Rev. Proc. 59-25

SECTION 1. PURPOSE.

.01 The purpose of this Revenue Procedure is to set forth the conditions applicable to the reopening of cases examined and closed in the office of a District Director of Internal Revenue.

SEC. 2. SCOPE.

.01 For the purpose of this procedure, a closed case is any income, estate, gift, excise or employment tax return closed by examination in the office of the District Director, in which the taxpayer has been notified in writing by the District Director of the adjustment in tax liability or the acceptance of the return as filed.

.02 It also includes estate tax cases subject to post review even though the closing letter has not been issued. It does not include any action pertaining to the reopening of cases or issues under the jurisdiction of the offices of the Appellate Division or the Regional Counsel.

SEC. 3. BACKGROUND.

.01 Cases closed in the office of the District Director may be considered for reopening as a result of additional information received by the District Director's office. This information may come from within or outside the Internal Revenue Service.

.02 Cases closed in the office of the District Director may also be considered for reopening as a result of errors disclosed by the regional post review. Under the regional post review authority, delegated to the Assistant Regional Commissioner (Audit) at the time the National Office responsibility for that function was transferred to the regional offices, examined cases are reviewed to discover and identify the categories of most frequent procedural and technical errors in order to improve the quality, technical accuracy, and uniformity of the audit activity. The cases selected for post review from among those closed in the district are reviewed only after all administrative processing, including the assessment of additional taxes and the scheduling of overassessments, has been completed in the district office.

SEC. 4. CONDITIONS FOR REOPENING.

.01 It is the administrative practice of the Internal Revenue Service not to reopen cases previously closed by the District Director unless there has been substantial error, both in amount and in relation to the total tax liability, or there is evidence of fraud, malfeasance, collusion, concealment or the misrepresentation of a material fact. Reopening as the result of additional information received by the District Director's office must have the approval of the District Director, and reopenings recommended as a result of post review action must have the approval of the Assistant Regional Commissioner (Audit).

.02 However, it will not be necessary to obtain the approval of the Assistant Regional Commissioner (Audit) or the District Director to reopen cases under the following circumstances:

1. The service receives a claim for refund or request by the taxpayer for reopening after the original audit has been completed.

2. Cases involving section 3801 of the Internal Revenue Code of 1939 or section 1311 of the Internal Revenue Code of 1954.

3. Cases involving the year of deduction of a net operating loss carryback.

.03 If a re-examination of the taxpayer's books and record is necessary, notification of such re-examination under section 7605(b) of the 1954 Code will be issued by the Regional Commissioner.