SECTION 12. EFFECT — Internal Revenue Bulletin 2009-40

DOCUMENTS

Revenue Procedure 2002–44 is superseded. This revenue procedure is subject to the requirements in Announcement 2008–111 for offer in compromise and Trust Fund Recovery Penalty cases.

DRAFTING INFORMATION

The principal author of this revenue procedure is Sarah Sheldon, Office of Chief Counsel, Procedure and Administration. For further information regarding this revenue procedure, contact Ms. Sheldon at (202) 622–7950 (not a toll-free call).

of the Internal Revenue Code, including sections 6103, 7213, and 7431.

.02 Section 7214(a)(8) disclosure . Under section 7214(a)(8), IRS employees must report information concerning violations of any revenue law to the Secretary. The agreement to mediate will state this requirement and the parties will acknowledge this duty.

.03 Disqualification of the non-IRS co-mediator . The non-IRS co-mediator will be disqualified from representing the taxpayer in any pending or future action that involves the transactions or issues that are the particular subject matter of the mediation. This disqualification extends to representing any other parties involved in the transactions or issues that are the particular subject matter of the mediation. Moreover, the co-mediator’s firm will be disqualified from representing the taxpayer or any other parties involved in the transactions or issues that are the particular subject matter of the mediation in any action that involves the transactions or issues that are the particular subject matter of the mediation.

The co-mediator’s firm will not be disqualified from representing the taxpayer or any other parties in any future action that involves the same transactions or issues that are the particular subject matter of the mediation, provided that (i) the co-mediator disclosed the potential of such representation to the parties to the medi

ation conducted by the co-mediator prior to the parties’ acceptance of the co-mediator, (ii) such action relates to a taxable year that is different from the taxable year that is the subject matter of the mediation, (iii) the firm’s internal controls preclude the co-mediator from any form of participation in the matter, and (iv) the firm does not apportion to the co-mediator any part of the fee therefrom. In the event the co-mediator has been selected prior to the co-mediator learning of the identity of one or more of the parties involved in the mediation, requirement (i) will be deemed satisfied if the co-mediator promptly notifies the parties of the potential representation.

Although the co-mediator is prohibited from receiving a direct allocation of the fee from the taxpayer (or other party) in the matter for which the internal controls are in effect, the co-mediator will not be prohibited from receiving a salary, partnership share, or corporate distribution established by prior independent agreement. The co-mediator and his or her firm are not disqualified from representing the taxpayer or any other parties involved in the mediation in any matters unrelated to the transactions or issues that are the particular subject matter of the mediation.

This paragraph 3 only applies to representations on matters before the IRS.

The provisions of this paragraph 3 are in addition to any other applicable disqualification provisions, including, for example,

October 5, 2009 465 2009–40 I.R.B.

Exhibit 1:

Addresses for Appeals Area Directors

Director, Area 1

IRS Appeals 290 Broadway, 11 ^th Floor New York, NY 10007

Director, Area 2 - Collection

IRS Appeals 1099 14 ^th Street, N.W. Washington, DC 20005

Director, Area 3

IRS Appeals 810 Broadway, Suite 300 Nashville, TN 37203

Director, Area 4

IRS Appeals 701 Market St., Suite 2200 Philadelphia, PA 19106

Director, Area 7

IRS Appeals 4050 Alpha Road Farmers Branch, TX 75244

Director, Area 8

IRS Appeals 160 Spear St. Suite 800 San Francisco, CA 94105

Director, Area 9

IRS Appeals 330 North Brand Blvd, Suite 600 Glendale, CA 91203

Director, Appeals Team Case Leaders 300 North Los Angeles Street, Federal Building Los Angeles, CA 90012

2009–40 I.R.B. 466 October 5, 2009

Exhibit 2:

The Mediation Process .

Model Agreement to Mediate

The mediation will be an extension of the Appeals process to help [NAME OF TAXPAYER] and Internal Revenue Service (IRS)—Appeals (the PARTIES) reach a negotiated settlement of the issues to be mediated. See (2) below for the participants in the mediation process. To accomplish this goal, the mediator will act as a facilitator, assist in defining the issues, and promote settlement negotiations between the PARTIES. The mediator will inform and discuss with the PARTIES the rules and procedures pertaining to the mediation process. The mediator will not have settlement authority and will not render a decision regarding any issue in dispute. The PARTIES will continue to have settlement authority for all issues considered under the mediation process.

