IRS REVISES PROCEDURES FOR ISSUING TECHNICAL ADVICE BY ASST. COMMISSIONER (EP/EO).

Rev. Proc. 91-5

                          TABLE OF CONTENTS

This revenue procedure explains when and how the Assistant Commissioner (Employee Plans and Exempt Organizations) gives technical advice to Key District Directors and Chiefs of Appeals Offices in the employee plans areas (including actuarial matters) and exempt organizations areas. It also explains the rights a taxpayer has when a Key District Director or a Chief, Appeals Office requests technical advice regarding a tax matter.

The term Key District Director means the District Director of one of the 7 key district offices set forth in section 4 of Rev. Proc. 90-27, 1990-1 C.B. 514. Any reference in this revenue procedure to the Chief, Appeals Office includes the Associate Chief, Appeals Office. In addition, any reference to EP/EO means Employee Plans and Exempt Organizations.

SEC. 2. WHAT IS TECHNICAL ADVICE?

Technical advice is guidance provided by the National Office to Key District and Appeals Offices. It answers technical or procedural questions those offices may have as they interpret or apply tax law, tax treaties, regulations, revenue rulings, notices or other precedents published by the National Office to a specific set of facts. Technical advice may be requested during any proceeding that includes (1) the examination of a taxpayer's return, (2) consideration of a taxpayer's claim for refund or credit, (3) a request for a determination letter, or (4) any other matter involving a specific taxpayer under the jurisdiction of the Chief, EP/EO Division or Chief, Appeals Office.

Technical advice requests may also be considered during the processing and consideration of nondocketed cases in an Appeals Office. However, technical advice requests do not include cases in which the issue in the case is in a docketed case for that year or for any prior or subsequent year.

Technical advice is furnished as a way of helping Service personnel close cases and establish and maintain consistent holdings throughout the Internal Revenue Service. A Key District Director or an Appeals Office may raise an issue in any tax period, even though technical advice may have been asked for and furnished for the same or a similar issue for another tax period. Technical advice does not include memoranda on matters of general technical application furnished to Key District or Appeals Offices when the issues are not raised in connection with a proceeding involving a specific taxpayer.

SEC. 3. ON WHAT ISSUES MAY OR MUST TECHNICAL ADVICE BE REQUESTED UNDER THIS PROCEDURE?

01 The instructions of this revenue procedure apply to requesting technical advice on any issue under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations).

02 If a Key District Director, Chief, Appeals Office, or a taxpayer requests technical advice on a determination letter under section 521 of the Code, the procedures under this revenue procedure and Rev. Proc. 90-27, 1990-1 C.B. 514, as well as section 601.201(n) of the Statement of Procedural Rules, must be followed.

03 Requests for technical advice are encouraged on any technical or procedural questions arising in connection with any case of the type described in section 2 at any stage of the proceedings in the Key District or Appeals Office that cannot be resolved on the basis of law, regulations, or a clearly applicable revenue ruling or other published precedent.

04 Aside from the exemption application cases covered by the requirements of Rev. Proc. 90-27, Key District and Appeals Offices are required to request technical advice on their exempt organization cases concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. Regarding employee plans matters, a request for technical advice is required on cases concerning (1) proposed adverse or proposed revocation letters on collectively- bargained plans, (2) plans for which the Service is proposing to issue a revocation letter because of certain fiduciary actions that violate the exclusive benefit rule of section 401(a) of the Code and are subject to Part 4, Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, Pub. L. 93-406, 1974-3 C.B. 1, 43, (3) amendments to defined contribution plans pursuant to Rev. Proc. 83-41, 1983-1 C.B. 775, as modified by Rev. Proc. 88-5, 1988-1 C.B. 587, in connection with a waiver of the minimum funding standards and a request for a determination letter (See section 15 of Rev. Proc. 91-10, 1991-5 I.R.B.), or (4) termination/reestablishment and spinoff-termination cases in which the Key District Office proposes that the Implementation Guidelines are not applicable.

SEC. 4. ON WHAT ISSUES MUST TECHNICAL ADVICE BE REQUESTED UNDER DIFFERENT PROCEDURES?

01 The procedures for obtaining technical advice on issues (other than farmers' cooperatives) under the jurisdiction of the Associate Chief Counsel (Technical) including shipowners' protection and certain homeowners' associations are contained in Rev. Proc. 91- 2, 1991-1 I.R.B. 38.

02 Procedures for obtaining technical advice on specific issues involving the interpretation or application of the federal income tax laws and income tax treaties relating to international transactions are contained in Rev. Proc. 87-5, 1987-1 C.B. 535, as modified by Rev. Proc. 88-4, 1988-1 C.B. 586.

