Appeals’ mission is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service. Appeals accomplishes this mission by considering protested and Tax Court cases and negotiating settlements in a manner which ensures Appeals employees act in accord with the Taxpayer Bill of Rights (TBOR) in every interaction with taxpayers. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights, Pub 5170, Taxpayer Bill of Rights, and IRM 8.1.1.1, Accomplishing the Appeals Mission.

When a taxpayer is charged interest on an underpayment during the same period of time interest is allowed on an overpayment, the procedure used by IRS to equalize the interest rate differential is called interest netting. Interest netting is authorized by IRC Section 6621(d). See IRM 8.7.19.1.2, Authority.

Per Revenue Procedure 2000-26, the Service will take reasonable steps to identify overlapping periods of tax overpayments and underpayments and apply the net interest rate of zero to interest accruing on or after October 1, 1998. Because the Service is currently unable to automatically apply the net interest rate of zero, there may be instances when the Service fails to identify periods of overlap and apply the net interest rate of zero. To ensure that taxpayers receive the benefit of the net interest rate of zero in all applicable situations, taxpayers should request the net interest rate of zero (or request the Service to recompute the net interest rate of zero if the taxpayer disagrees with a Service computation of the net interest rate of zero) on or before the date on which the last applicable period of limitation described in IRM 8.7.19.4, Applicable Periods of Limitation for NRN Requests.

IRC Section 6611 requires the Internal Revenue Service to pay interest on any tax overpayment when the requirements of IRC Section 6611 are met. IRC Section 6601 requires taxpayers to pay interest on any tax underpayment. Interest is computed at the rates established under IRC Section 6621(a)(1) for overpayments and IRC Section 6621(a)(2) for underpayments. IRC Section 6621(c) provides for an increase in underpayment rate for large corporate underpayments. IRC Section 6621 (d) provides that to the extent that, for any interest computation period, interest is payable under IRC Section 6601 and allowable under IRC Section 6611 on equivalent underpayments and overpayments by the same taxpayer of tax imposed under the Internal Revenue Code, the net rate of interest will be zero for that interest computation period.

The Director, Case and Operations Support, is the executive responsible for Appeals’ policy and procedural guidance.

The Director, PPQ&A is the program manager responsible for program oversight.

PPQ&A provides trend and data analyses and detailed summary reports for Appeals.

See IRM Exhibit 8.1.1-1, Common Terms Used in Appeals, for common terms and definitions used in IRM Part 8. Terms listed in this exhibit are not included in this section.

The table lists commonly used acronyms and their definitions:

IRM 20.2, Interest, provides standards and instructions for computing interest consistent with the Internal Revenue Code. The primary IRM resource for net rate netting is IRM 20.2.14, Netting of Overpayment and Underpayment Interest. The following table lists helpful IRM sections on the computation of interest:

Net rate netting under IRC Section 6621(d) is available only when there exists overlapping periods of overpayment and underpayment by the same taxpayer upon which interest is both payable and allowable. Prior to the time an overpayment or underpayment is determined for a tax period, there is no principal upon which interest can be computed and a request for zero-netting is premature.

When a NRN request is received by the Accounts Management (AM) Complex Interest Team (CIT) at the Ogden Campus, that site will ensure that the NRN request properly identifies the taxpayer, the taxpayer identification number (TIN), the overlapping underpayment and overpayment amount(s) and date(s), and the tax years and type(s) of overpayment and underpayment taxes involved. The AM CIT will perform IDRS research (TXMOD and CFOL) on all tax periods included in the NRN request to determine if any tax period has an open AIMS “L” freeze, which is an indicator of Examination or Appeals involvement.

If there is an "L" freeze and the AIMS status code is 80, 81, or 82 for any of the NRN request tax period(s), the AM CIT will take the following steps to determine if Appeals will accept the NRN request for the tax liability periods controlled by Appeals for the same taxpayer:

NRN is an Appeals Coordinated Issue (ACI). An ACI is an issue or category of case with Service-wide impact or importance, requiring coordination to ensure uniformity and consistency nationwide. ACIs along with the assigned Technical Specialist are listed on the Appeals Web site in the Domestic/International Operations "Issue Locator" . For the public, they are also listed at www.irs.gov/appeals.

The ATE is responsible for preparing and forwarding a referral, through the Appeals Team Manager, to Appeals’ Technical Guidance on Form 13381, Appeals Technical Guidance Referral, when the case has an ACI. In addition, the ACDS Feature Code "AI" (for Appeals Coordinated Issue) must be included on ACDS. See IRM 8.7.3, Domestic and International Operations, and the ACDS Utilities / Feature Code Lookup.

A Technical Guidance Specialist will review the NRN request and assist the ATE in determining whether to return the request, retain it in the file for consideration with a related case with unresolved principal amount(s), or to consider the standalone NRN request. For more information, see IRM 8.7.3.3, Appeals Technical Specialists’ Roles and Responsibilities.

After considering the NRN request, the ATE will select the appropriate closing letter based on actions previously taken for the request. See IRM 8.7.7.10.1, Closing Letters for Disposition of Claims. IRM 8.7.19.4, Applicable Periods of Limitations for NRN Requests, contains information on the period of limitation for filing a refund claim and for filing a refund suit for debit interest under Title 26 of the U. S. Code versus the period for requesting credit interest under Title 28.

If the ATE determines that a legal notice of disallowance is needed (see IRM 8.7.7.10.1), IRC Section 6402(l) requires the Service to explain in the legal notice the reason for the disallowance. However, the legal notice isn’t required if the Service receives a signed Form 2297, Waiver of Statutory Notification of Claim Disallowance, reflecting the taxpayer’s waiver of the requirement for the Service to mail the legal notice of disallowance. See IRC Section 6532(a)(3).

For most legal notices of disallowances, Appeals will send (by certified or registered mail) Letter 1363, Appeals Partial Disallowance of Claim - Certified Letter, or Letter 1364, Appeals Full Disallowance of Claim - Certified Letter. Both letters state that the law permits the taxpayer to bring suit within two years from the mailing date of the letter. If a legal notice of disallowance was previously issued or the Service received Form 2297, Appeals will send (by regular mail) closing Letter 2681. Appeals Full Disallowance After Previous Claim Disallowance, or Letter 2683, Appeals Partial Disallowance After Previous Claim Disallowance, reminding the taxpayer that the two-year period for filing suit wasn’t shortened or extended by Appeals’ reconsideration. See Exhibit 8.7.7-1, IRS Claim Disallowance Letters that Begin the 2-Year Period for Filing a Refund Suit.

The taxpayer or authorized representative can file a NRN claim by writing on top of Form 843 "Request for Net Interest Rate of Zero under Rev. Proc. 2000-26" and by providing documentation to substantiate the taxpayer’s entitlement to receive interest due on the overpayment. It is not necessary for the taxpayer to provide a dollar amount. For more information, see Form 843 Instructions and Revenue Procedure 2000-26.

No Form 843 is required when a NRN request is requested in connection with a return (or returns) of the taxpayer under consideration by any function of the Service (including Examination, Appeals, or a case before a federal court that requires a computation of interest by any function of the Service). Rather than filing a Form 843, the taxpayer should provide the contact representative (i.e. Appeals Technical Employee or Examiner) of such function a letter or written statement that includes the following:

If an Appeals Team Case Leader or Appeals Officer receives a NRN request (by letter or other written statement) for tax periods under Appeals’ jurisdiction, the ATE will: