IRS Revenue Procedure
2002-2

Code Sec. NONE

Status: Modified by 2002-30


<<FULL TEXT>>

26 CFR 601.105: Examination of returns and claims for refund, credit, or
abatement; determination of correct tax liability.


REV. PROC. 2002-2

TABLE OF CONTENTS

SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE PROCEDURE?

SECTION 2. WHAT IS TECHNICAL ADVICE?

SECTION 3. ON WHAT ISSUES MAY TECHNICAL ADVICE BE REQUESTED UNDER THIS
PROCEDURE?
.01 Issues under the jurisdiction of the Associate Chief Counsel
(Corporate), the Associate Chief Counsel (Financial Institutions &
Products), the Associate Chief Counsel (Income Tax & Accounting),
the Associate Chief Counsel (International), the Associate Chief
Counsel (Passthroughs & Special Industries), the Associate Chief
Counsel (Procedure and Administration), or the Division Counsel/
Associate Chief Counsel (Tax Exempt and Government Entities)
.02 Issues involving shipowners' protection and indemnity associations
and certain homeowners associations

SECTION 4. ON WHAT ISSUES MUST TECHNICAL ADVICE BE REQUESTED UNDER
DIFFERENT PROCEDURES?
.01 Alcohol, tobacco, and firearms taxes
.02 Tax exempt and government entities
.03 Farmers' cooperatives

SECTION 5. MAY TECHNICAL ADVICE BE REQUESTED UNDER SECTION 301.9100 DURING
THE COURSE OF AN EXAMINATION?
.01 A section 301.9100 request is a letter ruling request
.02 Period of limitation
.03 Address to send a section 301.9100 request
.04 If the return is being examined by a field office or considered by
an area office or a federal court, the taxpayer must notify the
national office and the national office will notify the director,
appeals officer, or government counsel

SECTION 6. WHO IS RESPONSIBLE FOR REQUESTING TECHNICAL ADVICE?
.01 Director or area director, appeals, determines whether to request
technical advice
.02 Taxpayer may ask that issue be referred for technical advice

SECTION 7. WHEN SHOULD TECHNICAL ADVICE BE REQUESTED?
.01 Uniformity of position lacking or unusual or complex issue
.02 When technical advice can be requested
.03 At the earliest possible stage

SECTION 8. WHEN SHOULD TECHNICAL ADVICE NOT BE REQUESTED?
.01 Technical advice will not be issued on frivolous issues
.02 A director may not request technical advice on an identical issue
of the same taxpayer that an area office is considering

SECTION 9. HOW ARE PRE-SUBMISSION CONFERENCES SCHEDULED?
.01 Pre-submission conference generally is permitted when the field or
area office likely will request technical advice and all parties
agree to request the conference
.02 Purpose of a pre-submission conference
.03 Request for a pre-submission conference must be submitted in
writing by the field or area office
.04 Branch will contact the field or area office to arrange the pre-
submission conference
.05 Pre-submission conference generally held in person
.06 Certain information required to be submitted to the national
office prior to the pre-submission conference
.07 Pre-submission conference may not be taped
.08 Discussion of substantive issues is not binding on the Service

SECTION 10. WHAT MUST BE INCLUDED IN THE REQUEST FOR TECHNICAL ADVICE?
.01 Statement of issues, facts, law, and arguments; submission of
relevant foreign laws and documents in a language other than
English; and statement regarding interpretation of an income or
estate tax treaty
.02 Statement identifying information to be deleted from public
inspection
.03 Transmittal Form 4463, Request for Technical Advice
.04 Number of copies of request to be submitted
.05 Power of attorney

SECTION 11. HOW ARE REQUESTS HANDLED?
.01 Taxpayer notified
.02 Conference offered
.03 If the taxpayer disagrees with the Service's statement of facts
.04 If the Service disagrees with the taxpayer's statement of facts
.05 If the interpretation of a foreign law or foreign document is a
material fact
.06 If the taxpayer has not submitted the required deletions statement
.07 Section 6104 of the Internal Revenue Code (Applications for
exemption and letter rulings issued to certain exempt
organizations open to public inspection)
.08 Criminal or civil fraud cases

SECTION 12. HOW DOES A TAXPAYER APPEAL A DIRECTOR'S OR AREA DIRECTOR,
APPEALS', DECISION NOT TO SEEK TECHNICAL ADVICE?
.01 Taxpayer notified of decision not to seek technical advice
.02 Taxpayer may appeal decision not to seek technical advice
.03 Territory manager or area director, appeals, determines whether
technical advice will be sought
.04 Territory manager's or area director, appeals', decision may be
reviewed but not appealed
.05 Special procedures applicable to appeals regarding frivolous
issues

SECTION 13. HOW ARE REQUESTS FOR TECHNICAL ADVICE WITHDRAWN?
.01 Taxpayer notified
.02 National office may provide views

SECTION 14. HOW ARE CONFERENCES SCHEDULED?
.01 If requested, offered to the taxpayer when adverse technical
advice proposed
.02 Normally held within 21 days of contact with the taxpayer
.03 21-day period will be extended if justified and approved
.04 Denial of extension cannot be appealed
.05 Entitled to one conference of right
.06 Conference may not be taped
.07 If requested and approved, conference will be delayed to address a
request for relief under section 7805(b)
.08 Service makes tentative recommendations
.09 Additional conferences may be offered
.10 Additional information submitted after the conference
.11 Under limited circumstances, may schedule a conference to be held
by telephone

SECTION 15. HOW IS STATUS OF REQUEST OBTAINED?
.01 Taxpayer or the taxpayer's representative may request status from
the field or area office
.02 National office will give status updates to the director or area
director, appeals

SECTION 16. HOW DOES THE NATIONAL OFFICE PREPARE THE TECHNICAL ADVICE
MEMORANDUM?
.01 Delegates authority to branch chiefs
.02 Determines whether request has been properly made
.03 Contacts the field or area office to discuss issues
.04 Informs the field or area office if any matters in the request
have been referred to another branch or office
.05 Informs the field or area office if additional information is
needed
.06 Informs the field or area office of the tentative conclusion
.07 If a tentative conclusion has not been reached, gives date
estimated for tentative conclusion
.08 Advises the field or area office if tentative conclusion is
changed
.09 Generally does not discuss the tentative conclusion with the
taxpayer
.10 Advises the field or area office of final conclusions
.11 If needed, requests additional information
.12 Requests taxpayer to send additional information to the national
office and a copy to the director or area director, appeals
.13 Informs the taxpayer when requested deletions will not be made
.14 Prepares reply in two parts
.15 Routes replies to appropriate office
.16 Sends a copy of reply to appropriate division counsel

SECTION 17. HOW DOES A FIELD OR AREA OFFICE USE THE TECHNICAL ADVICE?
.01 Generally applies advice in processing the taxpayer's case
.02 Discussion with the taxpayer
.03 Gives copy to the taxpayer
.04 Taxpayer may protest deletions not made
.05 When no copy is given to the taxpayer

SECTION 18. WHAT IS THE EFFECT OF TECHNICAL ADVICE?
.01 Applies only to the taxpayer for whom technical advice was
requested
.02 Usually applies retroactively
.03 Generally applied retroactively to modify or revoke prior
technical advice
.04 Applies to continuing action or series of actions until
specifically withdrawn, modified, or revoked
.05 Applies to continuing action or series of actions until material
facts change
.06 Does not apply retroactively under certain conditions

SECTION 19. HOW MAY RETROACTIVE EFFECT BE LIMITED?
.01 Taxpayer may request that retroactivity be limited
.02 Form of request to limit retroactivity -- continuing transaction
before examination of return
.03 Form of request to limit retroactivity -- in all other cases
.04 Taxpayer's right to a conference

SECTION 20. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 2001-2?

SECTION 21. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER
DOCUMENTS?

SECTION 22. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE?

DRAFTING INFORMATION

INDEX


SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE PROCEDURE?

This revenue procedure explains when and how the Associate Chief
Counsel (Corporate), the Associate Chief Counsel (Financial Institutions &
Products), the Associate Chief Counsel (Income Tax & Accounting), the
Associate Chief Counsel (International), the Associate Chief Counsel
(Passthroughs & Special Industries), the Associate Chief Counsel
(Procedure and Administration), and the Division Counsel/Associate Chief
Counsel (Tax Exempt and Government Entities) give technical advice to a
director or an area director, appeals. It also explains the rights a
taxpayer has when a director or an area director, appeals, requests
technical advice regarding a tax matter.


OPERATING DIVISIONS OF THE INTERNAL REVENUE SERVICE

The Internal Revenue Service includes four operating divisions that are
responsible for meeting the needs of the taxpayers they serve. These
operating divisions are:

(1) Large and Mid-Size Business Division (LMSB), which generally serves
corporations, S corporations, and partnerships with assets in excess of
$10 million;

(2) Small Business/Self-Employed Division (SB/SE), which generally
serves corporations, S corporations, and partnerships with assets less
than or equal to $10 million; estates and trusts; individuals filing an
individual federal income tax return with accompanying Schedule C (Profit
or Loss from Business (Sole Proprietorship)), Schedule E (Supplemental
Income and Loss), or Schedule F (Profit or Loss from Farming), or Form
2106 (Employee Business Expenses) or Form 2106-EZ (Unreimbursed Employee
Business Expenses); and individuals with international tax returns;

(3) Wage and Investment Division (W&I), which generally serves
individuals with wage and investment income only and with no international
tax returns, filing an individual federal income tax return without
accompanying Schedule C, E, or F, or Form 2106 or Form 2106-EZ; and

(4) Tax Exempt and Government Entities Division (TE/GE), which serves
three distinct taxpayer segments: employee plans, exempt organizations,
and government entities.


DESCRIPTION OF TERMS USED IN THIS REVENUE PROCEDURE

For purposes of this revenue procedure--

(1) 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, as appropriate, and their respective offices
or, when appropriate, the Director, International, LMSB, the Director,
Employee Plans Examinations, the Director, Exempt Organizations
Examinations, the Director, Federal, State & Local Governments, the
Director, Tax Exempt Bonds, or the Director, Indian Tribal Governments,
and their respective offices;

(2) any reference to area director, appeals, refers to the Area
Director, Appeals LMSB, or the Area Director, Appeals SB/SE-TE/GE, as
appropriate;

(3) any reference to territory manager refers to a territory manager,
LMSB, a territory manager, compliance, SB/SE, or the Director, Compliance,
W&I, as appropriate, and, includes, when appropriate, the Employee Plans
Examinations Area manager, the Exempt Organizations Examinations Area
manager, the Employee Plans Determinations manager, the Exempt
Organizations Determinations manager, the group manager, Federal, State &
Local Governments, the manager, field operations, Tax Exempt Bonds, or the
group manager, Indian Tribal Governments;

(4) any reference to area office refers to Appeals LMSB Area Office or
Appeals SB/SE-TE/GE Area Office, as appropriate;

(5) any reference to appeals officer includes, when appropriate, the
appeals team case leader;

(6) the term "taxpayer" includes all persons subject to any provision
of the Internal Revenue Code (including issuers of section 103
obligations) and, when appropriate, their representatives; and

(7) the term "national office" refers to the Office of Associate Chief
Counsel (Corporate), the Office of Associate Chief Counsel (Financial
Institutions & Products), the Office of Associate Chief Counsel (Income
Tax & Accounting), the Office of Associate Chief Counsel (International),
the Office of Associate Chief Counsel (Passthroughs & Special Industries),
the Office of Associate Chief Counsel (Procedure and Administration), or
the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and
Government Entities), as appropriate.


UPDATED ANNUALLY

The revenue procedure is updated annually as the second revenue
procedure of the year, but may be modified or amplified during the year.


SECTION 2. WHAT IS TECHNICAL ADVICE?

