A refund or credit subject to Joint Committee review can arise from an examination, or tentative allowances in excess of the jurisdictional amount.

House of Representative’s bill (H.R. 5771) was signed by the President and became law effective December 19, 2014 to increase the JC threshold for C Corporations. The jurisdictional amount for C Corporations is in excess of $5 million and for all other taxpayers the jurisdictional amount is in excess of $2 million.

The JCT staff attorneys (also known as Refund Counsel) will review the Joint Committee report and other documentation as deemed necessary. Should the staff attorney have questions, they are usually resolved informally through phone calls or e-mails. In some instances, a written inquiry may be issued. In the event the JCT disagrees with or questions the position taken in the report, the case is not finalized and remains open pending resolution of the questioned items. The JCT will issue either a clearance letter or Staff Review Memorandum (SRM) upon completion of their review.

The authority for Joint Committee procedures is covered under the following:

The Appeals Technical employee (ATE) is responsible for determining whether the case is required to be submitted to the Joint Committee on Taxation (JCT), and preparing the required documents for review by the JCT. The Taxpayer Bill of Rights, Pub 1, Your Rights as a Taxpayer, applies to ATEs’ interactions with taxpayers.

The Appeals Joint Committee Program Analyst (AJCPA) is responsible for:

See the table below for the most common acronyms in this IRM section:

Appeals is responsible for preparation of the report to the JCT in cases under its jurisdiction. For example, where a tentative allowance under IRC 6411 has been made for years under Appeals jurisdiction, a determination as to the correct amount of the carryback may be made prior to preparation of the JC report for the carryback years in Appeals. If so, the report made by Appeals to the JCT should be based on the correct amount of carryback. See IRM 8.7.9.6.1.3, Appeals/Compliance Case Procedures.

IRC 6405 requires that refunds or credits in excess of $2,000,000 ($5,000,000 for C corporations) must be reported to the JCT. Therefore, normally, no settlement should be made effective until receipt of notice that the JCT has no objection to the proposed overpayment. See IRM 8.7.9.6.5, Agreements (other than Closing Agreements) on JC Cases, and IRM 8.7.9.6.6, Closing Agreements Related to JC Cases. See IRM 8.7.9.6.7, Communications with the Taxpayer on JC Cases, for a discussion of letters to be sent to the taxpayer when the case is submitted to the JCT and after clearance is received from that office.

Appeals is not responsible for JC reports in docketed cases under Counsel's sole jurisdiction. However, Appeals must consider all JC reports sent to Counsel before any settlement is finalized. This is true regardless of who submitted the JC report or who made an inquiry to the JCT. Such reports are prepared and processed by Counsel. Appeals will furnish Counsel additional information with respect to issues on which Appeals obtained agreement. To the extent such information can only be furnished by Compliance, Appeals will so advise Counsel.

Appeals should seek clearance from the JCT before sending cases to Counsel. If this is not possible due to time constraints, cases transferred to Counsel which will require JCT approval before final disposition, or have potential for such requirement, will be identified on Form 5402, Appeals Transmittal and Case Memo, item 2, Special Features.

Appeals is responsible for the preparation of supplemental reports on all reconsidered cases transferred from Compliance as the result of an informal inquiry or a Staff Review Memorandum (SRM) from the JCT.

On any case which is determined to require a JC report, the ATE assigned the case must update the Feature Code to "JC" . This will help avoid selecting cases later for reporting to the JCT as large deficiency cases which have already been reported to the JCT as refund cases (where the case initially included proposed deficiencies when received in Appeals). Cases are not to be reported as both refund and as large deficiency cases.

If it is discovered that an overpayment under IRC 6405 in excess of $2,000,000 ($5,000,000 for C corporations) has been refunded without a report to the JCT, prepare a report as soon as possible. This must be done even though the statutory period of limitations has expired for one or more years. Explain the failure to submit a timely report in the JC letter, and submit the explanation to the applicable Area Director.

Consents are ordinarily obtained where the period of limitations expires in less than 180 days from date of submission of a report to the JCT. Counsel should be consulted concerning cases with previously executed restricted consents. Do not use restricted consents in JC cases.

