Rev. Proc. 69-26

Section 1. Purpose.

The purpose of this Revenue Procedure is to eliminate administrative appeals procedure in certain cases arising in District Collection Divisions involving section 6672 of the Internal Revenue Code of 1954 (or corresponding provisions of the Internal Revenue Code of 1939).

Sec. 2. Background.

.01 Section 6672 of the Code imposes a penalty (hereinafter referred to as the 100-percent penalty) against any person who, being required to collect, truthfully account for, and pay over any tax imposed by the Code, willfully fails to collect such tax, or truthfully account for any pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof.

.02 The term "person," as used herein, includes an officer or employee of a corporation, or a member or employee of a partnership who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs. See section 6671(b) of the Code.

.03 Revenue Procedure 57-26, C.B. 1957-2, 1093, extended jurisdiction of the Appellate Division, prior to assessment, to all unagreed cases arising in District Audit Divisions which involve excise taxes imposed under Chapters 31, 32, 33, 34, 36, 37, Subchapter F of Chapter 38, and Subchapters B, C, D, E, and F of Chapter 39, and employment taxes under Chapters 21, 22, 23 and 24 of the Internal Revenue Code of 1954 and corresponding provisions of the Internal Revenue Code of 1939. Revenue Procedure 61-27, C.B. 1961-2, 563, amplified Revenue Procedure 57-26 so as to extend jurisdiction of the Appellate Division prior to assessment to all unagreed and protested 100-percent penalty cases arising in District Collection Divisions, except where collection of the amount involved is in jeopardy.

.04 In developing the defense of a refund suit brought by one of several responsible persons subject to an assessment under the provisions of section 6672 of the Code (or corresponding provisions of the 1939 Code), it may become necessary to determine whether a person against whom an assessment has not been made may have been a person within the meaning of section 6672 (hereinafter referred to as "responsible person"). In such circumstances, it is customary to authorize or recommend that third-party actions be instituted against such a person.

.05 In order to maintain a third-party action in such circumstances, the district director must be requested to make an assessment, since no assessment had previously been made against such party. This action is necessary to bring all potentially responsible persons before the court and let the court decide which person is responsible under section 6672.

Sec. 3. Scope.

The procedures set forth below are applicable to 100-percent penalty cases arising in District Collection Divisions which relate to employment and excise taxes imposed under Chapters 21, 22, 24 and 33 of the 1954 Code (or corresponding provisions of the 1939 Code), except where notice of proposed 100-percent penalty assessment has been issued and hearing rights have already been made available prior to November 17, 1969.

Sec. 4. Procedure in District Collection Divisions.

.01 If the 100-percent penalty has not been assessed against all of the potentially responsible persons within the purview of section 6672 and a request for an assessment is made by the Chief Counsel in order to support a third-party action in a pending refund suit, the Collection Division of the appropriate district director's office shall immediately request an assessment of the 100-percent penalty against such potentially responsible persons. The administrative review procedures will continue to apply to those potentially responsible persons outside of the jurisdiction of the court in which the refund suit is pending.

.02 Assessments made under the foregoing conditions will not be subject to administrative appeal under District Conference procedures or before a Regional Appellate Division.

.03 The elimination of administrative appeal under District Conference and Regional Appellate Division procedures does not deprive the person of a right to review of his case. The forum for his hearing becomes the court which will decide which person, or persons, is responsible under section 6672.

Sec. 5. Effect on Other Documents.

Revenue Procedure 57-26, as amplified by Revenue Procedure 61-27, is hereby modified as provided herein.