If a case is under the jurisdiction of an Operating Division, examination personnel with responsibility for the case will forward a written memorandum to the corresponding Area Counsel requesting that a case be considered for designation. In most circumstances, the focus of the designation will be one issue in the case. The initial request to the Area Counsel will be made by the examination personnel most knowledgeable about the facts of the issue and the case, and who are best able to provide the details necessary to reach a considered decision as to whether the case meets the requirements for designation.

Upon receipt of a written request that a case be considered for designation, the Area Counsel will ensure that the request is subject to a careful analysis by attorneys and managers appointed by the Area Counsel. A reasonable effort will be made to identify other cases presenting the proposed designated issue to allow for Service-wide strategic coordination. Operating Division and Area Counsel personnel will ensure that the issue being considered for designation meets the requirements for designation.

If the Area Counsel agrees that the case is appropriate for further consideration of designation, Operating Division personnel will notify the taxpayer of such consideration and the reasons for the proposal. The taxpayer will also be notified that its views on the proposed designation may be presented, in a meeting, to the Operating Division personnel and Area Counsel.

If the Operating Division personnel and Area Counsel believe that the case should be proposed for designation, the Associate Area Counsel with prime responsibility for the proposed designation will prepare the Designation Recommendation Memorandum (DRM). See CCDM 33.3.6.3.1. The Associate Area Counsel will informally coordinate with the Associate Chief Counsel with subject matter jurisdiction of the issue proposed for designation while preparing this memorandum. If it is intended that a different Associate Area Counsel office be responsible for the trial of the case, the preparation of the DRM will be coordinated with that trial office. If the Area Counsel concurs with the DRM, such concurrence will be reflected by a signature on the memorandum.

The Area Counsel will forward the DRM simultaneously to the Operating Division Executive, listed below, and the Division Counsel, who will have 30 days to review and concur on the proposal. Any written submissions by the taxpayer reflecting his/her views on the proposed designation will be forwarded with the DRM. Concurrence will be reflected by a signature on the memorandum. For purposes of advanced notice and coordination, the Area Counsel will also forward a copy of the DRM to the Associate Chief Counsel with subject matter jurisdiction of the issue proposed for designation.

At the time the Area Counsel forwards the DRM to the Operating Division Executive and Division Counsel, the Operating Division will inform the taxpayer. The taxpayer will be provided with written notification that describes the issue proposed for designation and explains the reasons for the proposal. The taxpayer will also be notified that its views on the proposed designation may be presented, in writing and as a supplement to prior submissions, to the Operating Division Executive and the Division Counsel.

Following the signatures of the Operating Division Executive and the Division Counsel, the Division Counsel will forward the DRM, along with written submissions from the taxpayer, simultaneously to the Chief Counsel and the Associate Chief Counsel with subject matter jurisdiction of the issue proposed for designation. The Associate Chief Counsel will provide the Chief Counsel in writing comments on the DRM within 30 days of receipt of the DRM.

At the time the DRM is approved for forwarding to the Chief Counsel, the Operating Division will inform the taxpayer. The taxpayer will also be notified that its views on the proposed designation may be presented to the Chief Counsel.

If the Chief Counsel approves designating the case for litigation, the Division Counsel will notify the executives who concurred with the DRM and the Chief, Appeals. The Division Counsel will also notify the taxpayer in writing of the approval of the designation by the Chief Counsel.

Once the case is designated for litigation, the Operating Division will, as soon as possible, issue a statutory notice of deficiency to the taxpayer.

Once a designated case is docketed in the United States Tax Court, the trial counsel will seek the assignment of a judge and the calendaring of the case for trial. See T.C. Rule 132. As appropriate, trial counsel will seek the severance of the designated issue from the other issues set forth in the case. See T.C. Rule 141(b). In general, a Brannerton letter will be sent to the taxpayer within 30 days after the case is at issue. A first stipulation of facts should be proposed as early as possible after the case is at issue.

Consideration may be given to designating a case that is docketed in the Tax Court. The procedures for initiating and approving the designation of a nondocketed case for litigation under the jurisdiction of the Operating Division, as set forth in CCDM 33.3.6.2.1, will be followed, with the addition of the procedures set forth below.

The trial counsel will initiate the request for designation, as provided in CCDM 33.3.6.2.1(1), in coordination with Operating Division personnel.

The trial counsel will notify the taxpayer, as provided in CCDM 33.3.6.2.1(3), of the consideration of the case for designation and the reasons for the proposal.

The trial counsel will inform the taxpayer in writing, as provided in CCDM 33.3.6.2.1(6), of the forwarding of the DRM to the Operating Division Executive and the Division Counsel. The written notification will advise the taxpayer that, if the case is designated, the trial counsel will seek the assignment of a judge and the calendaring of the case for trial. See T.C. Rule 132.

The trial counsel will inform the taxpayer of the forwarding of the DRM to the Chief Counsel requires provided in CCDM 33.3.6.2.1(8).

As described in CCDM 33.3.6.1, an issue will generally be designated when a case is under the jurisdiction of an Operating Division. In certain instances, consideration may be given to designating a nondocketed case for litigation while the case is in Appeals jurisdiction. In general, a case is considered to be in Appeals jurisdiction after a protest is filed in response to a 30-day letter. The procedures for initiating and approving the designation of a nondocketed case for litigation under the jurisdiction of the Operating Division, as set forth in CCDM 33.3.6.2.1, will be followed, with the addition of the procedures set forth below.

While a request for designation is awaiting approval, Appeals may suspend settlement activity on the issue recommended for designation until a designation decision is made.

Appeals personnel will also receive a copy of the written memorandum requesting that the case be considered for designation as provided in CCDM 33.3.6.2.1(1).

The Chief, Appeals, will also ensure that the request is subject to a careful analysis, as provided in CCDM 33.3.6.2.1(2) by Appeals personnel.

If the Area Counsel and Chief, Appeals, agree that the case is appropriate for further consideration for designation, Appeals personnel will notify the taxpayer, as provided in CCDM 33.3.6.2.1(3) of such consideration. The taxpayer may present his/her views on the proposed designation to the Operating Division personnel, Chief, Appeals, and Area Counsel.

The Chief, Appeals, will concur in the DRM, as provided in CCDM 33.3.6.2.1(5), before the memorandum is forwarded to the Division Counsel and Operating Division Executive.

Appeals will provide the taxpayer, as provided in CCDM 33.3.6.2.1(6), with the written notification that the recommendation has been forwarded to the Operating Division Executive and Division Counsel. The taxpayer may present its views on the proposed designation, in writing as a supplement to prior submissions, to the Operating Division Executive, Chief, Appeals, and Division Counsel.

Appeals will inform the taxpayer of the forwarding of the DRM, as provided in CCDM 33.3.6.2.1(8), to the Chief Counsel.

Once the case is designated for litigation, Appeals will, as soon as possible, issue a statutory notice of deficiency for the designated issue and the other issues in the case.

After the case is docketed, the nondesignated issues may be referred to Appeals at the discretion of the Area Counsel.

Before a case is recommended for designation, it is the responsibility of the recommending Area Counsel office to:

The Designation Recommendation Memorandum (DRM) will contain the information listed below and generally be in the form of Exhibit 33.3.6-1: