PROCEDURES REVISED FOR FURNISHING TECHNICAL ADVICE.

Rev. Proc. 95-2

                          TABLE OF CONTENTS

This revenue procedure explains when and how the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), and the Associate Chief Counsel (International) give technical advice to District Directors and Chiefs of Appeals Offices. It also explains the rights a taxpayer has when a District Director or a Chief, Appeals Office, requests technical advice regarding a tax matter.

For purposes of this revenue procedure, (1) any reference to District Directors or District Offices includes their respective offices or, when appropriate, the Assistant Commissioner (International) or the Director of an Internal Revenue Service Center; (2) any reference to Chief, Appeals Office, includes, when appropriate, the Assistant Regional Director of Appeals (Large Case); and (3) any reference to Appeals Officer includes, when appropriate, the Team Chief; and (4) the word "taxpayer" includes all persons subject to any provision of the Internal Revenue Code (including issuers of section 103 obligations) and, when appropriate, their representatives.

The revenue procedure is updated annually as the second revenue procedure of the year, but may be modified or amplified during the year.

SECTION 2. WHAT IS TECHNICAL ADVICE?

"Technical advice" means advice or guidance in the form of a memorandum furnished by the Office of Associate Chief Counsel (Domestic), the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Office of Associate Chief Counsel (Enforcement Litigation), or the Office of Associate Chief Counsel (International) (each hereafter referred to as the "National Office"), upon the request of a District Director or a Chief, Appeals Office, submitted in accordance with the provisions of this revenue procedure, in response to any technical or procedural question that develops during any proceeding on the interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, notices, or other precedents published by the National Office to a specific set of facts. Such proceedings include: (1) the examination of a taxpayer's return; (2) the consideration of a taxpayer's claim for refund or credit; and (3) any matter under examination or in appeals pertaining to tax-exempt bonds or mortgage credit certificates; and (4) any other matter involving a specific taxpayer under the jurisdiction of the Chief, Examination Division, or the Chief, Appeals Office. They also include processing and considering nondocketed cases in an Appeals Office. However, they do not include cases in which the issue in the case is in a docketed case for any taxable year.

Technical advice helps Internal Revenue Service personnel close cases and also helps establish and maintain consistent holdings throughout the Service. A District Director or a Chief, Appeals Office, may raise an issue in any tax period, even though technical advice may have been asked and furnished for the same or similar issue for another tax period.

Technical advice does not include legal advice furnished to the District or Appeals Office in writing or orally, other than advice furnished pursuant to this revenue procedure. In accordance with section 10.01 of this revenue procedure, a taxpayer's request for referral of an issue to National Office for technical advice will not be denied merely because the National Office has provided legal advice, other than advice furnished pursuant to this revenue procedure, to the District or Appeals Office on the matter.

SECTION 3. ON WHAT ISSUES MAY TECHNICAL ADVICE BE REQUESTED UNDER THIS PROCEDURE?

.01 The instructions of this revenue procedure apply to requests for technical advice on any issue under the jurisdiction of the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), or the Associate Chief Counsel (International), and on certain issues under the jurisdiction of the Associate Chief Counsel (Enforcement Litigation). See section 3 of Rev. Proc. 95-1, this Bulletin, for a description of the principal subject matters of jurisdiction.

.02 The jurisdiction of the Associate Chief Counsel (Domestic) extends to issuing technical advice under sections 526 (shipowners' protection and indemnity associations) and 528 (certain homeowners associations).

SECTION 4. ON WHAT ISSUES MUST TECHNICAL ADVICE BE REQUESTED UNDER DIFFERENT PROCEDURES?

.01 The Procedures for obtaining technical advice specifically applicable to federal alcohol, tobacco, and firearms taxes under subtitle E of the Code are under the jurisdiction of the Bureau of Alcohol, Tobacco, and Firearms.

.02 The Procedures for obtaining technical advice specifically on issues under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations) are found in Rev. Proc. 95-5, this Bulletin. However, the procedures under Rev. Proc. 95-2 (this revenue procedure) must be followed for obtaining, technical advice on issues pertaining to tax-exempt bonds and mortgage credit certificates.

.03 Even though the Associate Chief Counsel (Domestic) has jurisdiction for issuing technical advice under section 521, the procedures under Rev. Proc. 95-5 and Rev. Proc. 90-27, 1990-1 C.B. 514, as modified by Rev. Proc. 95-8, this Bulletin, as well as section 601.201(n) of the Statement of Procedural Rules (26 C.F.R. section 601.201(n) (1994)), must be followed.

SECTION 5. MAY TECHNICAL ADVICE BE REQUESTED FOR A SECTION 301.9100-1 REQUEST MADE DURING THE COURSE OF AN EXAMINATION?

.01 A request for an extension of time for making an election or other application for relief under section 301.9100-1 of the Procedure and Administration Regulations is a letter ruling request even if the request is submitted after the examination of the taxpayer's return has begun or after the issues in the return are being considered by an Appeals Office. Therefore, a section 301.9100- 1 request should be submitted pursuant to Rev. Proc. 95-1 (including the payment of the applicable user fee listed in Appendix A of Rev. Proc. 95-1). See section 5.02 of Rev. Proc. 95-1.

.02 The running of any applicable statute of limitations is not suspended for the period during which a section 301.9100-1 request has been filed. If the statute of limitations on assessment under section 6501 (a) for the year for which a timely filed election would have been made or for any affected succeeding year will expire before receipt of a section 301.9100-1 letter ruling, the Service ordinarily will not issue a section 301.9100-1 ruling. See section 5.02(2) of Rev. Proc. 92-85, 1992-2 C.B. 490, as modified by Rev. Proc. 95-1, and Rev. Proc. 93-28, 1993-2 C.B. 344. Therefore, the taxpayer is responsible for seeking an extension of the statute of limitations on assessment. Note that the filing of a claim for refund under section 6511 does not extend the statute of limitations on assessment. If section 301.9100-1 relief is granted, the Service may require the taxpayer to consent to an extension of the statute of limitations on assessment. See section 8.02 of Rev. Proc. 92-85.

