Section 5. Non-Participants’ Dispute

Resolution Procedures

a. Case Development. The Service has examined numerous Transactions, which, except for minor factual variations, follow a common template. The Service has determined that notwithstanding the factual differences, these Transactions should be treated similarly for purposes of this settlement initiative and do not warrant terms more favorable than this settlement initiative. The Service will develop all of the potential issues, make appropriate income and expense adjustments for all tax benefits and attributes claimed, and determine appropriate income and employment tax penalties for Executives, Related Persons, and Corporations that do not participate in this settlement initiative (non-participants).

b. Appeals Consideration. Non-participants may request Appeals review of disputed tax and penalty determinations. Appeals has independently considered the issues raised by these Transactions with respect to Executives (and the Related Persons), and has evaluated the potential litigation hazards. Appeals has concluded that Executives and Related Persons should not expect a resolution of either the tax or penalty issues on terms that are more favorable than the terms offered in this settlement initiative. In addition, the resolution of a taxpayer’s case in Appeals will be based on the merits of the issues presented and will not involve administrative terms, such as the deferral of the recognition of income by the Executive. Consequently, a resolution of a Transaction with Appeals may be less favorable than the terms of this settlement initiative.

Appeals has not reviewed the corporate income tax, employment tax or penalty issues raised by these Transactions with respect to any Corporation. These include:

2005–11 I.R.B. 747 March 14, 2005

information about this announcement, contact Walter Harris, Deputy Director, Field Specialists LMSB Division, at (202) 283–8290 (not a toll-free number).