Rev. Proc. 79-59

Section 1. Purpose.

The purpose of this Revenue Procedure is to encourage more effective utilization of administrative appeals procedures by taxpayers, and to achieve earlier development and disposition of docketed cases.

Sec. 2. Changes.

This revenue procedure modifies Rev. Proc. 78-9, 1978-1 C.B. 563, to reflect changes in titles and/or transfer of responsibilities based on the Service's reorganization effective July 2, 1978, the implementation of the Service's one level of administrative appeal, effective October 1, 1978, the addition of section 7478 to the Code by the Revenue Act of 1978, Pub. L. 95-600, 1978-3 C.B. (Vol. 1) 1, and full implementation of Rev. Proc. 78-9 procedures on July 1, 1979.

Sec. 3. Procedure.

Rev. Proc. 78-9 is modified and United States Tax Court cases will be processed under the following procedures:

.01 Chief Counsel's delegate (hereinafter Counsel) will have exclusive jurisdiction over any case docketed in the Tax Court if the notice of deficiency, liability or other determination was issued by Appeals officials; if the notice of deficiency, liability or other determination was issued after an appellate consideration by the Employee Plans/Exempt Organizations function (hereinafter EP/EO); if the notice of deficiency, liability or final adverse determination letter was issued by a District Director and is based upon a National Office ruling or National Office technical advice in that case involving a qualification of an employee plan or tax exemption and/or foundation status of an organization (but only to the extent the case involves such issue); or if the case was docketed under Code sections 6110, 7477, or 7478. Jurisdiction will vest with Counsel at the time the case is docketed with the Court. For cases docketed under Code sections 6110, 7477, or 7478 settlement jurisdiction is provided by section 3.13.

.02 Appeals Division will have exclusive settlement jurisdiction for a period of four months (but no later than the receipt of the trial calendar in regular cases and no later than 15 days before the calendar call in S cases), over any case docketed in the Tax Court except cases described in above paragraph 3.01. The four-month period will commence at the time Appeals officials receive the case from Counsel. Appeals officials will arrange settlement conferences in such cases within 45 days of receipt of the case. In the event of a settlement, Appeals officials will prepare the necessary computations and forward them to Counsel, who will prepare the settlement documents for execution by the parties and filing with the Tax Court. Appeals officials will also have authority to settle less than all the issues in the case and to refer the unsettled issues to Counsel for disposition. In the event of a partial settlement Appeals officials will furnish Counsel with the agreement of the petitioner(s) and Appeals officials concerning the agreed issues. Counsel will prepare documents reflecting settlement of the agreed issues for execution by the parties and filing with the Tax Court at the appropriate time.

03. At the end of such four month period or before that time if Appeals officials determine the case is not susceptible of settlement, the case will be returned to Counsel. Thereafter, Counsel will have exclusive authority to dispose of the case. If at the end of the four month period there is substantial likelihood that a settlement of the entire case can be effected in a reasonable period of time, Counsel may extend the Appeals officials' settlement jurisdiction for a period not to exceed 60 days, but in no event beyond the date of the receipt of a trial calendar upon which the case appears.

.04 Extensions beyond the period specified in section 3.03 will be granted only with the personal approval of the Regional Counsel. Such extensions will be made only in those cases in which the probability of settlement of the case in its entirety by Appeals officials clearly outweighs the need to commence trial preparation.

.05 When Counsel acquires sole jurisdiction of a case, it will fully develop all of the legal positions and facts relevant to issues in the case. Conferences will be arranged within 45 days of receipt of jurisdiction to request informally any additional evidence or facts. If the requested information is not forthcoming within a reasonable period of time, the Court's discovery procedures will be utilized, as appropriate. When the case is fully developed legally and factually and when Counsel is in a position to evaluate the Service's litigating posture, Counsel will determine whether a settlement offer or settlement negotiations will be entertained. Settlement offers and counter offers made between Appeals officials and the taxpayer will not be binding on Counsel.

.06 During the period of Appeals officials' jurisdiction Appeals officials will make available such files and information as may be necessary for Counsel to take any action required by the Court (e.g., responding to a motion filed by petitioner) or which is in the best interest of the Government.

.07 At the time a case is referred by Counsel to Appeals officials, Counsel may indicate areas of needed factual development or areas of possible technical uncertainties. In referring a case to Counsel, Appeals officials will furnish their summary of the facts and the pertinent legal authorities.

.08 The Chief Counsel may, by appropriate order, require review by the Regional Counsel, or the Chief Counsel, of Counsel settlements of certain categories of cases. The decision of the Regional Counsel or the Chief Counsel in such cases is final.

.09 Before an offer in settlement of all or part of the issues in a case is accepted by Counsel, Counsel will solicit the views of Appeals officials in cases designated by Appeals officials. The solicitation will be in the form of a proposed Regional Counsel's decision. If Appeals officials disagree with the offer they will, within 15 work days, express their views of the offer. If Appeals officials disagree with the proposed settlement, and the settlement is not required to be reviewed by the Regional Counsel or the Chief Counsel pursuant to section 3.08, Appeals officials may protest the settlement and require the settlement to be reviewed by the Regional Counsel. If Appeals officials protest, the protest will be supported by a memorandum of their position and their view of the acceptable basis for settlement. The decision of the Regional Counsel in such protest cases is final. The 15-day period may be extended by Counsel upon request by Appeals officials.

.10 If an offer is received at or about the time of trial, in a case designated by Appeals officials for settlement consultation, Counsel will endeavor to have the case placed on a motions calendar to permit consultation with and review by Appeals officials in accordance with the foregoing procedures. If that is not possible, or if an offer meriting consideration is made at any time which does not permit the written procedures to be followed, Counsel will orally inform Appeals officials and consult with them, reducing to memorandum the results of that consultation. To the extent possible, Appeals officials will be afforded the same "protest" procedure in such a case as set forth above.

.11 In all cases in which a settlement has been concluded by Counsel, Appeals officials will prepare the appropriate computations including the audit statement and statement of account.

.12 For issues in docketed and non-docketed cases pending with Appeals officials which are related to issues in docketed cases over which Counsel has jurisdiction, no settlement offer will be accepted by either Appeals officials or Counsel unless both agree that the offer is acceptable. The protest procedure will be available to Appeals officials, and the Regional Counsel will have authority to resolve the issue with respect to both the Appeals and Counsel cases. If settlement of the docketed case requires approval by the Regional Counsel or the Chief Counsel pursuant to section 3.08, the final decision with respect to the issues under the jurisdiction of both Appeals officials and Counsel will be made by the Regional Counsel or the Chief Counsel.

.13 Assistant Commissioner (Technical) and Deputy Chief Counsel (Litigation) will have joint settlement jurisdiction over any case docketed in the Tax Court under Code sections 6110, 7477, or 7478 until the first day of the calendar on which the case is called for trial or, if earlier, the day on which the Court serves on Counsel an order setting brief due dates; thereafter the Chief Counsel's delegate will have settlement jurisdiction. Upon receipt, Counsel will promptly prepare the case for submission to the Court. If a settlement is recommended by Counsel during the joint jurisdiction period, it will be forwarded to the Deputy Chief Counsel (Litigation) with a supporting memorandum.

Sec. 4. Effective Date.

This procedure will be applicable to all cases docketed with the Tax Court.

Sec. 5. Effect on Other Document.

Rev. Proc. 78-9 is modified and superseded.