8.2.1.9.5  (02-17-1999)
Rescinding Notices of Deficiency

1. This subsection discusses rescinding notices of deficiency within Appeals.

8.2.1.9.5.1  (02-17-1999)
Criteria for Rescinding Notices of Deficiency

1. IRC 6212(d) provides that the Secretary may in complete discretion, with the consent of the taxpayer, rescind any notice of deficiency mailed to the taxpayer (see Delegation Order No. 77, as revised). The purpose of this provision is to allow the Service, with the taxpayer's consent, to rescind a statutory notice when it is determined that it is in the interest of both parties to do so.
2. This provision allows the Service, through a rescission agreement, to treat a case as if a notice of deficiency was never issued for purposes of section 6212(c)(1) (relating to further deficiency letters restricted), section 6213(a) (relating to restrictions applicable to deficiencies and petitions to Tax Court), and section 6512(a) (relating to limitations in case of petition to Tax Court). Limitations regarding credits, refunds, and assessments relating to the rescinded notice are void and the rights and obligations of the parties that existed prior to the issuance of the notice of deficiency are reinstated. A notice of deficiency may later be reissued for the same, or a greater or lesser amount.
3. A taxpayer may exercise all administrative and statutory appeal rights from a reissued notice of deficiency. However, the taxpayer has no right to file a petition with the Tax Court based on a rescinded notice.
4. The determination to rescind a notice of deficiency should be made on a case-by-case basis. Both parties must agree to the rescission.
5. A notice which has been defaulted (the 90 or 150 day period expired) cannot be rescinded.
6. The taxpayer has filed a petition with (or mailed a petition to) the Tax Court prior to the rescission.
7. If the notice of deficiency was issued to both husband and wife, the rescission agreement must be signed by both parties or an attorney-in-fact or designated representative(s) of both parties.
8. The rescission agreement must apply to and cover all of the same tax periods as the notice of deficiency.
9. The rescission agreement must reflect the same tax deficiency and penalties as the notice of deficiency.
10. If the Service does not agree that a notice of deficiency should be rescinded, the taxpayer will be notified in writing and the notice will remain in effect.
11. All questions regarding the propriety of a rescission agreement on any case be discussed with district counsel.

8.2.1.9.5.2  (02-07-2000)
Bases for Rescission

1. Administrative Error--The notice may be rescinded when an administrative error was made in issuance, for example:
   1. The notice was issued to the wrong taxpayer.
   2. The notice was issued for the wrong tax period.
   3. The notice was prematurely issued due to failure of the Service to consider a properly filed Form 872. Consent to Extend the Time to Assess Tax.
2. Incorrect or Insufficient Amount--If a notice of deficiency has been issued for an incorrect or insufficient amount, the notice may be rescinded. However, the taxpayer must be advised that another notice, for a greater amount, may be subsequently issued.
3. Appeals Conference Requested in 90-Day Case and No Petition Mailed or Filed with Tax Court--If a taxpayer specifically requests a conference with Appeals for the purpose of entering into settlement negotiations, the notice may be rescinded. However, the notice will be rescinded only if Appeals first decides that the case is susceptible to agreement. The taxpayer may be requested by Appeals, in appropriate cases to submit, in writing, a protest or similar document that explains his or her position on the unagreed issues. See the IRM 8.4, Docketed and 90-Day Cases for further 90-day case procedures.

8.2.1.9.5.3  (02-17-1999)
Period of Limitation for Assessment Considerations

1. If the normal three year period of limitations for assessment has expired, except for the issuance of the notice of deficiency, an agreement to rescind will not be entered into.
2. If, on the date of rescission, 90 days or less remain before the expiration date of the period of limitation on assessment (determined, for this purpose, without regard to the issuance of the notice of deficiency), the notice may be rescinded only if the taxpayer and the Service execute a consent (Form 872 only) to extend the limitation period.
3. A notice of deficiency will not be rescinded if there is an outstanding Form 872-A, Special Consent to Extend the Time to Assess Tax.

8.2.1.9.5.4  (02-17-1999)
Form 8626, Agreement to Rescind Notice of Deficiency

1. Form 8626, Agreement to Rescind Notice of Deficiency, will be used to secure an agreement between the taxpayer and the Government. When preparing Form 8626, care must be exercised to ensure the accuracy of the information contained within the document and its timely execution by the taxpayer and the Government.
2. The rescission agreement form will be prepared in duplicate. Once executed, one copy of Form 8626 will remain with the case file secured to the return for the latest year covered by the agreement. The second copy will be sent to the taxpayer. Copies of the rescission agreement will be attached to all other returns covered by that agreement.
3. A Form 8626 may be used as a rescission agreement for more than one taxable year. The agreement must apply to all taxable years contained in the rescinded notice of deficiency. All years covered will be entered below the first paragraph under "Tax Year Ended." The deficiency and additions to tax, as shown on the notice of deficiency, will be entered below the appropriate column headings.
4. The effective date for a rescission agreement is the date on which the Commissioner or delegate signs the rescission form. After Form 8626 is returned and signed on behalf of the Commissioner, a copy will be furnished to the taxpayer by mail or in person.
5. A taxpayer who believes that a notice of deficiency should be rescinded and wishes to enter into settlement negotiations should contact Appeals and request Form 8626. See the IRM 1.9.5.2(3), Bases for Rescission.

8.2.1.9.5.5  (02-17-1999)
Authority to Rescind and Sign Notices of Rescission

1. Authority to rescind notices of deficiency is granted to the Secretary by IRC 6212(d). Delegation Order No. 77 (as revised) delegates this authority to chiefs, assistant chiefs and associate chiefs and team chiefs as to their respective cases.
2. The authority to rescind does not apply to a Notice of Final Partnership Administrative Adjustment (FPAA) or to a Notice of Final S Corporation Adjustment (FSAA).
3. Delegates listed in Delegation Order No. 77 (as revised) will manually sign their own name.