"Technical advice" means advice or guidance in the form of a memorandum
furnished by the national office upon the request of a director or an area
director, appeals, submitted in accordance with the provisions of this
revenue procedure, 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 rulings,
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 or in appeals 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 or the area director, appeals. They also include processing and
considering nondocketed cases in an area office but do not include cases
in which the issue in the case is in a docketed case for any taxable year.
If, however, a case is docketed for an estate tax issue of a taxpayer
while a request for technical advice on the same issue of the same
taxpayer is pending, the national office may issue the technical advice
memorandum if the appropriate appeals officer and government counsel
agree, by memorandum, to the issuance of the technical advice memorandum.

Technical advice helps Service personnel close cases and also helps
establish and maintain consistent holdings throughout the Service. A
director or an area director, appeals, may raise an issue in any tax
period, even though technical advice may have been asked and furnished for
the same or similar issue for another tax period.

Technical advice does not include legal advice furnished to the field
or area office in writing or orally, other than advice furnished pursuant
to this revenue procedure. In accordance with section 12.01 of this
revenue procedure, a taxpayer's request for referral of an issue to the
national office for technical advice will not be denied merely because the
national office has provided legal advice, other than advice furnished
pursuant to this revenue procedure, to the field or area office on the
matter.


SECTION 3. ON WHAT ISSUES MAY TECHNICAL ADVICE BE REQUESTED UNDER THIS
PROCEDURE?

ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL
(CORPORATE), THE ASSOCIATE CHIEF COUNSEL (FINANCIAL INSTITUTIONS &
PRODUCTS), THE ASSOCIATE CHIEF COUNSEL (INCOME TAX & ACCOUNTING), THE
ASSOCIATE CHIEF COUNSEL (INTERNATIONAL), THE ASSOCIATE CHIEF COUNSEL
(PASSTHROUGHS & SPECIAL INDUSTRIES), THE ASSOCIATE CHIEF COUNSEL
(PROCEDURE AND ADMINISTRATION), OR THE DIVISION COUNSEL/ASSOCIATE CHIEF
COUNSEL (TAX EXEMPT AND GOVERNMENT ENTITIES)

.01 The instructions of this revenue procedure apply to requests for
technical advice on any issue under the jurisdiction of the Associate
Chief Counsel (Corporate), the Associate Chief Counsel (Financial
Institutions & Products), the Associate Chief Counsel (Income Tax &
Accounting), the Associate Chief Counsel (International), the Associate
Chief Counsel (Passthroughs & Special Industries), or the Division
Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), and
on certain issues under the jurisdiction of the Associate Chief Counsel
(Procedure and Administration). See section 3 of Rev. Proc. 2002-1, this
Bulletin, for a description of the principal subject matters of
jurisdiction.


ISSUES INVOLVING SHIPOWNERS' PROTECTION AND INDEMNITY ASSOCIATIONS AND
CERTAIN HOMEOWNERS ASSOCIATIONS

.02 The jurisdiction of the Associate Chief Counsel (Passthroughs &
Special Industries) extends to issuing technical advice under section 526
(shipowners' protection and indemnity associations) and section 528
(certain homeowners associations).


SECTION 4. ON WHAT ISSUES MUST TECHNICAL ADVICE BE REQUESTED UNDER
DIFFERENT PROCEDURES?

ALCOHOL, TOBACCO, AND FIREARMS TAXES

.01 The procedures for obtaining technical advice specifically
applicable to federal alcohol, tobacco, and firearms taxes under subtitle
E of the Code are under the jurisdiction of the Bureau of Alcohol, Tobacco
and Firearms.


TAX EXEMPT AND GOVERNMENT ENTITIES

.02 The procedures for obtaining technical advice specifically on
issues under the jurisdiction of the Commissioner, Tax Exempt and
Government Entities Division, are found in Rev. Proc. 2002-5, this
Bulletin. However, the procedures under Rev. Proc. 2002-2 (this revenue
procedure) must be followed for obtaining technical advice on issues
pertaining to tax-exempt bonds, Indian tribal governments, federal, state,
or local governments, mortgage credit certificates, and deferred
compensation plans under section 457.


FARMERS' COOPERATIVES

.03 Even though the Associate Chief Counsel (Passthroughs & Special
Industries) has jurisdiction for issuing technical advice under section
521, the procedures under Rev. Proc. 2002-5 and Rev. Proc. 90-27, 1990-1
C.B. 514, as well as section 601.201(n) of the Statement of Procedural
Rules (26 C.F.R. section 601.201(n) (2001)), must be followed.


SECTION 5. MAY TECHNICAL ADVICE BE REQUESTED UNDER SECTION 301.9100 DURING
THE COURSE OF AN EXAMINATION?

A SECTION 301.9100 REQUEST IS A LETTER RULING REQUEST

.01 A request for an extension of time for making an election or other
application for relief under section 301.9100-3 of the Procedure and
Administration Regulations is a letter ruling request even if the request
is submitted after the examination of the taxpayer's return has begun or
after the issues in the return are being considered by an area office or a
federal court. Therefore, a section 301.9100 request should be submitted
pursuant to Rev. Proc. 2002-1 (including the payment of the applicable
user fee listed in Appendix A of Rev. Proc. 2002-1). See section 5.02 of
Rev. Proc. 2002-1.


PERIOD OF LIMITATION

.02 The running of any applicable period of limitation is not suspended
for the period during which a section 301.9100 request has been filed. See
section 301.9100-3(d)(2). If the period of limitation on assessment under
section 6501(a) for the taxable year in which an election should have been
made, or any taxable year that would have been affected by the election
had it been timely made, will expire before receipt of a section 301.9100
letter ruling, the Service ordinarily will not issue a section 301.9100
ruling. See section 301.9100-3(c)(1)(ii). Therefore, the taxpayer must
secure a consent under section 6501(c)(4) to extend the period of
limitation on assessment. Note that the filing of a claim for refund under
section 6511 does not extend the period of limitation on assessment. If
section 301.9100 relief is granted, the Service may require the taxpayer
to consent to an extension of the period of limitation on assessment. See
section 301.9100-3(d)(2).


ADDRESS TO SEND A SECTION 301.9100 REQUEST

.03 Pursuant to section 8.03(1) of Rev. Proc. 2002-1, a section
301.9100 request, together with the appropriate user fee, must be
submitted by the taxpayer to the Associate Chief Counsel (Corporate), the
Associate Chief Counsel (Financial Institutions & Products), the Associate
Chief Counsel (Income Tax & Accounting), the Associate Chief Counsel
(International), the Associate Chief Counsel (Passthroughs & Special
Industries), the Associate Chief Counsel (Procedure and Administration),
or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government
Entities), as appropriate. The package should be marked: RULING REQUEST
SUBMISSION. See Appendix A of Rev. Proc. 2002-1 for the appropriate user
fee.

(1) A section 301.9100 request should be sent to the following address:

Internal Revenue Service
Attn: CC:PA:T
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044


However, if a private delivery service is used, the address is:

Internal Revenue Service
Attn: CC:PA:T, Room 6561
1111 Constitution Avenue, N.W.
Washington, D.C. 20224


(2) A section 301.9100 request may also be hand delivered between the
hours of 8:00 a.m. and 4:00 p.m. to the courier's desk at the loading dock
entrance of 1111 Constitution Avenue, N.W., Washington, D.C. A receipt
will be given at the courier's desk. The package should be addressed to:

Courier's Desk
Internal Revenue Service
Attn: CC:PA:T, Room 6561
1111 Constitution Avenue, N.W.
Washington, D.C. 20224


IF THE RETURN IS BEING EXAMINED BY A FIELD OFFICE OR CONSIDERED BY AN
AREA OFFICE OR A FEDERAL COURT, THE TAXPAYER MUST NOTIFY THE NATIONAL
OFFICE AND THE NATIONAL OFFICE WILL NOTIFY THE DIRECTOR, APPEALS OFFICER,
OR GOVERNMENT COUNSEL

.04 If the taxpayer's return for the taxable year in which an election
should have been made or any taxable year that would have been affected by
the election had it been timely made is being examined by a field office
or considered by an area office or a federal court, the taxpayer must
notify the national office. See section 301.9100-3(e)(4)(i) and section
5.02(3) of Rev. Proc. 2002-1. The national office will notify the
appropriate director, appeals officer, or government counsel that a
section 301.9100 request has been submitted to the national office. The
examining officer, appeals officer, or government counsel is not
authorized to deny consideration of a section 301.9100 request. The letter
ruling will be mailed to the taxpayer and a copy will be sent to the
appropriate Service official in the operating division that has
examination jurisdiction of the taxpayer's tax return, the appeals
officer, or the government counsel.


SECTION 6. WHO IS RESPONSIBLE FOR REQUESTING TECHNICAL ADVICE?

DIRECTOR OR AREA DIRECTOR, APPEALS, DETERMINES WHETHER TO REQUEST
TECHNICAL ADVICE

.01 The director or area director, appeals, determines whether to
request technical advice on an issue being considered. Each request must
be submitted through channels and signed by a person who is authorized to
sign for the director or area director, appeals.


TAXPAYER MAY ASK THAT ISSUE BE REFERRED FOR TECHNICAL ADVICE

.02 While a case is under the jurisdiction of a director or area
director, appeals, a taxpayer may request in writing or orally to the
examining officer or appeals officer that an issue be referred to the
national office for technical advice.


SECTION 7. WHEN SHOULD TECHNICAL ADVICE BE REQUESTED?

UNIFORMITY OF POSITION LACKING OR UNUSUAL OR COMPLEX ISSUE

.01 Technical advice should be requested when there is a lack of
uniformity regarding the disposition of an issue or when an issue is
unusual or complex enough to warrant consideration by the national office.


WHEN TECHNICAL ADVICE CAN BE REQUESTED

.02 The provisions of this revenue procedure apply only to a case under
the jurisdiction of a director or an area director, appeals. Technical
advice may also be requested on issues considered in a prior appeals
disposition, not based on mutual concessions for the same tax period of
the same taxpayer, if the area office that had the case concurs in the
request.


AT THE EARLIEST POSSIBLE STAGE

.03 Once an issue is identified, all requests for technical advice
should be made at the earliest possible stage in any proceeding. The fact
that the issue is raised late in the examination or appeals process should
not influence, however, the field or area office's decision to request
technical advice.

<<END RULING>>



SECTION 8. WHEN SHOULD TECHNICAL ADVICE NOT BE REQUESTED?

TECHNICAL ADVICE WILL NOT BE ISSUED ON FRIVOLOUS ISSUES

.01 TECHNICAL ADVICE WILL NOT BE ISSUED ON FRIVOLOUS ISSUES. A referral
of technical advice on frivolous issues should not be forwarded to the
national office. For purposes of this revenue procedure, a "frivolous
issue" is one without basis in fact or law, or that espouses a position
which has been held by the courts to be frivolous or groundless. Examples
of frivolous or groundless issues include, but are not limited to:

(1) frivolous "constitutional" claims, such as claims that the
requirement to file tax returns and pay taxes constitutes an unreasonable
search barred by the Fourth Amendment; violates Fifth and Fourteenth
Amendment protections of due process; violates Thirteenth Amendment
protections against involuntary servitude; or is unenforceable because the
Sixteenth Amendment does not authorize nonapportioned direct taxes or was
never ratified;

(2) claims that income taxes are voluntary, that the term "income" is
not defined in the Internal Revenue Code, or that preparation and filing
of income tax returns violates the Paperwork Reduction Act;

(3) claims that tax may be imposed only on coins minted under a gold or
silver standard or that receipt of Federal Reserve Notes does not cause an
accretion to wealth;

(4) claims that a person is not taxable on income because he or she
falls within a class entitled to "reparation claims" or an extra-statutory
class of individuals exempt from tax, for example, "free-born"
individuals;

(5) claims that a taxpayer can refuse to pay taxes on the basis of
opposition to certain governmental expenditures;

(6) claims that taxes apply only to federal employees; only to
residents of Puerto Rico, Guam, the U.S. Virgin Islands, the District of
Columbia, or "federal enclaves"; or that the Internal Revenue Code imposes
taxes on U.S. citizens and residents only on income derived from foreign
based activities;

(7) claims that wages or personal service income are not "income," are
"nontaxable receipts," or "are a nontaxable exchange for labor;" or

(8) other claims the courts have characterized as frivolous or
groundless.


A DIRECTOR MAY NOT REQUEST TECHNICAL ADVICE ON AN IDENTICAL ISSUE OF
THE SAME TAXPAYER THAT AN AREA OFFICE IS CONSIDERING

.02 A director may not request technical advice on an issue if an area
office is currently considering an identical issue of the same taxpayer
(or of a related taxpayer within the meaning of section 267 or a member of
an affiliated group of which the taxpayer is also a member within the
meaning of section 1504). A case remains under the jurisdiction of the
director even though an area office has the identical issue under
consideration in the case of another taxpayer (not related within the
meaning of section 267 or section 1504) in an entirely different
transaction. With respect to the same taxpayer or the same transaction,
when the issue is under the jurisdiction of an area office and the
applicability of more than one kind of federal tax is dependent upon the
resolution of that issue, a director may not request technical advice on
the applicability of any of the taxes involved.

A director or an area director, appeals, also may not request technical
advice on an issue if the same issue of the same taxpayer (or of a related
taxpayer within the meaning of section 267 or a member of an affiliated
group of which the taxpayer is also a member within the meaning of section
1504) is in a docketed case for the same taxpayer (or for a related
taxpayer or a member of an affiliated group of which the taxpayer is also
a member) for any taxable year. If, however, a case is docketed for an
estate tax issue of a taxpayer while a request for technical advice on the
same issue of the same taxpayer is pending, the national office may issue
the technical advice memorandum if the appropriate appeals officer and
government counsel agree, by memorandum, to the issuance of the technical
advice memorandum.


SECTION 9. HOW ARE PRE-SUBMISSION CONFERENCES SCHEDULED?

PRE-SUBMISSION CONFERENCE GENERALLY IS PERMITTED WHEN THE FIELD OR AREA
OFFICE LIKELY WILL REQUEST TECHNICAL ADVICE AND ALL PARTIES AGREE TO
REQUEST THE CONFERENCE

.01 In an effort to promote expeditious processing of requests for
technical advice, the national office generally will meet with the field
or area office and the taxpayer prior to the time a request for technical
advice is submitted to the national office. In cases involving very
complex issues, the field or area office and the taxpayer are encouraged
to request a pre-submission conference. A request for a pre-submission
conference should be made, however, only after the field or area office
determines that it likely will request technical advice and only after the
field or area office and the taxpayer agree that a pre-submission
conference should be requested.


PURPOSE OF A PRE-SUBMISSION CONFERENCE

.02 A pre-submission conference is intended to facilitate agreement
between the parties as to the appropriate scope of the request for
technical advice, the factual information to be included in the request
for technical advice, any collateral issues that either should or should
not be included in the request for technical advice, and any other
substantive or procedural considerations that will allow the national
office to provide the parties with technical advice as expeditiously as
possible.

A pre-submission conference is not intended to create an alternative
procedure for determining the merits of the substantive positions
advocated by the field or area office or by the taxpayer. The conference
is intended only to facilitate the overall technical advice process.


REQUEST FOR A PRE-SUBMISSION CONFERENCE MUST BE SUBMITTED IN WRITING BY
THE FIELD OR AREA OFFICE

.03 A request for a pre-submission conference must be submitted in
writing by the field or area office. The request should identify the
associate or assistant chief counsel office, as appropriate, expected to
have jurisdiction over the request for technical advice. The request
should include a brief explanation of the primary issue so that an
assignment to the appropriate branch can be made. Coordination with
division counsel is strongly encouraged or, if the issue is under the
jurisdiction of the Division Counsel/Associate Chief Counsel (Tax Exempt
and Government Entities), coordination with that office's local counsel is
strongly encouraged. If the request involves a designated issue or
industry under the Office of Pre-Filing and Technical Guidance, LMSB,
coordination with the technical advisor is also strongly encouraged.

An original and one copy of the request should be submitted to the
appropriate address listed in section 10.03 of this revenue procedure.


BRANCH WILL CONTACT THE FIELD OR AREA OFFICE TO ARRANGE THE
PRE-SUBMISSION CONFERENCE

.04 Within 5 working days after it receives the request, the branch
assigned responsibility for conducting the pre-submission conference will
contact the field or area office to arrange a mutually convenient time for
the parties to meet in the national office. The conference generally
should be held within 30 calendar days after the field or area office is
contacted. The field or area office will be responsible for coordinating
with the taxpayer as well as with any other Service personnel whose
attendance the field or area office believes would be appropriate.


PRE-SUBMISSION CONFERENCE GENERALLY HELD IN PERSON

.05 Pre-submission conferences generally will be held in person in the
national office. However, if the field or area office personnel or the
taxpayer is unable to attend the conference, the conference may be
conducted by telephone.


CERTAIN INFORMATION REQUIRED TO BE SUBMITTED TO THE NATIONAL OFFICE
PRIOR TO THE PRE-SUBMISSION CONFERENCE

.06 At least 10 working days before the scheduled pre-submission
conference, the field or area office and the taxpayer should submit to the
national office a statement of the pertinent facts (including any facts in
dispute); a statement of the issues that the parties would like to
discuss; and any legal analysis, authorities, or background documents that
the parties believe would facilitate the national office's understanding
of the issues to be discussed at the conference. The legal analysis
provided for the pre-submission conference need not be as fully developed
as the analysis that ultimately will accompany the request for technical
advice, but it should allow the national office to become reasonably
informed regarding the subject matter of the conference prior to the
meeting. The field or area office or the taxpayer should ensure that the
national office receives a copy of any required power of attorney,
preferably on Form 2848, Power of Attorney and Declaration of
Representative.


PRE-SUBMISSION CONFERENCE MAY NOT BE TAPED

.07 Because pre-submission conference procedures are informal, no tape,
stenographic, or other verbatim recording of a conference may be made by
any party.


DISCUSSION OF SUBSTANTIVE ISSUES IS NOT BINDING ON THE SERVICE

.08 Any discussion of substantive issues at a pre-submission conference
is advisory only, is not binding on the Service in general or on the
Office of Chief Counsel in particular and cannot be relied upon as a basis
for obtaining retroactive relief under the provisions of section 7805(b).


SECTION 10. WHAT MUST BE INCLUDED IN THE REQUEST FOR TECHNICAL ADVICE?

STATEMENT OF ISSUES, FACTS, LAW, AND ARGUMENTS; SUBMISSION OF RELEVANT
FOREIGN LAWS AND DOCUMENTS IN A LANGUAGE OTHER THAN ENGLISH; AND STATEMENT
REGARDING INTERPRETATION OF AN INCOME OR ESTATE TAX TREATY

.01 Whether initiated by the taxpayer or by a field or area office, a
request for technical advice must include the facts and the issues for
which technical advice is requested; a written statement clearly stating
the applicable law and the arguments in support of both the Service's and
the taxpayer's positions on the issue or issues; the information required
in sections 10.01(4) and 10.01(5) of this revenue procedure with respect
to the submission of relevant foreign laws and documents in a language
other than English, if applicable; and the written statement required in
section 10.01(6) of this revenue procedure with respect to the
interpretation of a substantive provision of an income or estate tax
treaty, if applicable.

To facilitate prompt action on technical advice requests, the taxpayer
is encouraged to request that if the Service requests additional
information from the taxpayer, the Service does so by fax. The procedures
for requesting such document to be faxed are the same as those in section
16.11(1) of this revenue procedure.

(1) IF TAXPAYER INITIATES REQUEST FOR TECHNICAL ADVICE, TAXPAYER MUST
SUBMIT WRITTEN STATEMENT, COPY OF RELEVANT FOREIGN LAWS, AND CERTIFIED
ENGLISH TRANSLATIONS OF DOCUMENTS IN A LANGUAGE OTHER THAN ENGLISH. If the
taxpayer initiates the request for technical advice, the taxpayer must
submit to the examining officer or appeals officer, at the time the
taxpayer initiates the request:

(a) a written statement--

(i) stating the facts and the issues;

(ii) explaining the taxpayer's position;

(iii) discussing any relevant statutory provisions, tax treaties, court
decisions, regulations, revenue rulings, revenue procedures, notices, or
any other authority supporting the taxpayer's position; and

(iv) stating the reasons for requesting technical advice;


(b) the information required in sections 10.01(4) and 10.01(5) of this
revenue procedure with respect to the submission of a copy of relevant
foreign laws and certified English translations of documents in a language
other than English, if applicable; and

(c) the written statement required in section 10.01(6) of this revenue
procedure with respect to the interpretation of a substantive provision of
an income or estate tax treaty, if applicable.


If the examining officer or appeals officer determines that technical
advice will be requested, the taxpayer's statement, including the
information required in sections 10.01(4), 10.01(5), and 10.01(6) of this
revenue procedure, will be forwarded to the national office with the
request for technical advice.

(2) IF THE SERVICE INITIATES REQUEST FOR TECHNICAL ADVICE, TAXPAYER IS
ENCOURAGED TO SUBMIT WRITTEN STATEMENT, COPY OF RELEVANT FOREIGN LAWS, AND
CERTIFIED ENGLISH TRANSLATIONS OF DOCUMENTS IN A LANGUAGE OTHER THAN
ENGLISH. If the request for technical advice is initiated by a field or
area office, the taxpayer is encouraged to submit a written statement
explaining the taxpayer's position and discussing relevant statutory
provisions, court decisions, regulations, revenue rulings, revenue
procedures, notices or any other authority supporting the taxpayer's
position. If the taxpayer chooses to submit this statement and
information, the taxpayer and the field or area office should determine a
mutually agreed date for the submission of the taxpayer's statement and
information so that it will be forwarded to the national office with the
request for technical advice. Section 11.03 applies with respect to any
disagreements with the Service's statement of facts and issues.

If the request for technical advice is forwarded to the national office
without the taxpayer's statement and information and if the taxpayer
chooses to submit the statement and information, the taxpayer must submit
the statement and information to the national office within 21 calendar
days after the request for technical advice has been forwarded. The
taxpayer must also send a copy of the statement and information to the
director or the area director, appeals. The procedures for requesting an
extension of the 21-day period and receiving approval of such extension
are the same as those in section 16.11(3) of this revenue procedure. If
the national office does not receive the taxpayer's statement and
information within the 21-day period, plus extensions granted by the
associate or assistant chief counsel, as appropriate, the national office,
at its discretion, may base its advice on the facts provided by the field
or area office.

(3) STATEMENT OF AUTHORITIES CONTRARY TO TAXPAYER'S POSITION. Whether
the request for technical advice is initiated by the taxpayer or by a
field or area office, the taxpayer is also encouraged to comment on any
legislation (or pending legislation), tax treaties, regulations, revenue
rulings, revenue procedures, or court decisions contrary to the taxpayer's
position. If the taxpayer determines that there are no contrary
authorities, a statement to this effect would be helpful. If the taxpayer
does not furnish either contrary authorities or a statement that none
exists, the Service, in complex cases or those presenting difficult or
novel issues, may request submission of contrary authorities or a
statement that none exists.

(4) RELEVANT PARTS OF ALL FOREIGN LAWS. Whether initiated by the
taxpayer or by a field or area office, a request for technical advice, and
other statements forwarded to the national office with the request, must
include a copy of the relevant parts of all foreign laws, including
statutes, regulations, administrative pronouncements, and any other
relevant legal authority. The documents submitted must be in the official
language of the country involved and must be copied from an official
publication of the foreign government or another widely available,
generally accepted publication. If English is not the official language of
the country involved, the submission must also include a copy of an
English language version of the relevant parts of all foreign laws. This
translation must be: (a) from an official publication of the foreign
government or another widely available, generally accepted publication; or
(b) a certified English translation submitted in accordance with section
10.01(5) of this revenue procedure.

The taxpayer or the field or area office must identify the title and
date of publication, including updates, of any widely available, generally
accepted publication that it (or its qualified translator) uses as a
source for the relevant parts of the foreign law.

The taxpayer and the field or area office are encouraged to inform the
national office about and discuss the implications of any authority
believed to interpret the foreign law, such as pending legislation,
treaties, court decisions, notices, or administrative decisions. But see
section 11.05 of this revenue procedure, stating that the national office
may refuse to provide technical advice if the interpretation of a foreign
law or foreign document is a material fact.

(5) STANDARDS FOR ACCEPTABILITY OF SUBMISSIONS OF DOCUMENTS IN A
LANGUAGE OTHER THAN ENGLISH AND CERTIFIED ENGLISH TRANSLATIONS OF LAWS IN
A LANGUAGE OTHER THAN ENGLISH. Whether initiated by the taxpayer or by a
field or area office, a request for technical advice, and other statements
forwarded to the national office with the request, must include an
accurate and complete certified English translation of the relevant parts
of all contracts, wills, deeds, agreements, instruments, trust documents,
proposed disclaimers, or other documents in a language other than English.
If the taxpayer or the field or area office chooses to submit certified
English translations of foreign laws, those translations must be based on
an official publication of the foreign government or another widely
available, generally accepted publication. In either case, the translation
must be that of a qualified translator and must be attested to by the
translator. The attestation must contain: (a) a statement that the
translation submitted is a true and accurate translation of the foreign
language document or law; (b) a statement as to the attestant's
qualifications as a translator and as to that attestant's qualifications
and knowledge regarding income tax matters; and (c) the attestant's name
and address.

(6) STATEMENT REGARDING INTERPRETATION OF A SUBSTANTIVE PROVISION OF AN
INCOME OR ESTATE TAX TREATY. Whether initiated by the taxpayer or by a
field or area office, a request for technical advice involving the
interpretation of a substantive provision of an income or estate tax
treaty must include a written statement regarding whether--

(a) the tax authority of the treaty jurisdiction has issued a ruling on
the same or similar issue for the taxpayer, a related taxpayer (within the
meaning of section 267 or a member of an affiliated group of which the
taxpayer is also a member within the meaning of section 1504), or any
predecessor;

(b) the same or similar issue for the taxpayer, a related taxpayer, or
any predecessor is being examined, or has been settled, by the tax
authority of the treaty jurisdiction or is otherwise the subject of a
closing agreement in that jurisdiction; and

(c) the same or similar issue for the taxpayer, a related taxpayer, or
any predecessor is being considered by the competent authority of the
treaty jurisdiction.


STATEMENT IDENTIFYING INFORMATION TO BE DELETED FROM PUBLIC INSPECTION

.02 The text of a technical advice memorandum is open to public
inspection under section 6110(a). The Service deletes certain information
from the text before it is made available for inspection. To help the
Service make the deletions required by section 6110(c), the taxpayer must
provide a statement indicating the deletions desired ("deletions
statement"). If the taxpayer does not submit the deletions statement, the
Service will follow the procedures in section 11.06 of this revenue
procedure.

A taxpayer who wants only names, addresses, and identifying numbers
deleted should state this in the deletions statement. If the taxpayer
wants more information deleted, the deletions statement must be
accompanied by a copy of the technical advice request and supporting
documents on which the taxpayer should bracket the material to be deleted.
The deletions statement must indicate the statutory basis under section
6110(c) for each proposed deletion.

If the taxpayer decides to ask for additional deletions before the
technical advice memorandum is issued, additional deletions statements may
be submitted.

The deletions statement must not appear in the request for technical
advice but, instead, must be made in a separate document.

The deletions statement must be signed and dated by the taxpayer or the
taxpayer's authorized representative. A stamped signature is not
permitted.

The taxpayer should follow these same procedures to propose deletions
from any additional information submitted after the initial request for
technical advice. An additional deletions statement, however, is not
required with each submission of additional information if the taxpayer's
initial deletions statement requests that only names, addresses, and
identifying numbers are to be deleted and the taxpayer wants only the same
information deleted from the additional information.


TRANSMITTAL FORM 4463, REQUEST FOR TECHNICAL ADVICE

.03 The field or area office should use Form 4463, Request for
Technical Advice, for transmitting a request for technical advice to the
national office using the addresses listed below.


ADDRESS TO SEND REQUESTS FROM FIELD OFFICES

The field office should send the request to:

Internal Revenue Service
Attn: CC:PA:T
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044


ADDRESS TO SEND REQUESTS FROM AREA OFFICES

The area office may send the request to either:

Office of LMSB Operations C:AP:LMSB
Office of the National Chief Appeals C:AP
Internal Revenue Service
1111 Constitution Ave., N.W.
Washington, D.C. 20224; or

Office of LMSB Operations C:AP:LMSB
Office of the National Chief Appeals C:AP
Internal Revenue Service
Franklin Court Building--East Court
1099 14th Street, N.W.--4th Floor
Washington, D.C. 20005


NUMBER OF COPIES OF REQUEST TO BE SUBMITTED

.04 The field or area office must submit three copies of the request
for technical advice to the address in section 10.03 of this revenue
procedure with two copies being designated for the national office.

Also, the field or area office must send: (1) one copy of the request
for technical advice to the technical advisor if the request involves a
designated issue or industry under the Office of Pre-Filing and Technical
Guidance, LMSB; and (2) one copy of the request for technical advice to
the division counsel of the operating division that has jurisdiction of
the taxpayer's tax return.


POWER OF ATTORNEY

.05 Any authorized representative, as described in section 8.01(13) of
Rev. Proc. 2002-1, whether or not enrolled to practice, must comply with
Treasury Department Circular No. 230 (31 C.F.R. part 10 (2001)) and with
the conference and practice requirements of the Statement of Procedural
Rules (26 C.F.R. section 601.501-601.509 (2001)). It is preferred that
Form 2848, Power of Attorney and Declaration of Representative, be used
with regard to requests for technical advice under this revenue procedure.
An original, a copy, or a fax transmission of the power of attorney is
acceptable so long as its authenticity is not reasonably disputed.


SECTION 11. HOW ARE REQUESTS HANDLED?

TAXPAYER NOTIFIED

.01 Regardless of whether the taxpayer or the Service initiates the
request for technical advice, the field or area office: (1) will notify
the taxpayer that technical advice is being requested; and (2) at or
before the time the request is submitted to the national office, will give
to the taxpayer a copy of the arguments that are being provided to the
national office in support of the Service's position.

If the examining officer or appeals officer initiates the request for
technical advice, he or she will give to the taxpayer a copy of the
statement of the pertinent facts and the issues proposed for submission to
the national office.

This section 11.01 does not apply to a technical advice memorandum
described in section 11.08 of this revenue procedure.


CONFERENCE OFFERED

.02 When notifying the taxpayer that technical advice is being
requested, the examining officer or appeals officer will also tell the
taxpayer about the right to a conference in the national office if an
adverse decision is indicated, and will ask the taxpayer whether such a
conference is desired.



IF THE TAXPAYER DISAGREES WITH THE SERVICE'S STATEMENT OF FACTS

.03 If the examining officer or appeals officer initiates the request
for technical advice, the taxpayer has 10 calendar days after receiving
the statement of facts and specific issues to submit to that officer a
written statement specifying any disagreement on the facts and issues. A
taxpayer who needs more than 10 calendar days must justify in writing the
request for an extension of time. The extension is subject to the approval
of the territory manager or the area director, appeals.

After receiving the taxpayer's statement of the areas of disagreement,
every effort should be made to reach an agreement on the facts and the
specific points at issue before the matter is referred to the national
office. If an agreement cannot be reached, the field or area office will
notify the taxpayer in writing. Within 10 calendar days after receiving
the written notice, the taxpayer may submit a statement of the taxpayer's
understanding of the facts and the specific points at issue. A taxpayer
who needs more than 10 calendar days to prepare the statement of
understanding must justify in writing the request for an extension of
time. The extension is subject to the approval of the territory manager or
the area director, appeals. Both the statements of the taxpayer and the
field or area office will be forwarded to the national office with the
request for technical advice.

When the director or the area director, appeals, and the taxpayer
cannot agree on the material facts and the request for technical advice
does not involve the issue of whether a letter ruling should be modified
or revoked, the national office, at its discretion, may refuse to provide
technical advice. If the national office chooses to issue technical
advice, the national office will base its advice on the facts provided by
the field or area office.

If a request for technical advice involves the issue of whether a
letter ruling should be modified or revoked, the national office will
issue technical advice.


IF THE SERVICE DISAGREES WITH THE TAXPAYER'S STATEMENT OF FACTS

.04 If the taxpayer initiates the request for technical advice and the
taxpayer's statement of the facts and issues is not wholly acceptable to
the field or area office, the Service will notify the taxpayer in writing
of the areas of disagreement. The taxpayer has 10 calendar days after
receiving the written notice to reply to it. A taxpayer who needs more
than 10 calendar days must justify in writing the request for an extension
of time. The extension is subject to the approval of the territory manager
or the area director, appeals.

If an agreement cannot be reached, both the statements of the taxpayer
and the field or area office will be forwarded to the national office with
the request for technical advice. When the disagreement involves material
facts essential to the preliminary assessment of the case, the director or
the area director, appeals, may refuse to refer a taxpayer initiated
request for technical advice to the national office.

If the director or the area director, appeals, submits a case involving
a disagreement of the material facts, the national office, at its
discretion, may refuse to provide technical advice. If the national office
chooses to issue technical advice, the national office will base its
advice on the facts provided by the field or area office.


IF THE INTERPRETATION OF A FOREIGN LAW OR FOREIGN DOCUMENT IS A
MATERIAL FACT

.05 If the interpretation of a foreign law or foreign document is a
material fact, the national office, at its discretion, may refuse to
provide technical advice. This section 11.05 applies whether or not the
field or area office and the taxpayer dispute the interpretation of a
foreign law or foreign document. The interpretation of a foreign law or
foreign document means making a judgment about the import or effect of the
foreign law or document that goes beyond its plain meaning.


IF THE TAXPAYER HAS NOT SUBMITTED THE REQUIRED DELETIONS STATEMENT

.06 When the field or area office initiates the request for technical
advice, the taxpayer has 10 calendar days after receiving the statement of
facts and issues to be submitted to the national office to provide the
deletions statement required under section 6110(c). See section 10.02 of
this revenue procedure. If the taxpayer does not submit the deletions
statement, the director or the area director, appeals, will tell the
taxpayer that the statement is required.

When the taxpayer initiates the request for technical advice and does
not submit a deletions statement with the request, the director or the
area director, appeals, will ask the taxpayer to submit the statement. If
the director or the area director, appeals, does not receive the deletions
statement within 10 calendar days after asking the taxpayer for it, the
director or the area director, appeals, may decline to submit the request
for technical advice.

However, if the director or the area director, appeals, decides to
request technical advice, whether initiated by the field or area office or
by the taxpayer, in a case in which the taxpayer has not submitted the
deletions statement, the national office will make those deletions that
the Commissioner of Internal Revenue determines are required by section
6110(c).


SECTION 6104 OF THE INTERNAL REVENUE CODE (APPLICATIONS FOR EXEMPTION
AND LETTER RULINGS ISSUED TO CERTAIN EXEMPT ORGANIZATIONS OPEN TO PUBLIC
INSPECTION)

.07 The requirements for submitting statements and other materials or
proposed deletions in technical advice memorandums before public
inspection is allowed do not apply to requests for any documents to the
extent that section 6104 applies.


