Bulletin No. 2022–39

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2022–39

September 26, 2022

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE, EMPLOYMENT TAX,

ESTATE TAX, EXCISE TAX, GIFT TAX,

INCOME TAX

REG-125693-19, page 241.

The proposed regulations provide guidance on the resolution of federal tax controversies by the IRS Independent Office of Appeals (Appeals) under the Taxpayer

First Act of 2019. Consideration of a federal tax controversy by Appeals is generally available to all taxpayers.

The proposed regulations provide clarification of issues

that do not meet the definition of a federal tax controversy, exceptions to consideration by Appeals, and

procedural and timing requirements that must be met

before Appeals will consider an issue. The proposed

regulations also provide requirements a taxpayer that

received a notice of deficiency must meet to receive

Finding Lists begin on page ii.

the notice described in section 7803(e)(5) when the

taxpayer requests consideration by Appeals and the

request is denied.

INCOME TAX

Notice 2022-38, page 239.

The notice publishes the inflation adjustment factor for

the carbon oxide sequestration credit under § 45Q for

calendar year 2022. Also, the notice informs taxpayers that pursuant to § 45Q(g), as amended by the IRA,

2022 will be the final calendar year for which a taxpayer

may claim a § 45Q credit under § 45Q(a)(1) and (2) for

qualified carbon oxide that is captured by carbon capture equipment originally placed in service at a qualified

facility before the date of enactment of the Bipartisan

Budget Act of 2018.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

September 26, 2022 

Bulletin No. 2022–39

Part III

Credit for Carbon

Oxide Sequestration

2022 Section 45Q Inflation

Adjustment Factor

Notice 2022-38

SECTION 1. PURPOSE

This notice publishes the inflation

adjustment factor for the credit for carbon oxide sequestration under § 45Q of

the Internal Revenue Code (§ 45Q credit)

for calendar year 2022. The inflation

adjustment factor is used to determine

the amount of the credit allowable under

§ 45Q.

This notice also confirms that 2022

will be the final calendar year for which a

taxpayer may claim a § 45Q credit under

§ 45Q(a)(1) and (2) for qualified carbon

oxide that is captured by carbon capture

equipment originally placed in service

at a qualified facility before the date of

enactment of the Bipartisan Budget Act of

2018.

SECTION 2. BACKGROUND

Section 45Q was added to the Code

by § 115 of the Energy Improvement and

Extension Act of 2008, enacted as Division B of Pub. L. 110-343, 122 Stat. 3765,

3829 (October 3, 2008), to provide a credit

for the sequestration of carbon dioxide.

Section 45Q was amended by § 1131 of

the American Recovery and Reinvestment

Tax Act of 2009, enacted as Division B of

Pub. L. 111-5, 123 Stat 115 (February 17,

2009), § 41119 of the Bipartisan Budget

Act of 2018 (BBA), Pub. L. No. 115-123

(February 9, 2018), § 121 of the Taxpayer

Certainty and Disaster Tax Relief Act of

2020, enacted as Division EE of the Consolidated Appropriations Act, 2021, Pub.

L. 116-260, 134 Stat. 3051 (December 27,

2020), and § 13104 of Pub. L. 117-169,

136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction

Act (IRA). As a result of the modifications

Bulletin No. 2022–39

made by the BBA amendment, the credit

under § 45Q now applies to the sequestration of “qualified carbon oxide,” a broader

term than qualified carbon dioxide. The

amount of the credit is also increased for

carbon oxide captured with equipment

originally placed in service on or after the

date of enactment of BBA.

Section 45Q(a)(1) allows a credit of

$20 per metric ton of qualified carbon

oxide (i) captured by the taxpayer using

carbon capture equipment which is originally placed in service at a qualified

facility before the date of the enactment

of BBA, (ii) disposed of by the taxpayer

in secure geological storage, and (iii) not

used by the taxpayer as a tertiary injectant

in a qualified enhanced oil or natural gas

recovery project.

Section 45Q(a)(2) allows a credit of

$10 per metric ton of qualified carbon

oxide (i) captured by the taxpayer using

carbon capture equipment which is originally placed in service at a qualified

facility before the date of the enactment

of BBA, and (ii) either (I) used by the

taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery

project and disposed of by the taxpayer in

secure geological storage or (II) utilized

by the taxpayer in a manner described in

§ 45Q(f)(5).

Under § 45Q(f)(7), for taxable years

beginning in a calendar year after 2009,

the dollar amounts contained in § 45Q(a)

(1) and (2) must be adjusted for inflation

by multiplying such dollar amount by the

inflation adjustment factor for such calendar year determined under § 43(b)(3)(B),

determined by substituting “2008” for

“1990.”

Section 43(b)(3)(B) defines the term

“inflation adjustment factor” as, with

respect to any calendar year, a fraction the

numerator of which is the GNP implicit

price deflator for the preceding calendar

year and the denominator of which is the

GNP implicit price deflator for 1990. For

purposes of § 45Q(f)(7), for the 2022 calendar year, the inflation adjustment factor

is a fraction the numerator of which is

the GNP implicit price deflator for 2021

239

(118.349) and the denominator of which

is the GNP implicit price deflator for 2008

(94.421).

Section 45Q(g), as amended by

§ 13104(f) of the IRA, provides that in

the case of any carbon capture equipment placed in service before the date of

the enactment of BBA, the credit under §

45Q shall apply with respect to qualified

carbon oxide captured using such equipment before the earlier of January 1, 2023,

and the end of the calendar year in which

the Secretary of the Treasury or her delegate, in consultation with the Administrator of the Environmental Protection

Agency, certifies that, during the period

beginning after October 3, 2008, a total

of 75,000,000 metric tons of qualified carbon oxide have been taken into account in

accordance with (i) § 45Q(a), as in effect

on the day before the date of the enactment of BBA, and (ii) § 45Q(a)(1) and (2).

SECTION 3. INFLATION

ADJUSTMENT FACTOR

The inflation adjustment factor for

calendar year 2022 is 1.2534. The § 45Q

credit for calendar year 2022 is $25.07

per metric ton of qualified carbon oxide

under § 45Q(a)(1) and $12.53 per metric ton of qualified carbon oxide under §

45Q(a)(2).

SECTION 4. TAX CREDIT

UTILIZATION

Section 6 of Notice 2009-83, 200944 I.R.B. 588, requires taxpayers to file

annual reports that provide (among other

information) the amount (in metric tons)

of qualified carbon oxide for the taxable

year that has been taken into account for

purposes of claiming the § 45Q credit

under § 45Q(a)(1) and (2). The annual

reports must be filed with the Internal

Revenue Service (IRS) not later than the

last day of the second calendar month following the month during which the tax

return on which the § 45Q credit under

§ 45Q(a)(1) and (2) is claimed was due

(including extensions).

September 26, 2022

Pursuant to § 45Q(g), as amended on

August 16, 2022, by § 13104(f) of the

IRA, 2022 will be the final calendar year

for which a taxpayer may claim a § 45Q

credit under § 45Q(a)(1) and (2) for qualified carbon oxide that is captured by carbon capture equipment originally placed

in service at a qualified facility before

the date of enactment of the BBA.

September 26, 2022

Accordingly, 2022 will be the final calendar year for which a taxpayer must file a

report under section 6 of Notice 2009-83.

SECTION 5. DRAFTING

INFORMATION

Chief Counsel (Passthroughs & Special Industries). For further information

regarding this notice contact Maggie

Stehn at (202) 317-6853 (not a toll-free

number).

The principal author of this notice is

Maggie Stehn of the Office of Associate

240

Bulletin No. 2022–39

Part IV

Notice of Proposed

Rulemaking

Resolution of Federal

Tax Controversies By the

Independent Office of

Appeals

REG-125693-19

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing on proposed rulemaking.

SUMMARY: This document contains

proposed regulations relating to the IRS

Independent Office of Appeals’ resolution

of Federal tax controversies without litigation and relating to requests for referral to that office following the issuance

of a notice of deficiency to a taxpayer by

the IRS. The proposed regulations reflect

amendments to the law made by the Taxpayer First Act of 2019. The proposed regulations apply to all persons that request to

have a Federal tax controversy considered

by that office. This document also provides a notice of a public hearing on these

proposed regulations.

DATES: Written or electronic comments

must be received by November 14, 2022.

Outlines of topics to be discussed at the

public hearing scheduled for November

29, 2022, must be received by November 14, 2022. If no outlines of topics are

received by November 14, 2022, the public hearing will be cancelled.

ADDRESSES: Commenters are strongly

encouraged to submit public comments electronically. Submit electronic

submissions via the Federal eRulemaking

Portal at www.regulations.gov (indicate

IRS and REG-125693-19) by following

the online instructions for submitting

comments. Once submitted to the Federal

eRulemaking Portal, comments cannot

be edited or withdrawn. The Department

of the Treasury (Treasury Department)

and the IRS will publish for public availability any comment to its public docket.

Send paper submissions to: CC:PA:LPD:PR (REG-125693-19), room 5203,

Internal Revenue Service, PO Box 7604,

Ben Franklin Station, Washington, D.C.

20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, Keith L. Brau at (202) 3175437 (not a toll-free number). Concerning

submissions of comments or the public

hearing, Regina Johnson, preferably at

publichearings@irs.gov or (202) 3176901 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

I. Overview

This document contains proposed

amendments to the Procedure and Administration Regulations (26 CFR part 301)

to implement section 7803(e) of the Internal Revenue Code (Code). The proposed

amendments (proposed regulations) relate

to the resolution by the IRS Independent

Office of Appeals (Appeals) of Federal tax

controversies without litigation, including

guidance regarding requests for referral to

Appeals following the issuance of a notice

of deficiency. (References in this preamble

to “Appeals” include references to the former Office of Appeals where appropriate.)

Since its establishment by the IRS

in 1927, Appeals’ mission has been

to resolve Federal tax controversies

without litigation on a basis that is fair

and impartial to both the Government

and the taxpayer.1 In doing so, Appeals

has independently considered disputed

administrative determinations made by

the IRS in administering and enforcing

the internal revenue laws arising from the

IRS’s examination or collection activities

with respect to a particular taxpayer, and

attempted to resolve those disputes without litigation. See House TFA Report, at

29. Appeals generally considers whether

to resolve Federal tax controversies without litigation based on the likelihood of

either the taxpayer’s or the IRS’s position prevailing if the Federal tax controversy was resolved before a court. When

Appeals resolves a Federal tax controversy, it does so through an administrative

settlement of the matter.

The IRS Restructuring and Reform

Act of 1998 (RRA), Public Law 105-206

(112 Stat. 685, 689 (1998)) directed the

Commissioner to restructure the IRS by

establishing and implementing an organizational structure that ensured an independent appeals function within the IRS.

Although the Code did not mandate the

existence of an independent office within

the IRS, provisions of the Code have

required the independent administrative

review of certain administrative determinations, such as section 6159 regarding

terminating an installment agreement,

sections 6320 and 6330 regarding notice

and an opportunity for a hearing before a

levy or upon the filing of a notice of lien,

and section 7122 regarding rejections of

an offer in compromise (OIC).

For decades the Internal Revenue

Manual (IRM) has contained the mission

statement of Appeals (Appeals Mission

Statement), which is “to resolve [Federal]

tax controversies, without litigation, on a

basis which is fair and impartial to both

the Government and the taxpayer and

in a manner that will enhance voluntary

compliance and public confidence in the

See H.R. Rep. No. 39 Part 1, 116th Cong., 1st Session (House TFA Report), 28-29, fn. 4 (2019). The House TFA Report states that Appeals was established and has operated under the general

authority of the Secretary of the Treasury or her delegate (Secretary) provided by section 7805 of the Code to interpret the Code, and the authority of the Commissioner of Internal Revenue

(Commissioner) provided by section 7803 to, among other things, “administer, manage, conduct, direct, and supervise the execution and application of the internal revenue laws or related

statutes and tax conventions to which the United States is a party,” and by section 7804 to, among other things, “employ such number of persons as the Commissioner deems proper for the

administration and enforcement of the internal revenue laws, and the Commissioner shall issue all necessary directions, instructions, orders, and rules applicable to such person.” Sections

7803(a)(2)(A) and 7804(a).

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241

September 26, 2022

integrity and efficiency of the Service.”

See IRM 8.1.1.1(1) (10-01-2016) (regarding accomplishing the Appeals mission).

On July 1, 2019, the President signed

into law the Taxpayer First Act of 2019

(TFA), Public Law 116-25 (133 Stat. 981

(2019)). Among other things, the TFA

added new section 7803(e) to the Code.

New section 7803(e)(1) establishes the

IRS Independent Office of Appeals “to

codify the role of the independent administrative appeals function within the IRS.”

See House TFA Report, at 29. New section 7803(e)(2) provides rules regarding

the appointment, duties, qualifications,

and compensation of the Chief of Appeals

who is to supervise and direct Appeals,

including that the Chief of Appeals is

appointed by and reports directly to

the Commissioner. In connection with

expressly setting forth the role of Appeals,

the TFA codified in new section 7803(e)

(3) the Appeals Mission Statement, with

the additional duty of resolving Federal

tax controversies on a basis that “promotes a consistent application and interpretation of, and voluntary compliance

with, the Federal tax laws.” See section

7803(e)(3)(B).

To meet Appeals’ mission, new section 7803(e)(6)(A) provides that all IRS

employees working within Appeals are

to report to the Chief of Appeals. In addition, new section 7803(e)(6)(B) provides

the Chief of Appeals with the authority to

obtain legal assistance and advice from the

staff of the IRS Office of the Chief Counsel (Chief Counsel) with regard to cases

pending at Appeals, which, to the extent

practicable, is to be provided by Chief

Counsel staff who were not involved

in advising the IRS employees directly

working on the case prior to its referral to

Appeals or in preparation of the case for

litigation. See House TFA Report, at 30.

The remainder of this Background

describes new sections 7803(e)(4) and

7803(e)(5), which are the primary focus

of the guidance provided in the proposed

regulations.

II. General Availability of the Appeals

Resolution Process

Section 7803(e)(4) of the Code, also

enacted by the TFA, provides that “the

resolution process [to resolve Federal tax

September 26, 2022

controversies] shall be generally available to all taxpayers.” For example, a taxpayer who does not resolve the taxpayer’s

deficiency case with the IRS examiner

assigned to the case usually will receive a

30-day letter of a proposed determination

of tax liability that provides the position

of the IRS regarding the taxpayer’s Federal tax controversy. Generally, receipt of

the 30-day letter triggers an opportunity

for the taxpayer to request that Appeals

consider the taxpayer’s Federal tax

controversy.

As an alternative to having a court

decide Federal tax controversies without

litigation (or without further litigation

if the taxpayer has petitioned the United

States Tax Court (Tax Court)) and to facilitate Appeals’ function, Appeals uses one

or more dispute resolution methods to settle Federal tax controversies. The Appeals

dispute resolution methods may include,

but are not limited to, a conference, correspondence, and certain Appeals-provided

alternative dispute resolution services.

These alternative dispute resolution services include fast-track settlement, fasttrack mediation, post-Appeals mediation,

Rapid Appeals Process, or early referral of

issues to Appeals.

The most frequent type of Federal tax

controversy involves a taxpayer disputing a liability that is subject to deficiency

procedures under section 6212. In many

of these cases the taxpayer requests an

Appeals conference after the IRS has

made a determination of the taxpayer’s

liability and sent a preliminary (30-day)

letter to the taxpayer. In another group of

cases, the taxpayer has received a notice

of deficiency and filed a petition in the Tax

Court, after which the docketed case may

be forwarded to Appeals for consideration.

III. Limitation on Access to the Appeals

Resolution Process

As discussed in more detail in section

I.C. of the Explanation of Provisions, the

TFA did not require that the IRS grant all

requests for Appeals to consider any dispute regarding a Federal tax controversy.

The Secretary of the Treasury or her delegate (Secretary) may provide exceptions

that allow the IRS to deny requests for

Appeals consideration of a Federal tax

controversy. In general, it has been the

242

historic practice of the Treasury Department and the IRS to publish limitations on

the access to the Appeals resolution process in IRS guidance such as regulations,

revenues procedures, and the IRM.

Although the TFA does not prohibit the

IRS from denying requests for Appeals

consideration for Federal tax controversies, the TFA did add new section 7803(e)

(5) to the Code. After the enactment of

the TFA, the IRS must follow the special

notification procedures set forth in section

7803(e)(5) if a taxpayer who is in receipt

of a notice of deficiency requests to have

the Federal tax controversy referred to

Appeals and that request is denied. In

such a case, the IRS is required to provide

the taxpayer a written notice containing a

detailed description of the facts involved

in the controversy, the basis for the decision to deny the request, a detailed explanation of how the basis for the decision

applies to such facts, and the procedures

for protesting the decision to deny the

request.

Explanation of Provisions

Proposed

§§301.7803-2

and

301.7803-3 would implement section

7803(e) as explained in sections I and II

of this Explanation of Provisions, respectively. Proposed §301.7803-2 implements

section 7803(e)(3) and (4) regarding the

resolution of Federal tax controversies by

Appeals. Proposed §301.7803-3 implements the special notice procedures of

section 7803(e)(5) to be followed by the

IRS upon denying taxpayer requests to

have Federal tax controversies referred to

Appeals for those taxpayers in receipt of a

notice of deficiency.

I. Appeals Resolution of Federal Tax

Controversies Without Litigation

A. Proposed §301.7803-2(a): Functions

of Independent Office of Appeals

As previously mentioned in the Background, in addition to establishing the

IRS Independent Office of Appeals in

section 7803(e)(1) to codify the role of

the independent administrative appeals

function and providing rules in section

7803(e)(2) regarding the supervision of

Appeals by the Chief of Appeals, the TFA

Bulletin No. 2022–39

codified in section 7803(e)(3) the Appeals

Mission Statement to resolve Federal tax

controversies with respect to taxpayers

without litigation.2 Section 7803(e)(3)

provides that “[i]t shall be the function of

[Appeals] to resolve Federal tax controversies without litigation on a basis which

(A) is fair and impartial to both the Government and the taxpayer, (B) promotes a

consistent application and interpretation

of, and voluntary compliance with, the

Federal tax laws, and (C) enhances public confidence in the integrity and efficiency of the [IRS].” These functions are

consistent with the historical functions

of Appeals prior to the enactment of the

TFA. As further indication that Congress

intended Appeals to generally maintain its

functions as they existed at the time the

TFA was enacted, the legislative history

provides that “Independent Appeals is

intended to perform functions similar to

those of the current Appeals.” See House

TFA Report, at 30. Accordingly, proposed

§301.7803-2(a), consistent with the statutory text of section 7803(e)(3), provides

that Appeals resolves Federal tax controversies without litigation on a basis that is

fair and impartial to the Government and

the taxpayer, promotes a consistent application and interpretation of, and voluntary

compliance with, the Federal tax laws,

and enhances public confidence in the

integrity and efficiency of the IRS.

B. Proposed §301.7803-2(b):

Consideration of Federal Tax

Controversies by Appeals Generally

Available to All Taxpayers

Section 7803(e)(4) provides that the

Appeals resolution process described in

section 7803(e)(3) to resolve Federal tax

controversies without litigation “shall be

generally available to all taxpayers.” Proposed §301.7803-2(b)(1), consistent with

the statutory text of section 7803(e)(4),

provides that the Appeals resolution process is generally available to all taxpayers

to resolve Federal tax controversies.

The statute does not define the term

“Federal tax controversy.” Consistent

with the excerpts of the House TFA

Report described in the Background, proposed §301.7803-2(b)(2) defines a “Federal tax controversy” as a dispute over

an administrative determination with

respect to a particular taxpayer made by

the IRS in administering or enforcing the

internal revenue laws, related Federal tax

statutes, and tax conventions to which

the United States is a party (collectively

referred to as internal revenue laws)

that arises out of the examination, collection, or execution of other activities

concerning the amount or legality of the

taxpayer’s income, employment, excise,

or estate and gift tax liability; a penalty;

or an addition to tax under the internal

revenue laws. Under these proposed regulations, Appeals generally continues to

resolve a Federal tax controversy based

on the likelihood the taxpayer’s or the

IRS’s position with respect to the administrative determination made by the IRS

would prevail if the Federal tax controversy was resolved by a court, as it did

before enactment of the TFA. In doing

so, Appeals continues to independently

consider disputed administrative determinations made by the IRS in administering or enforcing the internal revenue

laws with respect to a particular taxpayer

arising from the IRS’s examination, collection, or execution of other activities

with respect to the particular taxpayer

and attempts to resolve the disputes without litigation.

Consistent with the practice of Appeals

prior to the enactment of the TFA, the

Appeals resolution process is also available to persons who seek review of certain

administrative determinations made by

the IRS with respect to such persons that

do not directly involve their tax liabilities,

penalties, or additions to tax. Even though

such matters are not within the definition

of a Federal tax controversy in proposed

§301.7803-2(b)(2), proposed §301.78032(b)(3) provides that disputes over administrative determinations made by the IRS

with respect to a particular person regarding the listed topics are treated as a Federal

tax controversy. Appeals consideration of

such administrative determinations made

by the IRS is consistent with the historical functions of Appeals prior to the

enactment of the TFA, which Congress

intended to codify in section 7803(e)(3).

Specifically, the legislative history states:

“Independent Appeals is intended to perform functions similar to those of the current Appeals.” See House TFA Report, at

30. For example, Appeals considers determinations involving initial or continuing

tax exemption or foundation classification

of particular organizations, and initial

or continuing qualification of particular

employee plans, unless the issue underlying that determination is addressed by

Chief Counsel through a technical advice

issued by the office of an Associate Chief

Counsel (Associate Office). See proposed

§301.7803-2(b)(3)(iv) and (v); sec. 12.01

of Rev. Proc. 2022-2 (2022-1 I.R.B. 120)

(relating to use of technical advice);

§601.106(a)(1)(v)(a) of the Statement

of Procedural Rules (26 CFR part 601)

(same). In addition to the topics listed in

proposed §301.7803-2(b)(3)(i) through

(vii), proposed §301.7803-2(b)(3)(viii)

includes any other topic that the IRS

determines can be considered by Appeals.

This proposed rule, therefore, allows

Appeals to consider administrative determinations made by the IRS with respect to

a particular person that are not Federal tax

controversies within the meaning of proposed §301.7803-2(b)(2) but that Appeals

has historically considered and attempted

to resolve without litigation. Based on

its limited resources, the only disputes

that are not Federal tax controversies

as defined in proposed §301.7803-2(b)

(2) that Appeals has historically considered and continues to consider are those

categories of disputes with respect to a

particular person specified in proposed

§301.7803-2(b)(3)(i) through (vii). This

proposed rule also allows the addition of

new categories of administrative determinations made by the IRS with respect to

a particular person that in the future may

become evident as appropriate to fulfill

the function of Appeals. See proposed

§301.7803-2(b)(3)(viii).

The TFA’s codification of the Appeals Mission Statement was generally consistent with Appeals Mission described in the Internal Revenue Manual at the time the TFA was enacted. IRM

8.1.1.1(1) (10-1-2016).

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September 26, 2022

C. Proposed §301.7803-2(c): Exceptions

to Consideration by Appeals

When the TFA was enacted, the Appeals

resolution process was subject to exceptions and requirements that could limit use

of that process. Congress recognized these

limits, and the statute and legislative history demonstrate that the IRS retains discretion to have appropriate limits following

the statutory codification of the role of an

independent appeals function within the

IRS (that is, Appeals). As mentioned previously, section 7803(e)(4) provides that “[t]

he [Appeals] resolution process . . . shall

be generally available to all taxpayers.”

Section 7803(e)(4) (emphasis added). In

choosing to use the words “generally available” in section 7803(e)(4), Congress made

clear that the statute does not impose an

unqualified requirement that the Appeals

resolution process become a forum for any

dispute with the IRS.

In addition to the statutory language of

section 7803(e)(4), the House TFA Report

also reflects the intention of Congress

that the Treasury Department and the IRS

retain after the enactment of the TFA their

historical discretion to determine whether

the resolution of particular types of disputes is appropriate for the Appeals resolution process, or the discretion of the IRS

to determine whether a particular Federal

tax controversy is appropriate for the

Appeals resolution process:

I ndependent Appeals is intended to

perform functions similar to those

of the current Appeals. Independent

Appeals is to resolve tax controversies

and review administrative decisions of

the IRS in a fair and impartial manner,

for the purposes of enhancing public

confidence, promoting voluntary compliance, and ensuring consistent application and interpretation of Federal tax

laws. Resolution of tax controversies in

this manner is generally available to all

taxpayers, subject to reasonable exceptions that the Secretary may provide.

Thus, cases of a type that are referred

to Appeals under present law remain

eligible for referral to Independent

Appeals.

See House TFA Report, at 30-31 (emphasis added).

September 26, 2022

The House TFA Report also explains

that Congress knew the existing backdrop

of Appeals exceptions when it passed

the TFA: “The Committee is aware that

the Code does not currently require that

all taxpayers be provided an opportunity

to contest an administrative decision in

Appeals, although most taxpayers are

afforded that opportunity.” See House

TFA Report, at 29. The House TFA Report

noted some of the existing exceptions:

 xceptions occur, and include cases in

E

which inadequate time remains on the

limitations period for assessment and

collection or those in which the only

arguments raised by the taxpayer are

frivolous positions. Similarly, if a case

has reached a point at which litigation

is initiated, the availability of consideration by Appeals may be limited. First,

authority to settle cases referred to the

Department of Justice for defense or

initiation of litigation rests solely with

that Department. Therefore, such cases

are not eligible for referral to Appeals.

The terms under which a case pending

in the [United States Tax Court] may

be referred to Appeals are described

in published guidance that centralizes

the decision to withhold a case from

Appeals to assure consistent standards

are applied.

See House TFA Report, at 29 (footnotes

omitted). The footnote to the last quoted

sentence cites the guidance in Rev. Proc.

2016-22 and §601.106 of the Statement of

Procedural Rules (26 CFR part 601) that

sets out some of these exceptions, stating:

“Exceptions to the general rule in favor of

requiring Appeals consideration include

cases that are withheld in the interests of

sound tax administration, among other reasons.” See House TFA Report, at 29, fn. 8.

Proposed §301.7803-2(c) sets forth the

exceptions to consideration of a Federal tax

controversy by Appeals. These exceptions,

which are listed in proposed §301.78032(c)(1) through (24), generally predate the

enactment of the TFA. The proposed exceptions to consideration by Appeals involve

Federal tax controversies, or issues arising

in these controversies, that are excepted

from consideration by Appeals and matters or issues that are otherwise ineligible

for consideration by Appeals because they

244

are not Federal tax controversies as defined

in proposed §301.7803-2(b)(2) nor treated

as Federal tax controversies in proposed

§301.7803-2(b)(3). To the extent that a

matter or issue not eligible for consideration by Appeals is present in a case that

otherwise is eligible for consideration by

Appeals, the ineligible matter or issue will

not be considered by Appeals in the resolution of the case.

The Treasury Department and the IRS

request comments on the scope and rationale for the exceptions described in proposed §301.7803-2(c)(1) through (24). To

the extent any of the proposed exceptions

may differ from prior Appeals practice,

comments are requested on the effects of

such differences and whether the objectives of such exceptions could be accomplished by alternative means while still

allowing Appeals to function in accordance with section 7803(e)(3). Comments

are also requested on whether any additional exceptions to Appeals consideration

are warranted.

1. Frivolous Positions

Proposed §301.7803-2(c)(1) provides

that Appeals consideration is not available

for an administrative determination made

by the IRS with respect to a particular taxpayer in which the IRS rejects a frivolous

position, which includes any case solely

involving the failure or refusal of the taxpayer to comply with the tax laws because

of frivolous moral, religious, political,

constitutional, conscientious, or similar

grounds. A frivolous position includes a

position the IRS has identified as frivolous for purposes of section 6702(c) of the

Code (regarding listing of frivolous positions). A list of positions that the IRS has

determined to be frivolous under section

6702(c) can be found in Notice 2010-33

(2010-17 I.R.B. 609 (April 26, 2010)).

Proposed §301.7803-2(c)(1) codifies the

pre-TFA practice of the IRS of denying

the request of a taxpayer for Appeals resolution of frivolous arguments, including

cases based solely on frivolous moral,

religious, political, constitutional, conscientious, or similar grounds.

This approach is also consistent with

the restriction in section 7803(e)(5)(D),

also added by the TFA, that the notice and

protest procedures under section 7803(e)

Bulletin No. 2022–39

(5) do not apply to an Appeals referral

request if the issue is frivolous within

the meaning of section 6702(c). Appeals

consideration of frivolous positions would

facilitate the abuse of the tax system by

allocating IRS and Appeals resources to

a secondary review of positions that have

already been designated as frivolous.

Similar existing restrictions precluding

the consideration of frivolous positions by

Appeals can be found in §601.106(b) of the

Statement of Procedural Rules (26 CFR

part 601) (regarding appeal procedures

not extending to cases involving solely

the failure or refusal to comply with tax

laws because of frivolous moral, religious,

political, constitutional, conscientious, or

similar grounds), IRM 5.14.3.3(1) (10-202020) (relating to installment agreement

requests made to delay collection action),

and IRM 8.22.5.5.3 (11-08-2013) (relating to frivolous issues).

2. Penalties Related to Frivolous

Positions and False Information

Similarly, proposed §301.7803-2(c)

(2) provides that Appeals consideration

generally is not available regarding a

penalty assessed by the IRS with respect

to a particular taxpayer for asserting

a frivolous position, making a frivolous submission, or for providing false

information. Examples of such penalties

include sections 6702 relating to frivolous tax submissions and 6682 relating to false information with respect

to withholding. See IRM 8.11.8.2(1),

(3) (10-28-2013) (relating to a section

6702 penalty for frivolous tax submissions); IRM 8.22.8.10.4(1) (08-26-2020)

(relating to a frivolous tax submission

penalty under section 6702 and a false

Form W-2, “Wage and Tax Statement,”

penalty under section 6682). These penalties are immediately assessable. The

IRS notifies the taxpayer of the penalty

assessment and makes a demand for payment. See sections 6703(b), 6671(a), and

6682(c) (relating to penalty assessment).

A taxpayer seeking judicial review must

first pay the entire penalty and then file

a claim for refund with the IRS within

two years of the date of payment. These

penalties are designed to deter frivolous

behavior or improper conduct by a taxpayer. If Appeals does not consider the

Bulletin No. 2022–39

merits of the taxpayer’s frivolous position, it follows that Appeals should not

consider the IRS’s assessment of the penalty with respect to the taxpayer as well.

