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Part 8. Appeals

Chapter 2. Pre-90-Day and 90-Day Cases

Section 2. Processing 90-Day Cases and Defaulted Notices

8.2.2  Processing 90-Day Cases and Defaulted Notices

8.2.2.1  (10-24-2007)
Introduction to 90-Day Cases in Appeals

  1. When a notice of deficiency is issued, the case is considered a 90-day case from the date the notice is issued until a petition is filed with the United States Tax Court or until expiration of the 90-day period. This section covers how to process 90-day cases that are both resolved and not resolved during the 90-day period.

  2. A notice of deficiency is generally referred to as a 90-day letter.

  3. if there is a deficiency in the case as defined in IRC 6211, IRC 6212 authorizes mailing a notice of deficiency to the taxpayer's last known address using certified or registered mail.

8.2.2.2  (10-24-2007)
Examination Issues Notice of Deficiency

  1. Examination issues a 90-day letter when a taxpayer does not respond to the 30-day letter, which transmits the Revenue Agent's Report (RAR). The taxpayer has 90 days from the date the notice of deficiency is issued to file a petition with the Tax Court for redetermination.

    Note:

    If the notice of deficiency is addressed outside the United States or the taxpayer is out of the country during the 90-day period after the notice of deficiency is issued, the taxpayer has 150 days to file a petition with the Tax Court.

  2. Delegation Order No. 66 (Revision 15) gives Appeals Area Directors jurisdiction after issuance of a notice of deficiency over certain cases not docketed in the United States Tax Court when the taxpayer does not agree with the determination of the Service and requests consideration by Appeals. See IRM 1.2.47.5, Delegation Order 66 (Rev. 15) (01-23-1992).

  3. Appeals may relinquish the requested jurisdiction by waiver on any case where a notice of deficiency was issued by the IRS, as long as it is not docketed in Tax Court. No waiver is made on a case if it contains either of the following conditions:

    1. Criminal prosecution recommended but not finally disposed of; or

    2. Notice of deficiency determination that includes a fraud penalty.

  4. Although the receiving Appeals office needs the approval of the Appeals Area Director prior to transmitting a 90-day case to Appeals, Appeals rarely decides to take settlement jurisdiction during the 90-day period when Examination has issued a 90-day letter.

  5. Usually Appeals only considers or reconsiders cases during the 90-day period if extenuating circumstances exist.

  6. Appeals does not accept jurisdiction of a 90-day case with a belated protest from an IRS Campus function if the taxpayer did not submit all supporting information, explanations, or documents to the source function.

  7. If Appeals does not accept the case during the 90-day period, Appeals sends written notification to the taxpayer explaining the reason for the denial making it clear the denial does not extend the 90-day period for filing a petition with Tax Court.

8.2.2.2.1  (10-24-2007)
Requests for Appeal from Taxpayers Outside the U.S.

  1. If a taxpayer residing outside the United States requests that his/her case come to Appeals, the case is generally routed to and considered by the Baltimore Appeals Office.

  2. Some taxpayers requests the conference be held at another Appeals office location. If the Baltimore Appeals Office accepts the request for Appeals consideration during the 90-day period, the case is generally considered by them.

  3. The case is only transferred to the location requested by the taxpayer if the receiving Appeals Area Director approves the transfer. See IRM 8.20.6, Appeals Processing Manual, Interim Actions - Remittances, Partials, Transfers, and Returns, for procedures on transferring cases.

8.2.2.3  (10-24-2007)
Appeals Issues Notice of Deficiency

  1. When Appeals issues the notice of deficiency, the case can be considered or reconsidered during the 90-day period.

  2. Reconsideration of a case does not extend the 90-day time in which the taxpayer may petition the Tax Court for a redetermination.

  3. Special procedures apply when issuing a statutory notice of deficiency on a Refund Suit. See IRM 8.7.1, Refund Suits—Statutory Notice of Deficiency Issued, for detailed information.

8.2.2.3.1  (10-24-2007)
Undeliverable or Unclaimed Notice of Deficiency

  1. Occasionally, the mail service is unable to deliver a notice of deficiency, either because the taxpayer cannot be located or because the taxpayer will not accept delivery. In these circumstances, the Post Office returns the notice of deficiency to the issuing Appeals office.

