SERVICE ISSUES GUIDANCE RELATING TO ADMINISTRATIVE APPEALS AND DISPOSITION OF TAX COURT CASES.

Rev. Proc. 87-24

SECTION 1. PURPOSE

The purpose of this revenue procedure is to facilitate effective utilization of the administrative appeals process and achieve earlier development and disposition of Tax Court cases either by settlement or by trial.

SEC. 2. PROCEDURES

Cases docketed in the United States Tax Court will be processed under the following procedures:

01 Docketed cases will be referred by District Counsel (hereinafter "Counsel") to the Appeals Division (hereinafter "Appeals") for consideration of settlement unless the statutory notice of deficiency was issued by Appeals. Cases in which Appeals issued the statutory notice of deficiency may be referred to Appeals unless Counsel determines that there is little likelihood that a settlement of all or a part of the case can be achieved in a reasonable period of time.

02 Cases involving deficiencies (defined to include tax and penalties per taxable period) of more than $10,000 will be promptly returned to Counsel when no progress toward settlement of all or a part of a case is made, or when a case appears on a trial calendar, unless Counsel agrees to extend the period of Appeals' consideration of the case.

03 Except as provided in section 2.01, cases involving deficiencies of $10,000 or less, including "S" cases, will be referred to Appeals for a period of six months or until one month before the trial calendar call in regular cases or 15 days before the trial calendar call in "S" cases, if earlier. At the end of the period described in the foregoing sentence or at such time as Appeals determines the case is not susceptible of settlement in whole or in part, the case will be returned to Counsel. Where appropriate, Counsel and Appeals may agree to extend the period of Appeals' consideration, or return the case to Appeals, if there is a likelihood of settlement.

04 Appeals will have sole settlement authority over docketed cases referred to Appeals pursuant to these procedures until the case is returned to Counsel. Upon request, a case will be returned to Counsel to allow adequate trial preparation. Whenever a docketed case is returned to Counsel, sole authority to dispose of the case by trial or settlement will revert to Counsel, unless Counsel and Appeals agree that settlement authority over some or all issues will be retained by Appeals. Thus, in some situations Counsel will prepare a case for trial while Appeals simultaneously conducts settlement negotiations.

05 By agreement between Counsel and Appeals, any docketed case may be transferred from Counsel to Appeals or from Appeals to Counsel, as appropriate, notwithstanding the fact that the case was previously considered by the receiving function. This authority will be utilized when such transfer will promote more efficient disposition of the case.

06 In appropriate cases, such a those involving significant issues or large deficiencies, Counsel and Appeals may, as soon as the case is at issue, commence working together. During such a period of joint consultation Appeals will retain jurisdiction over settlement while Counsel acts in an advisory capacity, including attending settlement conferences. Joint consultation may continue until the case is settled or settlement appears unlikely.

07 At the request of Counsel and with the agreement of Appeals, when Counsel has jurisdiction over a case Appeals may assist Counsel with settlement negotiations, with trial preparation, or at the trial of the case.

08 The Director of the Tax Litigation Division (or the Deputy Associate Chief Counsel (International) with respect to international issues) may, after consulting with the Director of the Appeals Division and the appropriate Regional Counsel, determine that a case, or an issue or issues in a case, should not be considered by Appeals. In such a situation Appeals will forego settlement authority over such case or issues.

09 The petitioner and/or representative will be contacted promptly by the Counsel or Appeals Office receiving the case. This notification will state that the receiving office has acquired sole authority to dispose of the case, through settlement or trial, as appropriate. Prompt notification will also be sent in the event it is determined that trial preparation will be commenced under section 2.04 or that a case, or an issue or issues in a case, should not be considered by Appeals under section 2.08.

SEC. 3. EXCLUSIONS

Section 2 shall not apply to cases in which the notice of deficiency, liability, or other determination was issued by Appeals, by the Employee Plans/Exempt Organizations function or by a District Director based on a National Office ruling or technical advice in that case involving qualification of an employee plan or tax exemption and/or foundation status of an organization (but only to the extent the case involves such issue). Section 2 shall also not apply to cases docketed under sections 6110, 7428, 7476, 7477, or 7478 of the Internal Revenue Code.

SEC. 4. EFFECTIVE DATE

This procedure is applicable to all docketed Tax Court cases pending on or after June 1, 1987.

SEC. 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 82-42, 1982-2 C.B. 761, is superseded.