Similarly, under proposed §301.78032(c)(2) Appeals consideration is not

available regarding the IRS’s assessment

of a penalty with respect to a particular

taxpayer who submits false information.

Appeals consideration of an administrative determination made by the IRS

to impose a penalty that stems from the

particular taxpayer’s improper conduct

of submitting false information would

be inconsistent with the purpose of the

penalty, which is designed to disincentivize the taxpayer from engaging in this

improper conduct and to encourage voluntary compliance.

Although penalties assessed by the

IRS under sections 6702 and 6682 with

respect to particular taxpayer generally

are excepted from Appeals consideration,

proposed §301.7803-2(c)(2) recognizes

that Appeals may obtain verification

that the assessment of the penalties with

respect to a particular taxpayer complied

with sections 6203 (relating to method

of assessment) and 6751(b) (relating to

approval of assessment) of the Code in

a collection due process (CDP) hearing.

See section 6330(c)(1), section 6330(c)

(4)(B), and IRM 8.22.8.10.4(1) and (11)

(relating to Appeals review of certain

limited issues in a CDP action). Appeals

also may consider a non-frivolous challenge to an administrative decision made

by the IRS in assessing a penalty under

section 6702 or section 6682 with respect

to a particular taxpayer in a CDP hearing. An example of such a non-frivolous

argument that Appeals could consider

is the argument that a section 6702 penalty was erroneously assessed by the IRS

because the return the taxpayer filed does

not fall within section 6702. For instance,

if a taxpayer properly reported the taxpayer’s income tax liability but included

a statement objecting to pay the amount

of reported liability that would otherwise

go to the military and as a result the taxpayer is assessed a section 6702 penalty,

Appeals could consider the taxpayer’s

non-frivolous argument that the IRS erroneously assessed the penalty because the

return filed does not fall within section

6702.

245

3. Whistleblower Awards

Proposed §301.7803-2(c)(3) provides

that Appeals consideration is not available for any administrative determination

made by the IRS under section 7623 relating to awards to whistleblowers. The IRS

Whistleblower Office provides awards of

up to 30 percent of the amount recovered

in tax enforcement actions to individuals who provide credible evidence of tax

fraud to the IRS. A whistleblower files a

claim providing information of alleged

tax fraud involving a taxpayer. The IRS

Whistleblower Office notifies the whistleblower that it has received the claim,

that it will use the information to determine whether to pursue an investigation,

and that it will inform the whistleblower

as to whether the information meets the

criteria for paying an award. If the IRS

Whistleblower Office subsequently evaluates the whistleblower’s claim and determines that it does not meet the criteria for

an award, Appeals consideration is not

available to the particular whistleblower

for the administrative determination made

by the IRS under section 7623. Proposed

§301.7803-2(b)(2) defines a Federal tax

controversy as a dispute over an administrative determination with respect to a

particular taxpayer made by the IRS in

administering or enforcing the internal

revenue laws, related Federal tax statutes,

and tax conventions to which the United

States is a party (collectively referred to

as internal revenue laws). An administrative determination made by the IRS is

only with respect to a particular taxpayer

and arises out of the examination, collection, or execution of other activities

concerning the amount or legality of the

taxpayer’s income, employment, excise,

or estate and gift tax liability; a penalty;

or an addition to tax under the internal

revenue laws. In a whistleblower case,

the whistleblower’s Federal tax liability is

not at issue and Appeals is not reviewing

a determination by the IRS in its examination, collection, or execution of other

activities with respect to the whistleblower’s Federal tax liability. Consequently, a

whistleblower claim does not fall within

the definition of a Federal tax controversy,

and it is excepted from Appeals consideration consistent with Appeals’ preTFA procedures. See sec. 4 of Rev. Proc.

September 26, 2022

2016-22 (2016-15 I.R.B. 577) (relating to

practices for the administrative appeals

process in Tax Court). It also is not treated

as a Federal tax controversy under proposed §301.7803-2(b)(3), which identifies

certain matters with respect to a particular

person subject to Appeals review that do

not arise from the examination, collection,

or execution of other activities concerning a taxpayer’s Federal tax liability or

directly involve the taxpayer’s Federal tax

liabilities, penalties, or additions to tax.

4. Administrative Determinations Made

by Other Agencies

Proposed §301.7803-2(c)(4) provides

that Appeals consideration is not available for an administrative determination issued by an agency other than the

IRS. An example is a determination by

the Alcohol and Tobacco Tax and Trade

Bureau (TTB) concerning an excise tax

administered by and within the jurisdiction of TTB. Such taxes include an excise

tax imposed by Chapter 32 (relating to

firearms and ammunition); by Subtitle E

(relating to alcohol, tobacco, and certain

other excise taxes); or by Subchapter D

of Chapter 78 (relating to U.S. possessions) of the Code, to the extent it relates

to Subtitle E. This exclusion relating to

the excise taxes administered by the TTB

is currently found in §601.106(a)(3) of

the Statement of Procedural Rules (26

CFR part 601). Proposed §301.7803-2(c)

(4) is consistent with the statute and the

definition of a Federal tax controversy in

§301.7803-2(b)(2) because the Appeals

resolution process is available only for

consideration of administrative determinations made by the IRS with respect

to a particular taxpayer. Neither section 7803(e) nor the House TFA Report

refers to any agency other than the IRS

or contemplates Appeals consideration

of a decision by any agency other than

the IRS. See House TFA Report, at 31.

Similarly, §301.7803-2(b)(2) defines a

Federal tax controversy as a dispute over

an administrative determination with

respect to a particular taxpayer made by

the IRS in administering or enforcing

the internal revenue laws, related Federal tax statutes, and tax conventions to

which the United States is a party (collectively referred to as internal revenue

September 26, 2022

laws). An administrative determination

made by the IRS is only with respect to

a particular taxpayer and arises out of the

examination, collection, or execution of

other activities concerning the amount

or legality of the taxpayer’s income,

employment, excise, or estate and gift tax

liability; a penalty; or an addition to tax

under the internal revenue laws. Appeals

therefore will not consider an administrative determination of a tax that is not

administered by or within the jurisdiction

of the IRS.

5. Taxpayer Assistance Order

Proposed §301.7803-2(c)(5) provides

that Appeals consideration is not available for a decision made by the IRS not

to issue a Taxpayer Assistance Order

(TAO) under section 7811 of the Code

(relating to TAOs) with respect to a particular taxpayer if the taxpayer submits

a request for Taxpayer Advocate Service

assistance. This clarification in the proposed rule is consistent with the general

definition of a Federal tax controversy in

proposed §301.7803-2(b)(2) because the

Office of the Taxpayer Advocate (commonly referred to as the Taxpayer Advocate Service) is an independent part of the

IRS, and its decision not to issue a TAO

is a process separate and distinct from

an administrative determination made by

the IRS with respect to a particular taxpayer that arises out of the examination,

collection, or execution of other activities

concerning the amount or legality of the

taxpayer’s income, employment, excise,

or estate and gift tax liability; a penalty; or

an addition to tax under the internal revenue laws. .

6. Material to Be Deleted from a Written

Determination

Proposed §301.7803-2(c)(6) provides that Appeals consideration is not

available for any decision by the IRS

concerning material to be deleted from

the text of a written determination with

respect to a particular taxpayer pursuant

to section 6110 of the Code (relating to

public inspection of written determinations) unless the written determination

is otherwise being reviewed by Appeals.

Appeals did not consider these types of

246

matters before the TFA was enacted, and

these proposed regulations continue this

exception. See sec. 4 of Rev. Proc. 201622. Like whistleblower awards, disputes

under section 6110 do not involve the

type of controversy that Appeals has traditionally handled, that is, reviewing an

administrative determination made by

the IRS with respect to a particular taxpayer that arises out of the examination,

collection, or execution of other activities concerning the amount or legality

of the taxpayer’s income, employment,

excise, or estate and gift tax liability; a

penalty; or an addition to tax under the

internal revenue laws. A section 6110

dispute does not involve the resolution

of a Federal tax controversy but rather

is a dispute limited to whether particular

information in a written determination to

be issued by the IRS to the taxpayer is

information that must be redacted before

the written determination is released to

the public as required by section 6110.

Proposed §301.7803-2(c)(6) permits a

disagreement concerning material to be

deleted under section 6110 from the text

of a written determination to be taken up

at an Appeals conference that is otherwise

scheduled regarding a taxpayer’s determination. If Appeals is already considering

the substantive content of the determination, minimal resources and time would be

required to also review the redactions. See

sec. 13.04 of Rev. Proc. 2022-5 (2022-1

I.R.B. 256) (relating to exempt organization and private foundation status). This

review would not require the analysis of

an entirely new dispute by Appeals, which

would require significant resources.

7. Denials of Access Under the Privacy

Act

Similarly, proposed §301.7803-2(c)(7)

provides that Appeals consideration is not

available for any dispute regarding a determination of the IRS resulting in denial of

access under the Privacy Act (5 U.S.C.

552a(d)(1)) (relating to access to records)

to a particular person. Like a dispute

involving section 6110, a dispute involving the denial of access under the Privacy

Act does not involve the type of controversy that Appeals has traditionally handled. Rather than involving a controversy

regarding an administrative determination

Bulletin No. 2022–39

made by the IRS with respect to a particular taxpayer that arises out of the examination, collection, or execution of other

activities concerning the amount or legality of the taxpayer’s income, employment,

excise, or estate and gift tax liability; a

penalty; or an addition to tax under the

internal revenue laws, such a dispute

involves whether the Privacy Act prevents

disclosure of records. In addition, 5 U.S.C.

552a(d)(2) and (3) creates administrative

review rights for an agency’s refusal to

amend a record accessed under the Privacy Act, but there is no similar statutory

authority to obtain administrative review,

including by Appeals, of a denial of access

under the Privacy Act. Rather, 5 U.S.C.

552a(g) provides that a civil action may

be brought in certain cases.

8. Issues Settled by a Closing Agreement

Proposed §301.7803-2(c)(8) provides

that Appeals consideration is not available

for any issue that the IRS and a particular

taxpayer have resolved in an agreement

described in section 7121 of the Code

regarding closing agreements and for

any decision by the IRS to enter into or

not enter into such agreement. Proposed

§301.7803-2(c)(8) further provides that

Appeals may consider the question of

whether an item or items are covered by

a closing agreement, and how the item or

items are covered. Closing agreements are

binding on the IRS and the taxpayer in

accordance with section 7121. Under section 7121(b), a closing agreement between

the IRS and a taxpayer is final unless

fraud, malfeasance, or misrepresentation of a material fact can be shown; the

case cannot be reopened as to the matters

agreed upon or the agreement modified

by any officer, employee, or agent of the

United States. Therefore, any issue that

is resolved by a closing agreement under

section 7121 is statutorily precluded from

being considered by Appeals.

9. The IRS Erroneously Returns or

Rejects an OIC

According to section 7122(f) of the

Code, if an OIC is not rejected within

24 months after submission, it shall be

deemed to be accepted. An offer under

section 7122 will not be deemed to be

Bulletin No. 2022–39

accepted if it is rejected or returned as

nonprocessable or no longer processable

within the 24 months. See sec. 1.07 of

Notice 2006-68 (2006-31 I.R.B. 105 (July

31, 2006)) (relating to OICs). Proposed

§301.7803-2(c)(9) provides that Appeals

consideration is not available when the

IRS erroneously returns or rejects a taxpayer’s OIC submitted under section 7122

as nonprocessable or no longer processable and the taxpayer requests Appeals

consideration on the basis that the OIC

should be deemed to be accepted under

section 7122(f). This exception includes,

for example, the claim that the IRS’s mistaken rejection or return was in bad faith.

Because the IRS returned or rejected the

offer without making a determination

regarding the OIC, there is no administrative determination made by the IRS for

Appeals to review.

10. Criminal Prosecution is Pending

Against Taxpayer

Proposed §301.7803-2(c)(10) provides

that Appeals consideration is not available

for a Federal tax controversy with respect

to a taxpayer while a criminal prosecution

or a recommendation for criminal prosecution is pending against the taxpayer

for a tax-related offense other than with

the concurrence of Chief Counsel and

the Department of Justice, as applicable.

Appeals consideration therefore may be

temporarily unavailable, and it may come

later if the other requirements in proposed

§301.7803-2 are met. This proposed

exception to Appeals consideration avoids

any interference or even the appearance

of any interference with a criminal prosecution or an investigation that has been

recommended for criminal prosecution.

A similar existing exception can be found

in §601.106(a)(2)(vi) of the Statement

of Procedural Rules (26 CFR part 601)

(relating to the exclusion of review while

a recommendation for criminal prosecution is pending).

11. Branded Prescription Drug Fee and

Health Insurance Providers Fee

Proposed §301.7803-2(c)(11) provides that consideration by Appeals is

not available for issues relating to the

allocation among different fee payers of

247

the branded prescription drug fee found

in section 9008 of the Patient Protection

and Affordable Care Act (PPACA), Public Law 111-148 (124 Stat. 119 (2010)),

as amended by section 1404 of the Health

Care and Education Reconciliation Act

of 2010 (HCERA), Public Law 111-152

(124 Stat. 1029 (2010)), and the health

insurance providers fee found in section

9010 of PPACA, as amended by section

10905 of PPACA, and as further amended

by section 1406 of HCERA. The Further

Consolidated Appropriations Act, 2020,

Division N, Subtitle E, section 502, Public Law 116-94 (133 Stat. 2534 (2019)),

repealed the section 9010 fee for calendar

years beginning after December 31, 2020

(fee years after the 2020 fee year). Thus,

Appeals will not consider issues involving

the branded prescription drug fee and the

section 9010 fee because these disputes

do not involve tax issues with respect to a

particular taxpayer, but issues concerning

how a statutory fee is allocated amongst

multiple fee payers.

Each allocated fee in sections 9008

and 9010 (when it was in effect) has a

built-in corrections process that allows

fee payers an opportunity to address

errors and other problems before the final

fee is determined. Allowing the regular Appeals process to be available with

respect to one fee payer would be inconsistent with the process of calculating the

allocated fees, under which adjusting one

fee payer’s fee affects the fees payable

by all other fee payers. Comparatively,

the built-in corrections process allows

for each fee payer’s liability to be determined in a relatively short time. Appeals

consideration therefore is not appropriate

given the nature of the allocated fee process and the impracticality of, and lack of

time for, Appeals consideration. Furthermore, the regulations provide that all fee

determinations by the IRS are final. See

26 CFR §51.7(d) (relating to the finality

of the branded prescription drug fee calculation process) and 26 CFR §57.6(c)

(relating to the finality of the health insurance providers fee calculation process).

Proposed §301.7803-2(c)(11) promotes

efficient and fair tax administration and

enforcement of the internal revenue laws,

leading to the consistent resolution of

issues and conserving IRS and taxpayer

resources.

