SECTION 4. ADMINISTRATIVE

APPEAL PROCESS

.01 In general. Sections 4.03, 4.04, and 4.05 describe the circumstances in which an issuer may appeal an adverse determination by the District that interest on a Bond Issue is not excludable from gross income under § 103 of the Code. Following the receipt of a written notice from the District described in sections 4.03(b), 4.04(b), or 4.05(b), the issuer may request an appeal in accordance with section 5.

.02 Consultations with District Counsel. Prior to issuing a preliminary adverse determination to the issuer regarding the excludability of interest on the Bond Issue from gross income under § 103 of the Code, the District will consult with District Counsel regarding whether technical advice should be requested by the District. Technical advice should be requested, for example, when there is a lack of uniformity regarding the disposition of an issue or when an issue is unusual or complex enough to warrant consideration by the National Office.

.03 The District requests technical advice. (a) If the District, in consultation with District Counsel, determines that technical advice is warranted, the District will follow the procedures for requesting technical advice set forth in § 601.105 et seq. of the Statement of Procedural Rules and Rev. Proc. 98–2, 1998–1 I.R.B. 74. If the National Office issues a technical advice memorandum to the District, the District will notify the issuer, in writing, of its determination.

(b) The written notice will identify the Bond Issue under examination, include a copy of the technical advice memoran

dum and, if the District’s determination is adverse to the issuer, inform the issuer of the availability of an administrative appeal of the adverse determination.

.04 The issuer requests technical ad- vice referral. (a) If the District, after consultation with District Counsel, determines that technical advice is not necessary, the District will notify the issuer, in writing, of its preliminary adverse determination that the interest on the Bond Issue is not excludable from gross income under § 103 of the Code, and provide the issuer with an opportunity to have closing agreement discussions. The notice will also inform the issuer that it may request technical advice referral in accordance with § 601.105 et seq. of the Statement of Procedural Rules. If the issuer requests technical advice referral, such request will be made, and considered, in accordance with the procedures set forth in § 601.105 et seq. of the Statement of Procedural Rules and Rev. Proc. 98–2, 1998– 1 I.R.B. 74, or subsequent procedure. If the National Office issues a technical advice memorandum to the District, the District will notify the issuer, in writing, of its determination.

(b) The written notice will identify the Bond Issue under examination, include a copy of the technical advice memorandum and, if the District’s determination is adverse to the issuer, inform the issuer of the availability of an administrative appeal of the adverse determination.

.05 Technical advice not requested. (a) If, after receiving notice of the District’s preliminary adverse determination described in section 4.04(a), the issuer does not request technical advice referral or if the issuer’s request is denied, the District will provide the issuer with an opportunity to have closing agreement discussions. If closing agreement discussions between the issuer and the District are unsuccessful, the District will send the issuer a written notice to the effect that the District has made an adverse determination that the interest on the Bond Issue under examination is not excludable from gross income under § 103 of the Code.

(b) The written notice will identify the Bond Issue under examination, state the District’s reasons for its adverse determination and inform the issuer of the availability of an administrative appeal of the District’s adverse determination.

December 7, 1998 14 1998–49 I.R.B.

.03 If agreement is reached. If Appeals and the issuer agree that no action is necessary with respect to the Bond Issue, Appeals will notify the District and close the case. If Appeals and the issuer reach an agreement with respect to the Bond Issue, Appeals will generally prepare a closing agreement using the model closing agreement provided in Announcement 95–61, 1995–33 I.R.B. 25. .04 If agreement is not reached. (a) If Appeals and the issuer fail to reach an agreement with respect to an appeal, Appeals will close the appeal file, return jurisdiction over the Bond Issue to the District for appropriate action, and send a copy of the Appeals Case Memorandum with respect to the Bond Issue to the District.

(b) Appeals will not reconsider an unagreed appeal unless there has been a substantial change in the circumstances regarding the appeal issue.