The responsible attorney/paralegal assigned to the case should take the following steps.

An appeal bond is an irrevocable, open-ended promise of the taxpayer to pay the deficiencies finally determined to be due, together with any interest, additional amounts, or additions to tax provided for by law. It continues the stay on assessment and collection until the appellate proceedings are concluded and the Tax Court decision becomes final. See section 7485 and Tax Court Rule 192.

The taxpayer must file the appeal bond with the Tax Court on or before filing the notice of appeal.

The Tax Court fixes the amount of the bond. The amount may not exceed double the amount of the deficiency that is the subject of the appeal. See section 7485.

Section 7485(a), which requires a taxpayer to post an appeal bond in order to stay collection, does not apply to collection due process (CDP) cases. By its terms, section 7485 applies only to the collection (and assessment) of deficiencies, not assessed liabilities that are the subject of a CDP case. In a CDP levy case, levy is suspended during the pendency of appeals, unless the IRS obtains a lifting of the suspension pursuant to section 6330(e)(2).

An appeal letter to the Department of Justice should be sent within five days of the filing of the taxpayer's notice of appeal.

Unlike Commissioner appeals, in taxpayer appeals it is usually not necessary to go into a detailed discussion of the facts or the law. It is sufficient if the letter includes the following:

Any problems concerning what is appealed, timeliness, venue, or the substantive issues should be mentioned.

If the case involved a related issue decided adversely to the Commissioner and approval of the action on decision recommending acquiescence on such related issue has been withheld, the letter to the Department of Justice should set forth the related issue or issues on appeal. The letter will further request that the Department of Justice inform us within 30 days from the date of the letter whether it believes that release of the action on decision on the related issue will adversely affect defense of the appeal. If it appears that the release of acquiescence on the related issue will have the result of requiring administrative settlement of other cases, that information should also be set forth in the defense letter. See CCDM 36.3.1, Actions on Decision.

If the case involved an issue decided adversely to the Commissioner, the letter should include a statement that Chief Counsel does not intend to cross-appeal. If there is a need for cross-appeal, the attorney should consult CCDM 36.1.1.2.2, Protective Appeals and Cross-Appeals.

Attachments to the letter should include copies of the notice of appeal, notice of transmission of the record, the tax court's opinion and the appeal bond, if one has been posted.

A sample letter for taxpayer appeals is reproduced at Exhibit 36.4.1–16, Taxpayer Appeal Letter.

Upon request by the Appellate Section attorney assigned to the case, Field Counsel will forward the legal and miscellaneous files to the Department of Justice. Typically, this will be an electronic copy of the legal and miscellaneous files. If the Appellate Section attorney requests an electronic copy of the legal and miscellaneous files, the attorney will provide instructions for transmittal. If the legal and miscellaneous files are maintained in paper and paper files are to be sent, the Field Counsel will forward the legal and miscellaneous files to the following address:

If paper files are sent, the letter transmitting the files to Justice will direct that upon completion of appellate proceedings the files should be promptly returned for closing to the following address:

The administrative file in taxpayer appeal cases remains in the field for assessment purposes.

When assigned a taxpayer appeal, the National Office attorney/paralegal should prepare and maintain an open folder, a file for a case on appeal. This file should contain copies of the three notices comprising the appeal package, the TLCATS assignment sheet, copies of both the Tax Court opinion and decision, a copy of the completed Form 9725 (Form 9724 in TEFRA cases), a copy of the letter to the Department of Justice, and a copy of the appeal bond, if one has been filed. Any further documents pertaining to the case on appeal should be placed in this temporary file until a closing letter is received from the Department of Justice. At that time, the temporary file should be merged with the legal file, regardless of the format (paper or electronic) of the legal file.

The Associate Chief Counsel attorney should check the legal and miscellaneous law files to be sure all exhibits and transcripts are accounted for. If not, see CCDM 36.2.5.9.1, Docketing and Filing the Record on Appeal.

The Associate Chief Counsel attorney should request from the Area Counsel office any documents thought necessary for processing the case in the court of appeals. Transmit these documents with the appeal letter and the files through the various stage of review and, ultimately, to the Department of Justice.

The following are examples of situations requiring protective or cross-appeals.

Disputes over the year in which an item should be taxed or a gift deemed to be made. If the tax years in question are included in the same docket, a cross-appeal should be recommended. If the years are in different dockets, a protective appeal will be necessary.