.03 A section 301.9100-1 request must be submitted by the taxpayer to the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, at the following address:

     Internal Revenue Service

.04 If the taxpayer's return covering the issue presented in the section 301.9100-1 request is being examined by a District Director or the issues in the return are being considered by an Appeals Office, the taxpayer must notify the National Office. See sections 5.02(1) and (3) of Rev. Proc. 95-1. The National Office will notify the appropriate District Office or Appeals Office that a section 301.9100-1 request has been submitted to the National Office. The Examining Officer or the Appeals Officer is not authorized to deny consideration of a section 301.9100-1 request. The letter ruling will be mailed to the taxpayer, and the appropriate District Office or Appeals Office will be sent a copy.

SECTION 6. WHO IS RESPONSIBLE FOR REQUESTING TECHNICAL ADVICE?

.01 The District Director or Chief, Appeals Office, determines whether to request technical advice on any issue being considered. Each request must be submitted through channels and signed by a person who is authorized to sign for the District Director or Chief, Appeals Office.

.02 While a case is under the jurisdiction of a District Director or Chief, Appeals Office, a taxpayer may request in writing or orally that an issue be referred to the National Office for technical advice.

SECTION 7. WHEN SHOULD TECHNICAL ADVICE BE REQUESTED?

.01 Technical advice should be requested when there is a lack of uniformity regarding the disposition of an issue or when an issue is unusual or complex enough to warrant consideration by the National Office.

.02 The provisions of this revenue procedure apply only to a case under the jurisdiction of a District Director or Chief, Appeals Office. Technical advice may also be requested on issues considered in a prior Appeals disposition, not based on mutual concessions for the same tax period of the same taxpayer, if the Appeals Office that had the case concurs in the request. A District Director may not request technical advice on an issue if an Appeals Office is currently considering an identical issue of the same taxpayer (or of a related taxpayer within the meaning of section 267 or a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504). A case remains under the jurisdiction of the District Director even though an Appeals Office has the identical issue under consideration in the case of another taxpayer (not related within the meaning of section 267 or section 1504) in an entirely different transaction. With respect to the same taxpayer or the same transaction, when the issue is under the jurisdiction of an Appeals Office and the applicability of more than one kind of federal tax is dependent upon the resolution of that issue, a District Director may not request technical advice on the applicability of any of the taxes involved.

A District Director or Chief, Appeals Office, also may not request technical advice on an issue if the same issue of the same taxpayer (or of a related taxpayer within the meaning of section 267 or a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504) is in a docketed case for the same taxpayer (or for a related taxpayer or a member of an affiliated group of which the taxpayer is also a member) for any taxable year.

.03 All requests for technical advice should be made at the earliest possible stage in any proceeding.

SECTION 8. WHAT MUST BE INCLUDED IN THE REQUEST?

.01 Whether initiated by the taxpayer or by a District or Appeals Office, a request for technical advice must include the facts and the issues for which technical advice is requested and also a written statement clearly stating the applicable law and the arguments in support of both the Service's and the taxpayer's position on the issue or issues.

(1) If the taxpayer initiates the request for technical advice, the taxpayer must submit, at the time of the request, a written statement --

(a) stating the facts and the issues;

(b) explaining the taxpayer's position;

(c) discussing any relevant statutory provisions, tax treaties, court decisions, regulations, revenue rulings, revenue procedures, notices, or any authority supporting the taxpayer's position; and

(d) stating the reasons for requesting technical advice.

If technical advice is requested, the taxpayer's statement will be forwarded to the National Office with the request for technical advice.

(2) If the request for technical advice is initiated by a District or Appeals Office, the taxpayer is encouraged to submit the written statement described in section 8.01(1) of this revenue procedure. If the taxpayer submits this statement, it will be forwarded to the National Office with the request for technical advice. If the taxpayer's statement is received after the request for technical advice has been forwarded to the National Office, the statement will be forwarded to the National Office for association with the technical advice request.

(3) Whether the request for technical advice is initiated by the taxpayer or by a District or Appeals Office, the taxpayer is also encouraged to comment on any legislation (or pending legislation), tax treaties, regulations, revenue rulings, revenue procedures, or court decisions contrary to the taxpayer's position. If the taxpayer determines that there are no contrary authorities, a statement to this effect would be helpful. If the taxpayer does not furnish either contrary authorities or a statement that none exists, the Service in complex cases or those presenting difficult or novel issues may request submission of contrary authorities or a statement that none exists.

.02 The text of a technical advice memorandum is open to public inspection under section 6110(a). The Service deletes certain information from the text before it is made available for inspection. To help the Service make the deletions required by section 6110(c), the taxpayer must provide a statement indicating the deletions desired ("deletions statement"). If the taxpayer does not submit the deletions statement, the Service will follow the procedures in section 9.05 of this revenue procedure.

A taxpayer who wants only names, addresses, and identifying numbers deleted should state this in the deletions statement. If the taxpayer wants more information deleted, the deletions statement must be accompanied by a copy of the technical advice request and supporting documents on which the taxpayer should bracket the material to be deleted. The deletions statement must indicate the statutory basis under section 6110(c) for each proposed deletion.

If the taxpayer decides to ask for additional deletions before the technical advice memorandum is issued, additional deletions statements may be submitted.

The deletions statement must not appear in the request for technical advice, but instead must be made in a separate document.

The deletions statement must be signed and dated by the taxpayer or the taxpayer's authorized representative.

The taxpayer should follow these same procedures to propose deletions from any additional information submitted after the initial request for technical advice. An additional deletions statement, however, is not required with each submission of additional information if the taxpayer's initial deletions statement requests that only names, addresses, and identifying numbers are to be deleted and the taxpayer wants only the same information deleted from the additional information.

.03 Form 4463, Request for Technical Advice, should be used for transmitting requests for technical advice to the National Office using the addresses listed below.

     Address to send requests from District Directors:

SECTION 9. HOW ARE REQUESTS HANDLED?

.01 Regardless of whether the taxpayer or the Service initiates the request for technical advice, the Service will notify the taxpayer that technical advice is being requested and will give the taxpayer a copy of the arguments that were provided to the National Office in support of the Service's position, except as noted in section 9.07 of this revenue procedure.

If the Examining Officer or the Appeals Officer initiates the request for technical advice, action, the Service will give the taxpayer a copy of the statement of the pertinent facts and the issues proposed for submission to the National Office.

.02 When notifying the taxpayer that technical advice is being requested, the Service will also tell the taxpayer about the right to a conference in the National Office if an adverse decision is indicated and will ask the taxpayer whether such a conference is desired.

.03 If the Service initiates the request for technical advice, the taxpayer has 10 calendar days after receiving the statement of facts and specific issues to indicate in writing any disagreement. A taxpayer who needs more than 10 calendar days must justify in writing the request for an extension of time. The extension is subject to the approval of the Chief, Examination Division, or the Chief, Appeals Office.

After receiving the taxpayer's statement of the areas of disagreement, every effort should be made to reach agreement on the facts and the specific points at issue before the matter is referred to the National Office. If an agreement cannot be reached, the District or Appeals Office will notify the taxpayer in writing. Within 10 calendar days after receiving the written notice, the taxpayer may submit a statement of the taxpayer's understanding of the facts and the specific points at issue. A taxpayer who needs more than 10 calendar days to prepare the statement of understanding must justify in writing the request for an extension of time. The extension is subject to the approval of the Chief, Examination Division, or the Chief, Appeals Office. Both the statements of the taxpayer and the District or Appeals Office will be forwarded to the National Office with the request for technical advice.

When the District Director or the Chief, Appeals Office, and the taxpayer cannot agree on material facts, the National Office, at its discretion, may refuse to provide technical advice. If the National Office chooses to issue technical advice, the National Office will base its advice on the facts provided by the District or Appeals Office.

.04 If the taxpayer initiates the request for technical advice and the taxpayer's statement of the facts and issues is not wholly acceptable to the District or Appeals Office, the Service will notify the taxpayer in writing of the areas of disagreement. The taxpayer has 10 calendar days after receiving the written notice to reply to it. The taxpayer must justify in writing the need for more than 10 calendar days. The extension is subject to the approval of the Chief, Examination Division, or the Chief, Appeals Office.

If an agreement cannot be reached, both the statements of the taxpayer and the District or Appeals Office will be forwarded to the National Office with the request for technical advice. When the disagreement involves material facts essential to the preliminary assessment of the case, the District Director or the Chief, Appeals Office, may refuse to refer a taxpayer initiated request for technical advice to the National Office.

If the District Director or the Chief, Appeals Office, submits a case involving a disagreement of material facts, the National Office, at its discretion, may refuse to provide technical advice. If the National Office chooses to issue technical advice, the National Office will base its advice on the facts provided by the District or Appeals Office.

.05 When the District or Appeals Office initiates the request for technical advice, the taxpayer has 10 calendar days after receiving the statement of facts and issues to be submitted to the National Office to provide the deletions statement required under section 6110(c). See section 8.02 of this revenue procedure. If the taxpayer does not submit the deletions statement, the District Director or the Chief, Appeals Office, will tell the taxpayer that the statement is required.

When the taxpayer initiates the request for technical advice and does not submit a deletions statement with the request, the District Director or the Chief, Appeals Office, will ask the taxpayer to submit the statement. If the District Director or the Chief, Appeals Office, does not receive the deletions statement within 10 calendar days after asking the taxpayer for it, the District Director or the Chief, Appeals Office, may decline to submit the request for technical advice.

However, if the District Director or the Chief, Appeals Office, decides to request technical advice, whether initiated by the District or Appeals Office or by the taxpayer, in a case in which the taxpayer has not submitted the deletions statement, the National Office will make those deletions that the Commissioner determines are required by section 6110(c).

.06 The requirements for submitting statements and other materials or proposed deletions in technical advice memorandums before public inspection is allowed do not apply to requests for any documents to the extent that section 6104 applies.

.07 The provisions of this section (about referring issues upon the taxpayer's request, telling the taxpayer about the referral of issues, giving the taxpayer a copy of the arguments submitted, submitting proposed deletions, and granting conferences in the National Office) do not apply to a technical advice memorandum described in section 6110(g)(5)(A) that involves a matter that is the subject of or is otherwise closely related to a criminal or civil fraud investigation, or a jeopardy or termination assessment.

In these cases, a copy of the technical advice memorandum is given to the taxpayer after all proceedings in the investigations or assessments are complete, but before the Commissioner mails the notice of intention to disclose the technical advice memorandum under section 6110(f)(1). The taxpayer may then provide the statement of proposed deletions to the National Office.

SECTION 10. HOW DOES TAXPAYER APPEAL A DISTRICT DIRECTOR OR APPEALS OFFICE DECISION NOT TO SEEK TECHNICAL ADVICE?

.01 If the Examining Officer or the Appeals Officer concludes that a taxpayer's request for referral of an issue to the National Office for technical advice does not warrant referral, the Examining Officer or the Appeals Officer will tell the taxpayer. A taxpayer's request for such a referral will not be denied merely because the National Office provided legal advice, other than advice furnished pursuant to this revenue procedure, to the District Appeals Office on the matter.

.02 The taxpayer may appeal the decision of the Examining Officer or the Appeals Officer not to request technical advice. To do so, the taxpayer must submit to that official, within 10 calendar days after being told of the decision, a statement of the facts, law, and arguments on the issue and the reasons why the taxpayer believes the matter should be referred to the National Office for technical advice. A taxpayer who needs more than the allowed 10 calendar days must justify in writing the request for an extension of time. The extension is subject to the approval of the Chief, Examination Division, or the Chief, Appeals Office.

.03 The Examining Officer or the Appeals Officer submits the taxpayer's statement through channels to the Chief, Examination Division, or the Chief, Appeals Office, along with the Examining Officer's or the Appeals Officer's statement of why the issue should not be referred to the National Office. The Chief determines on the basis of the statements whether technical advice will be requested.

If the Chief determines that technical advice is not warranted and proposes to deny the request, the taxpayer is told in writing about the determination. In the letter to the taxpayer, the Chief states the reasons for the proposed denial (except in unusual situations when doing so would be prejudicial to the best interests of the Government). The taxpayer has 10 calendar days after receiving the letter to notify the Chief of agreement or disagreement with the proposed denial.

.04 The taxpayer may not appeal the decision of the Chief, Examination Division, or the Chief, Appeals Office, not to request technical advice from the National Office. However, if the taxpayer does not agree with the proposed denial, all data on the issue for which technical advice has been sought, including the taxpayer's written request and statements, will be submitted to the Assistant Commissioner (Examination), the Assistant Commissioner (International), or the National Director of Appeals, as appropriate.

The Assistant Commissioner (Examination), the Assistant Commissioner (International), or the National Director of Appeals, as appropriate, will review the proposed denial solely on the basis of the written record, and no conference will be held with the taxpayer or the taxpayer's representative. The Assistant Commissioner (Examination), the Assistant Commissioner (International), or the National Director of Appeals may consult with the National Office, if necessary, and will notify the District Office or the Appeals Office within 45 calendar days of receiving all the data regarding the request for technical advice whether the proposed denial is approved or disapproved. The District Office or the Appeals Office will then notify the taxpayer.

While the matter is being reviewed, the District Office or the Appeals Office suspends action on the issue (except when the delay would prejudice the Government's interest).

The provisions of this revenue procedure in regard to review of the proposed denial of a request for technical advice continue to be applicable in those situations in which the authority normally exercised by the District Director or Chief, Appeals Office, has been delegated to another official.

SECTION 11. HOW ARE REQUESTS FOR TECHNICAL ADVICE WITHDRAWN?

.01 Only a District Director or a Chief, Appeals Office, may withdraw a request for technical advice. He or she may ask to withdraw a request at any time before the responding transmittal memorandum for the technical advice is signed.

The District Director or the Chief, Appeals Office, as appropriate, must notify the taxpayer in writing of an intent to withdraw the request for technical advice except --

(1) when the period of limitation on assessment is about to expire and the taxpayer has declined to sign a consent to extend the period; or

(2) when such notification would be prejudicial to the best interests of the Government.

If the taxpayer does not agree that the request for technical advice should be withdrawn, the procedures in section 10 of this revenue procedure must be followed.

.02 When a request for technical advice is withdrawn, the National Office may send its views to the District Director or the Chief, Appeals Office, when acknowledging the withdrawal request. In an Appeals case, acknowledgment of the withdrawal request should be sent to the appropriate Appeals Office, through the National Director of Appeals, CC:AP:FS. In appropriate cases, the subject matter may be published as a revenue ruling or as a revenue procedure.

SECTION 12. HOW ARE CONFERENCES SCHEDULED?

.01 If, after the technical advice request is analyzed, it appears that technical advice adverse to the taxpayer will be given, and if a conference has been requested, the taxpayer will be informed, by telephone if possible, of the time and place of the conference.

.02 The conference must be held within 21 calendar days after the taxpayer is contacted. If conferences are being arranged for more than one request for technical advice for the same taxpayer, they will be scheduled to cause the least inconvenience to the taxpayer. The National Office will notify the Examining Officer or the Appeals Officer of the scheduled conference. The Examining Officer or the Appeals Officer may ask or be requested to attend the conference. The Assistant Commissioner (Examination), the Assistant Commissioner (International), the National Director of Appeals, the District Director, or the Chief, Appeals Office, may designate other Service representatives to attend the conference in lieu of, or in addition to, the Examining Officer or the Appeals Officer.

.03 An extension of the 21-day period will be granted only if the taxpayer justifies it in writing, and the Branch Chief, Senior Technician Reviewer (or Senior Technical Reviewer), or Assistant to the Branch Chief (or Assistant Branch Chief) of the Branch to which the case is assigned approves it. The request for extension should be submitted before the end of the 21-day period. If unusual circumstances near the end of the period make a timely written request impractical, the National Office should be told orally before the end of the period about the problem and about the forthcoming written request for extension. The taxpayer will be told promptly (and later in writing) of the approval or denial of the requested extension.

.04 There is no right to appeal the denial of an extension request. If the National Office is not advised of problems with meeting the 21-day period or if the request is not sent promptly after the National Office is notified of problems with meeting the 21-day period, the case will be processed on the basis of the existing record.

.05 A taxpayer is entitled by right to only one conference in the National Office unless one of the circumstances discussed in section 12.09 of this revenue procedure exists. This conference is normally held at the Branch level. It is attended by a person who has authority to sign the transmittal memorandum (discussed in section 14.14 of this revenue procedure) on behalf of the Branch Chief.

When more than one Branch has taken an adverse position on an issue in the request or when the position ultimately adopted by one Branch will affect another Branch's determination, a representative from each Branch with authority to sign for the Branch Chief will attend the conference. If more than one subject is discussed at the conference, the discussion constitutes a conference for each subject.

To have a thorough and informed discussion of the issues, the conference usually is held after the Branch has had an opportunity to study the case. However, the taxpayer may request that the conference of right be held earlier in the consideration of the case than the Service would ordinarily designate.

The taxpayer has no right to appeal the action of a Branch to an Assistant Chief Counsel or to any other Service official. But see section 12.09 of this revenue procedue for situations in which the service may offer additional conferences.

.06 Because conference procedures are informal, no tape, stenographic, or other verbatim recording of a conference may be made by any party.

.07 In the event of a tentatively adverse determination, the Branch representatives may offer the taxpayer the option of delaying the conference so that the taxpayer can prepare and submit a brief requesting relief under section 7805(b) (discussed in section 17 of this revenue procedure). In these cases, the Service will schedule a conference on the tentatively adverse decision and the section 7805(b) relief request within 10 days of receiving the taxpayer's section 7805(b) request.

.08 The senior Service representative at the conference ensures that the taxpayer has full opportunity to present views on all the issues in question. The Service representatives explain the tentative decision on the substantive issues and the reasons for it.

If the taxpayer requests relief under section 7805(b) (regarding limitation of retroactive effect), the Service representative will discuss the tentative recommendation concerning the request for relief and the reason for the tentative recommendation.

No commitment will be made as to the conclusion that the Service will finally adopt regarding the outcome of the section 7805(b) issue or on any other issue discussed.

.09 The Service will offer the taxpayer an additional conference if, after the conference of right, an adverse holding is proposed on a new issue or on the same issue but on grounds different from those discussed at the first conference.

When a proposed holding is reversed at a higher level with a result less favorable to the taxpayer, the taxpayer has no right to another conference if the grounds or arguments on which the reversal is based were discussed at the conference of right.

The limitation on the number of conferences to which a taxpayer is entitled does not prevent the National Office from inviting a taxpayer to attend additional conferences, including conferences with an official higher than the Branch level, if National Office personnel think they are necessary. Such conferences are not offered as a matter of course simply because the Branch has reached an adverse decision. In general, conferences with higher level officials are offered only if the Service determines that the case presents significant issues of tax policy or tax administration and that the consideration of these issues would be enhanced by additional conferences with the taxpayer.

.10 Within 21 calendar days after the conference, the taxpayer must furnish to the National Office any additional data, lines of reasoning, procedures, etc., that the taxpayer proposed and discussed at the conference but did not previously or adequately present in writing. This additional information must be submitted by letter with a penalties of perjury statement in the form described in section 14.11(1) of this revenue procedure.

The taxpayer must also send a copy of the additional information to the District Director or the Chief, Appeals Office, for comment. Any comments by the District Director or the Chief, Appeals Office, must be furnished promptly to the appropriate Branch in the National Office. If the District Director or the Chief, Appeals Office, does not have any comments, he or she must notify the Branch representative promptly.

If the additional information would have a significant impact on the facts in the request for technical advice, the National Office will ask the District Director or the Chief, Appeals Office, for comment on the facts contained in the additional information submitted. The District Director or the Chief, Appeals Office, will give the additional information prompt attention.

If the additional information is not received within 21 days, the technical advice memorandum will be issued on the basis of the existing record.

An extension of the 21-day period may be granted only if the taxpayer justifies it in writing and the Branch Chief, Senior Technician Reviewer (or Senior Technical Reviewer), or the Assistant to the Branch Chief (or Assistant Branch Chief) of the Branch to which the case is assigned approves the extension. The procedures for requesting an extension of the 21-day period and notifying the taxpayer of the Service's decision are the same as those in sections 12.03 and 12.04 of this revenue procedure.

.11 Infrequently, taxpayers request that their conference of right be held by telephone. This may occur, for example, when a taxpayer wants a conference of right but believes that the issue involved does not warrant incurring the expense of traveling to Washington, DC. If a taxpayer makes such a request, the Branch Chief, Senior Technician Reviewer (or Senior Technical Reviewer), or Assistant to the Branch Chief (or Assistant Branch Chief) of the Branch to which the case is assigned will decide if it is appropriate in the particular case to hold the conference of right by telephone. If the request is approved, the taxpayer will be advised when to call the Service representatives (not a toll-free call).

In accordance with section 12.02 of this revenue procedure, the Examining Officer or the Appeals Officer will be offered the opportunity to participate in the telephone conference. Section 12.02 of this revenue procedure also provides that other Service representatives are allowed to participate in the conference.

SECTION 13. HOW IS STATUS OF REQUEST OBTAINED?

.01 A taxpayer or the taxpayer's representative may obtain information on the status of the request for technical advice by contacting the District or Appeals Office that requested the technical advice. See section 14.09 of this revenue procedure concerning the time for discussing the tentative conclusion with the taxpayer or the taxpayer's representative. See section 15.02 of this revenue procedure regarding discussions of the contents of the technical advice memorandum with the taxpayer or the taxpayer's representative.

.02 The District or Appeals Office will be given status updates on the technical advice request once a month by the National Office attorney or Branch Chief assigned to the request. In addition, a District Director or a Chief, Appeals Office, may get current information on the status of the request for technical advice by calling the person whose name and telephone number are shown on the acknowledgement of receipt of the request for technical advice.

See section 14.10 of this revenue procedure about discussing the final conclusions with the District or Appeals Office. Further, the District Director or the Chief, Appeals Office, will be notified at the time the technical advice memorandum is mailed.

SECTION 14. HOW DOES THE NATIONAL OFFICE PREPARE THE TECHNICAL ADVICE MEMORANDUM?

.01 The authority to issue technical advice on issues under the jurisdiction of the Associate Chief Counsel (Domestic) has largely been delegated to the Branch Chiefs in the offices of the Assistant Chief Counsel (Corporate), the Assistant Chief Counsel (Financial Institutions and Products), the Assistant Chief Counsel (Income Tax and Accounting), and the Assistant Chief Counsel (Passthroughs and Special Industries).

The Branch Chiefs in the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations) and in the Office of Associate Chief Counsel (International) have largely been delegated the authority to issue technical advice on issues under their jurisdiction.

The authority to issue technical advice on issues under the jurisdiction of the Associate Chief Counsel (Enforcement Litigation) has largely been delegated to the Branch Chiefs in the office of the Assistant Chief Counsel (General Litigation).

.02 Requests for technical advice generally are given priority and processed expeditiously. As soon as the request for technical advice is assigned, the technical employee analyzes the file to see whether it meets all requirements of sections 6 through 8 of this revenue procedure.

However, if the request does not comply with the requirements of section 8.02 of this revenue procedure relating to the deletions statement, the Service will follow the procedure in the last paragraph of section 9.05 of this revenue procedure.

.03 Usually, within 21 calendar days after the Branch receives the request for technical advice, a representative of the Branch telephones the District or Appeals Office to discuss the procedural and substantive issues in the request that come within the Branch's jurisdiction.