September 26, 2022

12. IRS’s Automated Process of Certifying

a Seriously Delinquent Tax Debt

Proposed §301.7803-2(c)(12) provides that consideration by Appeals is not

available for the certification or issuance

of a notice of certification of a seriously

delinquent Federal tax debt of a particular

taxpayer to the Department of State (State

Department) under section 7345 of the

Code (relating to the revocation or denial

of a taxpayer’s passport in the case of serious tax delinquencies). The IRS relies on

automated systems to identify every electronic taxpayer record on an individual’s

account with an unpaid assessed tax liability that is not statutorily excepted from

the definition of seriously delinquent tax

debt or otherwise in a category excluded

from certification. Once all eligible unpaid

liabilities have been identified, the systems aggregate the amount of unpaid liabilities. If the total is more than the statutory threshold, the taxpayer is identified

as having a seriously delinquent tax debt,

and the relevant transaction code is posted

to the electronic taxpayer records. The

Commissioner of the IRS’s Small Business/Self-Employed Division then certifies that the identified individuals each

have a seriously delinquent tax debt, and

the IRS sends a list of all certified individuals to the State Department. The taxpayer receives Notice CP508C, “Notice of

certification of your seriously delinquent

Federal tax debt to the State Department,”

informing the taxpayer to contact the

IRS at the phone number in that notice

to request reversal of the certification if

the taxpayer believes the certification is

erroneous.

The sole remedy of a taxpayer who

believes that a certification is erroneous or

that the IRS incorrectly failed to reverse a

certification because the tax debt is either

fully satisfied or ceases to be a seriously

delinquent tax debt is to file a civil action

in court under section 7345(e). Although a

taxpayer can challenge the certification in

a Federal district court or the Tax Court,

the taxpayer cannot challenge the underlying liabilities because the amounts of

the liabilities that constitute a seriously

delinquent tax debt are not at issue in

the certification process. See Ruesch v.

Commissioner, 154 T.C. 289 (2020). In

a docketed case, Appeals consideration

September 26, 2022

is not appropriate given the automated

nature of the IRS’s process for identifying

and certifying individuals with seriously

delinquent tax debts and because the certification of a taxpayer will have been

verified by the assigned Counsel attorney

in answering the docketed case. Consequently, there are no issues for Appeals to

consider. An existing exception similar to

this proposed rule can be found in Notice

2018-01 (2018-2 I.R.B. 299 (January 16,

2018)) (relating to revocation, limitation,

or denial of a passport in the case of certain tax delinquencies).

the prior notice. See §§301.6320-1(e)(3)

Q&A-E7, 301.6330-1(e)(3) Q&A-E7.

The Procedure and Administration Regulations (26 CFR part 301) provide that

a taxpayer whose CDP hearing request

is untimely is not entitled to a CDP hearing under section 6320 or section 6330

but may receive an “equivalent hearing.”

See §§301.6320-1(i)(1), 301.6330-1(i)(1).

Proposed §301.7803-2(c)(13) also applies

to equivalent hearing requests.

13. Issues Barred from Consideration in

CDP Cases

Proposed §301.7803-2(c)(14) provides

that consideration by Appeals is not available for any case, determination, matter,

decision, request, or issue with respect to a

particular taxpayer that Appeals lacks the

authority to settle. There is no reason for

Appeals to expend resources considering

a Federal tax controversy that it cannot

ultimately resolve.

Proposed

§301.7803-2(c)(14)(i)

through (v) provides a non-exclusive list

of examples illustrating this rule. Appeals

does not have authority to resolve an issue

with respect to a particular taxpayer in

a docketed case after a referral has been

made to the Department of Justice. For

instance, Appeals lacks the authority to

settle a tax claim in a bankruptcy court

where the taxpayer has filed a petition

in the bankruptcy court and objected to

the Government’s proof of claim and

requested that the court determine tax liability. Section 7122(a) provides that settlement authority resides with the Department of Justice after a referral is made.

Appeals also lacks authority over decisions that are delegated exclusively to

other offices within the IRS. For example, Appeals cannot consider a competent

authority case under a United States tax

treaty that is within the exclusive authority

of the United States Competent Authority.

The term Competent Authority is defined

in U.S. tax treaties as the Secretary or her

delegate. The Secretary has delegated this

authority to the Commissioner, who has

redelegated it to the Commissioner of the

Large Business and International (LB&I)

Division of the IRS, the Deputy Commissioner of LB&I, and specified officials

within LB&I with respect to particular

matters. See IRM 1.2.2.5.11 (06-09-2021)

Proposed §301.7803-2(c)(13) provides

that consideration by Appeals is not available for any issue that is statutorily prohibited from being considered during a

CDP hearing in accordance with section

6320 regarding notice and opportunity for

a hearing upon the filing of a notice of lien,

section 6330 regarding notice and opportunity for a hearing before levy, the corresponding regulations, or any other administrative guidance related to CDP hearings.

For example, in a CDP case a taxpayer is

precluded from requesting relief under

section 66 relating to community property

and section 6015 relating to relief from

joint and several liability on a joint return

if the Commissioner has already made a

final determination as to spousal defenses

in a statutory notice of deficiency or final

determination letter. See §§301.6320-1(e)

(2), 301.6330-1(e)(2); §§301.6320-1(e)

(3) Q&A-E4, 301.6330-1(e)(3) Q&A-E4.

In this example, a taxpayer may request

relief, and receive a second final determination, only if one of the exceptions provided in §1.6015-5(c) (relating to effect

of a final administrative determination)

or IRM 25.15.17.7 (03-05-2019) (relating

to issuing second preliminary and final

determinations for the same relief request)

apply. In another example, if a taxpayer

received a prior CDP notice under section

6320 or 6330 for the same tax liability

and taxable period, the taxpayer has had

an opportunity to dispute the existence

and amount of that liability and may not

challenge it in a subsequent CDP hearing, regardless of whether the taxpayer

requested a CDP hearing in response to

248

14. Authority Over the Matter Rests with

Another Office

Bulletin No. 2022–39

(Delegation Order 4-12 (Rev. 4)). The

United States Competent Authority has

exclusive authority over a competent

authority issue it accepts for consideration or a competent authority resolution

that was previously accepted by the taxpayer. Therefore, Appeals generally does

not have authority to review these matters.

See sec. 6.04(1) of Rev. Proc. 2015-40

(2015-35 I.R.B. 236) (regarding procedures for requesting competent authority

assistance under U.S. tax treaties).

In another example, Appeals lacks

authority over the discretionary decision

of the Commissioner or the Commissioner’s delegate whether to rescind a section

6707A penalty for a non-listed reportable

transaction. See section 6707A(d) (relating to the Commissioner’s authority to

rescind the penalty); §301.6707A-1(e)

(relating to rescission authority); and IRM

8.11.7.6.8(2) (10-29-2013) (relating to

rescission requests).

Similarly, Appeals lacks authority over

an issue when a requesting spouse seeks

relief under section 6015 relating to relief

from joint and several liability on a joint

return and a nonrequesting spouse is a

party to a docketed case in the Tax Court

and does not agree to granting full or partial relief under section 6015. See Chief

Counsel Notice 2013-011 (June 7, 2013)

(relating to litigating cases that involve

claims for Innocent Spouse relief under

section 6015). As explained in Chief

Counsel Notice 2013-011, the IRS, which

includes Appeals, is legally prohibited

from providing section 6015 relief or

settling with the requesting spouse if the

non-requesting spouse is a joint petitioner

or an intervenor in a Tax Court case and is

not a party to the settlement. See Corson

v. Commissioner, 114 T.C. 354 (2000). In

that case, authority to resolve the issues

rests solely with the Tax Court.

Appeals also lacks authority over a

criminal restitution-based assessment

under section 6201(a)(4) of the Code

relating to certain orders of criminal restitution and restriction on challenge of

assessment.

15. Certain Technical Advice Memoranda

Proposed §301.7803-2(c)(15) provides

that Appeals consideration is not available

for certain adverse actions related to the

Bulletin No. 2022–39

initial or continuing recognition of tax-exempt status, an entity’s classification as a

foundation, the initial or continuing determination of employee plan qualification,

or a determination involving an obligation and the issuer of an obligation under

section 103. The proposed exception

regarding the recognition of tax-exempt

status, foundation classification, plan

qualification determination, or determination involving an obligation and the issuer

of an obligation under section 103 applies

only if the adverse action is based upon

a technical advice memorandum (TAM)

issued by an Associate Office before an

appeal is requested. Appeals may request

that the Associate Office reconsider the

TAM. See sec. of 12.01 Rev. Proc. 2022-2

regarding Appeals submitting a proposed

disposition of an issue contrary to a TAM

as a request for a new TAM.

A TAM is advice furnished by an

Associate Office in a memorandum that

responds to any request for assistance on

any technical or procedural legal question involving the interpretation and

proper application of any legal authority

that is submitted in accordance with an

applicable revenue procedure. See Rev.

Proc. 2022-2 (defining the term “Associate office” and explaining when and

how an Associate Office provides technical advice, conveyed in technical advice

memoranda). Chief Counsel has jurisdiction over legal questions. See section

7803(b)(2). If a TAM is furnished concerning an organization’s exempt status

or foundation classification, or concerning

an employee plan’s status or qualification,

Chief Counsel’s decision with respect to

those issues is the final position of the IRS

and therefore excepted from Appeals consideration. See §601.106(a)(1)(v)(a); IRM

8.1.1.2.1(1)(c.) (02-10-2012) (relating to

exceptions to Appeals authority). Accordingly, an IRS field office must process the

taxpayer’s case in accordance with the

conclusions in the TAM. See sec. 12.01

of Rev. Proc. 2022-2. Similarly, if a TAM

provides conclusions involving an obligation and the issuer of the obligation under

section 103, the field office must apply the

conclusions to the issuer and any holder

of the obligation unless a new TAM is

issued on behalf of the holder for the

same issue addressed in the initial TAM.

See sec. 12.01 of Rev. Proc. 2022-2. As in

249

the guidance referenced in this paragraph,

proposed §301.7803-2(c)(15) provides

that when these issues and determinations

are the subject of a TAM from an Associate Office, they are excepted from Appeals

consideration because Chief Counsel has

exclusive authority to resolve these issues.

16. Technical Advice from an Associate

Office in a Docketed Case

For the same reasons as explained in

section C.15. of this Explanation of Provisions, proposed §301.7803-2(c)(16)

provides that Appeals consideration is

not available for any case docketed in

the Tax Court if the notice of deficiency,

notice of liability, or final adverse determination letter is based upon an Associate Office TAM in that case involving an

adverse action described in §301.78032(c)(15). Like the exception in proposed

§301.7803-2(c)(15), the exception in proposed §301.7803-2(c)(16) relates to the

initial or continuing recognition of tax-exempt status, an entity’s classification as a

foundation, the initial or continuing determination of employee plan qualification,

or a determination involving an obligation

and the issuer of an obligation under section 103. When these issues and determinations are the subject of a TAM from

an Associate Office, they are final and

excepted from Appeals consideration. See

§601.106(a)(2)(iii) (relating to an exception if a notice of deficiency, notice of liability, or final adverse determination letter

is based upon specified ruling or technical

advice); sec. 12.01 of Rev. Proc. 2022-2.

17. Letter Rulings Issued by an Associate

Office

Proposed §301.7803-2(c)(17) provides

that Appeals consideration is not available for a decision by an Associate Office

whether to issue a letter ruling or the content of a letter ruling. A taxpayer requests

a letter ruling by submitting a request that

meets the requirements of the revenue

procedure that describes the letter ruling

process, which is updated annually. The

most recent update is Rev. Proc. 2022-1.

As explained in section 2.01 of Rev.

Proc. 2022-1, a letter ruling is a written

determination issued to a taxpayer by

an Associate Office in response to the

September 26, 2022

taxpayer’s inquiry, filed prior to the filing

of returns or reports that are required by

the tax laws, about its status for tax purposes or the tax effects of its acts or transactions. A letter ruling interprets the tax

laws and applies them to the taxpayer’s

specific set of facts. An Associate Office

issues a letter ruling when appropriate and

in the interest of sound tax administration.

A voluntary request for a letter ruling is

not an administrative determination that

is part of the IRS’s compliance function.

The taxpayer is not required to file a return

consistent with the letter ruling. The letter

ruling program is not designed to present a

position of the IRS for Appeals to consider.

The program is designed instead to provide taxpayers with information regarding

whether the IRS will accept a position

to be taken on the taxpayer’s return. An

exception similar to the exception in proposed §301.7803-2(c)(17) already exists

in section 10.02 of Rev. Proc. 2022-1.

However, proposed §301.7803-2(c)

(17) provides that the subject of the letter ruling may be considered by Appeals

if all other requirements in proposed

§301.7803-2 are met. For example,

assume that a taxpayer submits a letter ruling request pursuant to Rev. Proc. 2022-1

and an Associate Office issues a letter ruling adverse to the taxpayer’s request. If

the taxpayer files a tax return contrary to

the adverse letter ruling and a Federal tax

controversy arises that involves the subject of the adverse letter ruling, Appeals

could consider the subject of the letter ruling in the dispute if all other requirements

in proposed §301.7803-2 are met.

18. Challenges Alleging that a Statute is

Unconstitutional

Proposed §301.7803-2(c)(18) provides

that Appeals consideration is not available for any issue based on a taxpayer’s

argument that a statute violates the United

States Constitution unless there is an unreviewable decision from a Federal court

holding that the cited statute is unconstitutional. An argument that a statute violates

the United States Constitution includes an

argument that a statute is unconstitutional

on its face or as applied to a specific person. For purposes of the proposed regulations, an unreviewable decision is a decision that can no longer be appealed to any

September 26, 2022

Federal court because all appeals in a case

have been exhausted or the time to appeal

has expired and no appeal was filed, such

as a final determination under section

7481 of the Code. Once there is an unreviewable decision, no further action can be

taken in the case by any court. In fulfilling

its function of considering hazards of litigation based upon the possibility that an

administrative determination made by the

IRS with respect to a particular taxpayer

would be reversed in a court proceeding,

Appeals may consider such an unreviewable decision. Proposed §301.7803-2(c)

(18) further provides that this exception

does not preclude Appeals from considering a Federal tax controversy based on

arguments other than the constitutionality

of the statute, such as whether the statute

applies to the taxpayer’s facts and circumstances, and settling the Federal tax controversy weighing the likelihood a court

would agree with the position of the taxpayer or the Government.

Appeals is not an appropriate forum to

consider constitutional challenges to Federal tax statutes. Whether the actions taken

to enact a Federal tax statute comport with

the Constitution is initially determined by

Congress and the President. Questions

regarding the constitutionality of a duly

enacted statute are determinations of general applicability resolved at the highest

levels of the Treasury Department and

the IRS, in consultation with the Office of

Legal Counsel of the Department of Justice. Such a determination is not appropriate for Appeals to consider.

In addition, one of the statutory duties

of Appeals is to resolve cases on a basis

that “promotes a consistent application

and interpretation of, and voluntary compliance with, the Federal tax laws.” See

section 7803(e)(3)(B). A Federal court’s

unreviewable decision is a determination

by the judicial branch on the merits of the

constitutional challenge that may reject

the determinations made by Congress, the

President, the Treasury Department, or the

IRS with regard to the constitutionality of

a Federal tax statute, thereby providing

a basis for Appeals to consider constitutional challenges to the Federal tax statute

that is the subject of the taxpayer’s dispute. Unlike a Federal court’s unreviewable decision, which is publicly available

to all taxpayers, an Appeals resolution

250

relates only to a single Federal tax controversy and, by law, the outcome generally

can only be communicated by the IRS to

the taxpayer. Any constitutional determination with respect to a Federal tax law

should be communicated and applied consistently to all taxpayers. Accordingly, the

Treasury Department and the IRS believe

that it would be inappropriate for Appeals

to consider challenges to the constitutionality of a statute in the absence of an unreviewable decision from a Federal court

holding the statute to be unconstitutional.

The Treasury Department and the

IRS request comments on this proposed

exception.

19. Challenges Alleging that a Treasury

Regulation is Invalid

Proposed §301.7803-2(c)(19) provides

that Appeals consideration is not available

for any issue based on a taxpayer’s argument that a Treasury regulation is invalid

unless there is an unreviewable decision

from a Federal court invalidating the regulation as a whole or the provision in the

regulation that the taxpayer is challenging.

As explained previously, an unreviewable

decision is a decision that can no longer

be appealed to any Federal court. As with

the exception for constitutional challenges, this exception does not preclude

Appeals from considering a Federal tax

controversy based on other arguments.

For example, Appeals may consider

whether the Treasury regulation applies

to a taxpayer’s facts and circumstances

and resolve the Federal tax controversy

by weighing the likelihood a court would

agree with the position of the taxpayer or

the Government.

Questions regarding the validity of a

Treasury regulation are determinations of

general applicability resolved at the highest levels of the Treasury Department and

the IRS. Sections 7801 through 7805 of

the Code vest with the Secretary, the Commissioner, and other Treasury Department officials the authority to administer

the internal revenue laws, including the

power to promulgate regulations. Pursuant to these provisions of the Code and

31 U.S.C. 321(b), the delegated authority

to prescribe Treasury regulations is held

by the Assistant Secretary of the Treasury for Tax Policy (Assistant Secretary

Bulletin No. 2022–39

for Tax Policy) and the General Counsel

for the Department of the Treasury (Treasury Department General Counsel). See

Treasury Directive 18-02 (9-4-1986) and

Treasury Order 107-03 (01-30-1978). The

process of reviewing and approving Treasury regulations before they are published

is extensive and involves senior officials

in numerous offices within the Treasury

Department, the IRS, and sometimes

other Federal agencies. See IRM Part 32.1

(Chief Counsel Regulation Handbook) for

a description of the process for drafting

regulations. Before a regulation is published in the Federal Register it must be

approved by the Associate Chief Counsel

responsible for drafting the regulation; a

Deputy Chief Counsel; the Deputy Commissioner for Services and Enforcement;

multiple individuals in the Treasury

Department’s Office of Tax Policy, including the Assistant Secretary for Tax Policy;

the Treasury Department’s Office of General Counsel; the Office of the Executive

Secretary; and, in some cases, the Secretary of the Treasury.

In light of the extensive review and

approval procedures at senior levels in

both the Treasury Department and the

IRS, we believe that it would be inappropriate for Appeals to consider arguments

regarding the validity of Treasury regulations in the absence of an unreviewable

Federal judicial decision holding the regulation invalid. In the absence of an unreviewable Federal judicial decision holding a Treasury regulation invalid, Appeals

consideration of such arguments would

also be inconsistent with the delegation of

the Secretary’s authority to prescribe regulations to the Assistant Secretary for Tax

Policy and to the Treasury Department

General Counsel. Furthermore, unlike the

authority to apply the tax laws to a specific

set of facts, which, for example, is redelegated to the examination function within

the IRS to facilitate examination of a particular taxpayer, the authority and function to promulgate regulations rests with

the Assistant Secretary for Tax Policy and

the Treasury Department General Counsel. Such a determination would not be

appropriate for Appeals to consider until

there is an unreviewable decision from a

Federal court invalidating the regulation

as a whole or the provision in the regulation that the taxpayer is challenging.

Bulletin No. 2022–39

Treasury regulations are generally

submitted for notice and comment under

the Administrative Procedure Act and

have the force and effect of law once a

Treasury decision containing such regulations is published in the Federal Register. Consequently, Treasury regulations

are binding on the Treasury Department,

the IRS and the public, including all

Treasury Department and IRS employees. This means that Treasury Department and IRS employees must follow

the regulations until they are revised,

removed through the notice and comment

process, or invalidated by subsequent

legislation or an unreviewable decision

of a Federal court. As an office within the

Treasury Department and the IRS, these

requirements apply to Appeals and its

employees.

In addition, as with constitutional

challenges to a statute, a determination

with respect to the validity of a regulation should be communicated and

applied consistently to all taxpayers.

Unlike a non-public Appeals settlement,

an unreviewable decision by a Federal

court is available to all taxpayers and the

IRS regarding the validity of a Treasury

regulation. A settlement before Appeals

is specific to a taxpayer and cannot be

disclosed by the IRS unless an exception to section 6103 of the Code applies.

Furthermore, unlike most Appeals analysis, which weigh litigation hazards in

applying the law to specific facts, considering the validity of a regulation does

not involve taxpayer specific facts. A

Federal court’s unreviewable decision is

a determination by the judicial branch on

the merits of the validity challenge that

may reject the determinations made by

other levels of the Treasury Department

or the IRS with regard to the validity of

a Treasury regulation, thereby providing

a basis for Appeals to consider a regulation’s validity. Accordingly, the Treasury

Department and the IRS believe that it

would be inappropriate for Appeals to

consider challenges to the validity of

a Treasury regulation unless a Federal

court has rendered an unreviewable

decision holding that the regulation is

invalid.

The Treasury Department and the

IRS request comments on this proposed

exception.

251

20. Challenges Alleging that a Notice or

Revenue Procedure is Invalid

Proposed §301.7803-2(c)(20) provides that Appeals consideration is not

available for any issue based on a taxpayer’s argument that an IRS notice or revenue procedure published in the Internal

Revenue Bulletin is procedurally invalid

unless there is an unreviewable decision

from a Federal court invalidating the

notice or revenue procedure. An unreviewable decision is a decision that can

no longer be appealed to any Federal

court, as explained previously. However,

this proposed rule would not prevent

Appeals from considering the likelihood

that a court would agree or disagree with

the interpretation of the tax law asserted

by the taxpayer, even though it may differ from the interpretation described in a

notice or revenue procedure. Additionally, the proposed rule would not prevent

Appeals from considering a Federal tax

controversy based on arguments other

than the validity of a notice or revenue

procedure. For example, Appeals may

consider whether the notice or the revenue

procedure applies to the taxpayer’s facts

and circumstances and resolve the Federal

tax controversy weighing the likelihood a

court would agree with the position(s) of

the taxpayer or the Government.

Similar to Treasury regulations, the process for drafting and publishing notices

and revenue procedures is extensive. See

IRM Part 32.2 (Chief Counsel Publication

Handbook) for a description of the process

for drafting published guidance, including

notices and revenue procedures. Notices

and revenue procedures are approved

within the Treasury Department’s Office

of Tax Policy, involve numerous policy and implementation determinations,

and involve the coordination and agreement of many offices within the Treasury

Department, the IRS, and sometimes other

Federal agencies. The approval process

includes consideration of administrative

law requirements applicable to such guidance. Furthermore, unlike the application

of the tax law to a specific set of facts and

circumstances during, for example, an

examination, procedural determinations

regarding notices and revenue procedures

must be approved at high levels within the

Treasury Department and are not specific

September 26, 2022

to the facts of a particular case. Ultimately,

whether an IRS notice or revenue procedure is invalid is a determination of general applicability resolved at the highest

levels of the Treasury Department and the

IRS. Such a determination thus would not

be appropriate for Appeals to consider.

Furthermore, any determination regarding whether a notice or revenue procedure

failed to comply with administrative law

requirements, such as notice and comment under 5 U.S.C. 553, should be communicated and applied consistently. As

with constitutional and regulation validity

challenges, an unreviewable decision of a

Federal court is the appropriate means of

making information accessible to all taxpayers and the IRS regarding whether a

notice or revenue procedure was prescribed

in accordance with applicable Federal law.

A settlement before Appeals is specific to

a taxpayer and cannot be made available

to other taxpayers. A Federal court’s unreviewable decision is a determination by the

judicial branch on the merits of the validity

challenge that may reject the determinations made by other levels of the Treasury

Department or the IRS with regard to the

validity of an IRS notice or revenue procedure, thereby providing a basis for Appeals

to consider the validity of an IRS notice or

revenue procedure. Accordingly, the Treasury Department and the IRS believe that it

would be inappropriate for Appeals to consider challenges alleging that a notice or

revenue procedure is procedurally invalid

unless a Federal court has rendered an

unreviewable decision holding the notice

or revenue procedure to be invalid.

The Treasury Department and the

IRS request comments on this proposed

exception.

21. Case or Issue Designated for

Litigation or Withheld from Appeals

Proposed §301.7803-2(c)(21) provides

that Appeals consideration is not available

for any case or issue designated for litigation, or withheld from Appeals consideration in a Tax Court case, in accordance

with guidance regarding designating or

withholding a case or issue. Designation for

litigation means that the Federal tax controversy, comprising an issue or issues in a

case, will not be resolved without a full concession by the taxpayer or by decision of the

September 26, 2022

court. The ability to designate a case for litigation or withhold a Tax Court case from

Appeals existed long before section 7803(e)

was added to the Code. See, e.g., sec. 3.03

of Rev. Proc. 2016-22 and IRM 33.3.6 (1210-2010) (relating to designating a case for

litigation). See also NHQ-04-0521-0003

(5-24-2021) (interim guidance on designation of cases for litigation). Chief Counsel

will not refer to Appeals any case or issue

that has been designated for litigation.

Also, Chief Counsel will withhold

from Appeals a Tax Court case or one or

more issues in a Tax Court case if Chief

Counsel determines referral is not in the

interest of sound tax administration. For

example, Chief Counsel may decide not to

refer a Tax Court case to Appeals when the

Tax Court case involves a significant issue

common to other cases in litigation for

which it is important that the IRS maintains a consistent position or when the Tax

Court case is related to a case over which

the Department of Justice has jurisdiction

after referral to the Department of Justice

for prosecution or defense.

While the role of Appeals has been to

review the IRS’s and the taxpayer’s positions and consider issues based on the

likelihood that the IRS’s or the taxpayer’s

position would prevail if it were resolved

by a court, the processes described earlier

allow Chief Counsel to strategically manage its cases, fulfilling Chief Counsel’s

role of ensuring a consistent application

and interpretation of the internal revenue

laws and aiding in the development of the

tax law. See section 7803(b)(2)(E). These

processes are intended to serve the tax

administration interests of the IRS and

taxpayers by improving taxpayers’ understanding of and voluntary compliance

with the internal revenue laws, leading to

more effective and fair IRS enforcement.

Unlike an Appeals resolution, a judicial

decision in designated or withheld cases

will provide notice to all taxpayers of any

development in the law, leading to the

early resolution of issues and conserving

IRS and taxpayer resources.

22. Appeals Issued the Determination

that is the Basis of the Tax Court’s

Jurisdiction

Proposed §301.7803-2(c)(22) provides that except as provided in proposed

252

§301.7803-2(f)(1) (regarding when the

Tax Court remands a CDP case for reconsideration), Appeals consideration is not

available for any case docketed in the Tax

Court if the notice of deficiency, notice of

liability, or other determination was issued

by Appeals officials. Examples of the

cases subject to proposed §301.7803-2(c)

(22) include a case under sections 6320

or 6330, section 6404 (relating to abatement of interest), section 7428 (relating to

declaratory judgment on the classification

of specified organizations), section 7476

(relating to declaratory judgment on qualification of certain retirement plans), section 7477 (relating to declaratory judgment

on the value of certain gifts), or section

7479 (relating to declaratory judgment on

the eligibility of an estate with respect to

installment payments under section 6166

(regarding the extension of time for payment of estate tax where the estate consists largely of an interest in a closely held

business)). This proposed rule is reflected

in Rev. Proc. 2016-22. See secs. 3.01 and

4 of Rev. Proc. 2016-22. Under the proposed rule, Chief Counsel will not refer a

docketed case to Appeals if Appeals previously reviewed the case and issued the

correspondence stating its determination.

A taxpayer whose case has been reviewed

by Appeals cannot request a duplicative

or second opportunity to have the same

case reviewed by Appeals. It would be a

redundant exercise and a significant mismanagement of time and resources for

the IRS and Appeals to allow a taxpayer

to request consideration by Appeals if

Appeals already has considered the same

matter.

23. Appeals Consideration is a

Prerequisite to the Jurisdiction of Tax

Court

Proposed §301.7803-2(c)(23) provides

that subsequent Appeals consideration is

not available when timely Appeals consideration itself is a prerequisite to Tax

Court jurisdiction over an issue. To meet

the statutory jurisdictional requirements

in cases in which exhaustion of administrative review is a prerequisite to the Tax

Court’s jurisdiction, and such administrative review includes consideration by

Appeals, Appeals consideration must be

requested before a petition is filed in the

Bulletin No. 2022–39

Tax Court. Such a case is excluded from

Appeals at the docketed stage because

the taxpayer failed to take advantage of

the earlier administrative opportunity to

request Appeals review. Failure to request

prior Appeals consideration will constitute a failure to exhaust available administrative remedies and the failure cannot be

cured while the case is docketed.

Proposed §301.7803-2(c)(23) lists

some examples of such cases. Appeals

consideration must be requested before a

petition is filed in the Tax Court regarding a declaratory judgment request under

section 7428 relating to declaratory judgments on the classification of specified

organizations. See section 7428(b)(2)

(regarding exhaustion of administrative

remedies prior to seeking declaratory

judgment pursuant to section 7428); sec.

10.05 of Rev. Proc. 2022-5 (regarding

the same). Other examples are cases to

which section 7476(b)(3) applies regarding exhausting administrative remedies

prior to seeking declaratory judgment pursuant to section 7476 relating to declaratory judgment on qualification of certain

retirement plans. See §601.201(o)(6)

(i) of the Statement of Procedural Rules

(26 CFR part 601) (regarding the same);

section 7477(b)(2) (regarding exhausting

administrative remedies prior to seeking

declaratory judgment pursuant to section

7477 relating to declaratory judgment on

the value of certain gifts); see §301.74771(d)(4)(ii) (regarding the same).

certification. The CPEO program under

sections 3511 (relating to the rules for

CPEOs) and 7705 (relating to the definition of CPEOs) of the Code involves the

certification of a Professional Employer

Organization as having met certain tax

status, background, experience, business

location, financial reporting, bonding, and

other requirements described in statutes

and regulations. An applicant for certification that received a notice of proposed

denial of certification can request review

by OPR. Current procedures are in Rev.

Proc. 2016-33 (2016-25 I.R.B. 1034). A

CPEO that received a notice of suspension and proposed revocation of certification can also request review by OPR. Current procedures are in Rev. Proc. 2017-14

(2017-3 I.R.B. 426).

