SECTION 7. WHO IS

RESPONSIBLE FOR REQUESTING THE ADVICE?

Director or appeals area director determines whether to request a TAM or a TEAM

Taxpayer may ask that an issue be referred for a TAM or a TEAM; Territory manager or appeals area director determines whether a TAM or a TEAM will be sought

(7) claims that wages or personal service income are not “income,” are “nontaxable receipts,” or “are a nontaxable exchange for labor”;

(8) claims that income tax withholding by an employer on wages is optional; or

(9) other claims the courts have characterized as frivolous or groundless.

.03 A case remains under the jurisdiction of the director even though an area office has the identical issue under consideration in the case of another taxpayer (not related within the meaning of § 267 or a member of an affiliated group of which the taxpayer is not also a member within the meaning of § 1504) in a different transaction. With respect to the same taxpayer or the same transaction, when the issue is under the jurisdiction of an area office and the applicability of more than one kind of federal tax is dependent upon the resolution of that issue, a director may not request a TAM or a TEAM on the applicability of any of the taxes involved.

A director or an appeals area director may not request a TAM or a TEAM on an issue if the same issue of the same taxpayer (or of a related taxpayer within the meaning of § 267 or a member of an affiliated group of which the taxpayer is also a member within the meaning of § 1504) is in a docketed case for any taxable year. If a case is docketed for an estate tax issue of a taxpayer while a request for a TAM or a TEAM on the same issue of the same taxpayer is pending, the Associate office may issue the TAM or the TEAM only if the appropriate appeals officer and field counsel agree, by memorandum, to the issuance of the TAM or the TEAM.

.01 The director or appeals area director determines whether to request a TAM or a TEAM on an issue. Requests generally originate with the examining agent or appeals officer assigned to the case, are submitted through the supervisory chain, and must be approved in writing by the director or equivalent official in the respective operating divisions or by the appeals area director (or by someone with the delegated authority to approve on their behalf) before submission to the Associate office. Exam or appeals personnel, however, should also request advice from field counsel on issues involved in cases under their jurisdiction prior to requesting a TAM or a TEAM. If, during the discussion of an issue with an examining agent or appeals officer, field counsel believes that an issue warrants consideration as a TAM or a TEAM, field counsel may make a written or oral request to the examining agent or appeals officer that the issue be referred to the Associate office for a TAM or a TEAM. If, after considering a request that an issue be submitted for a TAM or a TEAM, the examining agent or appeals officer disagrees with the request, the field counsel may request reconsideration of the denial through the appropriate supervisory chain.

As discussed in section 1.03 of this revenue procedure, if a director or appeals area director requests a TAM, taxpayer cooperation is not required. Accordingly, the taxpayer cannot appeal the decision to seek a TAM. In contrast, as discussed in section 8.02 of this revenue procedure, if a director or appeals area director requests a TEAM, the field or area office, the taxpayer, and the Associate office must all agree that the TEAM procedures are appropriate, except for the two situations discussed above in section 1.03 of this revenue procedure. Thus, in general, if a taxpayer does not want an issue to be referred to the Associate office for a TEAM, the request for advice will be treated as a request for a TAM for which taxpayer agreement is not required.

.02 While a case is under the jurisdiction of a director or appeals area director, a taxpayer may request that an issue be referred to the Associate office for a TAM or a TEAM. The request may be oral or written and should be directed to the examining agent or appeals officer.

If the examining agent or appeals officer concludes that a taxpayer’s request for referral of an issue to the Associate office for a TAM or a TEAM does not warrant referral, the examining agent or appeals officer will notify the taxpayer. A taxpayer’s request for such a referral will not be denied merely because the Associate office provided legal advice, other than advice furnished pursuant to this revenue procedure, to the field or area office on the matter. The

Sec. 7.02 2004-1 I.R.B. 89 January 5, 2004

Territory manager’s or appeals area director’s decision may be reviewed but not appealed

Special review procedures applicable to frivolous issues

taxpayer may appeal the decision of the examining agent or appeals officer not to request a TAM or a TEAM. To do so, the taxpayer must submit to that officer, within ten calendar days after being notified of the decision, a written statement of the facts, law, and arguments on the issue and the reasons why the taxpayer believes the matter should be referred to the Associate office for a TAM or a TEAM. A taxpayer who needs more than ten calendar days must justify in writing the request for an extension of time. The extension is subject to the approval of the territory manager or the appeals area director.

The examining agent or appeals officer submits the taxpayer’s statement through appropriate channels to the territory manager or the appeals area director along with the examining agent’s or appeals officer’s statement of why the issue should not be referred to the Associate office. The territory manager or the appeals area director determines on the basis of the statements whether a TAM or a TEAM will be requested.

If the territory manager or the appeals area director determines that a TAM or a TEAM is not warranted and proposes to deny the request, the taxpayer is told in writing about the determination. In the letter to the taxpayer, the territory manager or the appeals area director states the reasons for the proposed denial (except in unusual situations when doing so would be prejudicial to the best interests of the Government). The taxpayer has ten calendar days after receiving the letter to notify the territory manager or the appeals area director of agreement or disagreement with the proposed denial. If the taxpayer does not respond within ten calendar days after receiving the letter, the lack of response will be deemed as agreement with the proposed denial.

.03 The taxpayer may not appeal the decision of the territory manager or the appeals area director not to request a TAM or a TEAM. If the taxpayer does not agree with the proposed denial, all data on the issue for which a TAM or a TEAM has been sought, including the taxpayer’s written request and statements, will be submitted for review to the Industry Director, LMSB; the Area Director, SB/SE; the Director, Compliance, W&I; the Director, International, LMSB; the Director, Federal, State & Local Governments; the Director, Tax Exempt Bonds; the Director, Indian Tribal Governments; or the Appeals Director, Technical Services, as appropriate.

Review of the proposed denial will be based solely on the written record; no conference will be held with the taxpayer or the taxpayer’s representative. The party responsible for review may consult with the Associate office, if necessary, and will notify the director or area office within 45 calendar days of receiving all the data regarding the request for a TAM or a TEAM whether the proposed denial is approved or disapproved. The director or area office will then notify the taxpayer.

While the matter is being reviewed, the director or area office will suspend action on the issue (except when the delay would prejudice the Government’s interests).

.04 If the request for a TAM or a TEAM concerns a “frivolous issue,” as described in section 6.02 of this revenue procedure, a TAM or a TEAM will not be given, and the examining agent or appeals officer will deny the taxpayer’s request for referral. The taxpayer may appeal the decision of the examining agent or appeals officer. If the territory manager or the appeals area director determines that no TAM or TEAM will be sought, an expedited review procedure will be followed.

This expedited review procedure will consist of the following:

(1) the territory manager or the appeals area director will inform the appropriate official (the Industry Director, LMSB; the Area Director, SB/SE; the Director, Compliance, W&I; the Director, International, LMSB; the Director, Federal, State, and Local Governments; the Director, Tax Exempt Bonds; the Director, Indian Tribal Governments; or the Appeals Director, Technical Services) of the request for review and the basis for the denial, but will not forward the taxpayer’s written request and statements, unless requested to do so by the official;

(2) the director or area office will not suspend action on the issue;

Sec. 7.02 January 5, 2004 90 2004-1 I.R.B.