.04 If the technical advice request concerns matters within the jurisdiction of more than one Branch, a representative of the Branch that received the original technical advice request informs the District or Appeals Office within 21 calendar days of receiving the request that --

(1) the matters within the jurisdiction of another Branch have been referred to the other Branch or office for consideration; and

(2) a representative of the other Branch or office will contact the District or Appeals Office about the technical advice request within 21 calendar days after receiving it in accordance with section 14.03 of this revenue procedure.

.05 The Branch representative will inform the District or Appeals Office that the case is being returned if substantial additional information is required to resolve an issue. Cases should be returned for additional information when significant unresolved factual variances exist between the statement of facts submitted by the District or Appeals Office and the taxpayer. They should also be returned if major procedural problems cannot be resolved by telephone.

If only minor procedural deficiencies exist, the Branch representative will request the additional information in the most expeditious manner without returning the case. Within 21 calendar days after receiving the information requested, the Branch representative will notify the District or Appeals Office of the tentative conclusion and an estimated date by which the technical advice memorandum will be mailed, or an estimated date when a tentative conclusion will be made.

.06 If all necessary information has been provided, the Branch representative informs the District or Appeals Office of his or her tentative conclusion and the estimated date that the technical advice memorandum will be mailed.

.07 If a tentative conclusion has not been reached because of the complexity of the issue, the Branch representative informs the District or Appeals Office of the estimated date the tentative conclusion will be made.

.08 Because the Branch representative's tentative conclusion may change during the preparation and review of the technical advice memorandum, the tentative conclusion should not be considered final. If the tentative conclusion is changed, the Branch representative will inform the District or Appeals Office.

.09 Neither the National Office nor the District or Appeals Office should advise the taxpayer or the taxpayer's representative of the tentative conclusion during consideration of the request for technical advice. However, in order to afford taxpayers an appropriate opportunity to prepare and present their position, the taxpayer or the taxpayer's representative should be told the tentative conclusion when scheduling the adverse conference, at the adverse conference, or in any discussion between the scheduling and commencement of the adverse conference. See section 15.02 of this revenue procedure regarding discussions of the contents of the technical advice memorandum with the taxpayer or the taxpayer's representative.

.10 In all cases, the Branch representative will inform the Examining Officer or the Appeals Officer of the National Office's final conclusions. The Examining Officer or the Appeals Officer will be offered the opportunity to discuss the issues and the National Office's final conclusions before the technical advice memorandum is issued.

.11 If, following the initial contact referenced in section 14.03 of this revenue procedure, it is determined, after discussion with the Branch Chief or reviewer, that additional information is needed, a Branch representative will obtain the additional information from the taxpayer or from the District Director or the Chief, Appeals Office, in the most expeditious manner possible. Any additional information requested from the taxpayer by the National Office must be submitted by letter with a penalties of perjury statement within 21 calendar days after the request for information is made.

(1) Additional information submitted to the National Office must be accompanied by the following declaration: "UNDER PENALTIES OF PERJURY, I DECLARE THAT I HAVE EXAMINED THIS INFORMATION, INCLUDING ACCOMPANYING DOCUMENTS, AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE FACTS REPRESENTED ARE TRUE, CORRECT, AND COMPLETE." This declaration must be signed by the taxpayer, not the taxpayer's representative.

(2) A written request for an extension of time to submit additional information must be received by the National Office within the 21-day period, giving compelling facts and circumstances to justify the proposed extension. The Branch Chief, Senior Technician Reviewer (or Senior Technical Reviewer), or Assistant to the Branch Chief (or Assistant Branch Chief) of the Branch to which the case is assigned will determine whether to grant or deny the request for an extension of the 21-day period. There is no right to appeal the denial of an extension request.

(3) If the National Office does not receive the additional information within the period of 21 days, plus any extensions granted by the Branch Chief, Senior Technician Reviewer (or Senior Technical Reviewer), or Assistant to the Branch Chief (or Assistant Branch Chief), the National Office will issue the technical advice memorandum based on the existing record.

.12 Whether or not requested by the Service, any additional information submitted by the taxpayer should be sent to the National Office.

Also, the taxpayer must send a copy to either the District Director or the Chief, Appeals Office, for comment. Any comments by the District Director or the Chief, Appeals Office, must be furnished promptly to the appropriate Branch in the National Office. If the District Director or Chief, Appeals Office, does not have any comments, he or she must notify the Branch representative promptly.

.13 Generally, before replying to the request for technical advice, the National Office informs the taxpayer orally or in writing of the material likely to appear in the technical advice memorandum that the taxpayer proposed be deleted but that the Service has determined should not be deleted.

If so informed, the taxpayer may submit within 10 calendar days any further information or arguments supporting the taxpayer's proposed deletions.

The Service attempts, if possible, to resolve all disagreements about proposed deletions before the National Office replies to the request for technical advice. However, the taxpayer does not have the right to a conference to resolve any disagreements about material to be deleted from the text of the technical advice memorandum. These matters, however, may be considered at any conference otherwise scheduled for the request. See section 15.04 of this revenue procedure for the procedures to protest the disclosure of information in the technical advice memorandum.

.14 The replies to technical advice requests are in two parts. Each part identifies the taxpayer by name, address, identification number, and year or years involved.

The first part of the reply is a transmittal memorandum (Form M- 6000). In unusual cases it is a way of giving the District or Appeals Office administrative or other information that under the nondisclosure statutes, or for other reasons, may not be discussed with the taxpayer.

The second part is the technical advice memorandum, which contains --

(1) a statement of the issues;

(2) a statement of the facts pertinent to the issues;

(3) a statement of the pertinent law, tax treaties, regulations, revenue rulings, and other precedents published in the Internal Revenue Bulletin, and court decisions;

(4) a discussion of the rationale supporting the conclusions reached by the National Office; and

(5) the conclusions of the National Office. The conclusions give direct answers, whenever possible, to the specific issues raised by the District or Appeals Office. However, the National Office is not bound by the precise statement of the issues as submitted by the taxpayer or by the District or Appeals Office and may reframe the issues to be answered in the technical advice memorandum. The discussion of the issues will be in sufficient detail so the District or Appeals officials will understand the reasoning underlying the conclusion.