24. An Administrative Determination to

Deny or Revoke a CPEO Certification

The IRM currently provides that

Appeals consideration is not available for

a decision issued by an Associate Office

regarding 9100 relief relating to a request

for an extension of time for making an

election or other application for relief

where the decision is reviewable by a

court under an abuse of discretion standard. See IRM 8.6.3.11(4) (10-06-2016)

(relating to procedures if Appeals conclusion is contrary an IRS position) and

IRM 8.6.3.11(4) (10-06-2016) (relating

to extension of time for making certain

elections). Under this rule, Appeals will

not settle any case or matter contrary to

the Associate Office’s decision to deny the

extension request, nor will Appeals consider any hazards of litigation based upon

the possibility that Chief Counsel’s denial

of the 9100 relief would be reversed in a

Proposed §301.7803-2(c)(24) provides that Appeals consideration of an

administrative determination made by the

IRS to deny or revoke a Certified Professional Employer Organization (CPEO)

certification is not available because the

IRS has established another independent

review process to review the determination. It is excepted from Appeals consideration because review by Appeals

would be duplicative when a non-Appeals

office has an established process to independently review the matter. The CPEO

certification procedures established the

IRS Office of Professional Responsibility

(OPR) as the independent reviewer of the

IRS’s decision to deny or revoke a CPEO

Bulletin No. 2022–39

D. Request for Comments on Other

Exclusions

The list of exclusions in proposed

§301.7803-2(c) does not include certain

exclusions from Appeals review currently provided in the IRM. The Treasury

Department and the IRS are evaluating whether these items, which relate to

requests for relief under §§301.9100-1

through 301.9100-22 of the Procedure and

Administration Regulations (9100 relief)

and requests for a change in accounting

method, should be included on the list.

1. 9100 Relief

253

court proceeding. The 9100 relief regulations provide that the decision to grant

taxpayers an extension to make a regulatory election is left to the Commissioner’s

discretion. See §301.9100-1(c) (regarding

Commissioner’s discretion to grant an

extension to make a regulatory election).

The Commissioner has delegated this

authority to Chief Counsel.

2. Changes of Accounting Method

Section 1.446-1(a)(2) of the Income

Tax Regulations provides that no method

of accounting is acceptable unless, in the

opinion of the Commissioner, it clearly

reflects income. See section 446(b). Rev.

Proc. 2015-13 (2015-5 I.R.B. 419) provides the automatic and non-automatic

procedures to obtain the consent of the

Commissioner to change a method of

accounting. Section 11.02 of Rev. Proc.

2015-13 states that the Associate Office

will deny a request to make a change in

method of accounting if the requested

change would not clearly reflect income

or would otherwise not be in the interest

of sound tax administration.

The IRM currently provides that

Appeals consideration is not available for

a decision issued by an Associate Office

regarding a change of accounting method

where the decision is reviewable by a

court under an abuse of discretion standard. See IRM 8.6.3.3(2) (10-06-2016)

(relating to procedures if Appeals conclusion is contrary to Service position) and

IRM 8.6.3.10(3) (10-06-2016) (relating to

change in accounting practice or method).

Thus, Appeals will not settle any case or

matter contrary to the Associate Office’s

decision to deny the method change,

nor will Appeals consider any hazards

of litigation based upon the possibility

that a court would reverse Chief Counsel’s denial of the request for a change in

accounting method.

When a taxpayer receives a letter ruling

approving a change in method of accounting, the IRS and the taxpayer typically

enter into a consent agreement regarding the change. The terms of the consent

agreement are binding on the IRS and the

taxpayer and are not subject to Appeals

consideration. See IRM 8.1.1.2.1(1)(d.)

(02-10-2012) (relating to some exceptions

to Appeals authority).

September 26, 2022

3. Comments Requested

The Treasury Department and the

IRS request comments on whether items

relating to requests for changes in methods of accounting and requests for 9100

relief should continue to be excluded

from Appeals review. In addition to general comments, comments are specifically

requested on the following:

A. whether the binary nature of decisions regarding 9100 relief and changes

in method of accounting make these decisions unsuitable for Appeals review,

B. whether a different review standard

should apply if Appeals considers 9100

relief or changes of accounting method,

and

C. what impact would Appeals review

of 9100 relief and changes in accounting

method have on later years that are not

before Appeals?

E. Originating Office Has Completed Its

Review

Proposed §301.7803-2(d)(1) provides

a prerequisite requirement that a taxpayer

must meet before Appeals may consider

the taxpayer’s Federal tax controversy.

Appeals consideration of a matter or issue

is appropriate only after the originating

IRS office has completed its action on

the Federal tax controversy and issued

a final administrative determination or

a proposed administrative determination that is accompanied by an offer for

Appeals consideration. This requirement

is necessary because a case or issue is not

ready for Appeals consideration until the

originating IRS office has completed its

factfinding and developed a position. If

the originating office has not set out its

position, there is no administrative determination made by the IRS with respect to

the particular taxpayer for Appeals to consider. If the originating office has not set

out its position regarding the Federal tax

controversy, the request for Appeals consideration is premature and the taxpayer

may request Appeals consideration after

the originating office has set out its position if the other requirements in proposed

§301.7803-2 are met.

Circumstances in which Appeals consideration is premature arise in many contexts. For example, Appeals consideration

September 26, 2022

is premature if a taxpayer petitions the Tax

Court in a deficiency case under section

6213(a) and raises for the first time a claim

for relief under section 6015. Because the

issue was first raised in litigation, the IRS

does yet not have a position regarding the

taxpayer’s eligibility for relief under section 6015. In another example, a taxpayer

files a claim with the IRS for abatement

of interest under section 6404 and after

180 days pass without a determination,

the taxpayer files a petition with the Tax

Court. Appeals consideration would be

premature before the IRS has considered

the merits. Another example is a relevant

new issue raised during Appeals consideration for which the originating office has

not set out its position. Similarly, Appeals

consideration is premature if during an

examination a decision is made to return

an OIC that was submitted by the taxpayer. In yet another example, as part of an

examination the IRS requests documents

that the taxpayer does not provide, and the

IRS refers the matter to the Department of

Justice to bring a summons enforcement

action. An administrative determination

regarding the taxpayer’s liability has not

been made by the IRS. The decision to

bring a summons enforcement action is

part of the process that leads to an administrative determination that will be made

by the IRS, and Appeals consideration

would be premature because the position

of the originating office has not been set

out.

Proposed §301.7803-2(d)(2) provides

that the requirement that the originating

office must have completed its review will

be treated as satisfied when the person

requests to participate in an Appeals early

consideration program and such request is

granted. Where administrative guidance

permits the originating office to engage

Appeals prior to completing its action on

the case, Appeals may consider the controversy under the terms of that administrative guidance. For example, Appeals

may consider the Federal tax controversy

in mediation under a fast track settlement program or early consideration of

some issues under an early referral program. These programs existed prior to

the TFA. See, e.g., Rev. Proc. 2003-40

(2003-25 I.R.B. 1044) (relating to mediation under the LB&I Division Fast Track

Settlement Program), as modified by Rev.

254

Proc. 2015-40 (regarding procedures for

requesting competent authority assistance

under U.S. tax treaties); Rev. Proc. 99-28

(1999-29 I.R.B. 109) (relating to early

consideration of some, but not all, issues

in case under Early Referral Program).

These programs promote a more efficient

disposition of a taxpayer’s case by leading

to the early resolution of issues or developing or narrowing the issues in dispute.

F. Procedural and Timing Requirements

are Followed

Proposed §301.7803-2(e) provides

the procedural and timing requirements

that a taxpayer must meet before Appeals

may consider the taxpayer’s Federal

tax controversy. Specifically, proposed

§301.7803-2(e) provides that a request

for Appeals consideration must be submitted in the time and manner prescribed

in applicable forms, instructions, or other

administrative guidance and that all procedural requirements must be complied

with for Appeals to consider a Federal tax

controversy. These proposed requirements

existed prior to the enactment of the TFA.

An example of specific procedural requirements are the special claim procedures for

penalties under sections 6694(b), 6700,

and 6701. For instance, a CP 15 Notice

and Demand letter is sent to a promoter

upon assessment of the penalties advising

the promoter of the special claim procedures pursuant to section 6703(c). Section

6703(c)(1) allows the promoter to pay

at least 15 percent of the amount of the

penalty within 30 days and file a claim for

refund of the amount paid. If the claim for

refund is disallowed and a written request

for Appeals consideration is received

timely, Appeals may consider the claim

for refund in the same manner as any other

claim for refund. The special claim procedures, including the requirement to pay at

least 15 percent, are part of the required

claims process. Appeals review is unavailable to a claimant unless the claimant follows the special claim procedures.

Another example of procedural requirements is the refund procedures under

section 6402. Appeals review is unavailable to a claimant that submits a claim

for refund under section 6402 unless the

claimant follows the required claims procedures in section 7422(a) regarding the

Bulletin No. 2022–39

requirement to file an administrative claim

according to IRS procedures before filing

suit and §§301.6402-2 and 301.6402-3

regarding general procedures for making

a claim for a refund of income tax. To

promote compliance and an orderly process, the proposed rule would ensure that

the taxpayer complies with statutory and

regulatory requirements and Appeals has

sufficient information to consider the taxpayer’s claim.

In addition, proposed §301.7803-2(e)

provides that there must be sufficient time

remaining on the appropriate limitations

period for Appeals to consider the matter,

as provided in administrative guidance.

Consideration of a case by Appeals can

take a significant amount of time. Appeals

needs to correspond with the taxpayer and

in some cases the IRS office that made the

administrative determination or proposed

administrative determination, understand

and evaluate both parties’ legal arguments,

in some cases negotiate with the taxpayer,

and make a determination. This all must

be completed with sufficient time for an

assessment to be made if a settlement

cannot be reached. If there is insufficient

time remaining on the assessment limitations period, Appeals will not have time

to conduct an independent review before

the period expires. This requirement was

in place well before the TFA was enacted

and is necessary for tax administration.

See, e.g., IRM 8.20.5.3.1.3(1) (03-012016) (relating to cases not accepted by

Appeals); IRM 8.21.2.3(2)b (10-15-2014)

(same). Similarly, proposed §301.78032(e) also provides that in a case docketed

in Tax Court, if Chief Counsel has recalled

the case from Appeals or, if not recalled,

Appeals has returned the case to Chief

Counsel so that it is received by Chief

Counsel prior to the date of the calendar

call for the trial session, further consideration by Appeals will not be available

if there is insufficient time for such consideration. See sec. 3.07 of Rev. Proc.

2016-22.

G. One Opportunity for Consideration by

Appeals

Proposed §301.7803-2(f)(1) provides

that if a Federal tax controversy is eligible for consideration by Appeals and

the procedural and timing requirements

Bulletin No. 2022–39

are followed, a taxpayer generally has

one opportunity for Appeals to consider

such matter or issue in the same case for

the same period or in any type of future

case for the same period. According to

proposed §301.7803-2(f)(1), Appeals has

considered a Federal tax controversy if

the Federal tax controversy was before

Appeals for consideration and Appeals

issued a determination or made a settlement offer, decided the Federal tax controversy was not susceptible to settlement,

or the person who requested consideration

failed to respond to Appeals’ communications and as a result of that failure Appeals

issued or made a determination. Appeals

also has considered a Federal tax controversy if the taxpayer notifies Chief Counsel or the IRS that the taxpayer wants to

discontinue settlement consideration by

Appeals or requests to transfer settlement

consideration of a Federal tax controversy

that is currently before the Tax Court from

Appeals to Chief Counsel. Additionally,

a taxpayer with a Federal tax controversy who previously failed to respond

to Appeals’ communications with respect

to that Federal tax controversy is treated

as having had a prior opportunity for

Appeals consideration. This proposed rule

is intended to deter and not reward nonresponsive taxpayers and to avoid wasting

Appeals resources.

Appeals therefore generally will consider a Federal tax controversy only once.

A taxpayer whose Federal tax controversy

has been reviewed by Appeals cannot

request a duplicative or second opportunity to have it reviewed by Appeals. Neither section 7803(e) nor its legislative history indicates that Congress intended for

a taxpayer whose case already has been

considered by Appeals to have multiple

opportunities for Appeals consideration. It

would be duplicative to allow a taxpayer

to request consideration by Appeals if

Appeals already has considered the same

matter. This one-bite-at-the-apple rule is

a practical, longstanding rule that existed

prior to the TFA. See secs. 3.01 and 4 of

Rev. Proc. 2016-22.

There are several exceptions to this

proposed rule. Proposed §301.7803-2(f)

(1) provides an exception to the proposed general rule where the Tax Court

remands a CDP case for reconsideration. This exception to the general rule

255

accounts for the Tax Court’s ability to

remand CDP cases for further Appeals

consideration. Proposed §301.7803-2(f)

(2) provides an exception for a taxpayer

that participated in an Appeals early consideration program but did not reach an

agreement with Appeals. See, e.g., Rev.

Proc. 99-28 (1999-29 I.R.B. 109) (relating to early consideration of some, but

not all, issues in case under Early Referral

program); Rev. Proc. 2003-40 (2003-25

I.R.B. 1044) (relating to the Large Business and International Division Fast Track

Settlement (FTS) program), as modified

by Rev. Proc. 2015-40 (2015-35 I.R.B.

236) (regarding procedures for requesting competent authority assistance under

U.S. tax treaties); Rev. Proc. 2017-25

(2017-14 I.R.B. 1) (relating to the Small

Business/Self-Employed Division FTS

program); Rev. Proc. 2016-57 (2016-49

I.R.B. 707) (relating to the FTS program

for certain collection cases and issues);

and Announcement 2012-34 (2012-36

I.R.B. 334) (relating to the Tax-Exempt

and Government Entities Division FTS

program). It also provides an exception

for a taxpayer that may be able to request

post-Appeals mediation under the terms

of administrative guidance after a traditional appeal if no agreement was reached

between the taxpayer and Appeals. See,

e.g., Rev. Proc. 2014-63 (2014-53 I.R.B.

1014) (relating to Appeals mediation).

The exception to the general rule in

proposed §301.7803-2(f)(2) that carves

out early consideration programs is a critical part of these programs. As previously

mentioned, these fast track and early consideration programs promote a more efficient disposition of a taxpayer’s case by

leading to the early resolution of issues

or developing or narrowing the issues in

dispute. If a taxpayer who unsuccessfully

participated in one of these programs was

unable later to have Appeals consider the

taxpayer’s case, it is unlikely the taxpayer

would take advantage of these programs.

Similarly, post-Appeals mediation promotes a more efficient disposition of a

taxpayer’s case.

Proposed §301.7803-2(f)(2) also provides an exception to the general rule in

proposed §301.7803-2(f)(1) for taxpayers who provide new information to the

IRS and who meet the conditions and

requirements for audit reconsideration or

September 26, 2022

for reconsideration of liability issues previously considered by Appeals. Appeals

may consider the new information. See

IRM 8.7.7.17 (12-17-2019) (relating to

audit reconsideration cases); IRM 8.7.7.16

(12-17-2019) (relating to reconsideration

of claims for liabilities previously considered by Appeals).

H. Special Rules

The following are proposed special

rules.

1. Appeals Reconsideration

Proposed §301.7803-2(g)(1) provides

a special rule that notwithstanding the

exception in proposed §301.7803-2(c)

(22), if Appeals issued a notice of deficiency, notice of liability, or other determination, without having fully considered

one or more issues because of an impending expiration of the statute of limitations

on assessment, Appeals may choose to

have Chief Counsel return the case to

Appeals for full consideration of the issue

or issues once the case is docketed in the

Tax Court. This is a longstanding rule that

existed prior to the enactment of the TFA

and can be found in section 3.02 of Rev.

Proc. 2016-22. The proposed rule promotes the efficient disposition of cases by

leading to the early resolution of issues

and developing or narrowing the issues in

dispute.

