved by the Director, Technical Services.

  2. See IRM 1.2.43.6 for text of DO 4-25.

8.7.3.4.3.1  (11-06-2008)
Review and Concurrence of Coordinated Issues under Delegation Order 4-25, Part 1 (paragraphs 1-13) as effective March 11, 2005

  1. For settlements under paragraphs 1 - 13 of DO 4-25, Compliance managers must get the review and concurrence of both the Appeals Technical Guidance Coordinator and the Compliance Technical Advisor for the issue prior to discussing a settlement with the taxpayer. (See IRM 4.46.5.6, Delegation Order 4-25, Settlement Authority for Coordinated Issues, for a discussion of LMSB's procedures.) Paragraphs 1-13 of DO 4-25 apply to all operating divisions, including LMSB, SB/SE, TEGE and W&I.

  2. When the Compliance manager contacts the Appeals TGC, the TGC -

    1. Gives them the Appeals Settlement Guidelines and Appeals Settlement Position and any additional information which is helpful in formulating a settlement;

    2. Becomes involved in settlement negotiations with Compliance and the taxpayer, as needed;

    3. Keeps in contact with the Compliance manager and the Compliance Technical Advisor;

    4. Reviews the proposed settlement submitted by the Compliance manager (with Form 5701S) and any related Form 906, Closing Agreement and/or Form 870-AD , Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment, and supporting documentation before the Compliance manager discusses settlement ranges with the taxpayer. The Compliance manager submits a settlement memorandum which is similar to the Appeals Case Memo;

    5. Either concurs with the proposed settlement and conveys that concurrence or explains the reasons for non-concurrence with the proposed settlement. After providing the explanation, continues to work with the Case Manager in an attempt to reach a proposed settlement that is acceptable to both parties;

    6. Maintains activity records.

  3. When Compliance utilizes paragraphs 1-13 of Delegation Order 4-25 to settle an issue, in order to facilitate the capture and tracking of taxpayer and case information, Form 13970, Delegation Order 4-25: Appeals Review and Concurrence, is forwarded in electronic format to the Technical Guidance Coordinator by the Compliance manager. The Compliance manager completes sections I, II and III of the form and the Technical Guidance Coordinator completes the remainder.

8.7.3.4.3.2  (11-06-2008)
Review and Concurrence of Coordinated Issues under Delegation Order 4-25, paragraphs 14 - 26 as effective March 11, 2005

  1. For certain issues designated by the Chief, Appeals, Delegation Order 4-25 delegates authority to settle cases based on an Appeals Settlement Position or Appeals Settlement Guideline, without a case-by-case review and concurrence by Appeals. Paragraphs 14–26 of Delegation Order 4-25 apply to all operating divisions, including LMSB, SB/SE, TEGE and W&I. The preamble to paragraphs 14-26 provides:

    The following authorities relating to Settlement Offers, Closing Agreements and Settlement Agreements under Section 6224(c) apply only to specific coordinated issues designated by the Chief Appeals.

  2. For cases under the jurisdiction of Compliance the following procedures apply:

    1. Appeals and the Operating Division(s) work together to identify issues or categories of cases where the delegation of authority pursuant to DO 4-25 referenced above is in the best interest of the Service.

    2. The Chief, Appeals issues a memorandum to the appropriate Operating Division responsible for designating a specific issue or category of case which may be resolved using the previously cited provisions of DO 4-25. The Director, Appeals Technical Guidance ensures the issues or categories of cases designated for resolution under DO 4-25 have a champion for implementation and are listed on the Appeals web site in the Technical Guidance section.

    3. The appropriate Compliance Director appoints a management official to champion the implementation of DO 4-25. The champion assures information concerning the issue or category of case is listed on the appropriate Operating Division’s web site. Example: SBSE Abusive Transactions web site at http://abusiveshelter.web.irs.gov See IRM 1.2.43.6 for complete text of DO 4-25.