Disposition of an item for one year causes a correlative change in another tax year (either as to the petitioner or as to a related taxpayer). This is often found in cases involving the correct tax treatment of an element affecting basis (and which may not be covered by sections 1311–1314). As a general rule, even when the revenue may possibly be protected under such statutory provisions, it may be appropriate to file a notice of appeal or to take other protective action.

Income items or deductions may be either that of taxpayer A or taxpayer B, but not both. This includes alimony, partnerships, joint ventures, certain community property income questions, stockholder-corporation issues, dependency exemptions, and goodwill versus a covenant not to compete.

Determination of one tax correlatively affects the computation of a related tax. For example, with respect to income and estate taxes, and estate and gift taxes.

When the Service presents alternative theories to support a deficiency in a single year and the court sustains the deficiency based on one of the theories, but rejects another theory. The tax liability computed under the alternative theories may be different amounts. When the liability redetermined by the court is less than the amount contended under an alternative theory, it may be advisable to file an appeal or cross-appeal to sustain the greater tax.

When the alternative theories result in the same amount of tax, the proper course of action is to expand the taxpayer appeal letter to the Department of Justice by urging the department to continue the argument of the alternative theory rejected by the Tax Court or recommending a remand to the Tax Court to decide the alternative theory should the taxpayer prevail on appeal. A cross-appeal is not necessary since our alternative arguments can be raised on defense of the taxpayer's appeal notwithstanding rejection of the arguments by the Tax Court. Cross-appeals are only appropriate where the taxpayer has appealed an issue or issues and we wish to raise an issue or issues which, if successful, would increase the deficiency, not simply keep it as determined by the Tax Court.

When the Service has recommended to the Department of Justice that a case be appealed and the Solicitor General has not acted on the recommendation before the expiration of the time to file a notice of appeal, the Service will file a protective notice of appeal in a Tax Court case. See CCDM 36.2.6.2.2.

It may be necessary to consider protective action to preserve the Commissioner's interests in multiple petition cases when one taxpayer seeks an interlocutory appeal.

When protective action other than protective or cross-appeal is necessary, the attorney's reviewer should be consulted prior to beginning the assignment.

Not all cases in which a protective appeal situation could arise justify the filing of a protective appeal. Whipsaw cases are per se among those that often do not justify protective action.

In other whipsaw situations, protective appeals need not be filed where there is no appreciable possibility that the losing party could prevail on appeal. Judgment in these situations, considering the effort of the appeal, and the amount of revenue at stake, is required.

In certain whipsaw situations, the Service may take a position as to which taxpayer should prevail. In some situations, the Service expresses no preference.

While completing a favorable or adverse opinion review, or upon assignment of a taxpayer appeal, be alert to any circumstances that would indicate that the Commissioner should file a protective or cross-appeal. Consider any recommendation by Area Counsel for protective action.

If Area Counsel has not made a recommendation, and protective action might be necessary, contact the Area Counsel attorney who handled the case in the Tax Court and discuss the need to have the favorable decision and the adverse decision entered by the court at or very near the same time. Most appeals courts require the Government to actively prosecute a protective appeal, even where the taxpayer has not yet appealed. Simultaneous entry of decision prevents the premature prosecution of these appeals.

Once the decision to file a protective appeal or cross–appeal has been approved by the reviewer, prepare an appeal letter (see paragraph (6), below) and the notice of appeal for filing with the Tax Court. See CCDM 36.2.5.6, Notices of Appeal, and CCDM 36.2.6.2.2. Except to the extent set forth below, the procedures for filing protective notices of appeal and cross–appeals are governed by those sections. Sample notices of appeal are reproduced at Exhibit 36.4.1–5, Notices of Appeal — Tax Court. As a protective appeal generally involves multiple docket numbers, the attorney should pay particular attention to CCDM 36.2.5.6.1, Multiple Docket Numbers.

Filing the notice of appeal in a protective appeal:

Filing the notice of appeal in a cross-appeal:

Letter to Department of Justice regarding protective appeals in whipsaw situation. Prepare a letter to the Assistant Attorney General, Tax Division, Department of Justice, requesting authorization to file and prosecute an appeal for protective purposes only, and stating that the appeal should be dismissed if the taxpayer does not file an appeal in the related case. A sample letter is reproduced at Exhibit 36.4.1–22, Protective Appeal Letter. Review and approval of a protective appeal letter is the same as a regular Commissioner appeal letter. See CCDM 36.2.1.1, Preparation of Appeal Letters, and CCDM 36.2.6.2.2 .

If the taxpayer does not file an appeal in the related case, the attorney should contact the Department of Justice to determine whether any further action is required to effect the dismissal of the appeal.

