SECTION 5. TRANSFERRING THE

ISSUE FROM THE DISTRICT TO APPEALS

.01 In general. If an issue is approved for transfer from the District to Appeals, the procedures described in section 5 of Rev. Proc. 96–9 generally will apply. The following specifically apply to employment tax issues:

.02 The District issues an employ- ment tax report. The District will prepare an employment tax report for each approved early referral issue. The report must identify the amount of employment tax(es) in dispute; fully describe the issue(s); and explain the District’s position. This report will be sent to the taxpayer.

.03 Taxpayer response to District’s report. The taxpayer must respond in writing to the District’s report. The response must contain an explanation of the taxpayer’s position regarding the issue(s), similar to that which would be provided in an Appeals protest, and satisfy the declaration and signature requirements in sections 3.03 and 3.04 of Rev. Proc. 96–9.

The taxpayer’s response must be submitted to the case manager within 30 days of the date of the report. This 30-day requirement may be extended by the case manager. If the taxpayer’s response with respect to an issue is not received within the time provided, the taxpayer’s early referral request will be considered withdrawn regarding that particular issue(s) without prejudice to the taxpayer’s right to an administrative appeal at a later date. But see section 8 of Rev. Proc. 96–9, Withdrawal from the Early Referral Process, regarding withdrawal after Appeals has taken jurisdiction over the early referral issue(s).

.04 Early referral file sent to Ap- peals. After the taxpayer has responded in writing to the report, the District compliance function will send the early referral file to Appeals. The file should include copies of:

• applicable portions of tax returns and workpapers;

• the approved early referral request;

• the District’s report;

• the taxpayer’s written response to the report; and

• the District’s response to the taxpayer’s position, if any.

Appeals has jurisdiction over the issue(s) accepted for early referral. All other issues in the case remain in the District’s jurisdiction.