03 Procedures for obtaining technical advice specifically applicable to federal alcohol, tobacco, and firearms taxes under subtitle E of the Internal Revenue Code are under the jurisdiction of the Bureau of Alcohol, Tobacco and Firearms.

04 Technical advice procedures regarding excise taxes (other than excise taxes imposed under Chapters 41, 42 and 43 of the Internal Revenue Code), and employment taxes that employee plans and exempt organizations are subject to, are set forth in Rev. Proc. 91- 2, 1991-1 I.R.B. 38.

SEC. 5. WHO IS RESPONSIBLE FOR REQUESTING TECHNICAL ADVICE?

01 The Key District Director or Chief, Appeals Office determines whether to request technical advice on any issue being considered. Each request must be submitted through channels and signed by a person who is authorized to sign for the Key District Director or Chief, Appeals Office.

02 While a case is under the jurisdiction of a Key District Director or Chief, Appeals Office, a taxpayer may request that an issue be referred to the National Office for technical advice.

03 Taxpayers may also request technical advice when seeking an extension of time fixed by regulations for making an election or application for relief pursuant to section 1.9100-1 of the Income Tax Regulations. See section 8.08 of this revenue procedure for additional information.

SEC. 6. WHEN SHOULD TECHNICAL ADVICE BE REQUESTED?

01 Technical advice should be requested when there is a lack of uniformity regarding the disposition of an issue or when an issue is unusual or complex enough to warrant consideration by the National Office.

02 The provisions of this revenue procedure apply only to a case under the jurisdiction of a Key District Director or Chief, Appeals Office. Technical advice may be requested on issues considered in a prior Appeals disposition, not based on mutual concessions for the same tax period of the same taxpayer, if the Appeals Office that had the case concurs in the request. A Key District Director may not request technical advice on an issue if an Appeals Office is currently considering an identical issue of the same taxpayer (or of a related taxpayer within the meaning of section 267 of the Code or a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504). A case remains under the jurisdiction of the Key District Director even though an Appeals Office has the identical issue under consideration in the case of another taxpayer (not related within the meaning of section 267 and 1504, respectively) in an entirely different transaction. With respect to the same taxpayer or the same transaction, when the issue is under the jurisdiction of an Appeals Office, and the applicability of more than one kind of tax is dependent upon the resolution of that issue, a Key District Director may not request technical advice on the applicability of any of the taxes involved.

03 All requests for technical advice should be made at the earliest possible stage of the proceedings.

SEC. 7. WHAT MUST BE INCLUDED IN THE REQUEST?

01 Whether initiated by the taxpayer or by a Key District or Appeals Office, a request for technical advice must include the issues for which technical advice is requested, a clear statement of applicable law and the arguments in support of both the Service's and the taxpayer's position on the issue or issues.

Taxpayers are encouraged to make written requests that set forth the facts, law, and argument on the issue, and reasons for requesting National Office technical advice. They are encouraged to comment on any legislation, tax treaties, regulations, revenue rulings, revenue procedures, or court decisions contrary to the taxpayer's position.

02 The text of a technical advice memorandum may be open to public inspection under section 6110 of the Code. The Service deletes certain information from the text before it is made available for inspection. To help the Service make the deletions required by section 6110(c) of the Code, the taxpayer should provide a statement indicating the deletions desired.

A taxpayer who wants only names, addresses, and identifying numbers deleted should state this in the request. A taxpayer who wants more information deleted should submit a separate document indicating those deletions. The document must be accompanied by a copy of the request and supporting documents on which the taxpayer should bracket the material to be deleted. The deletions statement must indicate the statutory basis, under section 6110(c), for each proposed deletion.

The deletions statement must not appear or be referred to anywhere in the request for technical advice. If the taxpayer decides to ask for additional deletions before the technical advice memorandum is issued, additional deletion statements may be submitted.

The taxpayer should follow these same procedures to propose deletions from any additional information submitted after the initial request.

03 Form 5565, Request for Technical Advice -- EP/EO, should be used for transmitting requests for technical advice to the National Office to the addresses listed below.

     Requests from Key District Directors

SEC. 8. HOW ARE REQUESTS HANDLED?

01 Regardless of whether the taxpayer or the Service initiates the request for technical advice, the Service will notify the taxpayer that technical advice is being requested and will give the taxpayer a copy of the arguments that were provided to the National Office in support of its position, except as noted in section 8.07.

If the EP/EO Specialist or the Appeals Officer initiates the action, the Service will give the taxpayer a copy of the statement of the pertinent facts and the questions proposed for submission to the National Office.