2. Coordination Between Chief Counsel

and Appeals

Proposed §301.7803-2(g)(2) provides

a special rule that Appeals and Chief

Counsel may determine how settlement

authority in a Federal tax controversy that

is before the Tax Court will be transferred

between the two offices. For example, to

promote a more efficient disposition of

a case in the Tax Court, the case may be

transferred from Chief Counsel to Appeals

or from Appeals to Chief Counsel by agreement between them. This is a longstanding

practice that has been used to efficiently

manage resources and respond to developments in litigation. Details regarding

this practice are most recently described

in Rev. Proc. 2016-22. In another example, if Chief Counsel determines that the

September 26, 2022

case is needed for trial preparation, Chief

Counsel may request that Appeals return

the case (including settlement authority)

to Chief Counsel before Appeals has completed its consideration of the case. See

sec. 3.08 of Rev. Proc. 2016-22. Ensuring adequate time to prepare for trial is

pragmatic and beneficial to taxpayers and

Chief Counsel attorneys. Chief Counsel also may delay forwarding a case to

Appeals when Chief Counsel anticipates

filing a dispositive motion (for example,

a motion for summary or partial summary

judgment, or a motion to dismiss for lack

of jurisdiction), in which case Chief Counsel will retain the case until the Tax Court

rules on the motion. See sec. 3.04 of Rev.

Proc. 2016-22. Allowing Chief Counsel

and Appeals the flexibility to respond to

the needs of specific Federal tax controversies promotes the efficient disposition

of a taxpayer’s case, including developing

or narrowing the issues in dispute.

I. Applicability Date

These regulations are proposed to

apply to all requests for consideration by

Appeals that are received on or after the

date 30 days after a Treasury Decision

finalizing these rules is published in the

Federal Register. The Treasury Department and the IRS request comments on

the proposed applicability date.

II. Requests for Referral to Appeals

Following Issuance of a Notice of

Deficiency

A. Notice and Protest

If a taxpayer received a notice of deficiency authorized under section 6212, section 7803(e)(5) requires the Commissioner

to explain the basis for denying an Appeals

referral request and provide procedures to

protest the denial. Proposed §301.78033(a) implements section 7803(e)(5) and

provides that if any taxpayer requests

Appeals consideration of a matter or issue

and the request is denied, the Commissioner or the Commissioner’s delegate

must provide the taxpayer a written notice

that provides a detailed description of the

facts involved, the basis for the decision

to deny the request, a detailed explanation

of how the basis for the decision applies to

256

such facts, and the procedures for protesting the decision to deny the request if the

requirements of proposed §301.7803-3(a)

are met. These requirements are listed in

proposed §301.7803-3(a)(1) through (5).

1. Notice of Deficiency

Proposed §301.7803-3(a)(1) provides

that the taxpayer must have received a

notice of deficiency authorized under section 6212 for the notice and protest procedures to apply.

2. Frivolous Positions

Proposed §301.7803-3(a)(2) requires

that, for the notice and protest procedures to apply, the taxpayer’s issue must

not involve a frivolous position. This

proposed requirement follows from the

restriction on Appeals access in proposed §301.7803-2(c)(1), which makes

Appeals review unavailable for frivolous positions. Also, pursuant to section

7803(e)(5)(D), the protest procedures

under section 7803(e)(5) do not apply to

an Appeals referral request if the issue is

frivolous. Like the exception in proposed

§301.7803-2(c)(1), this proposed rule

prevents taxpayers from continuing to

propose frivolous arguments. Allowing a

taxpayer to protest the IRS’s decision to

deny the taxpayer’s request for Appeals

consideration of frivolous positions would

result in wasted IRS time and resources.

3. Multiple Requests for Referral to

Appeals

Proposed §301.7803-3(a)(3) requires

that the taxpayer must not have previously

requested Appeals consideration for the

same matter or issue in a taxable year or

period for the notice and protest procedures

to apply. Thus, when a taxpayer already

has requested Appeals consideration and

filed a valid protest under section 7803(e)

(5), the notice and protest procedures in

proposed §301.7803-3(a) do not apply

if the taxpayer submits another Appeals

referral request concerning the same matter or issue in a taxable year or period. It

would be redundant to allow the taxpayer

to submit multiple referral requests and

protests under section 7803(e)(5), including when the taxpayer’s prior protest was

Bulletin No. 2022–39

either rejected or allowed in a final decision by the Commissioner or the Commissioner’s delegate.

on or after a Treasury Decision finalizing

these rules is published in the Federal

Register.

4. Previous Appeals Consideration

Statement of Availability of IRS

Documents

Except as provided in proposed

§301.7803-2(f)(2), proposed §301.78033(a)(4) provides that for the notice and

protest procedures to apply, Appeals must

not have previously considered the matter

or issue in a taxable year or period that is

the subject of the request and determined

that it could not be settled. This requirement follows from the prerequisite in

proposed §301.7803-2(f), which provides

that Appeals will consider a Federal tax

controversy only once. Since a taxpayer

receives only one opportunity for Appeals

review, it would be redundant to allow a

taxpayer to submit a protest under section

7803(e)(5) if Appeals already has considered the same matter or issue in a taxable

year or period and decided that it could

not be settled or a settlement offer was

rejected.

5. Notice of Deficiency with More Than

One Matter or Issue

Proposed §301.7803-3(a)(5) requires

that if the notice of deficiency for which

the taxpayer requests Appeals consideration includes more than one matter or

issue in a taxable year or period, the taxpayer must request referral and submit

all matters or issues sought for Appeals

consideration at the same time. This proposed rule will ensure the efficient use of

Appeals’ time and resources and help to

prevent unnecessary delays and potential

abuse. For example, without this proposed rule, a taxpayer in a case with three

issues could potentially seek sequential

Appeals consideration for each issue separately, thereby wasting Appeals’ time and

resources, creating unnecessary delay, and

abusing the referral process. Such a piecemeal approach, if allowed, also would

undermine the one-bite-at-the-apple rule

in proposed §301.7803-2(f)(1).

6. Applicability Date

The regulations in this section are proposed to apply to all relevant requests for

consideration by Appeals that are received

Bulletin No. 2022–39

For copies of recently issued revenue

procedures, revenue rulings, notices, and

other guidance published in the Internal

Revenue Bulletin, please visit the IRS

website at http://www.irs.gov.

Special Analyses

This regulation is not subject to review

under section 6(b) of Executive Order

12866 pursuant to the Memorandum of

Agreement (April 11, 2018) between

the Treasury Department and the Office

of Management and Budget regarding

review of tax regulations.

In accordance with the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.) it

is hereby certified that these proposed

rules will not have a significant economic

impact on a substantial number of small

entities.

The proposed rules affect any person

who would like to have a Federal tax controversy considered by Appeals, including

any small entity. Because any small entity

could potentially request consideration by

Appeals, these proposed regulations are

expected to affect a substantial number

of small entities. However, the IRS has

determined that the economic impact on

small entities affected by the proposed

rules would not be significant.

The proposed rules provide procedural

and timing requirements for consideration by Appeals. The proposed rules

also establish the general availability of

consideration by Appeals and exceptions

to that consideration. The procedural

requirements, timing requirements, and

the vast majority of the exceptions to

consideration by Appeals already exist in

previously established guidance regarding

Appeals. The proposed regulations also

provide rules regarding certain circumstances in which a written explanation will

be provided regarding why Appeals consideration was not provided. None of the

proposed rules affect entities’ substantive

tax liability nor do they affect the process

that Appeals follows when it considers

257

an eligible Federal tax controversy. Any

significant economic impact on small

entities will result from the application of

the substantive tax provisions and will not

be as a result of the proposed regulations.

Accordingly, the Secretary hereby certifies that the proposed rules will not have a

significant economic impact on a substantial number of small entities. The Treasury

Department and the IRS invite comment

from members of the public about potential impacts on small entities.

Pursuant to section 7805(f) of the

Code, this notice of proposed rulemaking

has been submitted to the Chief Counsel

for the Office of Advocacy of the Small

Business Administration for comment on

its impact on small business.

Comments and Public Hearing

Before these proposed amendments

to the regulations are adopted as final

regulations, consideration will be given

to comments that are submitted timely

to the IRS as prescribed in the preamble

under the “ADDRESSES” section. The

Treasury Department and the IRS request

comments on all aspects of the proposed

regulations, particularly circumstances

where Appeals consideration is not available. Any electronic comments submitted, and to the extent practicable any

paper comments submitted, will be made

available at www.regulations.gov or upon

request.

The public hearing is being held by

teleconference on November 29, 2022,

beginning at 10 a.m. EST. Requests to

speak and outlines of topics to be discussed at the public hearing must be

received by November 14, 2022. If no

outlines are received by November 14,

2022, the public hearing will be cancelled. Requests to attend the public hearing must be received by 5:00 p.m. EST

on November 22, 2022. The telephonic

hearing will be made accessible to people with disabilities. Requests for special

assistance during the telephonic hearing

must be received by November 22, 2022.

Announcement 2020-4, 2020-17 I.R.B.

1, provides that until further notice, public hearings conducted by the IRS will be

held telephonically. Any telephonic hearing will be made accessible to people with

disabilities.

September 26, 2022

Drafting Information

The principal author of these proposed

regulations is Keith L. Brau of the Office

of the Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the

IRS participated in their development.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes,

Excise taxes, Gift taxes, Income taxes,

Penalties, Reporting and recordkeeping

requirements.

Proposed Amendments to the

Regulations

Accordingly, the Treasury Department

and the IRS propose to amend 26 CFR

part 301 as follows:

PART 301—PROCEDURE AND

ADMINISTRATION

Paragraph 1. The authority citation for

part 301 is amended by adding entries for

§§301.7803-2 and 301.7803-3 in numerical order to read, in part, as follows:

Authority: 26 U.S.C. 7805.

*****

Section 301.7803-2 also issued under

26 U.S.C. 7803.

Section 301.7803-3 also issued under

26 U.S.C. 7803.

*****

Par. 2. Sections 301.7803-2 and

301.7803-3 are added to read as follows:

§301.7803-2 Appeals resolution of

Federal tax controversies without

litigation.

(a) Function of Independent Office of

Appeals. Appeals resolves Federal tax

controversies without litigation on a basis

that is fair and impartial to both the Government and the taxpayer, promotes a consistent application and interpretation of,

and voluntary compliance with, the Federal tax laws, and enhances public confidence in the integrity and efficiency of the

Internal Revenue Service (IRS).

(b) Consideration of a Federal tax

controversy by the Independent Office

of Appeals--(1) In general. The Appeals

September 26, 2022

resolution process is generally available

to all taxpayers to resolve Federal tax

controversies.

(2) Definition of Federal tax controversy. For purposes of this section, a Federal tax controversy is defined as a dispute

over an administrative determination with

respect to a particular taxpayer made by

the IRS in administering or enforcing the

internal revenue laws, related Federal tax

statutes, and tax conventions to which

the United States is a party (collectively

referred to as internal revenue laws) that

arises out of the examination, collection,

or execution of other activities concerning

the amount or legality of the taxpayer’s

income, employment, excise, or estate and

gift tax liability; a penalty; or an addition

to tax under the internal revenue laws.

(3) Other administrative determinations treated as Federal tax controversies.

Notwithstanding the definition of a Federal tax controversy in paragraph (b)(2)

of this section, disputes over administrative determinations made by the IRS with

respect to a particular person regarding the

following topics are treated as Federal tax

controversies for purposes of this section:

(i) Liabilities and penalties administered by the IRS that are outside the

Internal Revenue Code (Code), such as

a liability or penalty pursuant to section

5321 of title 31 of the United States Code

(relating to civil Report of Foreign Bank

and Financial Accounts or Bank Secrecy

Act penalties);

(ii) A request under the Freedom of

Information Act (5 U.S.C. 552);

(iii) Application to become, or the

sanction of, an Electronic Return Originator or Authorized IRS e-file Provider;

(iv) The initial or continuing qualification of an organization as exempt

from tax under section 501(a) (relating

to tax-exempt organizations) or section

521 of the Code (relating to tax-exempt

farmers’ cooperatives), or as an organization described in section 170(c)(2) of

the Code (relating to charitable organizations); the classification or reclassification of an organization’s foundation status

under section 509(a) of the Code (relating

to private foundations); and the classification of an organization as a private operating foundation under section 4942(j)

(3) of the Code (relating to an operating

foundation);

258

(v) The qualification of an employee

plan;

(vi) An IRS proposed determination

to a bond issuer that interest on an obligation the bond issuer previously issued

is not tax-exempt under section 103 of

the Code (relating to interest on State or

local bonds), that an issue of bonds fails

to qualify for the tax credits for the bondholders or direct payments to the issuer

with respect to the bonds under provisions of the Code applicable to tax-advantaged bonds, or that denies a claim for

recovery of an asserted overpayment of

arbitrage rebate under section 148 of the

Code (relating to arbitrage) with respect

to tax-exempt bonds or under section 148

as modified by relevant provisions of the

Code with respect to other tax-advantaged

bonds;

(vii) Administrative costs under section

7430 of the Code (relating to awarding of

costs and certain fees); or

(viii) Any other topic that the IRS has

determined can be considered by Appeals.

(c) Exceptions to consideration by

Appeals. The following are Federal tax

controversies that are excepted from consideration by Appeals or matters or issues

that are otherwise ineligible for consideration by Appeals because they are neither

a Federal tax controversy nor treated as a

Federal tax controversy under paragraph

(b)(3) of this section. If a matter or issue

not eligible for consideration by Appeals

is present in a case that otherwise is eligible for consideration by Appeals, the ineligible matter or issue will not be considered by Appeals during resolution of the

case. The exceptions are:

(1) An administrative determination

made by the IRS rejecting a position of

a taxpayer that the IRS has identified as

frivolous for purposes of section 6702(c)

of the Code (regarding listing of frivolous

positions) and any case solely involving

the taxpayer’s failure or refusal to comply with the tax laws because of frivolous

moral, religious, political, constitutional,

conscientious, or similar grounds.

(2) Penalties assessed by the IRS

under section 6702 (relating to frivolous

tax submissions) or section 6682 of the

Code (relating to false information with

respect to withholding) or any other penalty imposed for a frivolous position or

false information. Appeals, however, may

Bulletin No. 2022–39

obtain verification that the assessment of

the penalties complied with sections 6203

(relating to method of assessment) and

6751(b) (relating to approval of assessment) of the Code in a collection due

process (CDP) hearing under sections

6320 (relating to a hearing upon filing of

a notice of lien) and 6330 (relating to a

hearing before levy) of the Code. Appeals

also may consider a non-frivolous substantive challenge to a section 6702 or

section 6682 penalty in a CDP hearing.

(3) Any administrative determination made by the IRS under section

7623 of the Code (relating to awards to

whistleblowers).

(4) An administrative determination

issued by an agency other than the IRS,

such as a determination by the Alcohol

and Tobacco Tax and Trade Bureau (TTB)

concerning an excise tax administered by

and within the jurisdiction of TTB.

(5) A decision made by the IRS not to

issue a Taxpayer Assistance Order (TAO)

under section 7811 of the Code (relating

to TAOs).

(6) Any decision made by the IRS concerning material to be deleted from the

text of a written determination pursuant to

section 6110 of the Code (relating to public inspection of written determinations)

unless the written determination is otherwise being considered by Appeals.

(7) Any denial of access under the Privacy Act (5 U.S.C. 552a(d)(1)).