If the taxpayer files a notice of appeal in the related case, prepare the appeal letter to the Department of Justice. In the appeal letter, the protective appeal should be noted and, if necessary, more detail of the office's position should be provided.

Communication with the Department of Justice regarding cross-appeals:

If an appeal is filed by the Commissioner or the taxpayer strictly for protective purposes, and the other party does not file a notice of appeal, the protective appeal should be dismissed.

The Associate Chief Counsel office, the Technical Services Support Branch and assigned attorneys should maintain records (including but not limited to TLCATS) showing the assessment status of all cases on appeal. The Area Counsel office should also maintain such records.

The procedures to be followed by Associate Chief Counsel attorneys and Area Counsel attorneys in completing their assessment responsibilities will vary depending on the classification of the case on appeal; i.e., Commissioner appeals, nonbonded taxpayer appeals, or bonded taxpayer appeals. The attorney should consult the sections below that are relevant to assessment in each type of case.

In general, the following steps are taken:

Master file assessments are eventually posted to the master file computer in Martinsburg, West Virginia, and appear on official transcripts of account. Nonmaster file assessments are relatively uncommon and are never posted to the master file.

Even though quick and prompt assessments (as well as jeopardy and termination assessments) may be either master file or nonmaster file transactions, they are all made by the nonmaster file unit at each Internal Revenue Service Campus and are typically referred to as manual assessments.

In quick and prompt assessments (as well as jeopardy and termination assessments), the person making the assessment request determines the date by which the assessment must be made. Associate Chief Counsel and Area Counsel attorneys can thus assure performance by a date certain.

Absent a statute of limitations expiration date (see CCDM 35.9.2.2, Time Limitation on Assessment) or a date specified by the requester, nonmaster file units are required to make quick and prompt assessments no later than the second next regular 23C date. Note, however, that posting of the transaction on the Martinsburg computer may not occur for several weeks even though the assessment has been made.

Preferred form of verification. When the field is notified that a non-TEFRA case has been appealed by the Commissioner or the taxpayer, the Associate Chief Counsel office requests verification that assessment has been made.

Verifying nonmaster file assessments. To verify these assessments, the attorney should call the contact person in the nonmaster file unit at the appropriate Internal Revenue Service Campus.

Exhibit 36.4.1–24, Contact Information for Service Centers, contains a list of contact persons for the Internal Revenue Service Campuses. The appropriate Internal Revenue Service Campus is the one at which the taxpayer filed the tax return for which a statutory notice of deficiency was issued and petitioned from, resulting in the Tax Court decision and the appeal.

The DLN is a 14-digit number (in some cases, 13-digit) that confirms the existence of an assessment. The DLN is generated at the time the assessment occurs. Since telephone assessment procedures are recommended in the field for non-TEFRA bonded taxpayer appeal cases, Area Counsel will generally obtain the DLN at the time of assessment and provide it to the Associate Chief Counsel attorney. See Exhibit 36.4.1–23, Interpreting a 14 or 13 Digit Document Locator Number (DLN).

To help the nonmaster file unit contact person locate the appropriate records, the attorney should provide the following information: taxpayers' name and address; taxpayers' social security number; type of tax; tax year or period; and approximate assessment date (such as a 23C date).

In non-TEFRA bonded taxpayer appeal cases, the Associate Chief Counsel attorney must verify the fact of assessment and the date of assessment. Absent a transcript this is done by interpreting the document locator number (DLN).

Transcripts of account showing master file assessments can be ordered through the Disclosure & Litigation Support Branch, Office of Associate Chief Counsel (P&A).

In Commissioner appeals and nonbonded taxpayer appeals, verification that the assessment has been made is not requested by or forwarded to the Associate Chief Counsel office. See CCDM 36.2.6.2.4.6 and CCDM 36.2.6.2.4.7.

For bonded taxpayer appeals, see CCDM 36.2.6.2.4.8.

This subsection describes the procedures for assessment in commissioner appeals.

This subsection describes the procedures for assessment in nonbonded taxpayer appeals for Associate Chief Counsel Attorneys and Area Counsel Attorneys respectively.

When an adequate bond is posted, assessment cannot be made as to any deficiencies, additional amounts and interest covered by the bond, nor can a refund be made of any overpayment found by the Tax Court, until the decision of the Tax Court becomes final. Once the decision of the Tax Court becomes final, the Service has only 60 days in non-TEFRA cases and one year in TEFRA cases in which to assess the tax (plus any additional time obtained through tacking).