02 When notifying the taxpayer that technical advice is being requested, the Service will also tell the taxpayer about the right to a conference in the National Office if an adverse decision is indicated and will ask the taxpayer whether such a conference is desired.

03 If the Service initiates the request for technical advice, the taxpayer has 10 calendar days after receiving the statement of facts and specific questions to indicate in writing any disagreement. A taxpayer who needs more time than that must justify, in writing, a request for more time. The justification is subject to the approval of the Chief, EP/EO Division, or the Chief, Appeals Office.

Every effort should be made to reach agreement on the facts and the specific points at issue before the matter is referred to the National Office. However, a taxpayer who does not agree may send, within 10 calendar days after receiving the statement of facts, a statement of understanding of the new specific points at issue. This statement will be forwarded to the National Office with the request for technical advice. When the Key District Director or the Chief, Appeals Office, and the taxpayer cannot agree on material facts, the National Office, at its discretion, may refuse to provide technical advice.

A taxpayer who needs more than 10 days to prepare the statement of understanding must justify the need for an extension of time in writing. The justification is subject to the approval of the Chief, EP/EO Division, or the Chief, Appeals Office.

04 If the taxpayer initiates the action to request technical advice, and the taxpayer's statement of the facts and points at issue is not wholly acceptable to the Key District or Appeals Office, the Service will notify the taxpayer in writing what the areas of disagreement are. The taxpayer has 10 calendar days after receiving the written notice to reply to it. The taxpayer must justify in writing the need for more than 10 calendar days. The justification is subject to the approval of the Chief, EP/EO Division, or the Chief, Appeals Office.

If agreement cannot be reached, both the statements of the taxpayer and the Key District or Appeals Office will be forwarded to the National Office with the request for technical advice. When the disagreement involves material facts essential to the preliminary assessment of the case, the Key District Director or Chief, Appeals Office, may refuse to refer a taxpayer initiated request for technical advice to the National Office. In addition, when there are factual discrepancies in the submission the National Office, at its discretion, may refuse to provide technical advice.

05 If the taxpayer has not provided the required deletions statement under section 6110(c) of the Code with the request to seek technical advice, the taxpayer has 10 calendar days after receiving the statement of facts and questions to be submitted to the National Office to provide the deletions statement. If the taxpayer does not submit the statement, the Key District Director or the Chief, Appeals Office, will tell the taxpayer that the statement is required.

If the Key District Director or the Chief, Appeals Office, does not receive the statement within 10 days after asking the taxpayer for it, the Key District Director or the Chief, Appeals Office, may decline to submit the request for technical advice.

However, if the Key District Director or the Chief, Appeals Office, decides to request technical advice in a case in which the taxpayer has not submitted the statement of proposed deletions, the National Office will make those deletions that the Commissioner determines are required by section 6110(c).

06 The requirements for submitting statements and other materials on proposed deletions in technical advice memoranda before public inspection is allowed do not apply to requests for any documents to the extent section 6104 of the Code applies.

07 The provisions of this section (about referring issues upon the taxpayer's request, telling the taxpayer about the referral of issues, giving the taxpayer a copy of the arguments submitted, submitting proposed deletions, and granting conferences in the National Office, do not apply to a technical advice memorandum described in section 6110(g)(5)(A) of the Code that involves a matter that is the subject of or is otherwise closely related to a criminal or civil fraud investigation or a jeopardy or termination assessment.

In these cases a copy of the technical advice memorandum is given to the taxpayer after all proceedings in the investigations or assessments are complete, but before the Commissioner mails the notice of intention to disclose the memorandum under section 6110(f)(1). The taxpayer may then provide the statement of proposed deletions to the National Office.

08 See Rev. Proc. 79-63, 1979-2 C.B. 578, which concerns applications for extension of time for making an election or application for relief pursuant to section 1.9100-1 of the regulations. If a taxpayer requests an extension of time under section 1.9100-1 during an examination or when the issue is being considered by an Appeals Office, the procedures of Rev. Proc. 91-4 (except for section 5.03) apply. The EP/EO Specialist or Appeals Officer is not authorized to deny consideration of a request for technical advice that involves section 1.9100-1 relief. All such requests must be referred to the National Office. See section 4.03 of Rev. Proc. 79-63.

SEC. 9. HOW DOES TAXPAYER APPEAL KEY DISTRICT DIRECTOR OR APPEALS OFFICE DECISION NOT TO SEEK TECHNICAL ADVICE?

01 If the EP/EO Specialist or Appeals Officer concludes that a taxpayer's request for referral of an issue to the National Office for technical advice does not warrant referral, the EP/EO Specialist or Appeals Officer will tell the taxpayer.

02 The taxpayer may appeal the decision of the EP/EO Specialist or the Appeals Officer not to request technical advice. To do so, the taxpayer must submit to that official, within 10 calendar days after being told of the decision, a statement of the facts, law, and arguments on the issue and the reasons why the taxpayer believes the matter should be referred to the National Office for technical advice. A taxpayer who needs more than the allowed 10 days must justify in writing the need for more time. The justification is subject to the approval of the Chief, EP/EO Division, or the Chief, Appeals Office.

03 The EP/EO Specialist or the Appeals Officer submits the taxpayer's statement through channels to the Chief, EP/EO Division, or the Chief, Appeals Office, along with the EP/EO Specialist's or the Appeals Officer's statement of why the issue should not be referred to the National Office. The Chief determines, on the basis of the statements, whether technical advice will be requested.

If the Chief determines that technical advice is not warranted and proposes to deny the request, the taxpayer is told in writing about the determination. In the letter to the taxpayer, the Chief states the reasons for the proposed denial (except in unusual situations when doing so would be prejudicial to the best interests of the Government). The taxpayer has 10 calendar days after receiving the letter to notify the Chief of agreement or disagreement with the proposed denial.

04 The taxpayer may not appeal the decision of the Chief, EP/EO Division, or the Chief, Appeals Office, not to request technical advice from the National Office. However, if the taxpayer does not agree with the proposed denial, all data on the issue for which technical advice has been sought, including the taxpayer's written request and statements, will be submitted to the Assistant Commissioner (Employee Plans and Exempt Organizations) or the National Director of Appeals as appropriate.

The Assistant Commissioner (Employee Plans and Exempt Organizations), through the Director, Employee Plans Technical and Actuarial Division or Director, Exempt Organizations Technical Division or, if appropriate, the National Director of Appeals will review the proposed denial solely on the basis of the written record and no conference will be held. The appropriate Director or his or her representative will notify the Key District Office or the Appeals Office within 45 calendar days of receiving all the data regarding the request for technical advice whether the proposed denial is approved or disapproved. And, in turn, the Key District Office or the Appeals Office will notify the taxpayer.

While the matter is being reviewed, the Key District Office or the Appeals Office suspends action on the issue (except when the delay would prejudice the Government's interest).

The provisions of this revenue procedure in regard to review of proposed denial of a request for technical advice continue to be applicable in those situations in which the authority normally exercised by the Key District Director or Chief, Appeals Office, has been delegated to another official.

SEC. 10. HOW ARE REQUESTS FOR TECHNICAL ADVICE WITHDRAWN?

01 Only a Key District Director or Chief, Appeals Office, may withdraw a request for technical advice. He or she may ask to withdraw a request at any time before the responding transmittal memorandum transmitting the technical advice is signed.

The Key District Director or Chief, Appeals Office, must notify the taxpayer in writing of an intent to withdraw the request for technical advice except (1) when the period of limitation on assessment is about to expire and the taxpayer has declined to sign a consent to extend the period or (2) when such notification would be prejudicial to the best interests of the Government.

If the taxpayer does not agree that the request for technical advice should be withdrawn, the procedures in section 9 of this revenue procedure must be followed.

02 When a request for technical advice is withdrawn, the National Office may send its views to the Key District Director or the chief, Appeals Office, when acknowledging the withdrawal request. In an Appeals case, acknowledgment of the withdrawal request should be sent to the appropriate Appeals Office, through the National Director of Appeals, CC:AP:FS. In appropriate cases, the subject matter may be published as a revenue ruling or as a revenue procedure.

SEC. 11. HOW ARE CONFERENCES SCHEDULED?

01 If, after the technical advice request is analyzed, it appears that advice adverse to the taxpayer will be given, and if a conference has been requested, the taxpayer will be informed, by telephone if possible, the time and place of the conference.

02 The conference must be held within 21 calendar days after the taxpayer is contacted. If conferences are being arranged for more than one request for technical advice for the same taxpayer, they will be scheduled to cause the least inconvenience to the taxpayer. The EP/EO specialist or Appeals Officer may ask or be requested to attend the conference.

03 An extension of the 21-day period will be granted only if the taxpayer justifies it in writing, and the appropriate Branch Chief (or his or her delegate) approves it. The request for extension should be submitted before the end of the 21-day period. If unusual circumstances near the end of the period make a timely written request impractical, the National Office should be told orally before the end of the period about the problem and about the forthcoming written request for extension. The taxpayer will be told promptly (and later in writing) of the approval or denial of the requested extension.

04 There is no right to appeal the denial of an extension request. If the Service is not advised of problems with meeting the 21-day period, or if the request is not sent promptly after the National Office is notified of problems with meeting the 21-day period, the case will be processed on the basis of the existing record.

05 A taxpayer is entitled by right to only one conference in the National Office unless one of the circumstances discussed in section 11.09 exists. This conference is normally held at the branch level in the appropriate division (Employee Plans Technical and Actuarial Division or Exempt Organizations Technical Division). It is attended by a person who has authority to sign the transmittal memorandum discussed in section 12.11 on behalf of the Branch Chief.

When more than one branch has taken an adverse position on an issue in the request, or when the position ultimately adopted by one branch will affect another branch's determination, a representative from each branch with authority to sign for the Branch Chief will attend the conference. If more than one subject is discussed at the conference, the discussion constitutes a conference for each subject.

To promote a free and open discussion of the issues, the conference usually is held after the branch has had an opportunity to study the case. However, the taxpayer may request that the conference of right be held earlier in the consideration of the case than the Service would ordinarily designate.

The taxpayer has no right to appeal the action of a branch to a Division Director or to any other Service official.

06 Because conference procedures are informal, no tape, stenographic, or other verbatim recording of a conference may be made by any party.

07 In the event of a tentative adverse determination the branch representatives may offer the taxpayer the option of delaying the conference so that the taxpayer can prepare and submit a brief requesting section 7805(b) relief (discussed in section 15 of this revenue procedure). In these cases, the Service will schedule a conference on the tentatively adverse position and the section 7805(b) relief request within 10 days of receiving the taxpayer's section 7805(b) request.

08 The senior Service representative at the conference ensures that the taxpayer has full opportunity to present views on all the issues in question. The Service representatives explain the tentative decision on the substantive issues and the reasons for it.

If the taxpayer requests relief under section 7805(b) of the Code (regarding limitation of retroactive effect), the representative will discuss the tentative recommendation concerning the request for relief and the reason for the tentative recommendation.

No commitment will be made as to the conclusion that the Service will finally adopt regarding the outcome of the section 7805(b) issue or on any other issue discussed.

09 The Service will offer the taxpayer an additional conference if, after the conference of right, an adverse holding is proposed on a new issue or on the same issue but on grounds different from those discussed at the first conference.

When a proposed holding is reversed at a higher level with a result less favorable to the taxpayer, the taxpayer has no right to another conference if the grounds or arguments on which the reversal is based were discussed at the conference of right.

The limitation on the number of conferences to which a taxpayer is entitled does not prevent the National Office from inviting a taxpayer to attend further conferences if National Office personnel think they are necessary.

10 Within 21 calendar days after the conference, the taxpayer must furnish, in duplicate, to the National Office any additional data, lines of reasoning, procedures, etc., that the taxpayer proposed and discussed at the conference but did not previously or adequately present in writing. The taxpayer must also send a copy of the additional material to the Key District Director or the Chief, Appeals Office, for information and, if appropriate, comment. If the Key District Director or Chief, Appeals Office, has comments they must be furnished promptly to the appropriate branch in the National Office.

If the additional information is not received from the taxpayer within 21 days, the technical advice memorandum will be issued on the basis of the existing record.

An extension of the 21-day period may be granted only if the taxpayer justifies it in writing, and the appropriate Branch Chief (or his or her delegate) approves the extension. Procedures for requesting an extension of the 21-day period and notifying the taxpayer of Services's decision are the same as those in sections 11.03 and 11.04.

If the additional information would have a significant impact on the facts in the request for technical advice, the National Office will ask the Key District Director or the Chief, Appeals Office, for comment on the facts contained in the additional information submitted. The Key District Director or the Chief, Appeals Office, will give the material prompt attention.

11 A taxpayer may get information on the status of the request for technical advice by contacting the Key District or Appeals Office that requested the technical advice.

12 A Key District Director or a Chief, Appeals Office, may get current information on the status of the request for technical advice by calling the office of the appropriate Branch Chief. Those offices and their matters of responsibility are listed below:

 Official                                Telephone Numbers

01 The authority to issue technical advice has largely been delegated to the Chief, Employee Plans Rulings Branch; Chief, Employee Plans Qualifications Branch; Chief, Employee Plans Projects Branch; Chief, Pension Actuarial Branch; Chief, General Actuarial Branch; and Chiefs, Exempt Organizations Rulings Branches.

02 Requests for technical advice generally are given priority and processed expeditiously. As soon as the request for technical advice is assigned, the technical employee analyzes the file to see whether it meets all requirements of sections 5 through 7.

However, if the request does not comply with the requirements of section 7.02 relating to the statement of proposed deletions, the Service will follow the procedure in the last paragraph of section 8.05.