  2. If the undeliverable or unclaimed statutory notice is returned, Appeals Processing Service (APS) rechecks the last known address using IDRS command code ENMOD, if available. If ENMOD is not available, APS checks command code INOLES and/or SPARQ.

    1. If the address on ENMOD/INOLES/SPARQ and the address on the notice are the same, APS also checks command code IRPTRL.

    2. On joint accounts, this research is performed using IDRS command code SPARQ to determine if the taxpayers have separate addresses.

  3. Retain the undelivered notice and envelope securely stapled inside the administrative file. These documents are evidence the Internal Revenue Service complied with the law by forwarding the notice of deficiency by certified or registered mail to the taxpayer’s last known address.

  4. APS notifies the Appeals Officer when a notice was returned. If the Appeals Officer wishes and time allows, the notice may be reissued/remailed:

    1. If Master File shows a different last known address and sufficient time remains on the statute, the notice is reissued to the last known address indicated on Master File. The notice of deficiency date and "Last Day to Petition Tax Court" are changed to reflect the date the notice is remailed. The period in which the taxpayer may submit a petition to the Tax Court starts with the date the new notice is mailed.

    2. If SPARQ research reveals a separate address for one of the spouses, a duplicate original notice must be prepared using the original joint names shown on the return and that spouse’s separate address. This duplicate original must use the same date as the original notice. The period in which the spouse can petition the Tax Court is the same as the original notice.

    3. If a new address is found somewhere other than Master File and does not meet the clear and concise notification definition of Rev. Proc. 2001-18, a copy of the original notice of deficiency is remailed to the new address. The date of the original notice does not change and the period in which the taxpayer may submit a petition to Tax Court continues from the original notice date.

    4. If, after checking all possible sources, another address cannot be found, and the Appeals Officer determines the notice was sent to the last known address, he/she initials the notice of deficiency and takes no further action to try to deliver the notice.

8.2.2.4  (10-24-2007)
APS Procedures for Establishing and Processing 90–Day Cases

  1. All 90-day cases must have the original return. Therefore if the original is not present in the file received from Examination, follow established procedures to request it.

  2. If the notice of deficiency was issued by Examination, review the administrative file, acknowledge receipt, establish the case on ACDS, and transmit the case to the ATM for assignment using the same procedures used for pre-90-day income tax cases. See IRM 8.2.

  3. If the notice of deficiency was issued by Appeals and the case is already controlled on ACDS, update the existing case by adding docketed information.

  4. Complete the SNDATE field in ACDS on all cases in which a notice of deficiency or a determination letter was issued, including docketed cases received from Compliance or the Campus. Use the appropriate entry as follows:

    • 030A — Appeals issued CDP determination letter

    • 090A — Appeals issued notice of deficiency

    • 150A — Appeals issued notice of deficiency to taxpayer residing outside the United States

    • 180A — Appeals issued notice of final determination of partial or full disallowance of an abatement of interest claim

    • 090D — Compliance issued notice of deficiency.

    • 150D — Compliance issued notice of deficiency to taxpayer residing outside the United States

    • 090S — Campus issued notice of deficiency

    • 150S — Campus issued notice of deficiency to taxpayer residing outside the United States

    • FPAA —TEFRA (Appeals Issued FPAA)

    • FPAD — TEFRA (Compliance Issued FPAA)

    • FPAS — TEFRA (Campus Issued FPAA)

    • FSAA — TEFRA (Appeals Issued FSAA)

    • FSAD — TEFRA (Compliance Issued FSAA)

    • FSAS — TEFRA (Campus Issued FSAA)

    Note:

    See IRM 8.2.2.14.. This subsection contains instructions to follow if the notice of deficiency is rescinded under Rev. Proc. 98-54.

  5. Statute information is found in IRM 8.21, Appeals Statute Responsibility.

  6. In 90-day cases, APS assesses liability for advance payments made after the issuance of the notice of deficiency unless it is specifically requested.

  7. If Counsel or the Department of Justice requests the administrative file during the 90-day period, send the file to Counsel, substitute a photocopy of the tax return, and retain the original return.

8.2.2.5  (10-24-2007)
Reconsideration of Notice of Deficiency During Suspense Period

  1. If the Appeals Team Manager (ATM) or Appeals Area Director decides to grant further consideration of a case in the suspense period, reactivate the case. When notified the case is being reconsidered:

    1. Remove the administrative file from suspense and give it to the Appeals Officer.

    2. Place a "chargeout" in the file where the administrative file is removed. Show the name of the case, the Appeals Officer, and the date this action is taken.

  2. If no agreement is reached after consideration or reconsideration in the suspense period:

    1. Ensure there is an approved informal memorandum and a signed closing letter for the unagreed case.

    2. Date the memorandum;

    3. Date and mail the closing letter.

    4. File the original memorandum and copy of the closing letter in the administrative file; file copies of each in the office file.

    5. Re-file the administrative file behind "Letter Issued—Awaiting Taxpayer’s Action File" and remove the charge out slip.

8.2.2.6  (10-24-2007)
Conferencing and Settling 90-Day Cases from Examination

  1. If Appeals decides to consider a case during the 90-day period, the ATM promptly assigns the case.

  2. The AO promptly considers the case to ensure it is resolved prior to the expiration of the 90-day period using the procedures found in IRM 8.6, Conference and Settlement Practices.

  3. Consideration and processing of a 90-day case is similar to a pre-90 day case. A Form 5402, Appeals Transmittal and Case Memo, is required. This form is a part of all ACMs and is sometimes all that is needed, i.e., for a very simple case, or when the taxpayer concedes in full.

  4. Generally, a longer narrative Appeals Case Memo (ACM) is needed for a case when settlement is reached, i.e., if it involves a hazard settlement or contains complex legal or factual issues. See IRM 8.6.2, Appeals Case Memo Procedures, for more information.

8.2.2.7  (10-24-2007)
Computation Settlements on 90-Day Cases

  1. A 90-day case must be given priority treatment because of the short time frames involved.

  2. When a case is settled during the 90-day period, the settlement computations must be handled as a priority. If a request to do settlement computations is sent to the Tax Computation Specialist (TCS) function, mark the case and annotate the Form 3608 as a priority so the TCS manager can easily identify that the case is a priority. This will ensure it is correctly logged into the Technical Automated Control System (TACS).

  3. No audit statement is required if the Commissioner's determination shown in the notice of deficiency is agreed in full either during the 90-day period or after filing a petition.

8.2.2.8  (10-24-2007)
Tax Court Petition or Complaint with District Court During Suspense Period

  1. If the taxpayer files a petition with the Tax Court or a complaint with the District Court, remove the administrative file from "Letter Issued—Awaiting Taxpayers’ Action File" and follow the procedures in IRM 8.4, (Docketed Cases), for processing the docket list and petition.

  2. If the tax periods are on AIMS, update AIMS to reflect status 82. The docketed alpha code "QQ" is automatically generated on AIMS using the MMQQYYYY format (positions 15–20) when the status is changed to 82.

  3. Update ACDS case/returns screen as follows:

    1. DKTNO = docket number

    2. CLOSINGCD = 43

    3. DATECLSD = date case sent to Counsel

    4. ACTION = DCJUR

    5. TODATE = date case sent to Counsel

    6. Notice of Deficiency STATDATE= delete entry

    7. Determination Letter STATDATE= do not delete entry

    8. STATCODE = DOCKT for each tax period identified on the petition.

  4. Since Appeals already attempted settlement and issued a notice of deficiency when an agreement could not be reached, the administrative file is generally retained by Counsel for settlement attempts or preparation for trial.

  5. If Counsel answers the petition and returns the administrative file to Appeals for a second attempt at settlement, enter the FROMDATE and assign.

8.2.2.9  (10-24-2007)
Disposing of 90-Day Cases

  1. After a notice is issued on a case, disposition usually occurs in one of the following ways:

    IF THEN
    taxpayer agrees to the deficiency within the 90-day (150-day) period by signing the appropriate agreement form the case is forwarded for assessment action under Form 5402 Appeals Transmittal and Case Memorandum.
    taxpayer fails to file the petition with the United States Tax Court within the prescribed period. the case is forwarded for assessment action under Form 5402 Appeals Transmittal and Case Memorandum.
    taxpayer enters into agreement under IRC 6212(d) to rescind the Notice of Deficiency follow procedures in IRM 8.2.2.14
    taxpayer files a timely petition and the case becomes docketed in the Tax Court the entire administrative file is transmitted to Counsel for preparation of pleadings and trial preparation.

8.2.2.10  (10-24-2007)
APS Procedures to Close Agreed 90(150)-Day Cases

  1. If the taxpayer agrees to the deficiency in the statutory notice during the 90-day (150-day) period, process the assessment when the executed waiver agreement form is received.

  2. Compare the agreement form with the copy of the notice of deficiency to ensure the amounts of deficiency and overassessment, if any, are the same. If they differ, call this to the attention of the Appeals Team Manager or designated official.

  3. Compute the new statute as follows:

    Example:

    New Statute = 60 days + agreement received date or original statute date, whichever is later. If the statute was previously opened under Form 872-A, add 60 days to the date agreement was received.

  4. Update STATDATE on ACDS with the new statute.

  5. Remove the 'Y' in the SND indicator at the return level for each return included on the signed agreement document. This helps ensure the returns appear on the statute report.

  6. Update the statute date on AIMS. When the taxpayer signs an agreement, it is very important to act quickly because there are often only 60 days left on the statute.

  7. Annotate Form 5402 with language similar to the following to indicate the new statute date. Expedite the processing of the case.

    "Tax to be assessed within 60 days
    of the agreement, i.e. ____________"

  8. Prepare Form 5403 as shown in the instructions in IRM Exhibit 8.20.7-1.

  9. Close the case on ACDS to PEAs using general closing instructions. Use CLOSINGCD = 04 (agreed statutory notice), and ACTION = ACKCLS.

  10. If these cases continue to appear on the statutory notice list, there may be a false sense of security created because the default date indicates additional time available before closing action is completed. However, the action taken to update the statute date causes the case to appear on the statute list. If you choose to keep the case from appearing on the statutory notice list, assign a "dummy" docket number (i.e., 999–9 or remove the SNTYPE code.)

  11. The following is helpful when determining whether the case requires a closing letter. If it does, mail the letter to the taxpayer at least 15 days prior to the expiration of the 90-day period.

    • If an agreement is received after the notice of deficiency is issued, a closing letter is not required.

    • If an agreement is received after the notice of deficiency is issued and a closing letter is sent, the closing letter should state that it is not necessary to file a petition with the Tax Court.

8.2.2.11  (10-24-2007)
AO Procedures When 90-Day Case is Unagreed

  1. Generally, a transmittal memorandum and supporting statement are not required in a 90-day case when a settlement is not reached.

  2. Prepare an informal memorandum (referred to as a 90–day memorandum) and a signed closing letter.

  3. The memorandum lists the following:

    1. the conferences held,

    2. those present at the conferences,

    3. the reason for assuming jurisdiction,

    4. any proposal and/or counterproposal,

    5. evidence or legal authority, and

    6. an evaluation of the case.

  4. The closing letter is mailed to the taxpayer at least 15 days prior to the expiration of the 90-day period.

8.2.2.12  (09-01-2006)
APS Actions on Non-Petitioned Year(s) in Multiple Year Statutory Notice

  1. If the taxpayer fails to petition one or more years of a multi-year statutory notice within the 90-day (150-day) period, APS must take the following actions:

    1. Update the statute date on AIMS.

    2. Prepare Form 5403 for each omitted tax period. Include a brief statement in Item A of Form 5403 showing that the year(s) being adjusted was omitted from the petition.

  2. If the administrative file or returns are to be returned to the Appeals office after assessment action is completed, include this information in a separate statement in Item A.

  3. If the taxpayer fails to petition one or more years of a multi-year notice of deficiency but there is still time remaining in the 90-day (150-day) period, the omitted tax periods must be removed from the docketed periods and established as a case on ACDS.

  4. On the update returns screen, delete the year(s) omitted from the petition.

  5. Establish the non-docketed year(s) as a new case and work unit. On the add case/returns screen enter the same information that appeared on the original case, except for the following:

    1. TIN - Enter the taxpayer’s TIN along with a modifier (A–J). The modifier allows an update to the returns in the new case.

    2. FEATRCD - Enter NY (non-petitioned years).

    3. KEYPER - Enter appropriate tax period.

    4. SNTYPE - Enter the appropriate code.

    5. SNDATE - Enter date statutory notice was issued.

    6. NOTES - Optional—You may want to state that the returns were omitted from the petition.

  6. On the update returns screen enter the same information that appeared on the original case, except for the following:

    1. Tax Period - Enter only those tax period(s) omitted from the petition.

    2. Ensure the correct statute date is reflected on each tax period so the tax period(s) omitted from the petition will continue to be tracked on the statute and statutory notice lists.