CRIMINAL OR CIVIL FRAUD CASES

.08 The provisions of this section (about referring issues upon the
taxpayer's request, telling the taxpayer about the referral of issues,
giving the taxpayer a copy of the arguments submitted, submitting proposed
deletions, and granting conferences in the national office) do not apply
to a technical advice memorandum described in section 6110(g)(5)(A) that
involves a matter that is the subject of or is otherwise closely related
to a criminal or civil fraud investigation, or a jeopardy or termination
assessment.

In these cases, a copy of the technical advice memorandum is given to
the taxpayer after all proceedings in the investigations or assessments
are complete, but before the Commissioner mails the notice of intention to
disclose the technical advice memorandum under section 6110(f)(1). The
taxpayer may then provide the statement of proposed deletions to the
national office.


SECTION 12. HOW DOES A TAXPAYER APPEAL A DIRECTOR'S OR AREA DIRECTOR,
APPEALS', DECISION NOT TO SEEK TECHNICAL ADVICE?

TAXPAYER NOTIFIED OF DECISION NOT TO SEEK TECHNICAL ADVICE

.01 If the examining officer or appeals officer concludes that a
taxpayer's request for referral of an issue to the national office for
technical advice does not warrant referral, the examining officer or
appeals officer will tell the taxpayer. A taxpayer's request for such a
referral will not be denied merely because the national office provided
legal advice, other than advice furnished pursuant to this revenue
procedure, to the field or area office on the matter.


TAXPAYER MAY APPEAL DECISION NOT TO SEEK TECHNICAL ADVICE

.02 The taxpayer may appeal the decision of the examining officer or
appeals officer not to request technical advice. To do so, the taxpayer
must submit to that officer, within 10 calendar days after being told of
the decision, a written statement of the facts, law, and arguments on the
issue and the reasons why the taxpayer believes the matter should be
referred to the national office for technical advice. A taxpayer who needs
more than 10 calendar days must justify in writing the request for an
extension of time. The extension is subject to the approval of the
territory manager or the area director, appeals.


TERRITORY MANAGER OR AREA DIRECTOR, APPEALS, DETERMINES WHETHER
TECHNICAL ADVICE WILL BE SOUGHT

.03 The examining officer or appeals officer submits the taxpayer's
statement through channels to the territory manager or the area director,
appeals, along with the examining officer's or appeals officer's statement
of why the issue should not be referred to the national office. The
territory manager or the area director, appeals, determines on the basis
of the statements whether technical advice will be requested.

If the territory manager or the area director, appeals, determines that
technical advice is not warranted and proposes to deny the request, the
taxpayer is told in writing about the determination. In the letter to the
taxpayer, the territory manager or the area director, appeals, states the
reasons for the proposed denial (except in unusual situations when doing
so would be prejudicial to the best interests of the Government). The
taxpayer has 10 calendar days after receiving the letter to notify the
territory manager or the area director, appeals, of agreement or
disagreement with the proposed denial.


TERRITORY MANAGER'S OR AREA DIRECTOR, APPEALS', DECISION MAY BE
REVIEWED BUT NOT APPEALED

.04 The taxpayer may not appeal the decision of the territory manager
or the area director, appeals, not to request technical advice from the
national office. However, if the taxpayer does not agree with the proposed
denial, all data on the issue for which technical advice has been sought,
including the taxpayer's written request and statements, will be submitted
to the Industry Director, LMSB; the Area Director, SB/SE; the Director,
Compliance, W&I; the Director, International, LMSB; the Director, Federal,
State & Local Governments; the Director, Tax Exempt Bonds; the Director,
Indian Tribal Governments; the Director, Appeals LMSB Operating Unit or
the Director, Appeals SBSE Operating Unit, as appropriate.

The Industry Director, LMSB; the Area Director, SB/SE; the Director,
Compliance, W&I; the Director, International, LMSB; the Director, Federal,
State & Local Governments; the Director, Tax Exempt Bonds; the Director,
Indian Tribal Governments; the Director, Appeals LMSB Operating Unit or
the Director, Appeals SBSE Operating Unit, as appropriate, will review the
proposed denial solely on the basis of the written record, and no
conference will be held with the taxpayer or the taxpayer's
representative. The Industry Director, LMSB; the Area Director, SB/SE; the
Director, Compliance, W&I; the Director, International, LMSB; the
Director, Federal, State & Local Governments; the Director, Tax Exempt
Bonds; the Director, Indian Tribal Governments; the Director, Appeals LMSB
Operating Unit or the Director, Appeals SBSE Operating Unit, as
appropriate, may consult with the national office, if necessary, and will
notify the field office or area office within 45 calendar days of
receiving all the data regarding the request for technical advice whether
the proposed denial is approved or disapproved. The field office or area
office will then notify the taxpayer.

While the matter is being reviewed, the field office or area office
suspends action on the issue (except when the delay would prejudice the
Government's interest).

The provisions of this revenue procedure in regard to review of the
proposed denial of a request for technical advice continue to be
applicable in those situations in which the authority normally exercised
by the director or the area director, appeals, has been delegated to
another official.


SPECIAL PROCEDURES APPLICABLE TO APPEALS REGARDING FRIVOLOUS ISSUES

.05 If the request for technical advice concerns a "frivolous issue,"
as described in section 8.01 of this revenue procedure, technical advice
will not be given, and the examining officer or appeals officer will deny
the taxpayer's request for referral. The taxpayer may appeal the decision
of the examining officer or appeals officer; however, if the territory
manager or the area director, appeals, determines that no technical advice
will be sought, an expedited review procedure will be followed.

This expedited review procedure will consist of the following:

(1) the territory manager or the area director, appeals, will inform
the appropriate official described in section 12.04 of this revenue
procedure (the Industry Director, LMSB; the Area Director, SB/SE; the
Director, Compliance, W&I; the Director, International, LMSB; the
Director, Federal, State, and Local Governments; the Director, Tax Exempt
Bonds; the Director, Indian Tribal Governments; the Director, Appeals LMSB
Operating Unit or the Director, Appeals SBSE Operating Unit) of the
request for review and the basis for the denial, but will not forward the
taxpayer's written request and statements, unless requested to do so by
the official;

(2) the field office or area office will not suspend action on the
issue;

(3) within 15 days, the official will notify the territory manager or
area director, appeals, whether the proposed denial is approved or
disapproved. The official may also determine that the expedited process is
not warranted and request all of the information supplied by the taxpayer
and allow suspension of action on the item while the denial is reviewed;
and

(4) the field office or area office will then notify the taxpayer of
the result of the review of the denial.


SECTION 13. HOW ARE REQUESTS FOR TECHNICAL ADVICE WITHDRAWN?

TAXPAYER NOTIFIED

.01 Once a request for technical advice has been sent to the national
office, only a director or an area director, appeals, may withdraw a
request for technical advice. He or she may ask to withdraw a request at
any time before the responding transmittal memorandum for the technical
advice is signed.

The director or the area director, appeals, as appropriate, must notify
the taxpayer in writing of an intent to withdraw the request for technical
advice except--

(1) when the period of limitation on assessment is about to expire and
the taxpayer has declined to sign a consent to extend the period; or

(2) when the notification would be prejudicial to the best interests of
the Government.


If the taxpayer does not agree that the request for technical advice
should be withdrawn, the procedures in section 12 of this revenue
procedure must be followed.


NATIONAL OFFICE MAY PROVIDE VIEWS

.02 When a request for technical advice is withdrawn, the national
office may send its views to the director or the area director, appeals,
when acknowledging the withdrawal request. This memorandum may constitute
Chief Counsel Advice, as defined in section 6110(j), subject to disclosure
under section 6110. In an appeals case, acknowledgment of the withdrawal
request should be sent to the appropriate area office, through the Chief,
Appeals, C:AP:LMSB. In appropriate cases, the subject matter may be
published as a revenue ruling or as a revenue procedure.


SECTION 14. HOW ARE CONFERENCES SCHEDULED?

IF REQUESTED, OFFERED TO THE TAXPAYER WHEN ADVERSE TECHNICAL ADVICE
PROPOSED

.01 If, after the technical advice request is analyzed, it appears that
technical advice adverse to the taxpayer will be given, and if a
conference has been requested, the taxpayer will be informed, by telephone
if possible, of the time and place of the conference.


NORMALLY HELD WITHIN 21 DAYS OF CONTACT WITH THE TAXPAYER

.02 The conference must be held within 21 calendar days after the
taxpayer is contacted. If conferences are being arranged for more than one
request for technical advice for the same taxpayer, they will be scheduled
to cause the least inconvenience to the taxpayer. The national office will
notify the examining officer or appeals officer of the scheduled
conference and will offer the examining officer or appeals officer the
opportunity to attend the conference. The Industry Director, LMSB; the
Director of Compliance, Field Operations, SB/SE; the Director, Compliance,
W&I; the Director, International, LMSB; the Director, Federal, State &
Local Governments; the Director, Tax Exempt Bonds; the Director, Indian
Tribal Governments; the Chief, Appeals; the director; or the area
director, appeals, may designate other Service representatives to attend
the conference in lieu of, or in addition to, the examining officer or
appeals officer.


21-DAY PERIOD WILL BE EXTENDED IF JUSTIFIED AND APPROVED

.03 An extension of the 21-day period will be granted only if the
taxpayer justifies it in writing and the associate or assistant chief
counsel, as appropriate, of the office to which the case is assigned
approves the request. No extension will be granted without the approval of
the associate or assistant chief counsel, as appropriate. Except in rare
and unusual circumstances, the national office will not agree to an
extension of more than 10 working days beyond the end of the 21-day
period.

The taxpayer's request for extension must be submitted before the end
of the 21-day period, and should be submitted sufficiently before the end
of this period to allow the national office to consider, and either
approve or deny, the request before the end of the 21-day period. If
unusual circumstances near the end of the 21-day period make a timely
written request impractical, the national office should be told orally
before the end of the period about the problem. The written request for
extension must be submitted to the national office promptly after the oral
request. The taxpayer will be told promptly (and later in writing) of the
approval or denial of a requested extension.


DENIAL OF EXTENSION CANNOT BE APPEALED

.04 There is no right to appeal the denial of a request for extension.
If the national office is not advised of problems with meeting the 21-day
period or if the written request is not sent promptly after the national
office is notified of problems with meeting the 21-day period, the case
will be processed on the basis of the existing record.


ENTITLED TO ONE CONFERENCE OF RIGHT

.05 A taxpayer is entitled by right to only one conference in the
national office unless one of the circumstances discussed in section 14.09
of this revenue procedure exists. This conference is normally held at the
branch level and is attended by a person who has authority to sign the
transmittal memorandum (discussed in section 16.14 of this revenue
procedure) in his or her own name or on behalf of the branch chief.

When more than one branch has taken an adverse position on an issue in
the request or when the position ultimately adopted by one branch will
affect another branch's determination, a representative from each branch
with authority to sign in his or her own name or for the branch chief will
attend the conference. If more than one subject is discussed at the
conference, the discussion constitutes a conference for each subject.

To have a thorough and informed discussion of the issues, the
conference usually is held after the branch has had an opportunity to
study the case. However, the taxpayer may request that the conference of
right be held earlier in the consideration of the case than the Service
would ordinarily designate.

The taxpayer has no right to appeal the action of a branch to an
associate or assistant chief counsel, as appropriate, or to any other
Service official. But see section 14.09 of this revenue procedure for
situations in which the Service may offer additional conferences.


CONFERENCE MAY NOT BE TAPED

.06 Because conference procedures are informal, no tape, stenographic,
or other verbatim recording of a conference may be made by any party.