03 Usually, within 21 calendar days after the branch receives the request for technical advice, a representative of the branch telephones the Key District or Appeals Office to discuss the procedural and substantive issues in the request that come within the branch's jurisdiction.

04 If the technical advice request concerns matters within the jurisdiction of more than one branch, a representative of the branch that received the original technical advice request informs the Key District or Appeals Office within 21 calendar days of receiving the request that --

(1) the matters within the jurisdiction of another branch have been referred to the other branch or office for consideration, and

(2) a representative of the other branch or office will contact the Key District or Appeals Office about the referral of the technical advice request within 21 calendar days after receiving it in accordance with section 12.03 above.

05 The branch representative will inform the Key District or Appeals Office that the case is being returned if substantial additional information is required to resolve an issue. Cases should be returned for additional information when significant unresolved factual variances exist between the statement of facts submitted by the Key District or Appeals Office and the taxpayer. They should also be returned if major procedural problems cannot be resolved by phone.

If only minor procedural deficiencies exist, the branch will request the additional information in the most expeditious manner without returning the case.

06 If all necessary information has been provided, the branch representative discusses with the Key District or Appeals Office his or her tentative conclusion.

07 Because the branch representative's tentative conclusion may change during the preparation and review of the technical advice memorandum, the conclusion should not be considered final. Therefore, neither the branch representative nor the Key District Director or Appeals Office should advise the taxpayer or the taxpayer's representative of the tentative conclusion.

08 If, following the initial contact referenced in section 12.03 it is determined, after discussion with the appropriate Branch Chief or reviewer, that additional information is needed, a branch representative will obtain the additional information from the taxpayer, the Key District Director, or Chief, Appeals Office in the most expeditious manner possible.

Any additional information submitted to the National Office must be accompanied by the following declaration: "Under penalties of perjury, I declare that I have examined this information, including accompanying documents, and to the best of my knowledge and belief, the facts represented are true, correct, and complete." This declaration must be signed by the taxpayer, not the representative.

A written request for an extension of time to submit additional material must be received by the National Office within the 21 day period, giving compelling facts and circumstances to justify the proposed extension. The appropriate Branch Chief to whom the case is assigned will determine whether to grant or deny the request for an extension of the 21-day period. There is no right to appeal the denial of an extension request.

If the National Office does not receive the additional information within the period of 21 days, plus any extensions granted by the Branch Chief, the National Office will issue the technical advice memorandum based on the existing record.

09 Any additional information submitted by the taxpayer should be sent to the National Office and a copy sent to either the Key District Director or the Chief, Appeals Office, for comments on the additional information. If the Key District Director or Chief, Appeals Office, has comments, they must be furnished promptly to the appropriate branch in the National Office that has jurisdiction over the case.

10 Generally, in cases subject to section 6110 of the Code, before replying to the request for technical advice, the National Office informs the taxpayer orally or in writing of the material likely to appear in the technical advice memorandum that the taxpayer proposed be deleted but that the Service has determined should not be deleted.

If so informed, the taxpayer may submit within 10 calendar days any further information, arguments, or other material that should be deleted.

The Services attempts, if possible, to resolve all disagreements about proposed deletions before the National Office replies to the request for technical advice. However, the taxpayer does not have the right to a conference to resolve any disagreements about material to be deleted from the text of the technical advice memorandum. These matters, however, may be considered at any conference otherwise scheduled for the request.

11 The replies to technical advice requests are in two parts. Each part identifies the taxpayer by name, address, identification number, and year or years involved.

The first part of the reply is a transmittal memorandum. In unusual cases it is a way of giving the Key District or Appeals Office administrative or other information that under the nondisclosure statutes, or for other reasons, may not be discussed with the taxpayer.

The second part (the "technical advice memorandum") contains:

(1) a statement of the issues;

(2) a statement of the pertinent facts with respect to the issues;

(3) a statement of the pertinent law, tax treaties, regulations, revenue rulings, and other precedents published in the Internal Revenue Bulletin, and court decisions;

(4) a discussion of the rationale developed by the National Office; and

(5) the conclusions of the National Office. The conclusions give direct answers, whenever possible, to the specific questions of the Key District or Appeals Office. The discussion of the issues is in enough detail so the Key District or Appeals officials know the reasoning underlying the conclusion.

Accompanying the memorandum is a notice, under section 6110(f)(1) of the Code, of intention to disclose a technical advice memorandum (including a copy of the version proposed to be open to public inspection and notations of third party communications under section 6110(d)).

12 Replies to requests for technical advice are addressed to the Key District Director or the Chief, Appeals Office. Replies to requests from Appeals should be routed to the appropriate Appeals Office through the National Director of Appeals, CC:AP:FS.

SEC. 13. HOW DOES KEY DISTRICT OR APPEALS OFFICE USE THE TECHNICAL ADVICE?

01 The Key District Director or the Chief, Appeals Office, must process the taxpayer's case on the basis of the conclusions in the technical advice memorandum unless --

(1) the Key District Director or the Chief, Appeals Office, thinks that the conclusions reached by the National Office in a technical advice memorandum should be reconsidered, or

(2) the Chief, Appeals Office, in the case of technical advice unfavorable to the taxpayer, decides to settle the issue in the usual manner under existing authority.

In any event, with or without requesting reconsideration, the Key District Director must follow the conclusions in a technical advice memorandum as to all issues, and the Chief, Appeals Office, must follow the conclusions in a technical advice memorandum on issues of an organization's/plan's status or qualification. Thus, if the technical advice memorandum received by a Key District Director concerns an organization's/plan's status or qualification, the organization/plan has no appeal to the Appeals Office on those specific issues.

02 The Key District Director or the Chief, Appeals Office, only after adopting the technical advice gives the taxpayer (1) a copy of the technical advice memorandum described in section 12.11, and (2) the notice under section 6110(f)(1) of the Code of intention to disclose the technical advice memorandum (including a copy of the version proposed to be open to public inspection and notations of third party communications under section 6110(d)).

This requirement does not apply to technical advice memoranda involving civil fraud or criminal investigations, jeopardy or termination assessments, as described in section 8.07, or documents to which section 6104 (document open to public inspection) applies.

03 After receiving the notice under section 6110(f)(1) of the Code of intention to disclose the technical advice memorandum, the taxpayer may protest the disclosure of certain information in it. The taxpayer must submit a written statement within 20 calendar days identifying those deletions not made by the Service that the taxpayer believes should have been made. The taxpayer must also submit a copy of the version of the technical advice memorandum proposed to be open to public inspection with brackets around deletions proposed by the taxpayer that have not been made by the National Office.

Generally, the National Office considers only the deletion of material that the taxpayer has proposed be deleted or other deletions as required under section 6110(c) of the Code before the National Office reply is sent to the Key District Director or the Chief, Appeals Office. Within 20 days after it receives the taxpayer's response to the notice under section 6110(f)(1), the National Office must mail the taxpayer its final administrative conclusion about the deletions to be made.

04 In those cases in which the National Office tells the Key District Director or the Chief, Appeals Office, that a copy of the technical advice memorandum should not be given to the taxpayer, the Key District Director or the Chief, Appeals Office tells the taxpayer this if the taxpayer requests a copy.

SEC. 14. WHAT IS THE EFFECT OF TECHNICAL ADVICE?

01 A taxpayer may not rely on a technical advice memorandum received from the Service by another taxpayer.

02 Except in rare or unusual circumstances, a holding in a technical advice memorandum that is favorable to the taxpayer is applied retroactively.

03 A holding that modifies or revokes a holding in a prior technical advice memorandum is applied retroactively, with one exception. If the new holding is less favorable to the taxpayer than the earlier one, it generally is not applied to the period in which the taxpayer relied on the prior holding in situations involving continuing transactions.

04 If a technical advice memorandum relates to a continuing action or a series of actions, ordinarily it is applied until specifically withdrawn or until the conclusion is modified or revoked by enactment of legislation, ratification of a tax treaty, or issuance of a United States Supreme Court decision, regulations (temporary or final), a revenue ruling, or other statement published in the Internal Revenue Bulletin. Publication of a notice of proposed rulemaking does not affect the application of a technical advice memorandum.

05 Generally, a technical advice memorandum that revokes or modifies a letter ruling or another technical advice memorandum is not applied retroactively for either the taxpayer to whom or for whom the ruling or memorandum was originally issued or for a taxpayer whose tax liability was directly involved in such ruling or memorandum if:

(1) there has been no misstatement or omission of material facts;

(2) the facts at the time of the transaction are not materially different from the facts on which the ruling or memorandum was based;

(3) there has been no change in the applicable law;

(4) in the case of a ruling, it was originally issued on a prospective or proposed transaction; and

(5) the taxpayer directly involved in the ruling or memorandum acted in good faith in relying on the ruling or memorandum, and the retroactive revocation would be to the taxpayer's detriment. For example, the tax liability of each employee covered by a ruling or memorandum relating to a pension plan of an employer is directly involved in the ruling or memorandum. However, the tax liability of members of an industry is not directly involved in a ruling or memorandum issued to one of the members, and the holding in a revocation or modification of a ruling or memorandum to one member of an industry may be retroactively applied to other members of the industry. By the same reasoning, a tax practitioner may not obtain the nonretroactive application to one client of a modification or revocation of a ruling or memorandum previously issued to another client.

When a ruling to a taxpayer or a technical advice memorandum involving a taxpayer is revoked with retroactive effect, the notice to the taxpayer, except in fraud cases, sets forth the grounds on which the revocation is being made and the reason why the revocation is being applied retroactively.

SEC. 15. HOW MAY RETROACTIVE EFFECT BE LIMITED?

01 Under section 7805(b) of the Code, the Commissioner or the Commissioner's delegate has the discretion to prescribe the extent, if any, to which a technical advice memorandum will be applied without retroactive effect.

02 A taxpayer who has received a technical advice memorandum or for whom a technical advice request is pending may request that the Assistant Commissioner (Employee Plans and Exempt Organizations), the Commissioner's delegate, exercise the discretionary authority under section 7805(b) of the Code to limit the retroactive effect of any holding stated in the technical advice memorandum or to limit the retroactive effect of any subsequent modification or revocation of the technical advice memorandum.

03 When a technical advice memorandum that concerns a continuing transaction is modified or revoked by, for example, a subsequent revenue ruling or final regulations, a request to limit the retroactive effect of the modification or revocation of the technical advice memorandum must be made in the form of a request for a letter ruling if submitted before examination of the return that contains the transaction that is the subject of the request for letter ruling. See Rev. Proc. 91-4, this Bulletin.

04 When, during the course of an examination of a taxpayer's return by a Key District Director or consideration by the Chief, Appeals Office, a taxpayer is informed that the Key District Director or the Chief, Appeals Office, will recommend that a technical advice memorandum will be revoked or modified during the course of an examination of the taxpayer's return by the Key District Director or during consideration by the Chief, Appeals Office, a request to limit the retroactive application of the modification or revocation of the technical advice memorandum must itself be made in the form of a request for technical advice. See sections 5 through 7 of this revenue procedure.

The taxpayer must also submit a statement that the request is being made pursuant to section 7805(b) of the Code. This statement must also indicate the relief requested and give the reasons and arguments in support of the relief requested. It must also be accompanied by any documents bearing on the request. The explanation should discuss the five items listed in section 14.05 of this revenue procedure as they relate to the taxpayer's situation.

The taxpayer's request, including the statement that the request is being made pursuant to section 7805(b) of the Code, must be forwarded by the Key District Director or the Chief, Appeals Office, to the National Office for consideration.

05 A request to limit the retroactive effect of a holding in a technical advice memorandum that does not modify or revoke a technical advice memorandum may be made as part of that technical advice request, either initially, or at any time before the technical advice memorandum is issued by the National Office. In such a case, the taxpayer must also submit a statement in support of the application of section 7805(b) of the Code, as described in section 15.04 above.

06 When a request for technical advice concerns only the application of section 7805(b) of the Code, the taxpayer has the right to a conference in the National Office in accordance with the provisions of section 11 of this revenue procedure.

If the request for application of section 7805(b) of the Code is included in the request for technical advice on the substantive issues or is made before the conference of right on the substantive issues, the section 7805(b) issues will be discussed at the taxpayer's one conference of right.

If the request for the application of section 7805(b) of the Code is made as part of a pending technical advice request after a conference has been held on the substantive issues, and the Service determines that there is justification for having delayed the request, then the taxpayer will have the right to one conference of right concerning the application of section 7805(b), with the conference limited to discussion of this issue.

SEC. 16. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 90-5?

01 A number of changes have been made to the revenue procedure in an effort to make it easier to read and use. First, the format is now in question and answer form. Second, more headings have been added to the text and the table of contents has been expanded.

02 Section 2 is clarified to indicate that technical advice may not be requested if the issue in the case is in a docketed case.

03 Various provisions are revised to reflect the publication of Rev. Proc. 90-27.

SEC. 17. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER DOCUMENTS?

Rev. Proc. 90-5 is superseded.

DRAFTING INFORMATION

The principal authors of this revenue procedure are Michael Rubin of the Employee Plans Technical and Actuarial Division and Dave Flavin of the Exempt Organizations Technical Division. For further information regarding this revenue procedure, please contact the Employee Plans Technical and Actuarial Division's taxpayer assistance telephone service or Mr. Rubin between the hours of 1:30 and 4 p.m. Eastern time, Monday through Thursday on (202) 566-6783/6784 or (202) 343-0729, respectively. Mr. Flavin's telephone number is (202) 566- 4332. None of these telephone numbers are toll-free calls.