SECTION 3. SCOPE

.01 In general . An appeal of a Proposed Adverse Determination by TEB is initiated by the issuer as described in section 4 of this revenue procedure. Any issue raised by TEB in a Proposed Adverse Determination that would cause interest on a bond issue to fail to qualify for the exclusion from gross income under section 103 of the Code or any Arbitrage Rebate Claim Denial that involves a denial by TEB of a claim for recovery of arbitrage rebate payments under section 148 of the Code with respect to a bond issue is appropriate for consideration by Appeals.

.02 Appeals procedures . Established appeals procedures, including those governing submissions and taxpayer conferences, apply to appeals regarding bond issues. See section 601.106 et seq. of the Regulations.

.03 Issuers as taxpayers . In order to expeditiously conduct an examination (including any related administrative appeal) of a tax-exempt bond issue, an issuer is generally treated as the taxpayer on behalf of any unidentified beneficial owners of the bonds comprising the issue under ex

amination. See section 5.02 of this revenue procedure regarding other parties that may participate in an Appeals proceeding.

.04 Bondholders as taxpayers . TEB must concurrently treat all identified owners of the bonds as taxpayers for all aspects of an examination, including taxpayer communications and the assessment of tax on past interest paid on that bond issue. The appeal rights of a bondholder are independent and separate from the appeal rights of an issuer described under this revenue procedure.

.05 Conduit borrowers as taxpayers . In appropriate circumstances, Appeals may consider issues relating to those raised in a Proposed Adverse Determination with respect to a bond issue which affect the tax liability (other than any potential penalties) of the borrower of bond proceeds of a conduit financing issue concurrently with the issuer’s appeal. Appeals will only consider an issue relating to the borrower’s tax liability if the borrower is under examination with respect to the issue, the resolution of that issue is affected by the determination of whether the interest on an issue of bonds is excludable from gross income under section 103 ( e.g., issues under sections 150(b) or 168(g) of the Code), and the borrower agrees to resolve the issue concurrently with the issuer’s appeal under this revenue procedure. See section 5.02 of this revenue procedure for Appeals procedures governing the participation of parties other than the issuer.

.06 Technical advice . Revenue Procedure 2006–2, 2006–1 I.R.B. 89, explains, in part, when and how the Division Counsel/Associate Chief Counsel (Tax Exempt & Government Entities) issues technical advice memoranda to TEB and Appeals. In accordance with section 7.02 of Rev. Proc. 2006–2, or subsequent revenue procedure, an issuer may submit a request to TEB or Appeals that a tax matter be referred for technical advice in accordance with the procedures contained therein while the bond issue is under the jurisdiction of TEB or Appeals respectively.

.07 Alternative dispute resolution pro- grams . TEB and Appeals offer certain alternative dispute resolution and fast track settlement programs pertaining to the examination of bond issues. These programs, described by revenue procedure, announcement or other published

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case to TEB if it determines that the significance of any new information warrants further case development by TEB FO.

.04 If agreement is reached . If Appeals and the issuer agree that no action is necessary with respect to the issues raised in a Proposed Adverse Determination or an Arbitrage Rebate Claim Denial, Appeals will provide written notification to the issuer that the Proposed Adverse Determination or Arbitrage Rebate Claim Denial has been withdrawn. 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 Exhibit 4.81.1–9 of the Internal Revenue Manual. Under either scenario, Appeals will provide TEB CPM with copies of the Appeals case memorandum and the executed closing agreement (if any), close the case at the appeal level, and send the case file to the Ogden Submission Processing Center.

.05 If agreement is not reached . If Appeals and the issuer cannot reach an agreement, Appeals will provide written notification to the issuer that TEB’s Proposed Adverse Determination or Arbitrage Rebate Claim Denial has become final. Appeals will send the case file (including a copy of the Appeals case memorandum) to TEB CPM and close the case at the appeal level.