In cases where there is no reasonable prospect of a deficiency, a statutory notice is not arbitrarily issued. Taxpayers will usually cooperate and sign a consent if the reason is explained. If a consent is unnecessary for a related or reference return in the file, prepare a memorandum (or other approved form such as Form 10495, Memorandum Regarding Statute) for the file setting out the facts. Attach the original of the memorandum to the return and the ATE will update ACDS with the correct statute information upon receipt of the signed Form 10495.

As in other cases under its jurisdiction, Appeals is responsible for protecting the period of limitations in JC cases, including the time the report is with the Appeals JC Program Analyst or the JCT. Appeals maintains a follow-up system to ensure that an assessment period does not expire while the report is being reviewed outside the office.

When Appeals first determines a case will require a report to the JCT, the ATE assigned the case will request a transcript for years subject to JC review, if none is in the file.

Do not prepare a statement of account for a JC case except where required for reasons other than JC status. See IRM 8.17.3.2, Explanation of the Statement of Account.

If Form 870-AD, Form 890-AD, Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and of Acceptance of Overassessment, or similar type AD agreement is used in a JC case, the following paragraph is ordinarily typed on the agreement: "Accepted as of the date the Joint Committee on Taxation completes its review without objection or the date accepted for the Commissioner, whichever is later."

If a Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment or Form 890, Waiver of Restrictions on Assessment and Collection of Deficiency and Acceptance of Overassessment - Estate, Gift, and Generation - Skipping Transfer Tax, type agreement is the agreement used in a JC case, the following paragraph is ordinarily typed on the agreement: "This agreement is submitted to take effect on the date the Joint Committee on Taxation completes its review without objection."

If Appeals action is based on mutual concessions and would have produced a deficiency for the carryback year, prior to considering the carryback provisionally allowed by Appeals, a Form 870–AD will be secured showing zero deficiency with a footnote reflecting the amount of deficiency before provisional allowance of the carryback.

Do not obtain Form 2297, Waiver of Statutory Notification of Claim Disallowance, in a JC case until the JCT has released the case unless the Form 2297 is modified as follows: "This waiver takes effect on the same date the agreement form (fill in appropriate form number) used in this case becomes effective."

The date the JCT completes its review will be the date of the clearance letter that is forwarded to Appeals.

In Fast Track Settlement (FTS) cases, the Service will report a proposed settlement reached as a result of FTS to the JCT in accordance with IRC 6405. The taxpayer acknowledges that the Service may reconsider a proposed settlement, as reflected in a signed FTS Session Report, upon receipt of comments on the proposed settlement from the JCT (Rev. Proc. 2003-40).

Closing agreements must not be executed on behalf of the Service until after the "report and wait" requirements of IRC 6405 have been met. Therefore, do not execute any closing agreement on behalf of the Commissioner until after the JCT clears the case.

In any case under Appeals jurisdiction requiring a report to the JCT which includes a closing agreement as to determination of tax liability; a determination covering specific matters; or a combined agreement, indicate in the report the tentative approval of the closing agreement. Submit proposed agreements with the JCT report. If the JCT takes no exception to the report, the Appeals official signs the closing agreement. Also submit a copy of any closing agreement that arose out of any prior examination of the reported years.

If the case in Appeals does not require a JC report, but the closing agreement affects a case which is or will be reported to the JCT, advance review of the closing agreement may be requested using an informal procedure with a cover memo explaining the reasons for the request. A copy of the closing agreement and the ACM discussing the issue should be submitted with the cover memo. See IRM 8.7.9.6.1.5, JC Review Before Case is Closed - Advance Review Request. The JCT will normally transmit their concurrence with the closing agreement and issue settlement by encrypted e-mail.

DO NOT enter into a closing agreement on an early referral case without concurrence from the JCT if there is a potential that the primary case will require a JC report. (Rev. Proc. 99-28.) See IRM 8.7.9.6.1.5 for discussion of instructions for JC advance review requests.

DO NOT enter into a closing agreement on any related affiliate or related tax year, not subject to JC review, where the execution of a closing agreement will have an effect on a JC case (regardless of where jurisdiction of the JC case resides), until the JC case has been reviewed by the JCT.

If the closing agreement relates to a proposed distribution from a DISC under IRC 992(c), or from resolution of a COLI issue, a request for expedited JC review may be made in a cover memo explaining the reasons for the request. See IRM 8.7.9.6.1.5.

For post-Appeals mediation issue resolution on cases subject to JC review, Appeals will not enter into a closing agreement without concurrence from the JCT (Rev. Proc. 2009-44, 2009-2, C.B. 462). Also, do not enter into a closing agreement on any related affiliate or related tax year, not subject to JC review, where the execution of the closing agreement will have an effect on a JC case, until the JCT has completed its review.

DO NOT execute a closing agreement on an "expedite" refund Appeals case until notification of the JC clearance has been received.

Appeals should not enter into a closing agreement on a JC case when Competent Authority is involved in the case. In addition, when Competent Authority is involved in a JC case, the Competent Authority official must be notified that JCT review of the closing agreement is required before executing the closing agreement on behalf of the Service.

After the report is forwarded to the JCT, the ATE assigned the case informs the taxpayer that the case has been reported by mailing Letter 1594.

Upon receipt of the clearance letter from the JCT, the Appeals JC Program Analyst will send a copy of the JC clearance letter by encrypted e-mail to the ATE listed as the contact on the JC letter.

Upon receipt of the JC clearance letter, the ATE informs the taxpayer that the JCT has taken no exception to the conclusions reached by the Service by mailing Letter 1537, Joint Committee No Exception.

Letter 1594, and Letter 1537 should be prepared on APGolf; however, see Exhibit 8.7.9-12, Sample Letter 1594(CG) - JC Submission, and Exhibit 8.7.9-13, Sample Letter 1537(CG) - JC No Exception. These two exhibits contain samples of these letters.

If the processing of the case is delayed, the ATE should provide the taxpayer with the reasons for the delay and provide periodic updates. The time, method and nature of the information to the taxpayer is discretionary. See IRM 8.7.9.10.2.1, SRM Procedures and Tracking - Response Required.

Reports to the JCT involving individual taxpayers or aliens admitted to permanent U.S. residence are disclosures to third parties under provisions of the Privacy Act of 1974. This also applies to disclosures of tax return information of an individual taxpayer or aliens admitted to permanent U.S. residence when sent with a report involving a corporate taxpayer.

Use Form 5482, Record of Disclosure, to account for disclosures (involving individual taxpayers or aliens admitted to permanent U.S. residence) to the JCT. Form 5482 is also required for deceased taxpayers.

A disclosure concerning an individual taxpayer or alien admitted to permanent U.S. residence occurs when Appeals signs, dates, and forwards the JC report. At this point, Form 5482 is completed recording the requested information pertaining to the taxpayer upon whom the disclosure is being made. After this information is recorded, annotate the case file to show the means used to account for the disclosure.

When completing the Form 5482, see instructions below:

See below for sample language for block 4 of Form 5482:

An electronic copy of the Form 5482 will be forwarded to the Appeals JC Program Analyst (AJCPA) by encrypted e-mail with the JCT report submitted for review. (See IRM 8.7.9.8.5, Review and Approval by Appeals JC Program Analyst (AJCPA)). The AJCPA will retain the Form 5482 in a separate file for the prescribed five years.

A copy of the Form 5482 will also be retained with the administrative file.

Additional information can be found in IRM 10.5.6.7, Privacy Act Accounting for Disclosures (formerly IRM 11.3.19).

This subsection covers procedures for working JC cases.

If a refund or credit has been reported to the JCT and a further overpayment in the same taxable year is determined, no additional report is required unless the further refund or credit also exceeds $2,000,000 ($5,000,000 for C corporations) Check to determine whether the prior year’s refund was subject to the $5,000,000 rule. If a refund or credit previously allowed did not require a report to the JCT, it is not combined with a subsequent refund or credit for determining JC jurisdiction.

A supplemental report covering the final resolution of unagreed issues pursuant to IRM 8.7.9.8.1.3, Supplemental Report, paragraph (2) is required regardless of the amount. The $2,000,000 ($5,000,000 for C corporations) minimum does not apply.

If a refund or credit has been reported to the JCT and a deficiency in the same taxable year is subsequently determined, no additional report is required to report any adjustments that reduce the previously reported refund or credit.

The amounts proposed for allowance to each separate taxpayer provide the basis for determining whether the case requires a report to the JCT. Overpayments proposed in other related cases do not enter into the computation. A deficiency determined in the case of one taxpayer is not to be offset against an overpayment determined in the case of another taxpayer, even though the changes resulted from the shifting of income or deductions from one taxpayer to the other.

If IRC 6405(b) refunds or credits stemming from carrybacks under IRC 6411 tentative allowances do not exceed $2,000,000 ($5,000,000 for C corporations)when added together, they are not aggregated with and reported with IRC 6405(a) refunds. Similarly, IRC 6405(a) refunds or credits not exceeding $2,000,000 ($5,000,000 for C corporations) , when added together, are not to be aggregated with or reported with IRC 6405(b) refunds. The interpretation of this paragraph is illustrated by the following examples:

Overpayments requiring JC review should be combined for the same taxpayer where the overpayment years are currently under Appeals jurisdiction in the same work unit. If overpayments or deficiencies have been proposed for the same taxpayer involving other years outside Appeals jurisdiction, such overpayments or deficiencies should not be considered for purposes of the current Appeals JC report.

In determining JC jurisdiction, reduce a credit or refund tentatively allowed under IRC 6411 by any agreed deficiency subsequently determined for that year and by partial agreements secured by Compliance for that year when forwarding the case to Appeals.

The finally determined IRC 6405(b) amount (tentative allowance) is not combined with any IRC 6405(a) amount (other refund). Each is kept separate for purposes of determining JC jurisdiction.

The examples below demonstrate different situations.

In multiple-year cases where there is a net deficiency (i.e., the total deficiencies exceed the total of all IRC 6405 refunds), no report is required.

The computations of separate jurisdictional limits for IRC 6405(a) and IRC 6405(b) amounts may be illustrated by the following example:

A similar computation can be made for IRC 6405(c) refunds if applicable.

Multiple year net assessment cases which include deficiencies require a special three step computation to determine which, if any, refund years must be reported.

The three steps are applied separately for each refund type and include:

For example, where multiple years are within the same Appeals work unit, assume the following:

See IRM 8.7.9.7.6 for additional information.

In determining jurisdiction under IRC 6405, Appeals may offset a taxpayer's agreed deficiency for one year against an overpayment for another year open in Appeals, even in a different work unit if closing at the same time, to determine whether there is a net refund or credit in excess of $2,000,000 ($5,000,000 for C corporations) . See IRM 8.7.9.6.9.4, Unagreed Deficiency JC Cases, which covers when a notice of deficiency is issued for an unagreed deficiency year. For work units not closing at the same time, there is no reason to delay a closing (and a report to the JCT).

The ordering procedure for offsetting agreed deficiencies against refunds is as follows:

A spreadsheet that computes jurisdictional amounts is available on the Appeals Technical Suppport SharePoint site: Joint Committee Netting Spreadsheet.

See examples below:

In determining jurisdiction under both IRC 6405(a) and IRC 6405(b), all open years under Appeals jurisdiction for the same taxpayer and closing at the same time should be considered one case/work product for the purpose of determining JC jurisdiction, regardless of the way in which Appeals work units are structured.

For .IRC 6405(a) only, if a determined overpayment in one tax results in an agreed deficiency in any other tax for the same taxable year, the deficiency should not be applied as an offset in determining the jurisdiction amount. No such limitation applies to IRC 6405(b) offsets.

Include a refund or credit of previously assessed and paid penalty or interest (do not include an abatement of unpaid penalty or interest) in determining whether an overpayment exceeds $2,000,000 ($5,000,000 for C corporations). For example, report a case involving an overpayment of tax of $1,800,000 and an overpayment of previously assessed and paid interest of $202,000 since the total exceeds $2,000,000.

The interest must be the same interest that was previously assessed and paid. If the tax reduction is caused by a tentative carryback, then the interest is not included.

A refund of previously assessed and paid interest in excess of $2,000,000 ($5,000,000 for C corporations) with no reduction in tax also requires a JC report.

Report a refund or credit of estate tax in excess of $2,000,000 to the JCT if it results from a credit allowed for estate, inheritance, legacy, or succession taxes paid to a state, District of Columbia, or a possession of the United States, or allowed for death duties paid to a foreign country.

IRC 6405(c) permits refunds or credits in excess of $2,000,000 ($5,000,000 for C corporations) attributable to a disaster in an area proclaimed by the President of the United States to be made prior to submitting a report for JC review.

However, the report is only prepared and submitted after the correct amount of tax is determined if the net refund or credit remains in excess of $2,000,000 ($5,000,000 for C corporations).

The following are the various types of reports that are submitted to the JCT:

Examples of these reports can be found in Exhibit 8.7.9-2 through Exhibit 8.7.9-9.

Only the years affecting a refund or credit are included in the report to the JCT.

If a year under JC jurisdiction has been surveyed or examined but not appealed, include as an attachment to the JCT report a copy of the RAR or survey report.

Separated years:

The following subsections regarding format apply to all JC reports. There are a few exceptions to the general format. See IRM 8.7.9.8.1.1, Expedite Refund Request Report, and IRM 8.7.9.8.1.6, Large Deficiency Case Report.

For consistency purposes, the documents submitted to the JCT as part of the JC report and attachments, must be assembled and submitted in a specific order as detailed in IRM 8.7.9.8.4.1, Refund Reports Assembly, and IRM 8.7.9.8.4.2, Large Deficiency Case Reports Assembly.

For additional information and description of the attachments, see IRM 8.7.9.8.4.4, Attachments to JC Report.

See Exhibit 8.7.9-1, Appeals Joint Committee Case Report Package Checklist. This checklist will aid in the assembly of the report package.

Once the refund or large deficiency report has been completed, but prior to mailing, use encrypted e-mail to send electronic copies of the following documents to the Appeals JC Program Analyst (AJCPA) for review and approval:

The AJCPA will review the report.

Notify the AJCPA of the shipped date when the package is prepared for shipping. This and other information from the report are captured and input into a database. From the database, the AJCPA will create and send an export file to the JCT on or before they receive the JCT package. This information will be maintained on an Excel spreadsheet on the Joint Committee SharePoint site.

See IRM 8.7.9.8.7, Mailing of JC Reports, for addresses and shipping instructions.

The AJCPA will also address questions concerning JC issues and procedures. The AJCPA will document all questions on a separate email that will include:

The AJCPA will run periodic reports to monitor all JC cases in Appeals to ensure all cases subject to JC procedures are submitted timely to the JCT.

Once the AJCPA has reviewed the report (refund and large deficiency) and granted permission to ship, the report will be signed and dated. The JC package will be assembled in accordance with IRM 8.7.9.8.4, Assembly of JC Reports.

The contact name, telephone and fax numbers and return mailing address of the ATE submitting the case are included on Form 4081. The form can be generated in APGOLF, and is also available on the publishing catalog website.

The Form 4081 is addressed with the same address as the shipping label. See IRM 8.7.9.8.7.1, Form 4081 Transmittal Memorandum.

The JC report address is similar, but different from the shipping address because the report address includes the appropriate title for the Joint Committee on Taxation:

Following submission of a report to the JCT, the ATE named in the report as the contact person will keep a copy of the JC report and any related papers such as the ACM and the examiner's report until notified that the JCT has released the case.

Generally, the JCT does not return any submitted information back to Appeals once they have completed their review of a case. Therefore, if any case related item, document, file, etc., such as an original agreement form or the return, is provided to the JCT and is vital to processing and closing the case, either:

This subsection covers the ATE and AJCPA procedures for submiting JC reports, including the preparation of Form 4081..

The TCS will prepare computations to determine jurisdictional limits under IRC 6405(a), IRC 6405(b), and IRC 6405(c) as follows:

The JC report must specify the basis for refunds or credits. So to the extent refunds or credits result from carrybacks and carryovers, the TCS will prepare a list of net operating loss deductions, alternative tax net operating loss deductions, capital loss carrybacks and credit carrybacks in an exhibit. See Exhibit 8.7.9-14, Information for Joint Committee Report, for illustration.

TCS will prepare a spreadsheet for regular tax.

The TCS will also prepare a spreadsheet for AMT tax even if AMT does not apply.

These spreadsheets are not required for:

Pages - Joint Committee has the following Excel spreadsheets available:

The Appeals JC web site also has a link to the LB&I Joint Committee website: Exam Procedures Knowledge Base - JointCommitteeCases.

