SECTION 3. SCOPE

.01 Except as provided in Section 3.02, this revenue procedure applies to any Taxpayer that has engaged in a Contingent Liability Transaction and timely elects to resolve the issues in dispute using this procedure. In order to participate in the resolution of a Contingent Liability Transaction under the procedures set forth in this revenue procedure, a Taxpayer must provide a written statement under penalties of perjury that each transferor involved in the Contingent Liability Transaction complied with the statutory requirements specified in the application described in Section 4.01. In addition, this statement must include a certification that each transferor involved in the Contingent Liability Transaction carried out the purported section 351 exchanges and subsequent sales in accordance with the applicable operating documents. The scope and contents of these statements are set forth in the application described in Section 4.01. The Service may request further information to verify the certifications described above.

.02 Taxpayers that have engaged in a Contingent Liability Transaction and meet the requirements set forth below (hereinafter referred to as “Eligible Taxpayers”) may elect to participate under this revenue procedure if:

1. The underpayment of tax attributable to the Contingent Liability Transaction is not due to fraud;

2. The contingent liability was assumed on or before October 18, 1999;

3. The Contingent Liability Transaction is not in litigation, i.e., at any time on or after October 4, 2002, a case containing the issue is not docketed in and under the jurisdiction of any court, including the Tax Court, a district court, a bankruptcy court, the Court of Federal Claims, a circuit court of appeals, or the Supreme Court for any year; and

4. The Contingent Liability Transaction issue has not been designated for litigation, or, if not designated for litigation, the Taxpayer has not been notified that the Contingent Liability Transaction issue is under consideration for designation for litigation, as of October 4, 2002. For purposes of this revenue procedure, the Contingent Liability Transaction issue has been designated for litigation if it has been desig

nated under the procedures set forth in CCDM 35.3.14 or any subsequently issued procedures for designation.

.03 A Taxpayer ineligible to participate in the resolution methodologies set forth in the revenue procedure solely because of the restrictions set forth in Section 3.02(4), relating to issues designated for litigation, becomes an Eligible Taxpayer upon written receipt of notification from the Service that it will not designate the Contingent Liability Transaction issue for litigation (or that the Service will remove the designation in a previously designated case). After the Taxpayer becomes an Eligible Taxpayer, the Taxpayer may apply to participate as set forth in Section 4 on or before the 90th day after the mailing date of the written notification from the Service of the decision not to designate (or to remove the designation of) the Contingent Liability Transaction issue. For purposes of this revenue procedure, a day means a calendar day.

.04 Further eligibility requirements for Taxpayers electing the Fixed Concession Procedure are set forth in Section 5.01.

.05 Eligible Taxpayers who do not elect to participate in one of the resolution methodologies provided for under this revenue procedure may not take advantage of the settlement, mediation or arbitration procedures under Notice 2001–67 (LMSB/ Appeals Fast Track Dispute Resolution Program), 2001–2 C.B. 544; Announcement 2002–60 (Extension of Test of Arbitration Procedure for Appeals), 2002–26 I.R.B. 28; and Rev. Proc. 2002–44 (Mediation Procedure for Appeals), 2002–26 I.R.B. 10.