Introduction and Understanding Your Goal................................................................................................ 2

Your Goal.............................................................................................................................................................................. 2

Reducing Tax........................................................................................................................................................................ 3

Reducing Interest.............................................................................................................................................................. 3

Reducing Penalties............................................................................................................................................................ 3

Monthly Payment Arrangements............................................................................................................................. 3

Removing Tax Liens to Sell the Home...................................................................................................................... 3

Important Information Which Must Be Furnished............................................................................................ 3

Can the House be Sold?................................................................................................................................................... 4

Certificate of Discharge................................................................................................................................................ 5

Certificate of Subordination...................................................................................................................................... 6

Non-Attachment of Lien................................................................................................................................................ 7

Certificate of Release – Overview............................................................................................................................ 7

5.12.2.2.2 (05/28/98) Liability is Unenforceable....................................................................................................... 7

5.12.2.2.3 (05/28/98) Acceptance of a Bond............................................................................................................... 8

5.12.2.2.4 (05/28/98) Acceptance of an Offer.............................................................................................................. 8

5.12.2.2.5 (05/28/98) Trust Fund Recovery Penalty.................................................................................................. 8

5.12.2.2.6 (05/28/98) Bankruptcy Discharge of One Party on a Jointly Filed Lien........................................... 9

5.12.2.2 (05/28/98) Conditions of Release.................................................................................................................. 9

5.12.2.2.1 (05/28/98) Liability is Satisfied................................................................................................................ 10

Effect of Certificate Issued........................................................................................................................................ 10

Withdrawal of Tax Lien Notice............................................................................................................................... 12

Reasons for withdrawal of tax lien notice.................................................................................................................. 12

•  the lien notice has been filed prematurely;............................................................................................................ 13

•  the taxpayer has entered into an installment agreement for  payment of the underlying tax liability, unless the installment agreement provides  otherwise (§6323(j));............................................................................................................... 13

•  the withdrawal of the lien notice will facilitate collection  of the tax liability; or........................................ 13

•  with the consent of the taxpayer or the Taxpayer Advocate,  the withdrawal of the lien notice is determined to be in the best interests  of the taxpayer (as determined by the Taxpayer Advocate) and the government............................. 13

Timing of Withdrawal..................................................................................................................................................... 13

Authority for Withdrawal of Notice............................................................................................................................. 14

Summary of tax liens..................................................................................................................................................... 15

Side notes about Federal Tax Liens........................................................................................................................ 17

Reducing Interest and/or Penalties................................................................................................................... 20

Reasons to reduce interest......................................................................................................................................... 20

Tax Court Jurisdiction................................................................................................................................................... 22

Administrative Remedy.................................................................................................................................................. 27

Reasons to reduce penalties...................................................................................................................................... 27

What are penalties........................................................................................................................................................ 28

Reducing the tax liability......................................................................................................................................... 36

Filing amended returns................................................................................................................................................ 37

Offer in Compromise........................................................................................................................................................ 37

What is Owed?.................................................................................................................................................................... 38

End Notes............................................................................................................................................................................... 39

 

 

 

 

 

Dear Client:

Introduction and Understanding Your Goal

Your Goal

You probably have some questions, and without realizing it, you may have made some assumptions without questioning the assumptions.  For example:

• What is owed?

• Is it correct?  

• Is the interest correct? 

• Are Payments first applied to tax and then penalty and then interest?  

•   How much is owed for each year?

• Can the lien be set aside to sell the house and keep the sales proceeds, or borrow on the equity in a house?

• Can I sell rental property and keep the sales proceeds?

 

In general you want to reduce the amount owed, arrange for monthly payments which you can afford and then sell your home, retaining all the sales proceeds for your benefit, not the benefit of the Government.

We can perform the following steps to assist in the accomplishment of your goal.  Please understand one cannot know the result of the work and there is not a warranty or guarantee each step will be successful in accomplishing the goal.

1.      Determine whether the tax was computed correctly – request changes as become available

2.      Determine extenuating circumstances for failure to pay or file – claim reasonable cause

3.      Determine your net worth – determine collectibility of the tax

4.      Determine your cash flow – available for tax installment arrangements – setup installment arrangements

5.      Look for other tactics as the engagement progresses

6.      File requests for certificates of release,discharge, subordination, or withdrawal of tax lien as any of these become available.

Why This Topic Pertains to Your Goal

Tax Liens are an important topic because you might be able to accomplish your objectives by working with the Federal Tax Lien.  Also, the Federal Tax Lien may already have been filed and you will need to understand what your rights are if this IRS Collection Method has been started.  Tax Liens many times come along with the Install Agreements, Offers in Compromise, Late Tax Returns and Late Payment of Taxes.

Reducing Tax

Reducing the tax is not always “easy”, but given the right situation it can happen.  There are methods known as the Offer in Compromise and filing claims for refund or amending tax returns.

Reducing Interest

Reducing interest is more difficult, but can be done.  The opportunity for the reduction here is very narrow.  “Reasonable Cause” is the most common opportunity for this reduction.

Reducing Penalties

Reducing the penalty may be even more difficult.  However, if the reasonable cause doctrine will work for the interest, then it may work for the penalty for failure to pay timely.

Monthly Payment Arrangements

Arranging an installment agreement is a definite possibility.  Making it suit your budget is not always simple.  If the payment arrangements fitting your needs will pay the entire tax liability within three years, the “road” is much easier.

Removing Tax Liens to Sell a Home

If the installment arrangement can be made, then there are provisions where we can appeal to the government to release the tax lien.  If that is arranged, then you will be in the position you want.

Important Information Which Must Be Furnished

q   Obtain a complete transcript for years:________

q   Obtain the ____,____ tax return as filed

q   Obtain a complete transcript for _____,_____

q   Obtain the _____,_____ tax return as filed

q   Obtain a complete transcript for _____,_____

q   Obtain the _____,_____ tax return as filed

q   Obtain IRC for forcing the Internal Revenue Service to apply all payments first to tax – if it exists.

q   Recompute all interest and penalties; use the Internal Revenue Service accounting fist, then have the client overview the schedule to confirm that all payments made are shown on the schedule

q   Obtain all financial information for applying for an installment agreement

q   First determine if there is a tax lien filed.  If yes, then get the dates and pertinent information.  Determine the tax liens seniority in relation to other recordings – specifically in regard to the homestead.  If the authority can be found (which I do recall there is authority.  The qualifications will need to be enumerated and identified.  This I will do), set aside the lien for the sale of the home, in order for the owner to retain all the sales proceeds.

q   Application for exemption for sale of single asset

q   Effect of new law regarding protection of homestead

q   Other ______________  Internal Revenue Service to subrogate its lien to a Second mortgage on home, protect the proceeds, sell the home

Can a House be Sold?

First let us discuss the option to sell the home and retain the sales proceeds.

Usually a tax lien is filed whenever there is an installment agreement OR the taxes have not been paid.

IF there is no tax lien, then the sale may take place subject only to the recorded liens and encumbrances.

IF there is a tax lien, the installment agreement will not change the closing actions (see exceptions to this statement in the section titled “Withdrawal of tax lien notice”).  At closing the sales proceeds will be used to pay all liens and encumbrances including the federal tax lien.  This is true whether there is an installment agreement or there is no installment agreement.

There are methods that can be used to “move” this federal tax lien out of the way for this particular sale.

There are a number of certificates that relate to the lien. The distinctions between the certificates are:

1. Release--operates to completely extinguish the lien,
2. Discharge--removes certain property from the effect of a tax lien,
3. Subordination--relegates IRS lien to a lower priority position,
4. Non-attachment--denotes that a person of like or similar name is not, in fact, the taxpayer.
5. Revocation--issued when a lien was erroneously or improvidently released or in connection with a breached collateral agreement with an offer in compromise

Memo:  The new tax law makes it very difficult to seize a taxpayer’s homestead.  This may have an effect on this transaction.  At this writing I have not located any authority on this possibility.  There is a provision that we can use to Request a Withdrawal of Tax Lien Notice – given a current and valid installment agreement.  There are provisions that have qualifications to meet for the withdrawal or discharge of Federal Tax Lien, however we must perform tests and gather information to determine whether your circumstances qualify.

Certificate of Discharge

The District Director has the discretion to issue a certificate of discharge for any part of the property subject to a federal tax lien.  Certain qualifications must be met, which will be shown after citing the authority for this.

AUTHORITY FOR CERTIFICATE OF DISCHARGE

Certificate of Subordination

 

 

 

Non-Attachment of Lien

 

 

Certificate of Release – Overview

1.      Notices of Federal Tax Lien (NFTL) are required to be released within 30 days of the date on which: If Then the District Director has reason to doubt the financial stability of an institution, he may reject the tender of the institution's guaranteed draft. a guaranteed draft is not duly paid, the United States will have a lien on all assets of the institution in the amount of the draft. payment is received to secure a release, certificate of discharge or subordination, use the designated payment code of 07 (DPC-07) when preparing the posting voucher.

5.12.2.2.2 (05/28/98)
Liability is Unenforceable

The word "unenforceable" means unenforceable as a matter of law, and not merely uncollectible.

NFTL filed on forms revised 12/82 or later do not require that a separate certificate of release be issued when the statutory period for collection has expired unless the NFTL has been refiled or a request is made for a separate release.

NFTL refiled on Form 668-F, Notice of Federal Tax Lien, are not self-releasing. A certificate of release must be filed when the liability becomes unenforceable.

5.12.2.2.3 (05/28/98)
Acceptance of a Bond

Issue a release of a NFTL within 30 days of accepting a bond based on the payment of the amount assessed (including any interest, addition to tax, assessable penalty, together with any accrued costs) within the time agreed to in the bond, but not later than six months before the expiration of the statutory period for collection. See IRC 6325(a)(2).

The bond must be executed by a surety company holding a certificate of authority from the Secretary of the Treasury, or, in the discretion of the district director, collateral may be accepted within established limits (see IRC 7101). The acceptability of a surety, other than a Treasury approved surety, will be determined on a case by case basis.

5.12.2.2.4 (05/28/98)
Acceptance of an Offer

When an offer in compromise, including a collateral agreement, is accepted, the NFTL will be released, when:

the payment of the offered amount including any accrued interest, has been paid;

all other terms and conditions of the offer are in compliance at the time the release is requested. This includes refund recoupment, collateral and future compliance issues.

Requests for the issuance of a certificate of release may be made by those OIC Units with ALS access. These requests will appear in the lien manager's queue for approval.

OIC Units will FAX supporting documentation to the appropriate lien unit. Requests for releases will not be approved until this action is taken.

Only those offers that do not have extenuating circumstances, e.g., innocent spouse, non-petitioning spouse, co-obligors, etc., should be requested using ALS. See Exhibit 5.12.2-2.

5.12.2.2.5 (05/28/98)
Trust Fund Recovery Penalty

Issue a Certificate of Release of Federal Tax Lien to the nonpaying officer(s) on a trust fund recovery penalty assessment when one officer has fully paid the liability. This will be done even though the liability has not been abated pending the expiration of the statutory period within which a claim for refund by the paying officer may be made.

5.12.2.2.6 (05/28/98)
Bankruptcy Discharge of One Party on a Jointly Filed Lien

When one party of a jointly filed NFTL files bankruptcy and is discharged, a transaction code 400 will be used to adjust the joint account.

The TC 400 will not cause the module to go to Masterfile status 12 and therefore the module will not cause a notification of satisfaction to be passed to the Automated Lien System (ALS). The jointly filed NFTL will not be released.

A manual Certificate of Release will be prepared. See Exhibit 5.12.2-1 and 5.12.2-2.

The liability is satisfied,

A bond is accepted, or

A taxpayer's request for release on the grounds that the liability is satisfied or legally unenforceable is received.

Employees authorized to execute the release must verify that the liability is satisfied or unenforceable.

Employees must use designated payment code (DPC) 07 when posting payments that are the result of a NFTL.

 

5.12.2.2 (05/28/98)
Conditions of Release

Systemic releases will be generated when all modules on a NFTL are satisfied. Module satisfied notices are generated by Masterfile whenever a module containing a TC 582 has been satisfied. Satisfied notices are produced weekly and must be processed within 48 hours of receipt. An analysis of the ALS database is completed systemically to determine if the Notice of Federal Tax Lien should be released.

Systemic releases will not be generated on NMF Accounts. Revenue officers must request a manual release through the unit responsible for the Automated Lien System (ALS) for all assigned NMF cases.

5.12.2.2.1 (05/28/98)
Liability is Satisfied

Issue of a release of a NFTL within 30 days after the taxpayer's outstanding obligation covered by the lien (including any interest, additional amount, addition to the tax, or assessable penalty, together with any additional costs that may have accrued) is fully satisfied by payment or by abatement. See 2(11)1 of IRM 57(16)0, Legal Reference Guide for Revenue Officers and IRC 6325(a)(1).

A NFTL may be released when the aggregate unpaid balance, including accruals, does not exceed the amount in 372 of LEM V.

Where payment is made by personal check, the 30-day release period will begin after 7 working days. This will permit sufficient time for the check to clear. A release may be issued immediately upon presentation of the canceled check.

Accounts satisfied by cash, money order, certified check, cashier's check or guaranteed draft drawn on any organization that is authorized to do business under state or federal laws relating to financial institutions, may be released immediately upon payment.

 

Effect of Certificate Issued

Once a certificate of release, discharge, subordination or nonattachment is properly filed (i.e., it is filed in the same office as the notice of lien to which it relates), the certificate:

•  extinguishes the lien, in the case of a certificate of release;

•  releases the property from the lien, in the case of certificate of discharge;

•  gives priority over the IRS' lien to other interest/liens, in the case of a certificate of subordination;

•  indicates that the IRS' lien does not encumber the property of the person named in the certificate, in the case of a certificate of nonattachment.

If under state law, a certificate or notice cannot be filed in the state office where the lien is filed, the certificate or notice must be filed with the clerk of the federal district court for the judicial district in which the state office is located.

 

 

 

Withdrawal of Tax Lien Notice

Reasons for withdrawal of tax lien notice

The IRS can withdraw filed notices of tax lien and treat the tax as if the lien notice had not been filed if it is determined that:

•  the lien notice has been filed prematurely;

•  the taxpayer has entered into an installment agreement for  payment of the underlying tax liability, unless the installment agreement provides  otherwise (§6323(j));

•  the withdrawal of the lien notice will facilitate collection  of the tax liability; or

•  with the consent of the taxpayer or the Taxpayer Advocate,  the withdrawal of the lien notice is determined to be in the best interests  of the taxpayer (as determined by the Taxpayer Advocate) and the government.

Timing of Withdrawal

The withdrawal of the tax lien notice is made when the IRS files a withdrawal notice at the same office where the lien itself was filed. The IRS is also to  provide the taxpayer with a copy of the notice of withdrawal. If the taxpayer  makes a written request, the IRS must make prompt reasonable efforts to notify those financial institutions, creditors, or credit agencies listed by the taxpayer in the written request of the lien's withdrawal.

Furthermore the Internal Revenue Service has the burden to notify those entities enumerated in the request (§6323(j)(2)).

Authority for Withdrawal of Notice

 

Summary of tax liens

From IRS Handboodk - Instructions to Revenue Officers:

105.1] 2.5.2 (09/26/96) When NOT to File a Lien

1.Do NOT file a Notice of Federal Tax Lien when:

A. The liability has been paid, is not correct or credits are available to fully satisfy it.

B.Bankruptcy has been filed.

C.The taxpayer is a defunct corporation (unless assets are about to be liquidated).

D.The taxpayer corporation has gone through liquidation.

E.An IMF taxpayer promises to full pay within 6 months (ACS only).

F.The taxpayer is deceased and there are no assets to be liquidated.

G.The taxpayer lives abroad and there are no known assets in the United States.

 

1.
Before the IRS files a Notice of Federal Tax Lien:

the IRS must assess the liability

the IRS must send the taxpayer a notice and demand for payment

the taxpayer must neglect or refuse to fully pay the liability within 10 days of notice and demand.

2.
The IRS will issue a Release of the Notice of Federal Tax Lien within 30 days after the taxpayer satisfies the tax due or within 30 days after the IRS accepts a bond guaranteeing payment.

3.
A lien will release automatically if the IRS does not refile the lien before the time expires to legally collect the tax--usually a period of 10 days.

4.
A taxpayer may sue the Federal government for damages if the IRS knowingly or negligently fails to release a Notice of Federal Tax Lien provided the taxpayer first exhausts all administrative appeals within the IRS and the suit is filed within 2 years from the date the IRS should have released the lien.

5.
Each application for a discharge of a tax lien releases the effects of the lien against one specifc piece of property. A Certificate of Discharge will be issued if the taxpayer has other property, subject to the lien, that is worth at least two times the total of the tax owed, plus any additions to the tax owed and any other debts owed on the property (e.g., a mortgage).

6.
A Certificate of Discharge will be issued if the IRS receives the value of the government's interest in the property and taxpayer is giving up ownership. A Certificate of Discharge will also be issued if the property in question is sold and there is a dispute as to who is entitled to the sale proceeds, and the proceeds are placed in escrow while the dispute is being resolved.

7.
The IRS must withdraw a filed Notice of Tax Lien if the notice was filed prematurely or not in accordance with IRS procedures.

8.
The IRS must withdraw a filed Notice of Tax Lien if the taxpayer has entered into an installment agreement to satisfy the liability.

9.
The IRS must withdraw a filed Notice of Tax Lien if the withdrawal will facilitate collection of the tax or if the withdrawal would be in the best interest of both the taxpayer (as determined by the Taxpayer Advocate) and the government.

10.
A lien is incorrect and may be appealed if:

the taxpayer paid the entire amount owed before the lien was filed

the IRS assessed the tax and filed the lien when the taxpayer was in bankruptcy and subject to the automatic stay during bankruptcy

the IRS made a procedural error in making an assessment

the statute of limitations expired before the IRS filed the lien.

Side notes about Federal Tax Liens

Internal Revenue Service Instructions to Service Personnel state:

When NOT to File a Lien:

Do NOT file a Notice of Federal Tax Lien when:

The liability has been paid, is not correct or credits are available to fully satisfy it.

Bankruptcy has been filed.

The taxpayer is a defunct corporation (unless assets are about to be liquidated).

The taxpayer corporation has gone through liquidation.

An IMF taxpayer promises to full pay within 6 months (ACS only).

The taxpayer is deceased and there are no assets to be liquidated.

The taxpayer lives abroad and there are no known assets in the United States.

Sometimes the amount of the unpaid tax can effect the decision to file a lien (and implied to assist the taxpayer with the request of a release):

“Make a determination whether to file a Notice of Federal Tax Lien when setting up installment agreements with aggregate assessed balance of $5,000 or more.

EXCEPTION: Liens don't need to be filed on IMF streamlined agreements up to $10,000. “

Form 900, Tax Collection Waiver

2.      The Collection Statute Expiration Date (CSED) is ten years from the date of assessment. Where an account has multiple assessments on different dates, each assessment has its own CSED.

EXAMPLE:

Deficiency assessments and certain penalties are assessed later than the tax and have their own CSEDs..

3.      You must protect the CSED while a taxpayer is making installment payments. If any CSED on any account included in the agreement will expire less than twelve months after the projected full payment date, extend the statute.

EXAMPLE:

An installment agreement will full pay the liability by 5/21/97. If the CSED for any of the assessments included in the agreement will expire before 5/21/98, extend the CSED.

4.      To extend the CSED:

1. Prepare Form 900, Tax Collection Waiver, extending the statute to the date per (4) below..
2. Get the taxpayer to sign the waiver and give him/her a copy.
3. Send a copy to SPf, keep a copy in the file, and use the remaining copy as the IDRS input document (TC 550).

5.      Extend the CSED to December 31 of the year after which the full amount owed will be paid, unless this is more than 5 years after the latest CSED date of all assessments, in which case extend the CSED to December 31 of the fifth year after the latest assessment date.

