SECTION 16. HOW DOES THE

NATIONAL OFFICE PREPARE THE TECHNICAL ADVICE MEMORANDUM?

Delegates authority to branch chiefs

Determines whether request has been properly made

Contacts the field or area office to discuss issues

Informs the field or area office if any matters in the request have been referred to another branch or office

Informs the field or area office if additional information is needed

See section 16.10 of this revenue procedure about discussing the final conclusions with the field or area office. Further, the director or the area director, appeals, will be notified at the time the technical advice memorandum is mailed.

.01 The branch chiefs in the Office of Associate Chief Counsel (Corporate), the Office of Associate Chief Counsel (Financial Institutions & Products), the Office of Associate Chief Counsel (Income Tax & Accounting), the Office of Associate Chief Counsel (International), the Office of Associate Chief Counsel (Passthroughs & Special Industries), the Office of Associate Chief Counsel (Procedure and Administration), and the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) have largely been delegated the authority to issue technical advice on issues under their jurisdiction.

.02 A request for technical advice generally is given priority and processed expeditiously. As soon as the request for technical advice is assigned, the branch representative analyzes the file to see whether it meets all requirements of sections 6, 7, and 10 of this revenue procedure.

However, if the request does not comply with the requirements of section 10.02 of this revenue procedure relating to the deletions statement, the Service will follow the procedure in the last paragraph of section 11.06 of this revenue procedure.

.03 Usually, within 21 calendar days after the branch receives the request for technical advice, a representative of the branch telephones the field or area office to discuss the procedural and substantive issues in the request that come within the branch’s jurisdiction.

.04 If the technical advice request concerns matters within the jurisdiction of more than one branch or office, a representative of the branch that received the original technical advice request informs the field or area office within 21 calendar days of receiving the request that—

(1) the matters within the jurisdiction of another branch or office have been referred to the other branch or office for consideration; and

(2) a representative of the other branch or office will contact the field or area office about the technical advice request within 21 calendar days after receiving it in accordance with section 16.03 of this revenue procedure.

.05 The branch representative will inform the field or area office that the case is being returned if substantial additional information is required to resolve an issue. Cases should be returned for additional information when significant unresolved factual variances exist between the statement of facts submitted by the field or area office and the taxpayer. Cases should also be returned if major procedural problems cannot be resolved by telephone. The field or area office should promptly notify the taxpayer of the decision to return the case for further factual development or other reasons.

If only minor procedural deficiencies exist, the branch representative will request the additional information in the most expeditious manner without returning the case. Within 21 calendar days after receiving the information requested, the branch representative will

Sec. 16.05 2002–1 I.R.B 105 January 7, 2002

Informs the field or area office of the tentative conclusion

If a tentative conclusion has not been reached, gives date estimated for tentative conclusion

Advises the field or area office if tentative conclusion is changed

Generally does not discuss the tentative conclusion with the taxpayer

Advises the field or area office of final conclusions

If needed, requests additional information

notify the field or area office of the tentative conclusion and an estimated date by which the technical advice memorandum will be mailed, or an estimated date when a tentative conclusion will be made.

.06 If all necessary information has been provided, the branch representative informs the field or area office of the tentative conclusion and the estimated date that the technical advice memorandum will be mailed.

.07 If a tentative conclusion has not been reached because of the complexity of the issue, the branch representative informs the field or area office of the estimated date the tentative conclusion will be made.

.08 Because the branch representative’s tentative conclusion may change during the preparation and review of the technical advice memorandum, the tentative conclusion should not be considered final. If the tentative conclusion is changed, the branch representative will inform the field or area office.

.09 Neither the national office nor the field or area office should advise the taxpayer or the taxpayer’s representative of the tentative conclusion during consideration of the request for technical advice. However, in order to afford taxpayers an appropriate opportunity to prepare and present their position, the taxpayer or the taxpayer’s representative should be told the tentative conclusion when scheduling the adverse conference, at the adverse conference, or in any discussion between the scheduling and commencement of the adverse conference. See section 17.02 of this revenue procedure regarding discussions of the contents of the technical advice memorandum with the taxpayer or the taxpayer’s representative.

.10 In all cases, the branch representative will inform the examining officer or appeals officer of the national office’s final conclusions. The examining officer or appeals officer will be offered the opportunity to discuss the issues and the national office’s final conclusions before the technical advice memorandum is issued.

.11 If, following the initial contact referenced in section 16.03 of this revenue procedure, it is determined, after discussion with the branch chief or reviewer, that additional information is needed, a branch representative will obtain the additional information from the taxpayer or from the director or the area director, appeals, in the most expeditious manner possible. Any additional information requested from the taxpayer by the national office must be submitted by letter with a penalties of perjury statement within 21 calendar days after the request for information is made.

(1) Request to receive a request for additional information by fax. To facilitate prompt action on technical advice requests, the taxpayer is encouraged to request that if the Service requests additional information from the taxpayer, the Service does so by fax.

A request to fax a copy of the request for additional information to the taxpayer or the taxpayer’s authorized representative must be made in writing, either as part of the original technical advice request or prior to the mailing of the request for additional information. The request to fax must contain the fax number of the taxpayer or the taxpayer’s authorized representative to whom the document is to be faxed.

