Rule 248(a) provides that a stipulation consenting to the entry of decision executed by the Tax Matters Partner and filed with the court shall bind all parties. The signature of the TMP constitutes a certification by him that no party objects to entry of decision. The signature must be that of the TMP rather than his counsel. Such a stipulation will also be signed by counsel for the Service. See Exhibit 35.11.11.1–187, Declaratory Judgement Cases: Exempt Organizations.

Rule 248(b) provides that if all participating partners have settled or do not object to entry of decision, then, after the expiration of the time within which to file a notice of election to intervene or to participate, the Service shall submit to the court a proposed decision document and motion for entry of decision. The motion should state: (i) that all of the participating partners have entered into a settlement agreement with the Service, or that all such partners do not object to the granting of the Service’s motion, and (ii) the Tax Matters Partner (if a participating partner) agrees to the proposed decision in the case but does not certify that no party objects to the granting of the Service’s motion. The proposed decision shall be in the form prescribed by Rule 155 (i.e., the decision shall contain no stipulation or signature line for the parties, etc.). The certificate of service should reflect service on both the petitioner and the TMP (regardless of whether the TMP is the partner who filed the petition or elected to intervene in the action). T.C. Rule 246. Within three days from the date on which the Service’s motion for entry of decision is filed with the court, the Service shall serve on the TMP a certificate showing the date on which the Service’s motion was filed with the court. Within three days after receiving the Commissioner’s certificate, the TMP shall serve on all other parties to the action other than the participating partners, a copy of the Service’s motion for entry of decision, a copy of the proposed decision, a copy of the certificate showing the date that the motion for entry of decision was filed, and a copy of Rule 248. The court will enter the decision if no partner seeks to intervene within 60 days of the date the Service filed the motion (or if a motion to intervene is filed and the motion to intervene is denied). See Exhibit 35.11.1–189, TEFRA Partnership: Rule 248(b) Motion for Entry of Decision, Certificate and Decision — Tax Matters Partner is a Participating Partner, and Exhibit 35.11.1–190, TEFRA Partnership: Rule 248(b) Motion for Entry of Decision, Certificate and Decision — Tax Matters Partner is not a Participating Partner.

Cash Out-Of-Pocket Settlements Under Rule 248(b). Appeals and counsel may settle cases allowing the partners a deduction for their cash invested. A deduction for cash out-of-pocket is not a partnership item, however, which can be reflected in a proposed decision submitted under Rule 248(b). Consequently, respondent shall use the following procedure in submitting proposed Rule 248(b) motions where settlement is based on cash out-of-pocket. Respondent shall send a letter to the Tax Matters Partner, each notice partner, and any other partner of which counsel is aware. The letter should set forth the settlement terms and advise the partners that execution of specific settlement documents, e.g., a closing agreement or Form 870–P, Agreement to Assessment and Collection of Deficiency in Tax for Partnership Adjustments, is required as a condition of settlement. The letter shall state that acceptance of the terms and execution of the required documents by the partner, as well as receipt of those executed documents by respondent, must occur by specified dates (for example, the letter may require an initial response within 60 days and execution of the settlement form within 30 days of the date it is sent). The letter should also advise the partners that after the close of the specified period(s), respondent will file a Rule 248(b) motion with a proposed decision reflecting all adjustments set forth in the notice of Final Partnership Administrative Adjustment. See Exhibit 35.11.1–192, TEFRA Partnership: Rule 248(b) Cash Out-of-pocket Settlements — Sample Letter to TMP and Partners, for a sample letter. As settlements are entered into with the partners, the provisions of Rule 248(c) pertaining to notice of settlement must be complied with. After the close of the specified period, respondent will file a Rule 248(b) motion and proposed decision reflecting all the FPAA adjustments. See Exhibit 35.11.1–191 , TEFRA Partnership: Rule 248(b) Motion for Entry of Decision, Certificate and Decision — Cash Out-of- Pocket Settlements, for a sample motion for use with cash out-of-pocket settlements. Since the partnership items of the settling partners will convert to nonpartnership items and those partners will no longer be parties to the partnership proceeding, the decision entered by the court will only affect the nonsettling partners. Sections 6226(d)(1)(A) and 6231(b)(1)(C).

If all participating partners have settled, then T.C. Rule 248(a) or (b) is applicable rather than Rule 248(c)(1). If less than all participating partners have settled, then Rule 248(c)(1) and/or (2) will apply. Rule 248(c)(1) provides that the Service shall file with the court a notice of settlement agreement or notice of consistent agreement (pursuant to section 6224(c)(2)), whichever may be appropriate, identifying the participating partners who have entered into the agreement. This subsection of Rule 248 deals only with participating partners. With respect to any partner (participating or nonparticipating), Rule 248(c)(2) requires the Service to serve on the Tax Matters Partner, within seven days after a settlement agreement is executed by both a partner and the Service, a statement which sets forth the identity of the parties to the settlement; the date of the settlement agreement; the years to which the settlement agreement relates; and the terms of the settlement as to each partnership item and the allocation of such items among the partners. Within seven days of receiving the statement, the TMP shall serve a copy of the statement on all parties to the action. The requirement of Rule 248(c)(2) does not apply in the case of a consistent agreement. The procedures for complying with Rule 248(c)(2) differ according to whether the case is in the jurisdiction of Appeals or the Field attorney.

Field Counsel Jurisdiction. Any agreements received at Service Centers, Examination or Appeals offices will be sent to the Field attorney before the agreements are executed by the Service. Acceptance of the settlement agreement or consistent agreement does not occur until the agreement is executed by the Service. Field attorneys should make that position clear in any contact with partners, the TMP, or any representative of said partners. Field Counsel does not have the authority to sign the settlement agreements on behalf of the Commissioner as there is no delegation order extending that authority. The supervisory Appeals officers must execute such agreements.

Appeals Office Jurisdiction. If a docketed case is in Appeals’ jurisdiction, Appeals will prepare the package to be submitted to the TMP, and will serve the TMP once the agreements are executed. Therefore, any agreements received by the Service Centers, Examination, and Field Counsel are to be forwarded to Appeals. Similarly, the agreements will be processed and forwarded to the Service Center for assessment. It is important that the field attorney advise the Appeals office of any changes in the status of the TMP or address changes for the TMP that Field Counsel may receive. It is also important to keep in mind that the Field attorney is ultimately responsible to the Tax Court for compliance with the court’s rules while a case is docketed, whether or not Field Counsel or Appeals has settlement authority. Therefore, Field Counsel should obtain and keep copies of any packages served on the TMP by Appeals.

Unlike settled deficiency cases which normally contain waivers of restrictions on assessment, cases settled under T.C. Rule 248 do not contain a waiver paragraph permitting immediate assessment of the deficiency. Nevertheless, all settled TEFRA cases should be closed in the same seven day period in which settled statutory notice cases are closed.

If the TEFRA entity to which the penalties or other affected items are attributable is not referenced in the affected item decision, confusion may arise as to whether non–TEFRA notices of deficiency may subsequently be issued. Thus, decision documents filed in TEFRA affected item cases should specifically note that the penalties and other affected items are attributable to a specific TEFRA partnership so that the application of section 6230(a)(2)(C) is clear. See Exhibit 35.11.1–195, TEFRA Partnership: Penalty Only Affected Item — Decision Document.

Section 7122 provides that the Secretary may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice (DOJ) for prosecution or defense; and the Attorney General or his delegate may compromise any such case after reference to the DOJ for prosecution or defense. Compromises by the Service are based primarily on the inability of a taxpayer to pay the deficiency, penalty, and interest determined to be due. See CCDM 33.3.2, Offers in Compromise.

If a settlement is reached in a docketed Tax Court case but it is determined that a petitioner’s offer in compromise should be considered before the settlement is finalized and a stipulation is filed with the Tax Court, the procedures set forth below should be followed by Field Counsel. To the extent practicable, Field Counsel should also act in accordance with the general guidelines set forth for offers in compromise. See generally IRM 5.8, Offer In Compromise.

If an offer in compromise is submitted by a petitioner while the petitioner’s case is pending in the Tax Court, a stipulation of the full amount of the deficiencies and penalties (those determined in the statutory notice or those redetermined on the merits by agreement of the parties) should be obtained from the petitioner. The reason for requiring the stipulation of the full amount, as determined or as redetermined in such cases, is to protect the Service’s ability to collect additional amounts pursuant to a collateral agreement in the event the financial status of the petitioner should change. Also, the Service could seek collection of the full liability if the petitioner defaults on the payments.

Unless the petitioner agrees to the immediate filing of the stipulation referred to in paragraph (3), it should be held in escrow in the possession of Field Counsel, and not in the possession of Appeals or the Area Director, pending the disposition of the offer in compromise. The stipulation will be executed by or on behalf of the petitioner, but will not be executed on behalf of Counsel until the offer in compromise is determined to be acceptable. If the offer in compromise is rejected, the stipulation should be returned to the petitioner or destroyed unless the petitioner submits an amended offer in compromise. If the offer in compromise is determined to be acceptable, the stipulation should be executed on behalf of Counsel and then filed with the Tax Court.

The letter accepting the offer in compromise should not be sent to the petitioner until the amounts specified in the stipulation referred to in paragraph (3) have been assessed.

Cases settled on the basis of an offer in compromise accepted by the Attorney General are situations in which there are pending cases in the district courts and Court of Federal Claims and also in the Tax Court. While these usually are related Tax Court and refund suit cases, they may also involve Tax Court and collection suit cases. The coordination instructions must be followed before the Tax Court settlement can be finalized, both in instances in which the offer is finally passed upon by the Attorney General and in those cases in which the Tax Court case is disposed of without a simultaneous disposition of the district court or Court of Federal Claims case. Usually, in the settlement by the Attorney General, any deficiency in tax or penalty to be collected in the Tax Court case is offset in the compromise of the refund case; therefore, the stipulation would state that there has been an acceptance of an offer in compromise by the Attorney General, and that by reason thereof there is now no deficiency in tax or penalty due in the Tax Court case. If a deficiency in tax or penalties is to be collected in the Tax Court case, the regular form of stipulation is to be used. See Exhibit 35.11.1–196, Compromise by the Attorney General.

If a case is pending in the Tax Court and also in another court having concurrent jurisdiction over the parties and subject matter, it must be handled based upon the attendant facts and circumstances. If the Tax Court case is disposed of first, no problem arises. If the other court determines the tax and penalty liabilities prior to the decision of the Tax Court, the Tax Court case must nevertheless be closed by stipulation or motion. In such instances, the type of stipulation used is similar to those in cases where the related district court case was compromised by the Attorney General. Reference is made, however, to the other court having concurrent jurisdiction and its final determination of the tax and penalty liabilities (rather than to the compromise of such tax and penalty liabilities by the Attorney General). See Exhibit 35.11.1–197, Adjudication by Another Court Having Concurrent Jurisdiction With Tax Court: Another Court Disposed of All Issues Pending in Tax Court, and Exhibit 35.11.1–198, Adjudication by Another Court Having Concurrent Jurisdiction With Tax Court: All Issues Before the Tax Court Not Disposed of by Another Court.

In most cases, Field Counsel will prepare a computation and forward it to the petitioner for approval. The objective is to file an agreed computation with the court. If the petitioner initially files a computation, the Field attorney must thoroughly review it, and, if necessary, file an objection thereto. This objection must be accompanied by an alternative computation. These must be filed on or before the date specified in the notice issued by the Tax Court. Failure to object and file an alternative computation will result in the court’s entry of decision in accordance with the petitioner’s computation.

The Field attorney and reviewer have the same responsibility in submitting to the court a computation statement and proposed decision upon which a legally adequate decision can be entered as they have in submitting settlement stipulations. It is incumbent upon the attorney to assist Appeals in preparing the first part of the computation statement. The court bases its decision on the first part of the statement, which is similar in many respects to a settlement stipulation. The court will hold the Field attorney ultimately responsible for the correctness of a computation submitted on behalf of the respondent. The computation statement must support the decision requested by the respondent. The Field attorney and reviewer must review the Rule 155 documents and determine whether they are accurate and complete before forwarding them to the petitioner for approval.

If the petitioner initially files a computation, an objection and an alternative computation should be filed by the date specified in the court’s notice of filing. If an unagreed computation is filed first, the petitioner must file an objection and alternative computation by the date specified in the court’s notice. Generally, any argument on contested computations is handled by a P&A attorney except when defense of the computation warrants argument by the trial attorney. Whether a trial attorney will argue the computation will depend to a large extent upon the location of the respective Associate Area Counsel office as well as the importance and complexity of the issues to be decided at the hearing. Associate Area Counsel, after consultation with the Associate Chief Counsel (P&A), will determine whether the trial attorney will appear at the hearing.

Arguments under Rule 155 are confined strictly to the question of whether the computation conforms with the opinion. It does not afford an opportunity to reargue the issues and matters already covered by the opinion, or to argue new issues. In all contested computations, the trial attorney should prepare a detailed memorandum covering all phases of the disputed items for the use by the P&A attorney.

In an estate tax case, petitioner may be entitled to deduct expenses incurred at or after the trial. The amount of the deduction generally is fixed by agreement. If the parties are unable to agree, the case may be reopened for further trial on this issue pursuant to T.C. Rule 156.

If the petitioner agrees to respondent’s computation and proposed decision, but an unagreed computation has already been filed, the agreed computation and proposed decision may be filed directly with the court. Prior to any hearing, Field Counsel may confer with the petitioner or petitioner’s counsel to seek an agreed computation. When necessary, a revised computation, or an amendment to the prior computation, should be promptly prepared and filed. In the event an agreement is reached after an unagreed computation has been sent to the court, a telephone conference should be promptly arranged to inform the judge that an agreement has been reached and that an agreed computation is being filed with the court, so that the court does not prematurely process the unagreed computation.

When, with respect to a nonliability issue, the appeals officer abused his discretion in conducting the hearing or in making the determination, the error was harmless, the notice of determination should be defended. If reconsideration of the case by Appeals is required because the error is not harmless, the attorney should generally file a Motion for Remand to Appeals to allow the appeals officer to correct the error and issue a supplement to the notice of determination. A sample motion to remand is in Exhibit 35.11.1-213, Motion to Remand in a Collection Due Process Case. On the other hand, some nonliability issues involving the application of law to uncontested facts may not require reconsideration by Appeals even if the error was not harmless. These issues may include whether the unpaid tax was discharged in bankruptcy, whether the statute of limitations has expired, or whether a notice of deficiency was properly issued. If an issue does not require further fact finding or a determination by Appeals, and the case is to be conceded and the tax abated, the decision document should state that the notice of determination is not sustained as in the sample decision at Exhibit 35.11.1-214, Notice of Determination Addressing Only Tax Liability or Collection Issues Not Sustained. When the assessment is conceded as invalid but the assessment period is still open, the sample paragraph stating that respondent’s right to reassess the tax liability is preserved should be included.

A motion to dismiss on ground of mootness, rather than a stipulated decision document, should be filed if the tax liability has been paid in full and no issues have been raised that would invoke the Tax Court’s overpayment jurisdiction under sections 6404(h) or 6015(e). See CCDM 35.3.23.4, Motion to Dismiss on the Ground of Mootness. Similarly, a motion to dismiss on the ground of mootness should be filed if the assessment has been abated. The attorney should also ensure that the lien has been, or will be, released or the proposed levy will be abandoned before filing the motion. If the Service has agreed to abate the assessment but the abatement has not been completed, a motion to dismiss on ground of mootness should not be filed. Instead, a stipulated decision document setting forth the basis for the abatement should be filed. A sample decision is contained in Exhibit 35.11.1-214, Notice of Determination Addressing Only Tax Liability or Collection Issues Not Sustained.. If some, but not all, tax periods at issue have been paid or abated, a stipulated decision can be filed stating that the issues associated with the pertinent tax periods are moot, and then separately addressing the unpaid periods.

If the taxpayer is conceding the case in full and the underlying tax liability is not at issue, then a stipulated decision document stating that the determinations are sustained in full should be filed. A sample decision is contained in Exhibit 35.11.1-215, Notice of Determination Addressing Only Tax Liability or Collection Issues Sustained in Full. If the taxpayer is conceding the case in full but a collection alternative has been agreed to outside CDP, then the collection alternative should be referred to below the judge’s signature as in the sample decision in Exhibit 35.11.1-216, Notice of Determination Addressing Only Tax Liability or Collection Issues Sustained in Full if Collection Alternative Agreed to Outside CDP Case. An example would be when Appeals properly rejected an offer-in-compromise but after the notice of determination was issued the taxpayer experienced a substantial adverse change in circumstances making the offer-in-compromise acceptable. While the appeal to Tax Court is pending, the taxpayer submits financial documentation and this is forwarded with taxpayer’s offer-in-compromise to the Collection function, which accepts the offer. The acceptance of the offer should not be referred to above the line because the offer was accepted outside of the CDP hearing and the court has no jurisdiction in connection with the offer. Note that if Appeals had erred in concluding that the financial documentation was not submitted, a motion for remand should generally be filed rather than a document not sustaining the determination.

An attorney is not authorized to accept offers-in-compromise or installment agreements. Accordingly, the stipulated decision document should not stipulate that a case has been resolved by an offer-in-compromise or installment agreement until the collection alternative has been already accepted by the Collection function or other authorized Service function. If the collection alternative has not yet been accepted, the stipulated decision document can provide that the petitioner has been given a specific period of time to submit a collection alternative to the Service.

When the taxpayer challenges the underlying tax liability (i.e., the proper amount of tax imposed by the Code), the attorney must first determine whether the challenge is precluded under section 6330(c)(2)(B). If the challenge to the underlying tax liability is not precluded, then the stipulated decision document must set forth the amount of the underlying tax liability, which is referred to in the decision document as the amount of tax imposed by the Internal Revenue Code. See Exhibit 35.11.1-217 Notice of Determination – Underlying Tax Properly at Issue and No Abuse of Discretion. The amounts of the liability and additions to tax should be calculated as of the date the decision is entered. Stipulations as to interest should generally be below the line and state that interest accrues in accordance with law. If the amount of interest that accrued on the tax liability was specifically at issue, the amount of interest agreed to can be put above the line. Any stipulation as to overpayments should be placed below the line, because the Tax Court does not have jurisdiction under the CDP provisions to determine an overpayment or order its refund (unless the overpayment arises under section 6404(h) or 6015(e)). If the underlying tax liability is not properly at issue but adjustments are agreed to, the amount of the underlying tax liability should be set forth below the judge’s signature. See Exhibit 35.11.1-218, Notice of Determination – Underlying Tax Not at Issue, but Adjusted and No Abuse of Discretion.

CDP cases may involve claims for interest abatement under section 6404 or relief from joint and several liability under section 6015. For sample decisions for cases in which the notice of determination addresses both CDP issues and interest abatement, see Exhibit 35.11.1-219, Notice of Determination Addressing CDP Issues and Interest Abatement of No Abuse of Discretion in Denial of Abatement of Interest. For sample decisions in which the notice of determination addresses both CDP issues and relief from joint and several liability, also see Exhibit 35.11.1-220, Notice of Determination Addressing CDP Issues and Innocent Spouse Relief.