6.      Sometimes the case file may indicate conditions under which the CSED was extended; if the correct CSED is not indicated, contact SPf for assistance. Some conditions which cause the CSED to be extended are:

·        Offer-in-Compromise

·        Military Deferment

·        Litigation

·        Bankruptcy

·        Taxpayer outside U.S. 6 months or more

·        Extension of time for payment of estate tax

·        Application for taxpayer assistance order

7.      If the taxpayer refuses to sign a waiver, you may still accept an IA. If the resulting agreement will cause the collection statute to expire on a large amount of tax, contact SPf to determine if a suit to reduce the tax to judgement should be filed.

Failure to Release Liens Under IRC 6325

8. Taxpayers have the right to sue the Federal Government for damages in federal district court if any officer or employee of the Internal Revenue Service knowingly or by reason of negligence, fails to release a filed Notice of Federal Tax Lien (NFTL). See IRC 7432 and IRC 6325 of the Code.
9. Taxpayers must exhaust all administrative remedies available within the Internal Revenue Service prior to initiating a civil action in federal district court.
10. Taxpayers must:

1. submit an administrative claim for damages (IRC 7432).
2. submit a written request for a release of NFTL to the district where the NFTL was filed.
3. exhaust any other administrative procedures that the Internal Revenue Service has made available.

11. If that request fails, the taxpayer must file an administrative claim for damages.

 

Reducing Interest and/or Penalties

Reasons to reduce interest

IRC §6404(e) list the reasons that interest should be reduced or abated.  The authority is as shown below:

1.
The IRS may make abatement of any or all interest on any tax deficiency.

2.
The tax deficiency may be attributable in whole or in part to either any "unreasonable error" by an IRS officer or employee or any "unreasonable delay" by an IRS officer or employee.

3.
The IRS officer or employee must be acting in his/her official capacity.

4.
The deficiency can pertain to any tax on income, estate, gift, generation skipping, and certain excise taxes. Abatement of interest for employment taxes or other excise taxes is not available.

5.
The error or dilatory performance by the IRS officer or employee may pertain to any ministerial or managerial act.

6.
A ministerial act is a procedural or mechanical act, not involving the exercise of judgement or discretion, that occurs during the processing of a taxpayer's case after all prerequisites (for example, conferences and review by supervisors) have taken place. A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act.

7.
Abatement will not be applied if the error or delay can be attributed to the taxpayer involved.

8.
The IRS must abate the assessment of all interest on any erroneous tax refund until the date the IRS demands repayment unless:

The taxpayer or a related party has in any way caused the erroneous refund, or

The erroneous refund exceeds $50,000

9.
A reduction of interest must be made on Form 843, Claim for Refund and Request for Abatement. The Form 843 may be filed with the IRS Service Center where the taxpayer filed the tax return that was affected by the ministerial error or delay. Generally, a taxpayer should file a separate Form 843 for each tax period and each type of tax.

10. Failure for the IRS to lower interest may be reviewed by the Tax Court. The action must be brought within 180 days after the IRS mails its final decision.

Tax Court Jurisdiction

New IRC 26 §6404(i) places into the jurisdiction of the tax court the authority to order the abatement of interest or penalties:

The following is a notice from the Internal Revenue Service Office of Chief Counsel regarding the new abatement process.

Department          Internal             Office of Chief Counsel

of the                   Revenue         

Treasury              Service

July 7, 1998

                Abatement of Interest
Subject:    Coordination Procedures                      Cancellation Date: January 3. 1999

 

This Notice provides attorneys with detailed guidance on the coordination and development of Tax Court abatement of interest cases. Taxpayer Bill of Rights 2 added new section 6404(g)[1] to the Internal Revenue Code, pursuant to which the Tax Court has jurisdiction to determine whether the Commissioner’s failure to abate interest was an abuse of discretion. The circumstances under which the Commissioner is permitted to abate interest are contained in I.R.C. § 6404(e). General information regarding abatement of interest actions has previously been published at CCDM (35)(25)1O, et seq.

 

Abatement of interest cases are different from traditional Tax Court cases in a number of fundamental ways. Furthermore, although there are temporary and proposed regulations interpreting section 6404(e), the regulations are necessarily general. To date, there is no case law providing guidance on the interpretation of phrases such as “ministerial act,” “managerial act,” or “unreasonable errors or delays”--three critical terms in section 6404(e). There is also no experience regarding how the Tax Court will approach matters such as discovery in abatement actions, where, unlike traditional deficiency cases, the Commissioner is more likely than the taxpayer to have access to the relevant information. In other words, each abatement case, at this time, is a case of first impression.

 

It is crucial that the initial coordination of these cases be thorough to ensure that the abatement procedures and case law are developed in a consistent fashion. The coordination procedures will be modified as soon as abatement cases become more routine or as the Tax Court procedures and case law are established.

 

The procedures set forth below, which track significant events and time periods, are to be used for the coordination of the Abatement of Interest issues.

Filing Instructions: Binder Parts (35), (31), (34)                              Master Sets: NO X RO X

NO: Circulate ___Distribute X to: All Personnel  Attorneys X In:  ES. IT&A. GL. INTL. EBEO

RO: Circulate___Distribute X to: All Personnel  Attorneys X In:  all divisions Other National and Regional FOIA Reading Rooms

Electronic Filename: Abatlnt2.odf Original signed copy in: CC:F&M:PF

Abatement of Interest Coordination Procedures

I.Within 30 days of service of the Petition

A.      Submit the following to Field Service, Procedural Branch:

-Petition & attachments.

-Notice of Final Determination (Notice of Disallowance).

-Form 843, or Request For Abatement of Interest.

B.      Identify Jurisdictional Issues, ~

-No Notice of Final Determination.

-Abatement request denied prior to July 31, 1996.

-Petition seeks abatement of tax or penalties.

-No statement that petitioner meets requirements of

I.R.C. § 7430(c)(4)(A)(ii) ---please see the end note added by bob parrish[i]

C.      Identify Summary Judgment issues, ~

-Tax year beginning December 31, 1978 or earlier.

-Petition seeks abatement of interest on employment taxes.

-Interest is attributable to an error on delay in the performance of a

managerial act and the tax year begins prior to July 31, 1996.

D.      Submit all Motions and Answers to the Procedural Branch for review. The documents must be received by the Procedural Branch at least 5 working days before the filing deadline.

Documents may be submitted via fax. Documents may not be submitted via email without prior approval from Chief, Procedural Branch.

E.      Ensure that the case has the “Al” CATS subtype. II.Trial Preparation (Prior to calendaring)

A.      Call the Procedural Branch for Informal Field Service Advice and provide the facts of your case. Include the following information:

-Identify whether the claim is based on an error, ~±g± incorrect advice or information, or a delay.

-Identify the period(s) of error or delay.

-Identify the stage(s) during which the error or delay occurred, ~ Exam, Appeals, Collection, District Counsel.

-Identify the causes(s) of the error or delay.

Indicate whether the causes fall within the definitions, managerial act, or general administrative decision. Specify the act(s).

-Indicate whether the delay occurred in connection with a tax shelter case or TEFRA partnership proceeding. Identify the shelter or partnership.

-Indicate whether there was truly a delay or whether the process merely took a long time.

-Indicate whether the error or delay was grossly unfair or unreasonable.

-Indicate the extent to which the petitioner and/or his representative have contributed to the error or delay.

B.      Submit a request for Field Service Advice to the Procedural Branch, if appropriate.

 

Ill. Trial Preparation (When case is calendared)

A.      Inform the Procedural Branch that the case has been calendared and provide the calendar date.

B.      Indicate whether any portion of the interest should be abated.

C.      Submit discovery requests to the Procedural Branch for review.

D.      Submit Stipulations of Fact to the Procedural Branch for review.

E.      Submit Trial Memorandum to the Procedural Branch for review.

F.      If the case will settle, contact the Procedural Branch regarding the proposed settlement. Any deviations from the format of the standard abatement Decision must be reviewed by the Procedural Branch.

 

All documents submitted for review must be received by the Procedural Branch at least 5 working days before the filing deadline.

Documents may be submitted via fax. Documents may not be submitted via email without prior approval from Chief, Procedural Branch.