    3. Update the statute date on AIMS if the omitted tax periods reflect MMQQYYYY indicating a docketed tax period.

8.2.2.13  (10-24-2007)
APS Actions When Appeals Notice of Deficiency Results in a Non-Petitioning Spouse

  1. When a non-petitioning spouse assessment is required, follow instructions in IRM 8.4.1.15, Non-Petitioning Spouse, for making the assessment. The following are guidelines for updating ACDS when a non-petitioning spouse case exists on a notice of deficiency issued by Appeals.

    Note:

    These instructions only apply to notices of deficiency. A non-petitioning spouse work unit is not created for CDP determination cases if only one spouse petitions. Since the tax is already assessed, this action is not necessary for CDP cases.

  2. On an Appeals-issued notice of deficiency case, update ACDS to create a work unit that includes three cases—the joint return, the petitioning spouse, and the non-petitioning spouse. The joint return is the key case.

  3. Make changes to the previously established joint return control as follows:

    • FEATRCD - Enter NS.

    • DKTNO - Leave Blank.

  4. Make the following changes on the update returns screen of the joint return(s) previously established:

    1. AIMS indicator - Enter Y if case is on AIMS. If the joint return is not on AIMS, enter N. (The joint return is controlled on AIMS. If it is not on AIMS when received, Appeals must establish the return on AIMS.)

    2. STATDATE - Enter the actual statute date on the joint return which results from the status of the non-petitioning spouse. Once verification of the MFT 31 assessment against the non-petitioning spouse is received, update the statute date to eight (8) years from the 23C date of the MFT 31 assessment. Also, update statute code to "ASESD."

  5. Establish separate ACDS records for the non-petitioning and petitioning spouses as outlined in IRM 8.4.

8.2.2.14  (10-24-2007)
Notice of Deficiency in 90-Day Cases Rescinded Under Rev. Proc. 98-54

  1. There may be instances where it is in the best interest of the Service and the taxpayer to rescind a notice of deficiency.

  2. Rev. Proc. 98-54, 1998-2 C.B. 531 provides taxpayers with instructions for entering into an agreement under IRC 6212(d) to rescind a notice of deficiency.

  3. Whether a notice of deficiency will be rescinded is discretionary on the part of the Secretary. A notice of deficiency is only rescinded with the agreement of the taxpayer, however, it may be initiated by either the taxpayer or the Service.

  4. Notices in 90-day cases are only rescinded if Appeals has first decided the case is amenable to agreement.

  5. Delegation Order No. 4-8 (See IRM 1.2.43.2, Delegation Order 4-8 (Formerly DO-77, Rev. 28) (02-10-2004)) authorizes Appeals Area Directors to rescind any notice of deficiency. Appeals Team Managers can rescind notices of deficiency issued to their respective cases

  6. In the event Appeals rescinds a statutory notice per Form 8626, Agreement to Rescind Notice of Deficiency, update ACDS as follows:

    1. Remove 090A or 150A from SNTYPE field.

    2. Remove date from SNDATE field.

    3. In NOTE field enter "SND rescinded (date signed by Commissioner)."

    4. Change Y to N in SND.

  7. If Form 872 or Form 872-A was also completed in conjunction with Form 8626, update the STATDATE or statute CODE as appropriate on ACDS.

8.2.2.14.1  (10-24-2007)
Criteria for Rescinding Notices of Deficiency

  1. IRC 6212(d) states that the Secretary may, with the consent of the taxpayer, rescind any notice of deficiency mailed to the taxpayer. Whether or not a notice is rescinded is discretionary on the part of the Secretary. A notice of deficiency may only be rescinded with the consent of the taxpayer.

  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 -

    1. IRC 6212(c)(1) - relating to further deficiency letters restricted;

    2. IRC 6213(a) - relating to restrictions applicable to deficiencies and petitions to Tax Court; and

    3. IRC 6512(a) - relating to limitations in case of petition to Tax Court.

  3. 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.

  4. 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.

  5. The determination to rescind a notice of deficiency should be made on a case-by-case basis. Both parties must agree to the rescission.

  6. A rescission will not be entered into if:

    1. It has been 90 days (150 days for notices mailed to addresses outside the United States) since the notice was issued.

    2. The taxpayer has petitioned the Tax Court.

  7. If the notice of deficiency was issued to both husband and wife, the rescission agreement must be signed by both parties or authorized representative(s) for both parties.

  8. The rescission agreement must cover all of the same tax periods shown in 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 should be discussed with Counsel.

8.2.2.14.2  (10-24-2007)
Bases for Rescission

  1. There are basically three reasons that a notice is rescinded. They are as follows:

    1. administrative error;

    2. incorrect or insufficient amount;

    3. an appeals conference is requested in a 90-day case and no petition was mailed or filed with Tax Court.

  2. When an administrative error has occurred, the notice may be rescinded. The following are examples of administrative errors:

    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.

  3. 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.

  4. 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 is confident the case will result in an agreement. Appeals may request that the taxpayer submit, in writing, a protest or similar document that explains his or her position on the unagreed issues. See IRM 8.4.1, Processing Docketed Cases, for further 90-day case procedures.

8.2.2.14.3  (10-24-2007)
Period of Limitation for Assessment Considerations

  1. If the normal three year period of limitations for assessment has expired do not enter into an agreement to rescind the notice.

  2. If, on the date of rescission, 90 days or less remain before the expiration of the period of limitation on assessment the notice may be rescinded but only if the taxpayer and the Service execute a Form 872 to extend the limitation period. When determining how many days remain on the statute, do not consider the additional time created by the issuance of the notice of deficiency.

  3. Generally, 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; however, see Rev. Proc. 98–54, 1998–2 C.B. 531 clarifying Service position on situations in which notice revocations may be considered.

8.2.2.14.4  (10-24-2007)
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 be secured to the return for the latest year covered by the agreement. The second copy will be sent to the taxpayer by mail or given to the taxpayer in person. Copies of the executed rescission agreement will be attached to all other returns covered by that agreement.

  3. One Form 8626 may be used as a rescission agreement for all years contained in the rescinded notice of deficiency. All years covered by the agreement 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.

  5. A taxpayer who believes that a notice of deficiency should be rescinded because they wish to enter into settlement negotiations should contact Appeals and request Form 8626.

8.2.2.14.5  (10-24-2007)
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. 4-8 (as revised) delegates this authority to Appeals Area Directors, Team Managers, and to Appeals Team Case Leaders on 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. 4-8 (as revised) will manually sign their own name.

8.2.2.15  (10-24-2007)
Defaulted Statutory Notices

  1. When the case is processed for assessment (defaulted statutory notice) systematically check CATS and DIMS to determine if a petition was filed. Compare this information with the Statutory Notice of Deficiency Report generated from ACDS (or search for the name directly on ACDS).

  2. Check the SN listing for any case where Appeals issued the notice of deficiency. Also check for any case on which Appeals accepted jurisdiction from Compliance during the 90-day period.

  3. If these cases do not appear on the Docket List during the suspense period, close the case.

  4. When the 120 or 180-day period expires in these cases, assess the deficiency by default if the taxpayer has not filed a petition with the United States Tax Court. A defaulted case is a case where a party fails to plead or otherwise proceed with the case as provided by the Tax Court Rules of Practice and Procedure, and the Tax Court enters a decision against the defaulting party. A decision rendered upon a default operates as an adjudication on the merits.

  5. After a reasonable amount of time, usually 120 days from the issuance of the notice, a case that does not appear on the Docket List is considered defaulted.

  6. Update ACDS using general closing instructions. In addition input the following:

    1. CLOSINGCD - 05

    2. ACTION - ACKCLS

    3. STATDATE - newly computed statute date (See IRM Exhibit 8.20.7-1)

    4. RevsdTax/Pen/Claim - enter the amounts from the notice of deficiency

    5. SN defaulted - Y = a 90 day letter was issued. Entry to reflect date assessed is required.

  7. Prepare Form 5403 for assessment.

  8. Update the statute date on AIMS.

8.2.2.15.1  (10-24-2007)
Disposition of Agreed or Defaulted 90-Day Cases Involving Claims

  1. If, in response to a notice of deficiency, the taxpayer submits an agreement or fails to file a petition within the time provided, a notice of claim disallowance must be issued before the case is forwarded for assessment, unless the taxpayer submits Form 2297.


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