Accompanying the technical advice memorandum is a notice under section 6110(f)(1) of intention to disclose a technical advice memorandum (including a copy of the version proposed to be open to public inspection and notations of third party communications under section 6110(d)).

.15 Replies to requests for technical advice are addressed to the District Director or the Chief, Appeals Office. Replies to requests from Appeals should be routed to the appropriate Appeals Office through the National Director of Appeals, CC:AP:FS.

SECTION 15. HOW DOES A DISTRICT OR APPEALS OFFICE USE THE TECHNICAL ADVICE?

.01 The District Director or the Chief, Appeals Office, must process the taxpayer's case on the basis of the conclusions in the technical advice memorandum unless --

(1) the District Director or the Chief, Appeals Office, decides that the conclusions reached by the National Office in a technical advice memorandum should be reconsidered; or

(2) the Chief, Appeals Office, in the case of technical advice unfavorable to the taxpayer, decides to settle the issue under existing authority.

.02 The National Office will not discuss the contents of the technical advice memorandum with the taxpayer or the taxpayer's representative until the taxpayer has been given a copy by the District or Appeals Office. See section 14.09 of this revenue procedure concerning the time for discussing the tentative conclusion with the taxpayer or the taxpayer's representative.

.03 The District Director or the Chief, Appeals Office, only after adopting the technical advice, gives the taxpayer --

(1) a copy of the technical advice memorandum described in section 14.14 of this revenue procedure; and

(2) the notice under section 6110(f)(1) of intention to disclose the technical advice memorandum (including a copy of the version proposed to be open to public inspection and notations of third party communications under section 6110(d)).

This requirement does not apply to technical advice memorandums involving criminal or civil fraud investigations, or jeopardy or termination assessments, as described in section 9.07 of this revenue procedure.

.04 After receiving the notice under section 6110(f)(1) of intention to disclose the technical advice memorandum, the taxpayer may protest the disclosure of certain information in it. The taxpayer must submit a written statement within 20 calendar days identifying those deletions not made by the Service that the taxpayer believes should have been made. The taxpayer must also submit a copy of the version of the technical advice memorandum proposed to be open to public inspection with brackets around the deletions proposed by the taxpayer that have not been made by the National Office.

Generally, the National Office considers only the deletion of material that the taxpayer has proposed be deleted or other deletions as required under section 6110(c) before the National Office reply is sent to the District Director or the Chief, Appeals Office. Within 20 days after it receives the taxpayer's response to the notice under section 6110(f)(1), the National Office must mail to the taxpayer its final administrative conclusion about the deletions to be made.

.05 In those cases in which the National Office tells the District Director or the Chief, Appeals Office, that a copy of the technical advice memorandum should not be given to the taxpayer, the District Director or the Chief, Appeals Office, will tell the taxpayer that no copy will be given if the taxpayer requests a copy.

SECTION 16. WHAT IS THE EFFECT OF TECHNICAL ADVICE?

.01 A taxpayer may not rely on a technical advice memorandum issued by the Service for another taxpayer. See section 6110(j)(3).

.02 Except in rare or unusual circumstances, a holding in a technical advice memorandum that is favorable to the taxpayer is applied retroactively.

Moreover, because technical advice, as described in section 2 of this revenue procedure, is issued only on closed transactions, a holding that is adverse to the taxpayer is also applied retroactively, unless the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, exercises the discretionary authority under section 7805(b) to limit the retroactive effect of the holding.

.03 A holding that modifies or revokes a holding in a prior technical advice memorandum is applied retroactively, with one exception. If the new holding is less favorable to the taxpayer than the earlier one, it generally is not applied to the period in which the taxpayer relied on the prior holding in situations involving continuing transactions.

.04 If a technical advice memorandum relates to a continuing action or a series of actions, ordinarily it is applied until specifically withdrawn or until the conclusion is modified or revoked by the enactment of legislation, the ratification of a tax treaty, a decision of the United States Supreme Court, or the issuance of regulations (temporary or final), a revenue ruling, or other statement published in the Internal Revenue Bulletin. Publication of a notice of proposed rulemaking does not affect the application of a technical advice memorandum.

.05 A taxpayer is not protected against retroactive revocation or modification of a technical advice memorandum involving a continuing action or a series of actions occurring after the material facts on which the technical advice memorandum is based have changed.

.06 Generally, a technical advice memorandum that revokes or modifies a letter ruling or another technical advice memorandum is not applied retroactively either to the taxpayer to whom or for whom the letter ruling or technical advice memorandum was originally issued, or to a taxpayer whose tax liability was directly involved in such letter ruling or technical advice memorandum if --

(1) there has been no misstatement or omission of material facts;

(2) the facts at the time of the transaction are not materially different from the facts on which the letter ruling or technical advice memorandum was based;

(3) there has been no change in the applicable law;

(4) in the case of a letter ruling, it was originally issued on a prospective or proposed transaction; and

(5) the taxpayer directly involved in the letter ruling or technical advice memorandum acted in good faith in relying on the letter ruling or technical advice memorandum, and the retroactive revocation would be to the taxpayer's detriment. For example, the tax liability of each shareholder is directly involved in a letter ruling or technical advice memorandum on the reorganization of a corporation. However, the tax liability of a member of an industry is not directly involved in a letter ruling or technical advice memorandum issued to another member, and, therefore, the holding in a revocation or modification of a letter ruling or technical advice memorandum to one member of an industry may be retroactively applied to other members of the industry. By the same reasoning, a tax practitioner may not obtain the nonretroactive application to one client of a modification or revocation of a letter ruling or technical advice memorandum previously issued to another client.

When a letter ruling to a taxpayer or a technical advice memorandum involving a taxpayer is revoked with retroactive effect, the notice to the taxpayer, except in fraud cases, sets forth the grounds on which the revocation is being made and the reason why the revocation is being applied retroactively.

