SECTION 2. SCOPE OF EARLY

REFERRAL PROCEDURES

.01 In general. Except as provided in section 2.03, a taxpayer may request early referral of any developed, unagreed issue under the jurisdiction of the District Director arising from an examination (audit). Examination will continue to develop other issues arising in the audit. Early referral is:

(1) optional; (2) initiated by the taxpayer; (3) subject to the approval of both the District Director and the Assistant Regional Director of Appeals-Large Case (ARDA); and

(4) limited to CEP taxpayers. .02 Appropriate issues for early re- ferral. Appropriate issues for early referral include those that:

(1) if resolved, can reasonably be expected to result in a quicker resolution of the entire case; and

(2) both the taxpayer and the District Director agree should be referred to Appeals early.

Industry Specialization Program (ISP) and Appeals Coordinated Issues (ACIs) can be referred to Appeals for early resolution under these early referral procedures. ISP issues are listed in Exhibit 8700–1 and ACIs are listed in Exhibit 8700–4 of the Internal Revenue Manual.

.03 Issues excluded from early referral. Early referral does not apply to:

(1) an issue designated for litigation by the Office of Chief Counsel; or

(2) issues for which the taxpayer has filed a request for Competent Authority assistance, or issues for which the taxpayer intends to seek Competent Authority assistance. Taxpayers are encouraged to request the simultaneous Appeals/Competent Authority procedure described in section 8 of Announcement 95–9, 1995–7 I.R.B. 57 or a subsequent revenue procedure. If a taxpayer enters into a settlement with Appeals (including an Appeals settlement through the early referral process), and then requests Competent Authority assistance, the U.S. competent authority will endeavor only to obtain a correlative adjustment with the treaty country and will not take any actions that would otherwise amend the settlement. See section 7.05 of Announcement 95–9.