Because of the unsecured nature of a fax transmission, the Service will take certain precautions to protect confidential information. For example, the Service will use a cover sheet that identifies the intended recipient of the fax and the number of pages transmitted, that does not identify the taxpayer by name or identifying number, and that contains a

Sec. 16.11 January 7, 2002 106 2002–1 I.R.B.

Requests taxpayer to send additional information to the national office and a copy to the director or area director, appeals

Informs the taxpayer when requested deletions will not be made

statement prohibiting unauthorized disclosure of the document if a recipient of the faxed document is not the intended recipient of the fax. Also, for example, the cover sheet should be faxed in an order in which it will become the first page covering the faxed document.

(2) Penalties of perjury statement. Additional information submitted to the national office must be accompanied by the following declaration: “Under penalties of perjury, I declare that I have examined this information, including accompanying documents, and, to the best of my knowledge and belief, the information contains all the relevant facts relating to the request for the information, and such facts are true, correct, and complete.” This declaration must be signed and dated by the taxpayer, not the taxpayer’s representative. A stamped signature is not permitted.

(3) 21-day period will be extended if justified and approved. A written request for an extension of time to submit additional information must be received by the national office within the 21-day period, giving compelling facts and circumstances to justify the proposed extension. The associate or assistant chief counsel, as appropriate, of the office to which the case is assigned will determine whether to grant or deny the request for an extension of the 21-day period. No extension will be granted without the approval of the associate or assistant chief counsel, as appropriate. Except in rare and unusual circumstances, the national office will not agree to an extension of more than 10 working days beyond the end of the 21-day period. There is no right to appeal the denial of a request for extension.

(4) If the taxpayer does not submit additional information. If the national office does not receive the additional information within the 21-day period, plus any extensions granted by the associate or assistant chief counsel, as appropriate, the national office will issue the technical advice memorandum based on the existing record.

.12 Whether or not requested by the Service, any additional information submitted by the taxpayer should be sent to the national office. Generally, the taxpayer needs only to submit the original of the additional information to the national office. However, in appropriate cases, the national office may request additional copies of the information.

Also, the taxpayer must send a copy of the additional information to the director or the area director, appeals, for comment. Any comments by the director or the area director, appeals, must be furnished promptly to the appropriate branch in the national office. If the director or the area director, appeals, does not have any comments, he or she must notify the branch representative promptly.

.13 Generally, before replying to the request for technical advice, the national office informs the taxpayer orally or in writing of the material likely to appear in the technical advice memorandum that the taxpayer proposed be deleted but that the Service has determined should not be deleted.

If so informed, the taxpayer may submit within 10 calendar days any further information or arguments supporting the taxpayer’s proposed deletions.

The Service attempts, if possible, to resolve all disagreements about proposed deletions before the national office replies to the request for technical advice. However, the taxpayer does not have the right to a conference to resolve any disagreements about material to be deleted from the text of the technical advice memorandum. These matters, however, may be considered at any conference otherwise scheduled for the request. See section 17.04 of this revenue procedure for the procedures to protest the disclosure of information in the technical advice memorandum.

Sec. 16.13 2002–1 I.R.B 107 January 7, 2002

Prepares reply in two parts .14 The replies to technical advice requests are in two parts. Each part identifies the taxpayer by name, address, identification number, and year or years involved.

The first part of the reply is a transmittal memorandum (Form M–6000). In unusual cases, it is a way of giving the field or area office strategic advice that need not be discussed with the taxpayer. If the transmittal memorandum provides more than the fact that the technical advice memorandum is attached or the case is returned for further development, the transmittal memorandum may constitute Chief Counsel Advice, as defined in § 6110(i)(1), subject to disclosure under § 6110.

The second part is the technical advice memorandum, which contains—

(1) a statement of the issues;

(2) the conclusions of the national office;

(3) a statement of the facts pertinent to the issues;

(4) a statement of the pertinent law, tax treaties, regulations, revenue rulings, and other precedents published in the Internal Revenue Bulletin, and court decisions; and

(5) a discussion of the rationale supporting the conclusions reached by the national office.

The conclusions give direct answers, whenever possible, to the specific issues raised by the field or area office. However, the national office is not bound by the precise statement of the issues as submitted by the taxpayer or by the field or area office and may reframe the issues to be answered in the technical advice memorandum. The discussion of the issues will be in sufficient detail so that the field or appeals officials will understand the reasoning underlying the conclusion.

Accompanying the technical advice memorandum is a notice under § 6110(f)(1) of intention to disclose a technical advice memorandum (including a copy of the version proposed to be open to public inspection and notations of third party communications under § 6110(d)).

Routes replies to appropriate office .15 Replies to requests for technical advice are addressed to the director (see paragraph 1 of description of terms used in section 1 of this revenue procedure) or the area director, appeals. A copy of the reply to a request from LMSB should be mailed simultaneously to the field personnel who requested it under the signature authority of the director. Replies to requests from appeals should be routed to the appropriate area office through the Chief, Appeals, C:AP:LMSB.

Sends a copy of reply to appropriate division counsel