IF REQUESTED AND APPROVED, CONFERENCE WILL BE DELAYED TO ADDRESS A
REQUEST FOR RELIEF UNDER SECTION 7805(b)

.07 In the event of a tentatively adverse determination, the taxpayer
may request, in writing, a delay of the conference so that the taxpayer
can prepare and submit a brief requesting relief under section 7805(b)
(regarding limitation of retroactive effect, discussed in section 19 of
this revenue procedure). The associate or assistant chief counsel, as
appropriate, of the office to which the case is assigned will determine
whether to grant or deny the request for delaying the conference. If such
request is granted, the Service will schedule a conference on the
tentatively adverse decision and the section 7805(b) relief request within
10 days of receiving the taxpayer's section 7805(b) request. There is no
right to appeal the denial of a request for delaying the conference. See
section 19.04 of this revenue procedure for the conference procedures if
the section 7805(b) request is made after the conference on the
substantive issues has been held.


SERVICE MAKES TENTATIVE RECOMMENDATIONS

.08 The senior Service representative at the conference ensures that
the taxpayer has full opportunity to present views on all the issues in
question. The Service representatives explain the tentative decision on
the substantive issues and the reasons for it.

If the taxpayer requests relief under section 7805(b), the Service
representatives will discuss the tentative recommendation concerning the
request for relief and the reason for the tentative recommendation.

No commitment will be made as to the conclusion that the Service will
finally adopt regarding the outcome of the section 7805(b) issue or on any
other issue discussed.


ADDITIONAL CONFERENCES MAY BE OFFERED

.09 The Service will offer the taxpayer an additional conference if,
after the conference of right, an adverse holding is proposed on a new
issue or on the same issue but on grounds different from those discussed
at the first conference.

When a proposed holding is reversed at a higher level with a result
less favorable to the taxpayer, the taxpayer has no right to another
conference if the grounds or arguments on which the reversal is based were
discussed at the conference of right.

The limitation on the number of conferences to which a taxpayer is
entitled does not prevent the national office from inviting a taxpayer to
attend additional conferences, including conferences with an official
higher than the branch level, if national office personnel think they are
necessary. Such conferences are not offered as a matter of course simply
because the branch has reached an adverse decision. In general,
conferences with higher level officials are offered only if the Service
determines that the case presents significant issues of tax policy or tax
administration and that the consideration of these issues would be
enhanced by additional conferences with the taxpayer.

In accordance with section 14.02 of this revenue procedure, the
examining officer or appeals officer will be offered the opportunity to
participate in any additional taxpayer's conference, including a
conference with an official higher than the branch level. Section 14.02 of
this revenue procedure also provides that other Service representatives
are allowed to participate in the conference.


ADDITIONAL INFORMATION SUBMITTED AFTER THE CONFERENCE

.10 Within 21 calendar days after the conference, the taxpayer must
furnish to the national office any additional data, lines of reasoning,
precedents, etc., that the taxpayer proposed and discussed at the
conference but did not previously or adequately present in writing. This
additional information must be submitted by letter with a penalties of
perjury statement in the form described in section 16.11(2) of this
revenue procedure.

The taxpayer must also send a copy of the additional information to the
director or the area director, appeals, for comment. Any comments by the
director or the area director, appeals, must be furnished promptly to the
appropriate branch in the national office. If the director or the area
director, appeals, does not have any comments, he or she must notify the
branch representative promptly.

If the additional information has a significant impact on the facts in
the request for technical advice, the national office will ask the
director or the area director, appeals, for comment on the facts contained
in the additional information submitted. The director or the area
director, appeals, will give the additional information prompt attention.

If the additional information is not received within 21 calendar days,
the technical advice memorandum will be issued on the basis of the
existing record.

An extension of the 21-day period may be granted only if the taxpayer
justifies it in writing and the associate or assistant chief counsel, as
appropriate, of the office to which the case is assigned approves the
extension. Such extension will not be routinely granted. The procedures
for requesting an extension of the 21-day period and notifying the
taxpayer of the Service's decision are the same as those in sections 14.03
and 14.04 of this revenue procedure.


UNDER LIMITED CIRCUMSTANCES, MAY SCHEDULE A CONFERENCE TO BE HELD BY
TELEPHONE

.11 Infrequently, taxpayers request that their conference of right be
held by telephone. This request may occur, for example, when a taxpayer
wants a conference of right but believes that the issue involved does not
warrant incurring the expense of traveling to Washington, D.C. If a
taxpayer makes such a request, the branch chief, senior technician
reviewer (or senior technical reviewer), or assistant to the branch chief
(or assistant branch chief) of the branch to which the case is assigned
will decide if it is appropriate in the particular case to hold the
conference of right by telephone. If the request is approved, the taxpayer
will be advised when to call the Service representatives (not a toll-free
call).

In accordance with section 14.02 of this revenue procedure, the
examining officer or appeals officer will be offered the opportunity to
participate in the telephone conference. Section 14.02 of this revenue
procedure also provides that other Service representatives are allowed to
participate in the conference.



SECTION 15. HOW IS STATUS OF REQUEST OBTAINED?

TAXPAYER OR THE TAXPAYER'S REPRESENTATIVE MAY REQUEST STATUS FROM THE
FIELD OR AREA OFFICE

.01 The taxpayer or the taxpayer's representative may obtain
information on the status of the request for technical advice by
contacting the field or area office that requested the technical advice.
See section 16.09 of this revenue procedure concerning the time for
discussing the tentative conclusion with the taxpayer or the taxpayer's
representative. See section 17.02 of this revenue procedure regarding
discussions of the contents of the technical advice memorandum with the
taxpayer or the taxpayer's representative.


NATIONAL OFFICE WILL GIVE STATUS UPDATES TO THE DIRECTOR OR AREA
DIRECTOR, APPEALS

.02 The branch representative or branch chief assigned to the technical
advice request will give status updates on the request once a month to the
director or the area director, appeals. In addition, a director or an area
director, appeals, may get current information on the status of the
request for technical advice by calling the person whose name and
telephone number are shown on the acknowledgment of receipt of the request
for technical advice.

See section 16.10 of this revenue procedure about discussing the final
conclusions with the field or area office. Further, the director or the
area director, appeals, will be notified at the time the technical advice
memorandum is mailed.


SECTION 16. HOW DOES THE NATIONAL OFFICE PREPARE THE TECHNICAL ADVICE
MEMORANDUM?

DELEGATES AUTHORITY TO BRANCH CHIEFS

.01 The branch chiefs in the Office of Associate Chief Counsel
(Corporate), the Office of Associate Chief Counsel (Financial Institutions
& Products), the Office of Associate Chief Counsel (Income Tax &
Accounting), the Office of Associate Chief Counsel (International), the
Office of Associate Chief Counsel (Passthroughs & Special Industries), the
Office of Associate Chief Counsel (Procedure and Administration), and the
Office of Division Counsel/Associate Chief Counsel (Tax Exempt and
Government Entities) have largely been delegated the authority to issue
technical advice on issues under their jurisdiction.


DETERMINES WHETHER REQUEST HAS BEEN PROPERLY MADE

.02 A request for technical advice generally is given priority and
processed expeditiously. As soon as the request for technical advice is
assigned, the branch representative analyzes the file to see whether it
meets all requirements of sections 6, 7, and 10 of this revenue procedure.

However, if the request does not comply with the requirements of
section 10.02 of this revenue procedure relating to the deletions
statement, the Service will follow the procedure in the last paragraph of
section 11.06 of this revenue procedure.


CONTACTS THE FIELD OR AREA OFFICE TO DISCUSS ISSUES

.03 Usually, within 21 calendar days after the branch receives the
request for technical advice, a representative of the branch telephones
the field or area office to discuss the procedural and substantive issues
in the request that come within the branch's jurisdiction.


INFORMS THE FIELD OR AREA OFFICE IF ANY MATTERS IN THE REQUEST HAVE
BEEN REFERRED TO ANOTHER BRANCH OR OFFICE

.04 If the technical advice request concerns matters within the
jurisdiction of more than one branch or office, a representative of the
branch that received the original technical advice request informs the
field or area office within 21 calendar days of receiving the request
that--

(1) the matters within the jurisdiction of another branch or office
have been referred to the other branch or office for consideration; and

(2) a representative of the other branch or office will contact the
field or area office about the technical advice request within 21 calendar
days after receiving it in accordance with section 16.03 of this revenue
procedure.


INFORMS THE FIELD OR AREA OFFICE IF ADDITIONAL INFORMATION IS NEEDED

.05 The branch representative will inform the field or area office that
the case is being returned if substantial additional information is
required to resolve an issue. Cases should be returned for additional
information when significant unresolved factual variances exist between
the statement of facts submitted by the field or area office and the
taxpayer. Cases should also be returned if major procedural problems
cannot be resolved by telephone. The field or area office should promptly
notify the taxpayer of the decision to return the case for further factual
development or other reasons.

If only minor procedural deficiencies exist, the branch representative
will request the additional information in the most expeditious manner
without returning the case. Within 21 calendar days after receiving the
information requested, the branch representative will notify the field or
area office of the tentative conclusion and an estimated date by which the
technical advice memorandum will be mailed, or an estimated date when a
tentative conclusion will be made.


INFORMS THE FIELD OR AREA OFFICE OF THE TENTATIVE CONCLUSION

.06 If all necessary information has been provided, the branch
representative informs the field or area office of the tentative
conclusion and the estimated date that the technical advice memorandum
will be mailed.


IF A TENTATIVE CONCLUSION HAS NOT BEEN REACHED, GIVES DATE ESTIMATED
FOR TENTATIVE CONCLUSION

.07 If a tentative conclusion has not been reached because of the
complexity of the issue, the branch representative informs the field or
area office of the estimated date the tentative conclusion will be made.


ADVISES THE FIELD OR AREA OFFICE IF TENTATIVE CONCLUSION IS CHANGED

.08 Because the branch representative's tentative conclusion may change
during the preparation and review of the technical advice memorandum, the
tentative conclusion should not be considered final. If the tentative
conclusion is changed, the branch representative will inform the field or
area office.


GENERALLY DOES NOT DISCUSS THE TENTATIVE CONCLUSION WITH THE TAXPAYER

.09 Neither the national office nor the field or area office should
advise the taxpayer or the taxpayer's representative of the tentative
conclusion during consideration of the request for technical advice.
However, in order to afford taxpayers an appropriate opportunity to
prepare and present their position, the taxpayer or the taxpayer's
representative should be told the tentative conclusion when scheduling the
adverse conference, at the adverse conference, or in any discussion
between the scheduling and commencement of the adverse conference. See
section 17.02 of this revenue procedure regarding discussions of the
contents of the technical advice memorandum with the taxpayer or the
taxpayer's representative.


ADVISES THE FIELD OR AREA OFFICE OF FINAL CONCLUSIONS

.10 In all cases, the branch representative will inform the examining
officer or appeals officer of the national office's final conclusions. The
examining officer or appeals officer will be offered the opportunity to
discuss the issues and the national office's final conclusions before the
technical advice memorandum is issued.


IF NEEDED, REQUESTS ADDITIONAL INFORMATION

.11 If, following the initial contact referenced in section 16.03 of
this revenue procedure, it is determined, after discussion with the branch
chief or reviewer, that additional information is needed, a branch
representative will obtain the additional information from the taxpayer or
from the director or the area director, appeals, in the most expeditious
manner possible. Any additional information requested from the taxpayer by
the national office must be submitted by letter with a penalties of
perjury statement within 21 calendar days after the request for
information is made.

(1) REQUEST TO RECEIVE A REQUEST FOR ADDITIONAL INFORMATION BY FAX. To
facilitate prompt action on technical advice requests, the taxpayer is
encouraged to request that if the Service requests additional information
from the taxpayer, the Service does so by fax.

A request to fax a copy of the request for additional information to
the taxpayer or the taxpayer's authorized representative must be made in
writing, either as part of the original technical advice request or prior
to the mailing of the request for additional information. The request to
fax must contain the fax number of the taxpayer or the taxpayer's
authorized representative to whom the document is to be faxed.