(8) Any issue resolved in an agreement

described in section 7121 of the Code

(regarding closing agreements) that the

taxpayer entered into with the IRS, and

any decision made by the IRS to enter into

or not enter into such agreement. Appeals

may consider the question of whether an

item or items are covered, and how the

item or items are covered, in a closing

agreement.

(9) A case in which the IRS erroneously

returns or rejects an offer in compromise

(OIC) submitted under section 7122 of

the Code (relating to compromises) as

nonprocessable or no longer processable

and the taxpayer requests Appeals consideration to assert that the OIC should

be deemed to be accepted under section

7122(f).

(10) Any case in which a criminal prosecution, or a recommendation for criminal prosecution, is pending against the

Bulletin No. 2022–39

taxpayer for a tax-related offense, except

with the concurrence of the Office of

Chief Counsel or the Department of Justice, as applicable.

(11) Issues relating to allocation among

different fee payers of the branded prescription drug and health insurance providers fees in section 9008 of the Patient

Protection and Affordable Care Act

(PPACA), Public Law 111-148 (124 Stat.

119 (2010)), as amended by section 1404

of the Health Care and Education Reconciliation Act of 2010 (HCERA), Public

Law 111-152 (124 Stat. 1029 (2010)), and

section 9010 of PPACA, as amended by

section 10905 of PPACA, and as further

amended by section 1406 of HCERA.

(12) A certification or issuance of a

notice of certification of a seriously delinquent Federal tax debt to the Department

of State under section 7345 of the Code

(relating to the revocation or denial of

a passport in the case of serious tax

delinquencies).

(13) Any issue barred from consideration under section 6320 or section 6330

of the Code, §§301.6320-1 and 301.63301, or any other administrative guidance

related to collection due process hearings

or equivalent hearings.

(14) Any case, determination, matter,

decision, request, or issue that Appeals

lacks the authority to settle. The following

is a non-exclusive list of examples:

(i) A case or issue in a case that has

been referred to the Department of Justice.

(ii) A competent authority case (including a competent authority resolution previously accepted by the taxpayer) under a

United States tax treaty that is within the

exclusive authority of the United States

Competent Authority.

(iii) A decision of the Commissioner

of Internal Revenue or the Commissioner’s delegate to not rescind a section

6707A penalty for a non-listed reportable

transaction.

(iv) A request for relief under section

6015 of the Code (relating to relief from

joint and several liability on a joint return)

when the nonrequesting spouse is a party

to a docketed case in the United States Tax

Court (Tax Court) and does not agree to

granting full or partial relief under section

6015 to the requesting spouse.

(v) A criminal restitution-based assessment under section 6201(a)(4) of the Code

259

(relating to certain orders of criminal restitution and restriction on challenge of

assessment).

(15) An adverse action related to the

initial or continuing recognition of tax-exempt status, an entity’s classification as a

foundation, the initial or continuing determination of employee plan qualification,

or a determination involving an obligation

and the issuer of an obligation under section 103. This exception applies only if

the tax-exempt recognition, classification,

determination of employee plan qualification, or determination involving an

obligation and the issuer of an obligation

under section 103 is based upon a technical advice memorandum issued by an

Office of Associate Chief Counsel before

an appeal is requested.

(16) Any case docketed in the Tax

Court if the notice of deficiency, notice of

liability, or final adverse determination letter is based upon a technical advice memorandum issued by an Office of Associate

Chief Counsel in that case involving an

adverse action described in paragraph (c)

(15) of this section.

(17) A decision by an Office of Associate Chief Counsel regarding whether to

issue a letter ruling or the content of a letter ruling. The subject of the letter ruling

may be considered by Appeals if all other

requirements in this section are met. For

example, if an Office of Associate Chief

Counsel issues an adverse letter ruling to

a taxpayer, the taxpayer cannot immediately appeal the issuance of the adverse

letter ruling. If the taxpayer subsequently

files a return taking a position that is contrary to the letter ruling and that position is

audited by the IRS, Appeals can consider

that Federal tax controversy if all other

requirements in this section are met.

(18) Any issue based on a taxpayer’s

argument that a statute violates the United

States Constitution unless there is an unreviewable decision from a Federal court

holding that the cited statute is unconstitutional. For purposes of this paragraph, an

argument that a statute violates the United

States Constitution includes any argument

that a statute is unconstitutional on its face

or as applied to a particular person. This

exception does not preclude Appeals from

considering a Federal tax controversy

based on arguments other than the constitutionality of a statute, such as whether

September 26, 2022

the statute applies to the taxpayer’s facts

and circumstances. For purposes of this

section, the term unreviewable decision

is a decision of a Federal court that can

no longer be appealed to any Federal

court because all appeals in a case have

been exhausted or the time to appeal has

expired and no appeal was filed. Once

there is an unreviewable decision no further action can be taken in the case by any

Federal court.

(19) Any issue based on a taxpayer’s

argument that a Treasury regulation is

invalid unless there is an unreviewable

decision from a Federal court invalidating

the regulation as a whole or the provision

in the regulation that the taxpayer is challenging. This exception does not preclude

Appeals from considering a Federal tax

controversy based on arguments other than

the validity of a Treasury regulation, such

as whether the Treasury regulation applies

to the taxpayer’s facts and circumstances.

(20) Any issue based on a taxpayer’s

argument that a notice or revenue procedure published in the Internal Revenue

Bulletin is procedurally invalid unless

there is an unreviewable decision from

a Federal court holding it to be invalid.

This exception does not preclude Appeals

from considering a Federal tax controversy based on arguments other than the

validity of a notice or revenue procedure,

such as whether the notice or revenue procedure applies to the taxpayer’s facts and

circumstances.

(21) Any case or issue designated for

litigation, or withheld from Appeals consideration in a Tax Court case, in accordance with guidance regarding designating or withholding a case or issue. For

purposes of this section, designation for

litigation means that the Federal tax controversy, comprising an issue or issues in

a case, will not be resolved without a full

concession by the taxpayer or by decision

of the court.

(22) Any case docketed in the Tax

Court if the notice of deficiency, notice

of liability, or other determination was

issued by Appeals unless the exception in

paragraph (f)(1) of this section (regarding

when the Tax Court remands a CDP case

for reconsideration) applies.

(23) A case in which timely Appeals

consideration must be requested before a

petition is filed in the Tax Court because

September 26, 2022

exhaustion of administrative review,

including consideration by Appeals, is

a prerequisite for the Tax Court to have

jurisdiction, and the taxpayer failed to

timely request Appeals consideration.

For example, Appeals consideration must

be requested before a petition is filed in

the Tax Court regarding a declaratory

judgment request under sections 7428

(relating to declaratory judgment on the

classification of specified organizations),

7476 (relating to declaratory judgment on

qualification of certain retirement plans),

or 7477 (relating to declaratory judgment

on the value of certain gifts) of the Code.

(24) An administrative determination

made by the IRS to deny or revoke a Certified Professional Employer Organization

certification.

(d) Originating office has completed its

review--(1) In general. Appeals consideration of a matter or issue is appropriate

only after the originating IRS office has

completed its action on the Federal tax

controversy and issued an administrative

determination or a proposed administrative determination accompanied by an

offer for consideration by Appeals. If the

originating office has not completed its

action regarding the Federal tax controversy, the request for Appeals consideration is premature. Appeals may consider

the Federal tax controversy if the taxpayer

requests consideration after the originating office’s action is complete and if all

requirements in this section are met.

(2) Exception for early consideration

programs. Where administrative guidance

permits the originating office to engage

Appeals prior to completing its action

regarding the Federal tax controversy,

Appeals may consider the Federal tax controversy under the terms of that administrative guidance, such as mediation under

a fast track settlement program or early

consideration of some issues under an

early referral program.

(e) Procedural and timing requirements are followed. A request for Appeals

consideration of a Federal tax controversy must be submitted in the time and

manner prescribed in applicable forms,

instructions, or other administrative

guidance. All procedural requirements

must be complied with before Appeals

will consider a Federal tax controversy.

In addition, there must be sufficient time

260

remaining on the appropriate limitations period for Appeals to consider the

Federal tax controversy, as provided in

administrative guidance. In a case docketed in the Tax Court, if the Office of

Chief Counsel has recalled the case from

Appeals or, if not recalled, Appeals has

returned the case to the Office of Chief

Counsel so that it is received by the

Office of Chief Counsel prior to the date

of the calendar call for the trial session,

further consideration by Appeals will not

be available if there is insufficient time

for such consideration.

(f) One opportunity for consideration

by Appeals--(1) In general. If a Federal

tax controversy is eligible for consideration by Appeals and the procedural and

timing requirements are followed, a taxpayer generally has one opportunity for

Appeals to consider such matter or issue

in the same case for the same period or

in any type of future case for the same

period, unless the Tax Court remands for

reconsideration in a collection due process

case. Appeals has considered a Federal tax

controversy if the Federal tax controversy

was before Appeals for consideration and

Appeals issued a determination or made

a settlement offer, Appeals decided the

Federal tax controversy was not susceptible to settlement, or the person who

requested consideration was issued and

failed to respond to Appeals’ communications and as a result of that failure Appeals

issued or made a determination. Appeals

also has considered a Federal tax controversy if the taxpayer notified the Office of

Chief Counsel or the IRS that the taxpayer

wanted to discontinue settlement consideration by Appeals or requested to transfer

from Appeals to the Office of Chief Counsel settlement consideration of a Federal

tax controversy that is currently before the

Tax Court.

(2) Exceptions. Notwithstanding paragraph (f)(1) of this section, taxpayers

retain the opportunity for a traditional

appeal after participating in an early consideration program as described in paragraph (d)(2) of this section if no agreement

was reached between the taxpayer and the

IRS originating office. Taxpayers may be

able to request post-Appeals mediation

under the terms of administrative guidance after a traditional appeal if no agreement was reached between the taxpayer

Bulletin No. 2022–39

and Appeals. Notwithstanding paragraph

(f)(1) of this section, taxpayers who provide new information to the IRS and who

meet the conditions and requirements

for audit reconsideration or for reconsideration of issues previously considered

by Appeals may have an opportunity for

Appeals consideration.

(g) Special rules. The following special

rules apply to this section:

(1) Appeals reconsideration. Notwithstanding the exception in paragraph (c)

(22) of this section, if Appeals issued a

notice of deficiency, notice of liability, or

other determination without having fully

considered one or more issues because of

an impending expiration of the statute of

limitations on assessment, Appeals may

choose to have the Office of Chief Counsel return the case to Appeals for full consideration of the issue or issues once the

case is docketed in the Tax Court.

(2) Coordination between Office of

Chief Counsel and Appeals. Appeals and

the Office of Chief Counsel may determine

how settlement authority in a Federal tax

controversy that is before the Tax Court is

transferred between the two offices.

(h) Applicability date. This section is

applicable to requests for consideration

by Appeals made on or after [insert date

30 days after a Treasury decision finalizing these rules is published in the Federal

Register].

Bulletin No. 2022–39

§301.7803-3 Requests for referral to

Appeals following the issuance of a

notice of deficiency.

(a) Notice and protest. If any taxpayer

requests consideration by Appeals of any

matter or issue eligible for consideration

by Appeals under section 7803(e)(5) of

the Internal Revenue Code (Code) (relating to limitation on designation of cases

as not eligible for referral to Appeals) and

the request is denied, the Commissioner

of Internal Revenue or Commissioner’s delegate shall provide the taxpayer

a written notice that provides a detailed

description of the facts involved, the

basis for the decision to deny the request,

a detailed explanation of how the basis

for the decision applies to such facts, and

the procedures for protesting the decision

to deny the request if the requirements of

paragraphs (a)(1) though (5) of this section are met:

(1) Notice of deficiency. The taxpayer

received a notice of deficiency authorized

under section 6212 of the Code (relating

to notice of deficiency).

(2) Frivolous positions. The issue

involved is not a frivolous position within

the meaning of section 6702(c) of the Code

(regarding listing of frivolous positions).

(3) Multiple requests for referral to

Appeals. The taxpayer has not previously requested consideration by Appeals,

261

pursuant to section 7803(e)(5), of the

same matter or issue in a taxable year or

period.

(4) Previous Appeals consideration.

Appeals has not previously considered the

matter or issue in a taxable year or period

that is the subject of the request and determined that the matter or issue could not be

settled or a settlement offer was rejected,

except as provided in §301.7803-2(f)(2)

with respect to a taxpayer participating in

an early consideration program.

(5) Notice of deficiency with more than

one matter or issue. If the notice of deficiency for which the taxpayer requests

Appeals consideration includes more than

one matter or issue in a taxable year or

period, the taxpayer must request referral

for Appeals consideration and submit all

such matters or issues at the same time.

(b) Applicability date. This section is

applicable to relevant requests for consideration by Appeals made on or after

[insert date of Treasury decision finalizing these rules is published in the Federal

Register].

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

(Filed by the Office of the Federal Register on September 9, 2022, 11:15 a.m. and published in the issue

of the Federal Register for September 13, 2022, 83

FR 55934)

September 26, 2022

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus,

if an earlier ruling held that a principle

applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is

being made clear because the language

has caused, or may cause, some confusion. It is not used where a position in a

prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously

published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2022–39

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

September 26, 2022

Numerical Finding List1

Bulletin 2022–39

Announcements:

2022-14, 2022-31 I.R.B. 136

2022-15, 2022-31 I.R.B. 136

2022-16, 2022-33 I.R.B. 144

2022-17, 2022-35 I.R.B. 179

2022-18, 2022-36 I.R.B. 190

2022-19, 2022-36 I.R.B. 191

2022-20, 2022-38 I.R.B. 238

Notices:

2022-29, 2022-28 I.R.B. 66

2022-30, 2022-28 I.R.B. 70

2022-31, 2022-29 I.R.B. 85

2022-32, 2022-32 I.R.B. 137

2022-33, 2022-34 I.R.B. 147

2022-34, 2022-34 I.R.B. 150

2022-35, 2022-36 I.R.B. 184

2022-36, 2022-36 I.R.B. 188

2022-37, 2022-37 I.R.B. 234

2022-38, 2022-39 I.R.B. 239

Proposed Regulations:

REG-130975-08, 2022-28 I.R.B. 71

REG 130675-17, 2022-30 I.R.B. 104

REG-125693-19, 2022-39 I.R.B. 241

Revenue Procedures:

2022-25, 2022-27 I.R.B. 3

2022-28, 2022-27 I.R.B. 65

2022-26, 2022-29 I.R.B. 90

2022-32, 2022-30 I.R.B. 101

2022-30, 2022-31 I.R.B. 112

2022-29, 2022-33 I.R.B. 141

2022-34, 2022-33 I.R.B. 143

Revenue Rulings:

2022-12, 2022-27 I.R.B. 1

2022-13, 2022-30 I.R.B. 99

2022-14, 2022-31 I.R.B. 110

2022-15, 2022-35 I.R.B. 152

2022-17, 2022-36 I.R.B. 182

Treasury Decisions:

9963, 2022-34 I.R.B. 145

9964, 2022-35 I.R.B. 172

9965, 2022-37 I.R.B. 192

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

1

September 26, 2022

ii

Bulletin No. 2022–39

Finding List of Current Actions on

Previously Published Items1

Bulletin 2022–39

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

1

Bulletin No. 2022–39

iii

September 26, 2022

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,

we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

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