SECTION 5. TRANSFERRING THE

ISSUE FROM EXAMINATION TO APPEALS

.01 In General. Jurisdiction over the issues accepted will be transferred from Examination to Appeals, and the procedures set forth in sections 5.02 through 5.04 will apply. .02 Examination issues Notice of Proposed Adjustment (Form 5701). Examination will complete a Notice of Proposed Adjustment (Form 5701), for each approved early referral issue, generally within 30 days after the CEP case manager advises the taxpayer of the approved early referral request. Examination will send the Form 5701 to the taxpayer. The Form 5701 will describe the issue and explain Examination’s proposed adjustment.

The issuance of the Form 5701 for the early referral issue is not treated as the first letter of proposed deficiency for purposes of computing increased interest under § 6621(c).

.03 Taxpayer response to Form 5701. The taxpayer must respond in writing to Examination’s proposed adjustment to each issue set forth in the Form 5701. The response must contain an explanation of the taxpayer’s position regarding the issues, similar to that which would be provided in an Appeals protest. The response shall be submitted to the CEP case manager within 30 days (unless extended by the CEP case manager) from the date that the proposed adjustment (Form 5701) is sent to the taxpayer. The procedural requirements of sections 3.03 and 3.04 of this revenue procedure (perjury statement and signatures) also apply to the taxpayer’s response to the Form 5701. If a response is not received for any issue within the time provided, the taxpayer’s early referral request will be considered withdrawn regarding that particular issue without prejudice to the taxpayer’s right to an administrative appeal at a later date. See section 8, Withdrawal from the Early Referral

Process, regarding withdrawal after Appeals has taken jurisdiction over an early referral issue.

.04 Early referral file sent to Ap- peals. Once the taxpayer has responded to the Form 5701, Examination will send the early referral file to Appeals. Appeals will then take jurisdiction over the issues accepted for early referral. All other issues in the case remain in Examination’s jurisdiction. The early referral file should include copies of:

(1) applicable portions of tax returns and workpapers;

(2) the approved early referral request;

(3) the Form 5701; (4) the taxpayer’s written response to the Form 5701;

(5) Examination’s response to the taxpayer’s position, if any; and

(6) an estimate of the potential tax effect of the proposed adjustment.