SECTION 17. HOW MAY RETROACTIVE EFFECT BE LIMITED?

.01 Under section 7805(b), the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as the Commissioner's delegate, may prescribe the extent, if any, to which a technical advice memorandum will be applied without retroactive effect.

A taxpayer for whom a technical advice memorandum was issued or for whom a technical advice request is pending may request that the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, limit the retroactive effect of any holding in the technical advice memorandum or of any subsequent modification or revocation of the technical advice memorandum.

.02 For example, a taxpayer may request the National Office to exercise the authority under section 7805(b) to limit retroactivity if --

(1) a technical advice memorandum that concerns a continuing transaction is modified or revoked by, for example, a subsequent revenue ruling or final regulations;

(2) during the course of an examination of the taxpayer's return by the District Director or during consideration by the Chief, Appeals Office, a taxpayer is informed that the District Director or the Chief, Appeals Office, will recommend that a technical advice memorandum, letter ruling, or determination letter be modified or revoked; or

(3) a holding in a technical advice memorandum does not modify or revoke a prior technical advice memorandum. When germane to a pending technical advice request, a request to limit the retroactive effect of the holding should be made as part of that pending technical advice request, either initially or at any time before the technical advice memorandum is issued by the National Office. If a request to limit the retroactive effect of the holding is not made before the technical advice memorandum is issued by the National Office, the National Office will consider such a request after the technical advice memorandum is issued by the National Office. However, taxpayers are strongly encouraged to request the application of section 7805(b) early during the consideration of the technical advice request by the National Office.

.03 A request to limit the retroactive effect of the modification or revocation of a technical advice memorandum that concerns a continuing transaction, as described in section 17.02(1) of this revenue procedure, must be made in the form of a request for a letter ruling if the request is submitted before examination of the return that contains the transaction that is the subject of the request for the letter ruling. The requirements for a letter ruling request are given in sections 8 and 11.11 of Rev. Proc. 95-1.

.04 In all other cases, a taxpayer's request to limit retroactivity must be made in the form of a request for technical advice.

The request must meet the general requirements of a technical advice request, which are given in sections 6 through 8 of this revenue procedure. The request must also --

(1) state that it is being made under section 7805(b);

(2) state the relief sought;

(3) explain the reasons and arguments in support of the relief sought (including a discussion of the five items listed in section 16.06 of this revenue procedure and any other factors as they relate to the taxpayer's particular situation); and

(4) include any documents bearing on the request.

The taxpayer's request, including the statement that the request is being made under section 7805(b), must be submitted to the District Director or the Chief, Appeals Office, who must then forward the request to the National Office for consideration.

.05 When a request for technical advice concerns only the application of section 7805(b), the taxpayer has the right to a conference in the National Office in accordance with the provisions of section 12 of this revenue procedure. In accordance with section 12.02 of this revenue procedure, the Examining Officer or the Appeals Officer may ask or be requested to attend the conference on the section 7805(b) issue. Section 12.02 of this revenue procedure also provides that other Service representatives are allowed to participate in the conference.

If the request for application of section 7805(b) is included in the request for technical advice on the substantive issues or is made before the conference of right on the substantive issues, the section 7805(b) issues will be discussed at the taxpayer's one conference of right.

If the request for the application of section 7805(b) is made as part of a pending technical advice request after a conference has been held on the substantive issues and the Service determines that there is justification for having delayed the request, then the taxpayer will have the right to one conference of right concerning the application of section 7805(b), with the conference limited to discussion of this issue only.

SECTION 18. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 94-2?

.01 Section 1 is amended to clarify that the word "taxpayer" in this revenue procedure includes all persons subject to any provision of the Code (including issuers of section 103 obligations) and, when appropriate, their representatives.

.02 Sections 2 and 4.02 are amended to clarify that a proceeding includes any matter under examination or in appeals pertaining to tax-exempt bonds or mortgage credit certificates and that the procedures under this revenue procedure, rather than Rev. Proc. 95-5, must be followed for obtaining technical advice on such matters.

.03 Section 5.02 is amended to remind taxpayers that if the statute of limitations on assessment for the year for which a timely filed election would have been made or for any affected succeeding year will expire before receipt of a section 301.9100-1 letter ruling, the Service ordinarily will not issue a section 301.9100-1 ruling. Therefore, the taxpayer is responsible for seeking an extension of the statute of limitations on assessment. Section 5.02 also is amended to remind taxpayers that the filing of a claim for refund under section 6511 does not extend the statute of limitations on assessment.

.04 Section 7.02 is amended to conform to section 2 of this revenue procedure by providing that technical advice may not be requested on an issue if the same issue of the same taxpayer (or of a related taxpayer within the meaning of section 267 or a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504) is in a docketed case for the same taxpayer (or for a related taxpayer or a member of an affiliated group of which the taxpayer is also a member) for any taxable year.

.05 Section 12.09 is amended to revise the procedures for offering additional conferences. Such conferences are not offered as a matter of course simply because the Branch has reached an adverse decision. Section 12.09 also is amended to provide that in general, conferences with an official higher than the Branch level are offered only if the Service determines that the case presents significant issues of tax policy or tax administration and that the consideration of these issues would be enhanced by additional conferences with the taxpayer.

SECTION 19. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER DOCUMENTS?

Rev. Proc. 94-2, 1994-1 C.B. 428, is superseded.

SECTION 20. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE?

This revenue procedure is effective January 3, 1995.

DRAFTING INFORMATION

The principal author of this revenue procedure is Kathleen Reed of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue procedure for matters under the jurisdiction of --

(1) the Associate Chief Counsel (Domestic) or the Associate Chief Counsel (Employee Benefits and Exempt Organizations), contact Ms. Reed at (202) 622-3110 (not a toll-free call);

(2) the Associate Chief Counsel (International), contact Gerard Traficanti at (202) 622-3830 (not a toll-free call);

(3) the Associate Chief Counsel (Enforcement Litigation), contact Peter J. Devlin at (202) 622-3600 (not a toll-free call).

                                 INDEX