Nature of Process, Participants, Withdrawal .

(a) The mediation process is optional.

(b) Each PARTY must have at least one participant attending the mediation session with decision-making authority. No later than two weeks before the mediation, each PARTY will submit to the other PARTY and the mediator a list of the participants who will attend the mediation session on behalf of or at the request of the PARTY, including a designation of the person with decision-making authority who will represent the PARTY at the mediation session. Each PARTY’s list of participants will contain the participant’s name, the participant’s position with the PARTY or other affiliation ( e.g., a member of XYZ law firm, counsel to the taxpayer), and the participant’s address, [telephone number, and fax number]. All participants attending the mediation on behalf of or at the request of a PARTY will be listed on the PARTY’s list of participants, including witnesses, consultants, and attorneys.

[Insert limitations on the number or types of participants, if any.]

(c) Either PARTY may withdraw from the process at any time prior to reaching a settlement of the issues to be mediated by notifying the other PARTY and the mediator in writing.

Selection of Mediator and Costs.

(a) Headquarters Appeals will pay the costs associated with the Appeals mediator. The taxpayer will pay the cost of a non-IRS co-mediator.

(b) The taxpayer, by signing this agreement, acknowledges that (i) the Appeals mediator is a current employee of the IRS, (ii) a conflict results from his or her continued status as an IRS employee, and (iii) this conflict will not interfere in the mediator’s ability to facilitate the case impartially.

Issues to be Mediated .

The mediation session will encompass the following issues in the IRS audit of the federal tax returns of [NAME OF TAXPAYER] for tax year(s) :

(a) Issue #1

(b) Issue #2

Submission of Materials .

Each PARTY will present to the mediator a separate written summation not to exceed 20 pages (exclusive of exhibits consisting of pre-existing documents and reports) regarding each issue. The mediator will have the right to ask either PARTY for additional information before the mediation session if deemed necessary for a full understanding of the issues to be mediated. Each PARTY will simultaneously submit to the other PARTY a copy of any submission to the mediator.

Place of Mediation .

The PARTIES will attempt to select a site at or near the mediator’s office, [NAME OF TAXPAYER] ’s office, or an Appeals office.

Proposed Schedule .

Subject to the approval of the mediator, the mediation session will be conducted according to the following schedule:

Submission of Materials to Mediator:

A DATE NO LATER THAN TWO WEEKS BEFORE THE DATE OF MEDIATION SESSION

Mediation Session: By MONTH DAY, YEAR and TIME

October 5, 2009 467 2009–40 I.R.B.

Confidentiality .

IRS and Treasury employees who participate in or observe the mediation process in any way, and any person under contract to the IRS pursuant to § 6103(n) of the Internal Revenue Code (including the mediator) that the IRS invites to participate or observe, will be subject to the confidentiality and disclosure provisions of the Internal Revenue Code, including §§ 6103, 7213 and 7431. See also 5 U.S.C. § 574.

Ex Parte Contacts Prohibited.

There will be no ex parte contacts from a PARTY to the mediator outside the mediation session. This provision is not intended to prevent the mediator from contacting a PARTY, or a PARTY from responding to the mediator’s request for information.

Section 7214(a)(8) Disclosure .

The PARTIES to this agreement acknowledge that IRS employees involved in this mediation are bound by the § 7214(a)(8) disclosure requirements concerning violations of any revenue law.

No Record .

There will be no stenographic record, audio or video tape recording, or other transcript of the mediation session(s).

Report by Mediator .

At the conclusion of the mediation session, the mediator will issue a brief report to the PARTIES identifying each issue described in section 4, above, and whether the PARTIES either agreed to resolve or did not resolve the issue.

Appeals Procedures Apply .