Because of the unsecured nature of a fax transmission, the Service will
take certain precautions to protect confidential information. For example,
the Service will use a cover sheet that identifies the intended recipient
of the fax and the number of pages transmitted, that does not identify the
taxpayer by name or identifying number, and that contains a statement
prohibiting unauthorized disclosure of the document if a recipient of the
faxed document is not the intended recipient of the fax. Also, for
example, the cover sheet should be faxed in an order in which it will
become the first page covering the faxed document.

(2) PENALTIES OF PERJURY STATEMENT. Additional information submitted to
the national office must be accompanied by the following declaration:
"Under penalties of perjury, I declare that I have examined this
information, including accompanying documents, and, to the best of my
knowledge and belief, the information contains all the relevant facts
relating to the request for the information, and such facts are true,
correct, and complete." This declaration must be signed and dated by the
taxpayer, not the taxpayer's representative. A stamped signature is not
permitted.

(3) 21-DAY PERIOD WILL BE EXTENDED IF JUSTIFIED AND APPROVED. A written
request for an extension of time to submit additional information must be
received by the national office within the 21-day period, giving
compelling facts and circumstances to justify the proposed extension. The
associate or assistant chief counsel, as appropriate, of the office to
which the case is assigned will determine whether to grant or deny the
request for an extension of the 21-day period. No extension will be
granted without the approval of the associate or assistant chief counsel,
as appropriate. Except in rare and unusual circumstances, the national
office will not agree to an extension of more than 10 working days beyond
the end of the 21-day period. There is no right to appeal the denial of a
request for extension.

(4) IF THE TAXPAYER DOES NOT SUBMIT ADDITIONAL INFORMATION. If the
national office does not receive the additional information within the
21-day period, plus any extensions granted by the associate or assistant
chief counsel, as appropriate, the national office will issue the
technical advice memorandum based on the existing record.


REQUESTS TAXPAYER TO SEND ADDITIONAL INFORMATION TO THE NATIONAL OFFICE
AND A COPY TO THE DIRECTOR OR AREA DIRECTOR, APPEALS

.12 Whether or not requested by the Service, any additional information
submitted by the taxpayer should be sent to the national office.
Generally, the taxpayer needs only to submit the original of the
additional information to the national office. However, in appropriate
cases, the national office may request additional copies of the
information.

Also, the taxpayer must send a copy of the additional information to
the director or the area director, appeals, for comment. Any comments by
the director or the area director, appeals, must be furnished promptly to
the appropriate branch in the national office. If the director or the area
director, appeals, does not have any comments, he or she must notify the
branch representative promptly.


INFORMS THE TAXPAYER WHEN REQUESTED DELETIONS WILL NOT BE MADE

.13 Generally, before replying to the request for technical advice, the
national office informs the taxpayer orally or in writing of the material
likely to appear in the technical advice memorandum that the taxpayer
proposed be deleted but that the Service has determined should not be
deleted.

If so informed, the taxpayer may submit within 10 calendar days any
further information or arguments supporting the taxpayer's proposed
deletions.

The Service attempts, if possible, to resolve all disagreements about
proposed deletions before the national office replies to the request for
technical advice. However, the taxpayer does not have the right to a
conference to resolve any disagreements about material to be deleted from
the text of the technical advice memorandum. These matters, however, may
be considered at any conference otherwise scheduled for the request. See
section 17.04 of this revenue procedure for the procedures to protest the
disclosure of information in the technical advice memorandum.


PREPARES REPLY IN TWO PARTS

.14 The replies to technical advice requests are in two parts. Each
part identifies the taxpayer by name, address, identification number, and
year or years involved.

The first part of the reply is a transmittal memorandum (Form M-6000).
In unusual cases, it is a way of giving the field or area office strategic
advice that need not be discussed with the taxpayer. If the transmittal
memorandum provides more than the fact that the technical advice
memorandum is attached or the case is returned for further development,
the transmittal memorandum may constitute Chief Counsel Advice, as defined
in section 6110(j)(1), subject to disclosure under section 6110.

The second part is the technical advice memorandum, which contains--

(1) a statement of the issues;

(2) the conclusions of the national office;

(3) a statement of the facts pertinent to the issues;

(4) a statement of the pertinent law, tax treaties, regulations,
revenue rulings, and other precedents published in the Internal Revenue
Bulletin, and court decisions; and

(5) a discussion of the rationale supporting the conclusions reached by
the national office.


The conclusions give direct answers, whenever possible, to the specific
issues raised by the field or area office. However, the national office is
not bound by the precise statement of the issues as submitted by the
taxpayer or by the field or area office and may reframe the issues to be
answered in the technical advice memorandum. The discussion of the issues
will be in sufficient detail so that the field or appeals officials will
understand the reasoning underlying the conclusion.

Accompanying the technical advice memorandum is a notice under section
6110(f)(1) of intention to disclose a technical advice memorandum
(including a copy of the version proposed to be open to public inspection
and notations of third party communications under section 6110(d)).


ROUTES REPLIES TO APPROPRIATE OFFICE

.15 Replies to requests for technical advice are addressed to the
director (see paragraph 1 of description of terms used in section 1 of
this revenue procedure) or the area director, appeals. A copy of the reply
to a request from LMSB should be mailed simultaneously to the field
personnel who requested it under the signature authority of the director.
Replies to requests from appeals should be routed to the appropriate area
office through the Chief, Appeals, C:AP:LMSB.


SENDS A COPY OF REPLY TO APPROPRIATE DIVISION COUNSEL

.16 The national office will send a copy of the reply to the request
for technical advice to the division counsel of the operating division
that has jurisdiction of the taxpayer's tax return.


SECTION 17. HOW DOES A FIELD OR AREA OFFICE USE THE TECHNICAL ADVICE?

GENERALLY APPLIES ADVICE IN PROCESSING THE TAXPAYER'S CASE

.01 The director or the area director, appeals, must process the
taxpayer's case on the basis of the conclusions in the technical advice
memorandum unless--

(1) the director or the area director, appeals, decides that the
conclusions reached by the national office in a technical advice
memorandum should be reconsidered and requests a reconsideration. The
reconsideration process may include a meeting held by the field
participants who requested technical advice and the national office
participants who prepared the memorandum;

(2) in the case of technical advice unfavorable to the taxpayer, the
area director, appeals, decides to settle the issue under existing
authority; or

(3) in the case of technical advice unfavorable to a Coordinated
Industry Case (formerly Coordinated Examination Program) taxpayer on a
coordinated issue within the Office of Pre-Filing and Technical Guidance,
LMSB, on which appeals has coordinated issue papers containing settlement
guidelines or positions, the team manager decides to settle the issue
under the settlement authority delegated in Delegation Order No. 247,
1996-1 C.B. 356.


Except as provided in paragraph (1), (2), or (3) of this section 17.01,
the conclusions in a technical advice memorandum involving a section 103
obligation and the issuer of this obligation must be treated by the
director or the area director, appeals, as applying to the issuer and any
holder of the obligation, unless the holder initiates a request for
technical advice on the same issue addressed in the technical advice
memorandum involving the issuer, and the national office issues a
technical advice memorandum involving that issue and that holder.


DISCUSSION WITH THE TAXPAYER

.02 The national office will not discuss the contents of the technical
advice memorandum with the taxpayer or the taxpayer's representative until
the taxpayer has been given a copy of the technical advice memorandum by
the field or area office. See section 16.09 of this revenue procedure
concerning the time for discussing the tentative conclusion with the
taxpayer or the taxpayer's representative.


GIVES COPY TO THE TAXPAYER

.03 The director or the area director, appeals, only after adopting the
technical advice, gives the taxpayer--

(1) a copy of the technical advice memorandum described in section
16.14 of this revenue procedure; and

(2) the notice under section 6110(f)(1) of intention to disclose the
technical advice memorandum (including a copy of the version proposed to
be open to public inspection and notations of third party communications
under section 6110(d)).


The director or appeals officer has 30 calendar days after receipt of a
technical advice memorandum to either formally request reconsideration or
give the adopted technical advice memorandum to the taxpayer. The director
or appeals officer must notify the national office when the technical
advice memorandum is given to the taxpayer.

These requirements do not apply to a technical advice memorandum
involving a criminal or civil fraud investigation, or a jeopardy or
termination assessment, as described in section 11.08 of this revenue
procedure.


TAXPAYER MAY PROTEST DELETIONS NOT MADE

.04 After receiving the notice under section 6110(f)(1) of intention to
disclose the technical advice memorandum, the taxpayer may protest the
disclosure of certain information in it. The taxpayer must submit a
written statement within 20 calendar days identifying those deletions not
made by the Service that the taxpayer believes should have been made. The
taxpayer must also submit a copy of the version of the technical advice
memorandum proposed to be open to public inspection with brackets around
the deletions proposed by the taxpayer that have not been made by the
national office.

Generally, the national office considers only the deletion of material
that the taxpayer has proposed be deleted or other deletions as required
under section 6110(c) before the national office reply is sent to the
director or the area director, appeals. Within 20 calendar days after it
receives the taxpayer's response to the notice under section 6110(f)(1),
the national office must mail to the taxpayer its final administrative
conclusion about the deletions to be made.


WHEN NO COPY IS GIVEN TO THE TAXPAYER

.05 If the national office tells the director or the area director,
appeals, that a copy of the technical advice memorandum should not be
given to the taxpayer and the taxpayer requests a copy, the director or
the area director, appeals, will tell the taxpayer that no copy will be
given.


SECTION 18. WHAT IS THE EFFECT OF TECHNICAL ADVICE?

APPLIES ONLY TO THE TAXPAYER FOR WHOM TECHNICAL ADVICE WAS REQUESTED

.01 A taxpayer may not rely on a technical advice memorandum issued by
the Service for another taxpayer. See section 6110(k)(3).


USUALLY APPLIES RETROACTIVELY

.02 Except in rare or unusual circumstances, a holding in a technical
advice memorandum that is favorable to the taxpayer is applied
retroactively.

Moreover, because technical advice, as described in section 2 of this
revenue procedure, is issued only on closed transactions, a holding that
is adverse to the taxpayer is also applied retroactively, unless the
Associate Chief Counsel (Corporate), the Associate Chief Counsel
(Financial Institutions & Products), the Associate Chief Counsel (Income
Tax & Accounting), the Associate Chief Counsel (International), the
Associate Chief Counsel (Passthroughs & Special Industries), the Associate
Chief Counsel (Procedure and Administration), or the Division
Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), as
appropriate, exercises the discretionary authority under section 7805(b)
to limit the retroactive effect of the holding.


GENERALLY APPLIED RETROACTIVELY TO MODIFY OR REVOKE PRIOR TECHNICAL
ADVICE

.03 A holding that modifies or revokes a holding in a prior technical
advice memorandum is applied retroactively, with one exception. If the new
holding is less favorable to the taxpayer than the earlier one, it
generally is not applied to the period when the taxpayer relied on the
prior holding in situations involving continuing transactions.


APPLIES TO CONTINUING ACTION OR SERIES OF ACTIONS UNTIL SPECIFICALLY
WITHDRAWN, MODIFIED, OR REVOKED

.04 If a technical advice memorandum relates to a continuing action or
a series of actions, ordinarily it is applied until specifically withdrawn
or until the conclusion is modified or revoked by the enactment of
legislation, the ratification of a tax treaty, a decision of the United
States Supreme Court, or the issuance of regulations (temporary or final),
a revenue ruling, or other statement published in the Internal Revenue
Bulletin. Publication of a notice of proposed rulemaking does not affect
the application of a technical advice memorandum.


APPLIES TO CONTINUING ACTION OR SERIES OF ACTIONS UNTIL MATERIAL FACTS
CHANGE

.05 A taxpayer is not protected against retroactive modification or
revocation of a technical advice memorandum involving a continuing action
or a series of actions occurring after the material facts on which the
technical advice memorandum is based have changed.


