Section 3. Technical Advice to Taxpayers and Examination Personnel

4.2.3 Technical Advice to Taxpayers and Examination Personnel

4.2.3.1 (10-01-2003)

Furnishing Advice to Taxpayers

1. Oral advice given to taxpayers should correctly reflect the position of the Service.

4.2.3.1.1 (10-01-2003)

Guidelines for Furnishing Advice

1. Employees who give advice and assistance to taxpayers will observe the following guidelines:

1. 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.
2. 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.

4.2.3.1.2 (10-01-2003)

Furnishing Advice on Filing Claims for Refund and Appeal Rights Questions

1. 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 Service's position and recite the law and regulations regarding the filing of a timely claim or an individual's 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 taxpayer's interest would have been protected and other similar assertions.

4.2.3.2 (10-01-2003)

Taxpayer's Request for Determination Letters

1. Determination letters will be issued by each director's 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.
2. Definitions:

1. 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.
2. 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.

4.2.3.2.1 (10-01-2003)

Determination Letters Issued

1. Directors issue determination letters in response to taxpayers' written requests on completed transactions that affect returns over which they have examination jurisdiction.
2. 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.

4.2.3.2.2 (10-01-2003)

Determination Letters Not Issued

1. Directors normally do not issue determination letters on the tax consequences of proposed transactions.
2. A Director will not issue a determination letter in response to any request if --

1. It appears that the taxpayer has directed a similar inquiry to Headquarters;
2. The same issue involving the same taxpayer or a related taxpayer is pending in a case in litigation or before an area office;
3. The determination letter is requested by an industry, trade association, or similar group; or
4. The request involves an industry-wide problem.

4.2.3.2.3 (10-01-2003)

Guidelines to Request a Determination Letter

1. 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.
2. Certain information is required in all requests for a determination letter:

1. Names, addresses, telephone numbers, and taxpayer identification numbers of all interested parties;
2. 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;
3. A description of the business reasons for the transaction; and
4. A detailed description of the transaction.
5. Copies of all contracts, wills, deeds, agreements, instruments, other documents, and foreign laws.

Internal Revenue Service

Attn: Manager, Office of Pre-Filing Services

Large and Mid-Size Business Division

Mint Building, 3rd Floor

801 9th Street N.W.

Washington, D.C. 20002-4503

4.2.3.2.4 (10-01-2003)

Employee Responsibilities

1. 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.

4.2.3.3 (10-01-2003)

Securing Advice for Compliance Personnel

1. Examination compliance personnel have various types of assistance that can be requested to assist them in performing their job duties.

4.2.3.3.1 (10-01-2003)

Assistance Available from Area Counsel

1. 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).

4.2.3.3.1.1 (10-01-2003)

Examples of Area Counsel Assistance

1. Examples of types of assistance that may be requested from Area Counsel through Technical Services (TS) include but are not limited to the following:

1. Meaning, enforceability, and effect of legal terms in a contract;
2. Application of State laws to the elements of a contract;
3. Information regarding applicable State statutes, which relate to corporate existence and the status of transferee assets;
4. Review of a case to ascertain favorable points, factual weaknesses, and/or adverse circumstances to the government's case in order to determine whether the Service's position on the issue would be fairly presented in court;
5. Evaluation of primary or secondary evidence in a case, which would be useful in litigation;
6. Documentation of evidence;
7. Review of proposed statutory notices of deficiency under the provisions of IRM 4.14; and
8. Advice related to the issuance and enforcement of summons per IRM 25.5.10.4.3.

4.2.3.3.1.2 (10-01-2003)

Informal Advice

1. 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.
2. 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.

4.2.3.3.1.3 (10-01-2003)

Procedures for Requesting Area Counsel Assistance

1. 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.
2. 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.
3. 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.

4.2.3.4 (10-01-2003)

Technical Advice Memorandum

1. 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.
2. 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 Service's position for a specific case. The examiner must follow the Technical Advice Memorandum in preparing the report and closing the case.
3. 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 Director's 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.
4. 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)
5. 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)

4.2.3.4.1 (10-01-2003)

Definition of Technical Advice

1. 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:

1. The examination of a taxpayer's return;
2. The consideration of a taxpayer's claim for refund or credit;
3. Any matter under examination pertaining to tax-exempt bonds or mortgage credit certificates; and
4. Any other matter involving a specific taxpayer under the jurisdiction of the territory manager.

4.2.3.4.2 (10-01-2003)