SECTION 6. EFFECT OF FINAL

ADVERSE DETERMINATION

A Proposed Adverse Determination becomes final if there is no timely appeal under section 4 or if Appeals and the issuer cannot reach agreement with respect to an appeal under section 5.05. Once a Proposed Adverse Determination becomes final with respect to a bond issue, the interest on those bonds will no longer be treated as excludable from gross income under section 103 of the Code and TEB may initiate procedures to impose tax on the bondholders with respect to the interest on the bonds. Once a Proposed Adverse Determination becomes final with respect to a bond issue, TEB generally will not re-open settlement negotiations with an issuer regarding matters identified in the examination of the bond issue.

An issuer may designate an authorized representative by submitting a duly executed Form 2848, Power of Attorney and Declaration of Representative, when making an appeal request under this revenue procedure.

.05 Response to an appeal request . Upon receipt of an appeal request, TEB will review the request to determine whether it meets the requirements of this revenue procedure. If the request does not meet the requirements of this revenue procedure, TEB will notify the issuer of the request’s deficiencies. If the request meets the requirements of this revenue procedure and does not contain any new information or analysis of the taxpayer’s position, TEB will transfer the case file to Appeals in the manner described in section 4.07 of this revenue procedure. If the request meets the requirements of this revenue procedure but the request contains new information or analysis of the taxpayer’s position, TEB will notify the issuer that the new information submitted in the request may change the case’s outcome and requires further discussions prior to transferring the case file to Appeals in the manner described in section 4.07 of this revenue procedure.

.06 Failure to make appeal request . If the issuer does not submit a written appeal request within the time period set forth in section 4.03 (including any filing extension granted by TEB) and in the manner described in section 4.04 of this revenue procedure, TEB’s Proposed Adverse Determination or Arbitrage Rebate Claim Denial shall become final.

.07 Transfer of case file . Upon receipt of an appeal request, TEB Field Operations (TEB FO) will send the case file to TEB Compliance & Program Management (TEB CPM) for review and transfer to Appeals. To facilitate the appeals process, TEB CPM will expeditiously review the case file to ensure that the factual and legal matters therein support the issues raised by TEB FO in the Proposed Adverse Determination or Arbitrage Rebate Claim Denial. Once the review process is complete, TEB CPM will close the case at the examination level and transfer the case file to Appeals.

The file should include copies of the following:

1. the technical advice memorandum, if any;

2. all information received by TEB from the issuer regarding the bond issue;

3. all work papers related to TEB’s examination of the bond issue;

4. TEB’s written Proposed Adverse Determination or Arbitrage Rebate Claim Denial;

5. the issuer’s written protest; and

6. TEB’s response to positions stated by the issuer in its protest.

.08 Jurisdiction over tax matters . Once TEB CPM sends the case file to Appeals, jurisdiction over the issues raised in the Proposed Adverse Determination or Arbitrage Rebate Claim Denial will transfer from TEB to Appeals. Except as provided in section 3.05 of this revenue procedure, TEB will retain jurisdiction over all tax matters related to the bond issue which are not specifically raised as an issue in the Proposed Adverse Determination ( e.g., section 6700 penalties) or Arbitrage Rebate Claim Denial.