DOES NOT APPLY RETROACTIVELY UNDER CERTAIN CONDITIONS

.06 Generally, a technical advice memorandum that modifies or revokes a
letter ruling or another technical advice memorandum is not applied
retroactively either to the taxpayer to whom or for whom the letter ruling
or technical advice memorandum was originally issued, or to a taxpayer
whose tax liability was directly involved in such letter ruling or
technical advice memorandum if--

(1) there has been no misstatement or omission of material facts;

(2) the facts at the time of the transaction are not materially
different from the facts on which the letter ruling or technical advice
memorandum was based;

(3) there has been no change in the applicable law;

(4) in the case of a letter ruling, it was originally issued on a
prospective or proposed transaction; and

(5) the taxpayer directly involved in the letter ruling or technical
advice memorandum acted in good faith in relying on the letter ruling or
technical advice memorandum, and the retroactive modification or
revocation would be to the taxpayer's detriment. For example, the tax
liability of each shareholder is directly involved in a letter ruling or
technical advice memorandum on the reorganization of a corporation.
However, the tax liability of a member of an industry is not directly
involved in a letter ruling or technical advice memorandum issued to
another member and, therefore, the holding in a modification or revocation
of a letter ruling or technical advice memorandum to one member of an
industry may be retroactively applied to other members of the industry. By
the same reasoning, a tax practitioner may not obtain the nonretroactive
application to one client of a modification or revocation of a letter
ruling or technical advice memorandum previously issued to another client.


When a letter ruling to a taxpayer or a technical advice memorandum
involving a taxpayer is modified or revoked with retroactive effect, the
notice to the taxpayer, except in fraud cases, sets forth the grounds on
which the modification or revocation is being made and the reason why the
modification or revocation is being applied retroactively.



SECTION 19. HOW MAY RETROACTIVE EFFECT BE LIMITED?

TAXPAYER MAY REQUEST THAT RETROACTIVITY BE LIMITED

.01 Under section 7805(b), the Associate Chief Counsel (Corporate), the
Associate Chief Counsel (Financial Institutions & Products), the Associate
Chief Counsel (Income Tax & Accounting), the Associate Chief Counsel
(International), the Associate Chief Counsel (Passthroughs & Special
Industries), the Associate Chief Counsel (Procedure and Administration),
or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government
Entities), as the Commissioner's delegate, may prescribe the extent, if
any, to which a technical advice memorandum will be applied without
retroactive effect.

A taxpayer for whom a technical advice memorandum was issued or for
whom a technical advice request is pending may request that the Associate
Chief Counsel (Corporate), the Associate Chief Counsel (Financial
Institutions & Products), the Associate Chief Counsel (Income Tax &
Accounting), the Associate Chief Counsel (International), the Associate
Chief Counsel (Passthroughs & Special Industries), the Associate Chief
Counsel (Procedure and Administration), or the Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities), as appropriate, limit
the retroactive effect of any holding in the technical advice memorandum
or of any subsequent modification or revocation of the technical advice
memorandum.

When germane to a pending technical advice request, a taxpayer should
request to limit the retroactive effect of the holding of the technical
advice memorandum early during the consideration of the technical advice
request by the national office. This section 7805(b) request should be
made initially as part of that pending technical advice request. The
national office, however, will consider a section 7805(b) request to limit
the retroactive effect of the holding if the request is made at a later
time.


FORM OF REQUEST TO LIMIT RETROACTIVITY -- CONTINUING TRANSACTION BEFORE
EXAMINATION OF RETURN

.02 When a technical advice memorandum that concerns a continuing
transaction is modified or revoked by, for example, issuance of a
subsequent revenue ruling or temporary or final regulations, a request to
limit the retroactive effect of the modification or revocation of the
technical advice memorandum must be made in the form of a request for a
letter ruling if the request is submitted before an examination of the
return pertaining to the transaction that is the subject of the request
for the letter ruling. The requirements for a letter ruling request are
given in sections 8 and 12.11 of Rev. Proc. 2002-1.


FORM OF REQUEST TO LIMIT RETROACTIVITY -- IN ALL OTHER CASES

.03 In all other cases during the course of an examination of a
taxpayer's return by the director or during consideration of the
taxpayer's return by the area director, appeals (including when the
taxpayer is informed that the director or the area director, appeals, will
recommend that a technical advice memorandum, letter ruling, or
determination letter previously issued to, or with regard to, the taxpayer
be modified or revoked), a taxpayer's request to limit retroactivity must
be made in the form of a request for technical advice.

The request must meet the general requirements of a technical advice
request, which are given in sections 6, 7, and 10 of this revenue
procedure. The request must also--

(1) state that it is being made under section 7805(b);

(2) state the relief sought;

(3) explain the reasons and arguments in support of the relief sought
(including a discussion of the five items listed in section 18.06 of this
revenue procedure and any other factors as they relate to the taxpayer's
particular situation); and

(4) include any documents bearing on the request.


The taxpayer's request, including the statement that the request is
being made under section 7805(b), must be submitted to the director or the
area director, appeals, who must then forward the request to the national
office for consideration.


TAXPAYER'S RIGHT TO A CONFERENCE

.04 When a request for technical advice concerns only the application
of section 7805(b), the taxpayer has the right to a conference in the
national office in accordance with the provisions of section 14 of this
revenue procedure. In accordance with section 14.02 of this revenue
procedure, the examining officer or appeals officer will be offered the
opportunity to attend the conference on the section 7805(b) issue. Section
14.02 of this revenue procedure also provides that other Service
representatives are allowed to participate in the conference.

If the request for application of section 7805(b) is included in the
request for technical advice on the substantive issues or is made before
the conference of right on the substantive issues, the section 7805(b)
issues will be discussed at the taxpayer's one conference of right.

If the request for the application of section 7805(b) is made as part
of a pending technical advice request after a conference has been held on
the substantive issues and the Service determines that there is
justification for having delayed the request, then the taxpayer will have
the right to one conference of right concerning the application of section
7805(b), with the conference limited to discussion of this issue only.


SECTION 20. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 2001-2?

.01 Section 1 is amended to reflect the current descriptions of the
LMSB and SB/SE divisions.

.02 Section 5.03(2) is amended to reflect the current operating hours
of the courier's desk.

.03 Section 8 is added to state when technical advice should not be
issued, including on frivolous issues, and all the subsequent sections are
renumbered.

.04 Section 10.04 is amended to require the field or area office to
submit three copies of the request for technical advice.

.05 Section 12.05 is added to set forth special procedures applicable
to appeals regarding frivolous issues.

.06 Section 16.15 is amended to provide that with respect to a request
for technical advice from LMSB, a copy of the reply to this request should
be mailed, at the same time the reply is mailed to the director, to the
field personnel who requested the request under the signature authority of
the director.

.07 Section 17.01(1) is amended to reflect the Service's existing
practice regarding the reconsideration process.

.08 Section 17.03 is amended to provide that (1) the director or
appeals officer has 30 calendar days after receipt of a technical advice
memorandum to either formally request reconsideration or give the adopted
technical advice memorandum to the taxpayer; and (2) the director or
appeals office must notify the national office when the technical advice
memorandum is given to the taxpayer. However, these requirements do not
apply to a technical advice memorandum involving a criminal or civil fraud
investigation, or a jeopardy or termination assessment.


SECTION 21. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER
DOCUMENTS?

Rev. Proc. 2001-2, 2001-1 I.R.B. 79, as modified by Rev. Proc. 2001-41,
2001-33 I.R.B. 173, is superseded.


SECTION 22. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE?

This revenue procedure is effective January 7, 2002.


DRAFTING INFORMATION

The principal author of this revenue procedure is Joseph Dewald of the
Office of Associate Chief Counsel (Procedure and Administration). For
further information regarding this revenue procedure for matters under the
jurisdiction of--

(1) the Associate Chief Counsel (Corporate), the Associate Chief
Counsel (Financial Institutions & Products), the Associate Chief Counsel
(Income Tax & Accounting), the Associate Chief Counsel (Passthroughs &
Special Industries), the Associate Chief Counsel (Procedure and
Administration), or the Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities), contact George Bowden or Henry
Schneiderman at (202) 622-3400 (not a toll-free call);

(2) the Associate Chief Counsel (International), contact Gerard
Traficanti at (202) 622-3619 (not a toll-free call);

(3) the Commissioner (Large and Mid-Size Business Division), contact
Nicholas Donadio at (202) 283-8408 (not a toll-free call);

(4) the Commissioner (Small Business and Self-Employed Division),
contact John Brueggeman at (336) 378-2821 (not a toll-free call);

(5) the Commissioner (Wage and Investment Division), contact Hugh
Barrett at (404) 338-9903; or

(6) the Chief, Appeals, contact Thomas R. Roley at (202) 694-1822 (not
a toll-free call).


INDEX

References are to sections in Rev. Proc. 2002-2

ADDITIONAL INFORMATION
-- procedure for submission 16.05, 16.11, 16.12
after conference 14.10
-- proposed deletions under section 6110 10.02
-- to receive request for additional
information by fax 10.01, 16.11(1)

CONFERENCES
-- offered 11.02, 14.01
after conference of right 14.09
exceptions 11.08, 12.04, 16.13
-- pre-submission conferences 9
-- scheduling 14
request to limit retroactivity 14.07, 19.04
telephone conferences 14.11

DEFINITIONS
-- area office 1
-- area director, appeals 1
-- director 1
-- field office 1
-- national office 1
-- taxpayer 1
-- technical advice 2
-- territory manager 1

DISCUSSIONS WITH TAXPAYERS
-- technical advice memorandum 17.02
-- technical advice request 16.09

EMPLOYEE PLANS AND EXEMPT ORGANIZATIONS
-- application of section 6104 11.07
-- jurisdiction of Commissioner, Tax Exempt
and Government Entities Division 4.02

EXTENSION OF TIME
-- to appeal decision not to request technical
advice 12.02
-- to disagree with statement of facts in
technical advice request 11.03, 11.04
-- to schedule conference 14.03, 14.04
-- to submit additional information 14.10, 16.11
-- to submit taxpayer's initial statement of
facts and arguments after technical advice
request forwarded to national office 10.01(2)

FOREIGN LAWS AND DOCUMENTS
-- required with technical advice request 10.01(4), 10.01(5)
certified English translations 10.01(4), 10.01(5)
-- effect if interpretation is a material fact 11.05

PENALTIES OF PERJURY STATEMENT
-- form 16.11(2)
-- required with additional information 14.10, 16.11
-- signature requirements 16.11(2)

POWER OF ATTORNEY 10.05

PRE-SUBMISSION CONFERENCES 9

PUBLIC DISCLOSURE UNDER SECTION 6110
-- deletion statement required 10.02, 11.08
exception when section 6104 applies 11.07
failure to submit 11.06, 16.02
signature requirements 10.02
-- notice of intention to disclose 16.14, 17.03
protesting deletions not made 16.13, 17.04

RETROACTIVE EFFECT
-- in general 18.02-18.06
on letter ruling 18.06
-- request to limit retroactivity 19
format of request 19.02, 19.03
scheduling conference 14.07, 19.04

REVENUE RULINGS
-- effect on a continuing transaction 18.04
request to limit retroactivity 19.02

SECTION 301.9100 RELIEF 5

STATUS OF TECHNICAL ADVICE REQUEST
-- to field or area office 15.02, 16.06,
16.08, 16.10
-- to taxpayer 15.01, 16.09

WHERE TO SEND
-- additional information 14.10, 16.12
-- taxpayer's initial statement of facts and
arguments after technical advice request
forwarded to national office 10.01(2)
-- technical advice request from area office 10.03
-- technical advice request from field
office 10.03

WITHDRAWAL OF TECHNICAL ADVICE REQUEST 13

<<END RULING>>


 

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