Tax Court has jurisdiction to order the refund of an overpayment plus interest if the Service has failed to refund or credit the overpayment within 120 days after the decision of the Tax Court has become final. Because timely assessment and timely refunds depend on knowledge of when the Tax Court's decision becomes final, and because the finality of the decision depends upon the conclusion of the appellate proceedings and the date of such conclusion, it is imperative that the appellate proceedings be closely monitored.

In both Commissioner and taxpayer appeals (whether bonded or not), if there is a reversal or modification of the Tax Court's decision by the appeals court, a new decision must be entered by the Tax Court (unless the Supreme Court subsequently reverses the court of appeals and affirms the Tax Court's decision).

When the final appellate action in a case results in the need for the entry of a new decision, the case is transferred by the Associate Chief Counsel office to Area Counsel.

Area Counsel will assume jurisdiction of the case for purposes of any further Tax Court action and for assessment or abatement activity.

Once the Tax Court enters its new decision, assessment responsibility remains with Area Counsel as in the situation of nonappealed cases. See CCDM 36.2.5.12, Cases Remanded to the Tax Court/Recomputations.

The Associate Chief Counsel attorney is responsible for reviewing the appeal bond. See CCDM 36.2.6.2.1.2. If the bond is defective in any manner (e.g., amount, expiration date, surety not approved) the attorney should immediately bring this to the attention of his reviewer.

A decision will be made in the Associate Chief Counsel office as to whether a motion should be prepared requesting the Tax Court to order that the bond be remedied, or whether to notify the field to initiate assessment activity in the same manner as a nonbonded taxpayer appeal. In either event, the Associate Chief Counsel attorney will advise the Area Counsel attorney as to the appropriate action to be taken.

If the Tax Court decision has become final (i.e., the case has not been remanded to the Tax Court), a copy of the decision should be inserted at the top of the legal file, together with verification of assessment in non-TEFRA cases (a transcript of account) or, if applicable, a copy of the taxpayer's bond. In TEFRA cases, verification that Area Counsel sent a request to Appeals to make the necessary assessments should be included in the legal file.

Once the attorney's secretary has prepared the files for closing, they should be submitted to the attorney's reviewer, who will ensure that the files are in proper order. The files are then forwarded to the Disclosure & Litigation Support Branch of the Office of the Associate Chief Counsel (P&A). The Disclosure & Litigation Support Branch will complete Form 9253, Appellate Court Closing Memorandum, and transmit the files to the Records Section for further transmittal to the closed files area.

Form 9253, Appellate Court Closing Memorandum, is used by the Associate Counsel office to close cases to the appropriate Appeals office. The form is completed by the Disclosure & Litigation Support Branch, following instructions provided by the attorney with the legal and miscellaneous law files.

Generally, Form 9253 is directed to the chief of the Appeals office, with copies to the appropriate Area Director and Area Counsel. At the time of final closing, the Disclosure & Litigation Support Branch will distribute copies of the closing memorandum to the Technical Services Support Branch in the Office of Associate Chief Counsel (P&A), the Docket, Records & User Fee Branch of the division, and the responsible attorney. When the addressee Area Counsel office signs and returns a copy of the closing memorandum acknowledging receipt, the Technical Services Support Branch will make a record of the receipt and enter the date of closing on the records of the case. If receipt of the closing memorandum has not been acknowledged within 30 days of transmittal, the Technical Services Support Branch will follow up with a further request for acknowledgment, while forwarding a duplicate copy of the original closing memorandum.

General rule. With the exceptions listed in (2) and (3), below, all appealed Tax Court cases should be closed in the Associate Counsel office as soon as the Tax Court decision becomes final. See CCDM 36.2.5.3, Finality of Tax Court Decisions and Mandamus.

Cases dismissed on stipulation of the parties. Although the Tax Court's decision is technically not final until the expiration of the certiorari period, these cases should be closed immediately upon the entry of dismissal in the court of appeals.

Cases won completely by the taxpayer. Although the Tax Court's decision is technically not final until the expiration of the certiorari period, these cases should be closed upon notification that the Solicitor General has decided not to authorize the filing of a petition for writ of certiorari. See CCDM 36.2.2.1, Petition for Certiorari Generally.

TLCATS events. TLCATS will remind the Associate Chief Counsel attorney when to close a case. The due date to forward the files to the Disclosure & Litigation Support Branch or to Area Counsel (in remanded cases and bonded taxpayer appeals) is 110 days after the court of appeals decides the case. The 110-day period accounts for the 90-day certiorari period, plus a reasonable time for retrieving the legal file from the Department of Justice. On the 100th day, the attorney should call the Justice Department attorney who handled the case on appeal as a reminder to return the file(s). The Disclosure & Litigation Support Branch then has an additional 21 days to complete the formal closing.