The LB&I Joint Committee web site has Excel spreadsheets available, located at Joint Committee Spreadsheet:

The LB&I Joint Committee web site also has a tutorial on how to prepare the regular tax JC spreadsheet, and a JC CPE Centra session is also available.

If Appeals closes a JC case without waiting for a loss/unused credit year to be examined, and a carryback from that loss/unused credit year is provisionally allowed, the settlement computation should contain the following modification: "The net operating loss deduction or other loss or credit carryback reflected herein which gave rise to the tentative allowance of $________ is provisionally allowed and is subject to change upon examination of the returns of the loss year or unused credit year."

For any refund or credit where expedited refund procedures are applicable, include the following paragraph in the settlement computation: Any refund or credit contained in these findings may be assessed as a deficiency without issuing the notice referred to in IRC 6212(a) and collected if the Service should redetermine tax liability after Joint Committee review.

There are times when it may be necessary for the JCT staff attorney to contact the Appeals employee who submitted the JCT report for additional information or clarification regarding items in the report. When this type of contact is made by telephone or e-mail, it is considered an informal inquiry.

These inquiries will be treated with the highest priority. Appeals will cooperate with the staff attorney to the fullest extent to resolve any questions raised. Responses may be made by telephone or by e-mail. E-mail responses should be encrypted. Do not use the taxpayer's name in the "Subject" line. The taxpayer's name should only appear in the body of the message.

Normally, this type of response does not involve a significant delay and will not require contact with the taxpayer. A premature contact with the taxpayer could convey the impression that the JCT is having serious problems with reviewing and clearing the JC report. However, see IRM 8.7.9.10.2.1, SRM Procedures and Tracking - Response Required, paragraph (6), if a lengthy delay may be involved.

Occasionally, the JCT will issue a Staff Review Memorandum (SRM). This is a formal inquiry from the Chief of Staff, JCT to the Chief, Appeals and may or may not require a formal response from the Chief, Appeals back to the Chief of Staff, JCT.

There are various reasons for issuance of SRMs which may include:

The SRM will indicate whether any action is required. The ATE must consider and respond to all issues raised by the JCT even if the case is currently in Counsel’s jurisdiction. If the JCT expects a reply, the memo will include the following or similar statement: "We will keep our file open and await your reply before final disposition of this case." See IRM 8.7.9.10.2.1., SRM Procedures and Tracking - Response Required.

If the JCT staff identifies an issue not worked in Appeals, Appeals will notify the originating function by notating in the "Remarks" section of the Form 5402 the issues and concerns raised by the JCT:" Note to Examining Function: the JCT in its SRM raised a new issue that was not considered by Appeals. See Note in the attached Appeals Case Memo for your future consideration. No response to Appeals is required."

If the JCT has completed their review and does not expect a reply, the memo will include this statement: "No reply is requested, and we are closing our files on this case." This is a form of a release/clearance letter and Appeals may close or process its case when received.

Generally, any IRS records generated during an examination or other process giving rise to the credit or refund should be considered agency records subject to the Freedom of Information Act (FOIA).

Informal or formal correspondence, including e-mail, from the JCT should also be considered agency records subject to FOIA but should not be released to the taxpayer without the permission of the JCT. If the JCT communication contains a legend that says the document should be treated a Congressional record and is beyond the scope of FOIA, it should be treated as such.

See IRM 11.3.13.3.4, , Joint Committee on Taxation, for further information.

If Appeals requests on its own initiative withdrawal of a report from JC consideration, the request should be sent to the AJCPA. Reasons for request to withdraw after a report has been submitted may include:

If the views of the JCT expressed in a formal or informal request are adopted by Appeals and result in adjustments (or proposed adjustments) which reduce the proposed refund or credit to $2,000,000($5,000,000 for C corporations) or less, the case will still be under JC jurisdiction. In this case, submit a supplemental JC report explaining that the refund is now below the jurisdictional amount and wait for JC clearance of such report. It cannot be withdrawn. If a notice of deficiency is prepared, follow procedures previously discussed. See IRM 8.7.9.6.9.4, Unagreed Deficiency JC Cases and IRM 8.7.9.10.2, Formal Inquiries from the JCT - Staff Review Memorandum(SRM).