    4. The following Aging Reason Codes (ARC) are designated for use in identifying and tracking Compliance cases where DO 4-25 part 2 (paragraphs 14-26) is by Appeals:

      Reason Code Description
      80 An agreed case where the settlement is based on Appeals Settlement Guidance.
      81 An unagreed case where a settlement based on Appeals Settlement Guidance is proposed by the examiner but not settled.
      82 Either an agreed or unagreed case where a settlement based on Appeals Settlement Guidance is not offered to the taxpayer by the examiner.
      83 A case where settlement based on Appeals Settlement Guidance is offered and pending.

    5. The Compliance Technical Advisors (or comparable position) and the Appeals Technical Guidance Coordinator develop draft implementation procedures specific to the designated issue or category of case. These procedures are flexible and open to revision as needed, but include guidance on:

      • Who is exercising the delegated authority.

      • Form and availability of Appeals settlement guidance that is most useful for the examiners and managers. Appeals settlement guidance is only available to IRS personnel who have a need to know. See IRM 8.7.3.3.2. This document is not given to the taxpayer or their representatives.

      • Closing procedures including the use (as appropriate) of Form 870-AD, closing agreement IRM 866 and Form 906, standardized language explaining a settlement based on Appeals guidance, etc.

      • Responsibilities for tracking and reporting cases closed using DO 4-25.

      • Roles of Appeals Technical Guidance Coordinator, Technical Advisor(s) and managerial officials.

      • Wording, flow, and retention of Form 5701S.

      • Materials and instructions to post to issue web sites.

      • Plans to familiarize those Compliance employees who are examining, approving, or processing DO 4-25 cases with the procedures.

      • Once approved by the designated Operating Division and Appeals champions, procedures specific to an identified issue or category of case are disseminated to appropriate Operating Division management officials and examiners, and made readily accessible through audit guides, web sites, or other information sources normally maintained by the Technical Advisor. A key location for such dissemination of information is the Operating Divisions web site. For SB/SE Abusive Transaction the web site is http://abusiveshelter.web.irs.gov.

      • Director, Appeals Technical Guidance and the designated Operating Division champion design oversight procedures to assure (1) settlements are offered in accordance with the terms of the Appeals Settlement Position, Guidelines or other Guidance; (2) agreement forms (including Form 870-AD and Form 906) are properly prepared and executed (if standard language was developed for closing agreements, that it is, in fact, being used; and (3) taxpayers understand they are giving up rights to further appeals or file refund claims because settlements are based on litigating hazards and are final.

      • Oversight may take the form of open or closed case reviews. The specific procedures are determined in each issue and may vary based on the specific facts of each issue. Factors which impact the specific procedure include the terms of the settlement, complexity of the cases, number of cases, and the geographical location of cases and examiners.

      • Results of any reviews conducted are discussed and used to determine if any changes are warranted to the procedures or their application.

      • If it is determined the designation of an issue or category of case is no longer appropriate, the Chief, Appeals notifies the Operating Division(s) in writing of the decision to discontinue the delegation of authority.

8.7.3.4.3.3  (11-06-2008)
Appeals Settlement Positions (ASPs) for Delegation Order 4-25

  1. On an as-needed basis as determined by the Director, Technical Guidance, the TGC utilizes the working draft of the ASG as an Appeals Settlement Position (ASP) for purposes of providing settlement guidance to appropriate IRS officials on an expedited basis until an ASG is finalized.

  2. An ASP, working draft ASG, may be prepared once Appeals obtains sufficient information from Compliance, Counsel and taxpayers regarding (1) the facts of the issue, (2) positions to be argued in the event of litigation, and (3) taxpayer arguments; and, an adequate consideration is given to the hazards of litigation to support the settlement position.

  3. The TGC and his/her ATM make a recommendation for using the working draft of the ASG as a basis for settling cases under DO 4-25.

  4. Coordinators submit draft ASPs through their ATM to the Director, Technical Guidance Office (or his/her designee, e.g., Technical Advisor/Program Analyst).

  5. The Director, Technical Guidance recommends the settlement for approval to the Director, Technical Services who is the approving official.

  6. All ASP drafts require the watermark "for official use only."

  7. Appeals Settlement Positions are available only to IRS personnel who have a need to know, such as -

    1. An Appeals Officer who has the coordinated issue in a specific case;

    2. A Compliance Case Manager who has the coordinated issue in a specific case; or

    3. The Compliance Technical Advisor who has to concur with the settlement at the Compliance level in order for the settlement to become final. See IRM 8.7.3.4.3. This contains a discussion of Delegation Order 4-25 (as revised).

    Distribute unredacted copies only to authorized persons (on a need to know basis). This document must be marked for official use only. Do not give the guidelines (drafts or final) to taxpayers or their representatives. Taxpayers may make a request for the final ASG under the Freedom of Information Act (FOIA) (see IRM 11.3.13) since portions of the guidelines are exempt from disclosure.

  8. The TGC continues to work on the Appeals Settlement Guidelines in accordance with IRM 8.7.3.3.1.

8.7.3.4.3.4  (11-01-2004)
Settlement Not Reached Under Delegation Order 4-25 (as revised)

  1. If the Compliance manager, Technical Advisor and the Appeals Technical Guidance Coordinator and his/her manager cannot agree on an acceptable settlement, the matter is elevated to a higher level of management: The following are examples:

    • Appeals Technical Guidance Coordinator, through his/her ATM, to the Director, Technical Guidance

    • Compliance Manager to Territory Manager

    • SBSE Territory Manager to Area Director

    • Compliance Technical Advisor, through his/her manager, to Director, Office of Pre-filing and Technical Services

  2. If agreement is not reached at the higher level of management, the case manager ceases settlement negotiations. Disagreements are not elevated further.

  3. If the taxpayer does not agree with the proposed settlement, the issue is unagreed and the full adjustment (unsettled position) is closed to Appeals if protested or included in the statutory notice of deficiency. Compliance must ensure both the Form 5701 and Form 5701S are in the case file when it is submitted to Appeals.

8.7.3.4.3.5  (11-06-2008)
Tracking of Information for Issues Settled under Delegation Order 4-25

  1. TGCs record time devoted to review and concurrence activities as well as a count of the number of cases settled by Compliance under these provisions.

  2. Form 13970, Delegation Order 4-25: Appeals Review and Concurrence, is used to capture taxpayer and case information to facilitate tracking.

  3. When a TGC is notified of a proposed DO 4-25 settlement requiring review and concurrence, the TGC forwards the form electronically to Compliance for completion of sections I, II, and III. Compliance returns the form electronically to the TGC.

  4. Once all documents necessary for the review and concurrence process are received from Compliance, the TGC reviews sections I - III of the form and reconciles them to the other case documents received; completes section IV, and electronically forwards the form to the Appeals Processing Team Manager (PTM) of his or her local/Area APS unit.

    1. ACDS feature code D5 applies to all cases received for review and concurrence. Feature code TS also applies if the issue or case is coordinated as part of the tax shelter program.

    2. Type of case for ACDS purposes is one of the following: EP, EO, EMPL, ES, EX, G, I, TEFRA, TEFRAI, TEFRAP. Seek guidance from the local/Area PTM if the type of case is unclear.

  5. APS establishes the case on ACDS and assigns the WUNO to the Coordinator whose name appears in section IV.

  6. Jurisdiction of the case and responsibility for statutes of limitations remain with Compliance during the review and concurrence process.

  7. The TGC charges review and concurrence time to the case, and makes appropriate notes on the case activity record.

  8. DO 4-25 cases is not tracked on the CIRS data base.

  9. The TGC notifies Compliance whether or not the settlement is approved, following the provisions in IRM 8.7.3.4.3.

  10. If the TGC concurs with the Compliance proposed settlement:

    1. Closing code 14 is used.

    2. Revised dollar amounts for tax and penalty reflects the adjustment shown on the RAR. If the coordinated issue is the only issue in dispute, use the amounts of tax and penalty shown on the RAR. Otherwise, estimate the tax and penalty attributable to this issue using a marginal tax rate of 35% for corporate taxpayers and 39% for individual taxpayers, and the agreed upon penalty percentage.

    3. Proposed dollars for tax and penalty is the TGC’s estimate of the tax and penalty amounts had the Appeals settlement not been offered to the taxpayer. The estimates are Based on the marginal tax rates shown above and full penalty assertion if Compliance proposed any penalty.

    4. Estimates are used in order to avoid the need for multiple computations.

  11. If the TGC does not concur with the Compliance proposed settlement:

    1. Closing code 15 is used, but only after the procedures described in IRM 8.7.3.4 are completed.

    2. Revised dollar amounts for tax and penalty reflects the adjustment shown on the RAR. To determine the Revised tax dollars, use the same instructions shown above (when the TGC concurs with the Compliance proposed settlement). The Revised dollar amount of the penalty is computed using the Compliance proposed penalty percentage.

    3. Proposed dollars for tax and penalty are the same as the Revised dollar amounts.

  12. At the completion of the review and concurrence process, the TGC completes section V of the form and sends it to the PTM of his or her local/Area APS unit for closing. No managerial approval is required. The date the form is completed constitutes the closing date.

  13. Send copies of the case activity record and Form 5701S accompanies the form when it is sent to APS for closing. All documents are electronically sent to the local/Area Processing Team Manager.

  14. APS closes the case off ACDS using the information in section V of the form.

  15. APS also creates an office file that includes a copy of the form, the case activity record, and Form 5701S. Since the TGC is responsible for communicating the results of the review and concurrence process to Compliance, no case-related information or documents are forwarded by APS.

  16. Appropriate adjustments to Master File and/or non-Master File accounts for the taxpayer or related entities are made by Compliance and not by Appeals.

8.7.3.4.4  (12-11-2007)
Full Concession of a Coordinated Issue Contrary to Service Position

  1. In the case of an approved settlement of a coordinated Compliance or Appeals issue where the result is"Contrary to Service Position " and the settlement is a full concession without offsetting consideration, the procedures described in IRM 8.6.3.5.2 apply in accordance with the following.

  2. When preparing Form 4368, Transmittal to National Office Appeals follow these steps:

    1. Include in Section 3 a concurrence statement and signature line as follows –

      "The Appeals Technical Guidance Coordinator for [insert industry or specialty] concurs in the recommended disposition of the [insert issue]" .

      [insert name] , Appeals Technical Guidance Coordinator for [insert industry or specialty]

    2. After signing, the Coordinator sends the Form 4368 to the AO for his or her signature and mailing to the Chief, Appeals.

  3. If the approved settlement is at the Compliance level under Delegation Order 4-25 (as revised),

    1. Prepare Form 4368 and state in section 3 that the case "is in Compliance and that the Compliance manager is exercising his or her settlement authority under Delegation Order 4-25 " .

    2. Send Form 4368 to the Compliance manager (LMSB team manager or SBSE Territory manager or TE/GE group managers or team managers who signs it), attach a copy of the signed Form 5701S and the settlement memorandum to it, and mail it to the Chief, Appeals.

8.7.3.4.5  (11-06-2008)
Review and Concurrence of Coordinated Issues in Fast Track Settlement Cases

  1. To meet the two-pronged requirement that all decision-makers are available for the Fast Track Session and that CCI and ACI are subject to the review and concurrence of the Appeals Technical Guidance Coordinator, the Appeals Technical Guidance Coordinator normally participates in the Fast Track Session with the taxpayer and Compliance. Where the Appeals Technical Guidance Coordinator is unable to attend the Fast Track Session meeting, the Appeals Technical Guidance Coordinator is available by phone to discuss review and concurrence.

  2. If, for whatever reason, the Appeals Technical Guidance Coordinator is not part of the Fast Track Appeals Team, settlement of the CCI/ACI issue remains subject to the review and concurrence of the Appeals Technical Guidance Coordinator. Before executing a Fast Track Session Report that includes CCI/ACI issues, the Appeals Officer obtains the concurrence of the Appeals Technical Guidance Coordinator.

  3. If there is a disagreement between the Appeals Technical Guidance Coordinator and the Appeals Officer/ATCL on how to settle the issue, resolution procedures follow IRM 8.7.3.4.


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