The Associate Chief Counsel attorney should immediately take steps to close the case in the Associate Chief Counsel office once the following events have occurred:

Bonded taxpayer appeals are closed by transfer to the Counsel office that handled the case in the Tax Court. Closing is accomplished by transmitting the legal and miscellaneous law files to the office that handled the case in Tax Court, together with a transfer memorandum. Copies of the transfer memorandum should be directed to the appropriate Appeals office and Field Director's office. An Appellate Court Closing Memorandum, Form 9253, is prepared by the Disclosure & Litigation Support Branch in the Associate Chief Counsel (P&A) and sent to the appropriate appeals office, with copies directed to the appropriate Counsel office and Area Director. See CCDM 36.2.6.2.5.2 for provisions regarding Form 9253. When the memorandum and files are sent to Associate Area Counsel, the branch TLCATS operator will change the case status code on TLCATS to 44 (BONDED-PENDING COLLECTION).

A CDP case is returned to Collection after the case is closed by the Office of Appeals, Processing Service (APS), and the Transaction Code (TC) 520 is reversed by Appeals with the entry of a TC 521.

In appealed Tax Court CDP cases the Appellate Section of the Department of Justice Tax Division is responsible for litigating the appeal. The Office of Associate Chief Counsel ( P&A) attorney monitors the taxpayer’s appeal and is responsible for ensuring that the trial attorney assigned to the case receives timely notification when the Tax Court CDP decision is final. See CCDM 36.2.5.3 , Finality of Tax Court Decisions and Mandamus, for instructions on determining when a Tax Court decision is final. The trial attorney is then responsible for ensuring that the appropriate APS office receives timely notification.

See CCDM 36.2.6.2.5.5.3 for additional instructions on what must be provided to APS upon notification that the Tax Court CDP decision is final. When APS receives notification that the Tax Court CDP decision is final, the appealed case is closed and the freeze code is reversed, allowing collection to resume.

Special attention should be paid to closing whistleblower cases. Unlike other Tax Court cases, whistleblower cases are closed to the IRS Whistleblower Office, not the Office of Appeals.

The P&A attorney should immediately take steps to close the case in the Associate Chief Counsel office once the Tax Court decision has become final. See CCDM 36.2.5.3, Finality of Tax Court Decisions and Mandamus. Note that remanded cases are closed by transfer to the Area Counsel office that handled the case in the Tax Court.

The P&A attorney should regularly check the court of appeals docket sheets (accessed by PACER) to monitor whether a judgment or order has been issued. Thereafter, the P&A attorney should monitor the judgment or order to determine when it is final.

Once a final judgment or order has been issued, the P&A attorney should call the attorney in the Tax Division Appellate Section (DOJ attorney) assigned to the case to confirm the finality of the court of appeals decision and that no petition for rehearing or cert was filed. During this call, the P&A attorney should ask whether the DOJ attorney has the Whistleblower Office’s administrative claim file. Finally, during the call, the P&A attorney should request that the DOJ attorney immediately route the legal files and administrative claim file (if in their possession) to the P&A attorney for closing.

After receiving a closing letter and the files from the DOJ attorney, the P&A attorney should compile one legal file with non-duplicate documents placed in reverse chronological order. If the DOJ legal files or the closing letter are missing, contact the DOJ attorney.

If the DOJ attorney provides the IRS Whistleblower Office’s administrative claim file, then the P&A attorney should immediately route the administrative claim file back to the IRS Whistleblower Office. If the DOJ attorney does not provide the administrative claim file, then the P&A attorney should contact the Area Counsel office that handled the case in Tax Court. The P&A attorney should notify the Area Counsel attorney that the case is final and ask that the Area Counsel attorney immediately route the administrative claim files back to the IRS Whistleblower Office.

When sending the administrative claim file to the IRS Whistleblower Office, the appropriate Chief Counsel attorney must include a copy of the Tax Court decision, including any opinion, a copy of the final judgement or order of the court of appeals, including any opinion, and, if applicable, a copy of the Supreme Court order mandate issued after the petition for a writ of certiorari is granted.

The IRS Whistleblower Office will not process the payment of an award until all appeals of the Whistleblower Office’s determination are final. See Treas. Reg. § 301.7623-4(d)(1). The IRS Whistleblower Office depends on the Office of Chief Counsel to return the IRS Whistleblower Office’s administrative claim file when the appellate litigation concludes and to confirm when any appeals of the IRS Whistelblower Office’s determination are final.