SECTION 6. RESOLVING THE EARLY

REFERRAL ISSUE(S)

.01 In general. The taxpayer’s written response to the District’s report generally serves the same purpose as an Appeals protest. Established Appeals procedures, including those governing submissions and taxpayer conferences, apply to early referral issues. See § 601.106 et seq. of the Statement of Procedural Rules. See generally section 6 of Rev. Proc. 96–9. The following specifically apply to early referral of employment tax issues:

.02 If agreement of the early refer- ral issue(s) is reached. If an agreement is reached with respect to an early referral issue(s), an agreement Form 2504 or 2504 AD, labelled ‘‘Partial Agreement,’’ may be used for factual or non-complex issues that have

no features that affect subsequent years. A closing agreement generally will be prepared for issues where a settlement is complex or affects subsequent years. See I.R.C. § 7121 and also Rev. Proc. 68–16, 1968–1 C.B. 770, which describes the preparation of closing agreements. Appeals will coordinate effects on subsequent years with the District and District Counsel.

.03 If agreement of the early refer- ral issue(s) is not reached. If an agreement is not reached with respect to an early referral issue(s), see section 6.03 of Rev. Proc. 96–9, Agreement Not Reached . See also generally, section 7, of Rev. Proc. 96–9, Effect of Conclusion of Examination. The following specifically apply to early referral of employment tax issues: If no issues in the case remain unagreed except for an early referral employment tax issue that could not be settled by Appeals and has been returned to the District, no 30-day letter will be issued. Rather, the District will process the case for assessment of tax due from the taxpayer.