If the mediation process enables the PARTIES to reach agreement on the issues, Appeals will use established procedures to close the case. Delegation Order 236 (Rev. 3) (addressing settlement authority for issues in a Coordinated Examination Program) or § 7122(b) (regarding offer in compromise cases) may apply to settlements resulting from the mediation process. If the PARTIES do not reach an agreement on an issue being mediated, the PARTIES may request arbitration for the issue provided the issue meets the requirements for arbitration. See Rev. Proc. 2006–44, 2006–2 C.B. 800, or any subsequent procedure. If arbitration is not requested or approved, Appeals will not reconsider the mediated issue(s), and a statutory notice of deficiency will be issued with respect to all unagreed issues (or the case will be processed using established closing procedures if there is no deficiency).

Precedential Use .

A settlement reached by the PARTIES through mediation will not be binding on the PARTIES (or be otherwise controlling) for taxable years not covered by the agreement. Except as provided in the agreement, no PARTY may use such settlement as precedent.

INTERNAL REVENUE SERVICE, APPEALS

By: NAME Appeals Team Manager

NAME OF TAXPAYER

By: NAME TITLE

Date: Date:

2009–40 I.R.B. 468 October 5, 2009

Exhibit 3:

Case Name:

Submitted By:

Date:

Model Mediation Participants List

Please list below all participants attending the mediation, including witnesses, consultants, and attorneys. This form must be sent to the other PARTY and to the mediator(s) no later than two weeks before the mediation session. Insert an asterisk (*) before the name of the person who has decision-making authority at the mediation session:

NAME POSITION OR

AFFILIATION

ADDRESS TELEPHONE &

FAX NUMBER

October 5, 2009 469 2009–40 I.R.B.

Exhibit 4:

Consent to Disclose Tax Information

Pursuant to section 6103(c) of the Internal Revenue Code of 1986 (as amended), I hereby consent to the disclosure of return information (as defined in section 6103(b)(2)) relating to the mediation session between (Taxpayer) and the Commissioner of Internal Revenue to be held on (date), as follows:

The Internal Revenue Service may disclose the taxpayer’s return and return information incident to the mediation to the mediator and any participants or observers identified in the initial list of participants and to any subsequent participants and observers identified in writing by the parties.

This consent relates to the mediation session that is the subject of an agreement to mediate dated . I am aware that in the absence of this authorization, the return and return information of (Taxpayer) is confidential and may not be disclosed except as authorized by the Internal Revenue Code.

I certify that I have the authority to execute this consent on behalf of Taxpayer.

Taxpayer Name:

Taxpayer Identification Number:

Taxpayer Address:

By: [Name of Individual Executing Consent]

Title: [Title of Individual Executing Consent]

Signature:

Date:

2009–40 I.R.B. 470 October 5, 2009

Exhibit 5:

Model Mediator’s Report

The parties below agreed to mediate their dispute and attended a mediation session on MONTH DAY, YEAR in an attempt to settle the following issue(s):

ISSUE:

SETTLEMENT: [ ] Yes

[ ] No

[ ] Partial

Proposed Adjustment Amount: Amount Sustained:

ISSUE:

SETTLEMENT: [ ] Yes

[ ] No

[ ] Partial

Proposed Adjustment Amount: Amount Sustained:

Settlement documents will be prepared under established Appeals procedures.

DATED this day of

/s/ Mediator

/s/ Party

may be true even for loans in which the underlying commercial real estate is providing more than enough cash flow to satisfy debt service before maturity.

.03 Many commercial mortgage loans are held in securitization vehicles such as investment trusts and real estate mortgage investment conduits (REMICS). Typically, these pools of loans are administered by servicers that handle the day-to-day operations of the mortgage loan pools and by special servicers that handle the modification and restructuring of defaulted loans, as well as foreclosure or similar conversion of defaulted mortgage loan property.

.04 Many loan pool administrators have developed and implemented procedures for monitoring both the status of the commercial properties securing the mortgage loans and the likelihood of borrowers being able to refinance their mortgage loans or sell the mortgaged property as the loans mature. The personnel who implement these procedures are often experienced in negotiating with borrowers, restructuring troubled commercial loans, and foreclosing on commercial properties. It may be possible, therefore, to foresee impending

26 CFR 601.105: Examination of returns and claims for refund, credit or abatement; determination of cor- rect tax liability. (Also: Part I, §§ 860D, 860F, 860G, 1001; 1.860G–2, 1.1001–3, 301.7701–2, 301.7701–3, 301.7701–4.)

Rev. Proc. 2009–45