SERVICE REVISES PROCEDURES FOR ISSUING TECHNICAL ADVICE BY ASSISTANT COMMISSIONER (EP/EO).

Rev. Proc. 90-5

                              CONTENTS

The purpose of this revenue procedure is to update Rev. Proc. 80-26, 1980-1 C.B. 671, as modified by Rev. Proc. 83-41, 1983-1 C.B. 775, which provides procedures for furnishing technical advice to Key District Directors and Chiefs, Appeals Office, by the Assistant Commissioner (Employee Plans and Exempt Organizations) regarding issues in the employee plans areas (including actuarial matters) and exempt organizations areas. It also tells taxpayers about their rights when a Key District Director or a Chief, Appeals Office, requests such advice.

SEC. 2. SCOPE

01 The Commissioner through his delegate, the Assistant Commissioner (Employee Plans and Exempt Organizations), provides principles and rules for uniformly interpreting and applying the federal tax laws under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations).

02 In the Office of the Assistant Commissioner (Employee Plans and Exempt Organizations), the authority to issue technical advice has been largely redelegated to the Chiefs of the Employee Plans Rulings Branch, Employee Plans Qualifications Branch, Employee Plans Projects Branch, Pension Actuarial Branch, General Actuarial Branch, and Exempt Organizations Rulings Branches.

03 This procedure applies to technical advice for employee plans and exempt organizations and is followed in obtaining technical advice on the exemption of farmers' cooperatives from tax under section 521 of the Code, even though the associate Chief Counsel (Technical) has jurisdiction for issuing technical advice under that section.

04 Rev. Proc. 90-2, 1990-1 I.R.B. 38 provides revised procedures for issuing technical advice in areas under the jurisdiction of the Associate Chief Counsel (Technical). The 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 not contained in that revenue procedure but are contained in Rev. Proc. 87-5, 1987-1 C.B. 535.

05 Technical advice procedures regarding excise taxes (other than the excise taxes imposed under Chapters 41, 42, and 43 of the Internal Revenue Code), and employment taxes that employee plans and exempt organizations may be subject to, are set forth in Rev. Proc. 90-2, 1990-1 I.R.B. 38.

SEC. 3. CHANGES

01 The procedures of this revenue procedure are similar to the procedures of Rev. Proc. 90-2, 1990-1 I.R.B. 38 which provides the procedures for technical advice requests under the jurisdiction of the Associate Chief Counsel (Technical). However, this procedure varies from Rev. Proc. 90-2 where employee plans and exempt organizations considerations so require.

02 The significant areas of change from Rev. Proc. 80-26 are:

(1) Section 3 of Rev. Proc. 80-26 has been redesignated as section 5 and sets forth areas of mandatory technical advice.

(2) Section 5.04 of Rev. Proc. 80-26 has been redesignated as section 7.04 and increases the time frame from 30 to 45 days for National Office review of the taxpayer's appeal to a Key District or Appeals Office's decision not to request technical advice.

(3) Section 6.07 of Rev. Proc. 80-26 has been redesignated as section 9.09 and contains an expanded list of telephone numbers of those Service officials who may be asked the status of a technical advice request.

(4) Section 8 of Rev. Proc. 80-26 has been redesigned as section 10 and has been revised to specifically provide for telephone conferences.

SEC. 4. DEFINITIONS AND NATURE OF TECHNICAL ADVICE

01 For purposes of this revenue procedure, the word "taxpayer" includes all persons subject to any provision of the Internal Revenue Code and, when appropriate, their representatives.

02 Any reference to the National Office means only the Office of the Assistant Commissioner (Employee Plans and Exempt Organizations).

03 Any reference to Key District Director or District Office includes the office of the Director of the Foreign Operations District, where appropriate. References to District Office mean Key District Office as set out in Rev. Proc. 80-30, 1980-1 C.B. 685, and Rev. Proc. 84-46, 1984-1 C.B. 541. Any reference to Chief, Appeals Office, includes Associate Chief, Appeals Office.

04 For purposes of this revenue procedure, any reference to EP/EO will mean Employee Plans and Exempt Organizations.

05 With regard to requests for technical advice that are subject to the disclosure provisions of section 6110 of the Code, the taxpayer must follow the procedures in section 601.201(n)(9)(iii)(e) of the Statement of Procedural Rules (26 CFR Part 601). For guidance as to which technical advice requests are subject to section 6110, see section 301.6110-1(a) of the Regulations on Procedure and Administration (26 CFR Part 301).

06 "Technical advice" means advice or guidance furnished by the National Office upon request of a Key District or an Appeals Office in response to any technical or procedural question that develops during any stage of any proceeding on the interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, or other precedents published on employee plans and exempt organizations matters by the National Office to a specific set of facts. Such proceedings include (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. 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.

07 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. 84-46, as well as section 601.201(n) of the Statement of Procedural Rules, must be followed.

08 Only the National Office can revoke a ruling letter. Therefore, if a Key District Director or a Chief, Appeals Office, thinks that a ruling letter previously issued to a taxpayer should be modified or revoked, including a ruling 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, the procedures in section 6 of this revenue procedure must be followed.

09 The provisions of this revenue procedure apply only to EP/EO cases 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 sections 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.

10 Any determination letter on exempt status or private foundation status issued by a Key District Office on the basis of National Office technical advice may not, thereafter, be appealed to the Appeals Office with regard to those status issues that were the subject of technical advice.

SEC. 5. AREAS IN WHICH TECHNICAL ADVICE MAY OR MUST BE REQUESTED

01 Technical advice may be requested on any technical or procedural question that develops during the examination of a taxpayer's return, consideration of a taxpayer's claim for refund or credit, or request for a determination letter that does not come within the requirements of section 6.02 of Rev. Proc. 84-46 regarding exemption applications. These procedures are applicable as provided in section 4.

02 Requests for technical advice are encouraged on any technical or procedural questions arising in connection with any case of the type described in section 4.06 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.

03 Aside from the exemption application cases covered by the requirements of Rev. Proc. 84-46, 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 1 of the Employee Retirement Income Security Act of 1974 (ERISA), Pub. L. 93-406, 1974- 3 C.B. 1, 43, (3) amendments to defined contributions plans pursuant to Rev. Proc. 83-41, 1983-1 C.B. 775, as modified by Rev. Proc. 885, 1988-1 C.B. 587, in connection with a waiver of the minimum funding standards and a request for a determination letter, or (4) termination/reestablishment and spinoff/termination cases in which the Key District Office proposes that the Implementation Guidelines are not applicable.

SEC. 6. REQUESTING TECHNICAL ADVICE

01 The Key District Director or Chief, Appeals Office, is responsible for determining 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, and should include, in writing, a statement of applicable law and the arguments submitted by the Key District or Appeals Office in support of its position on the issue or issues. All requests for technical advice from Appeals Offices should be submitted to the Assistant Commissioner (Employee Plans and Exempt Organizations) through the National Director of Appeals, CC:AP:PT. However, while the case is under the jurisdiction of the Key District Director or the Chief, Appeals Office, a taxpayer may request that an issue be referred to the National Office for technical advice. All requests for technical advice should be made at the earliest possible stage of the proceedings. The grounds for a request are that a lack of uniformity exists on the disposition of the issue or that the issue is unusual or complex enough to warrant consideration by the National Office. 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 6.11 of this revenue procedure. Although taxpayers are encouraged to make written requests setting forth the facts, law, and argument on the issue, and reasons for requesting National Office technical advice, they may make the request orally. If, after considering the taxpayer's request, the EP/EO specialist or Appeals Officer thinks that the circumstances do not warrant referral of the case to the National Office, the EP/EO specialist or Appeals Officer will tell the taxpayer. (See section 7 for taxpayer's appeal rights when an EP/EO specialist or an Appeals Officer declines to request technical advice.)

02 When technical advice is going to be requested, whether or not on the request of the taxpayer, the taxpayer will be told about it and given a copy of the arguments submitted by the Key District Director or the Chief, Appeals Office, in support of its position on the issue or issues, except as noted in section 6.10. 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. The request for technical advice should be worded to avoid possible misunderstanding in the National Office of the facts or the specific points at issue.

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 about them. The taxpayer must justify in writing an extension of time beyond the 10 calendar days. The justification must be approved by 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. If agreement cannot be reached, the taxpayer may send, within 10 calendar days after receipt of notice, a statement of the taxpayer's understanding of the new specific points at issue. This statement will be forwarded to the National Office with the request for technical advice. The taxpayer must justify in writing an extension of time beyond the 10 calendar days. The justification must be approved by the Chief, EP/EO Division, or the Chief, Appeals Office. 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.

04 If the taxpayer initiates the action to request technical advice and the taxpayer's statement of the facts and point at issue is not wholly acceptable to the Key District or Appeals Office, the Service will tell 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 an extension beyond the 10 calendar days. The justification must be approved by the Chief, EP/EO Division, or 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, at its discretion, refuse referral to the National Office of a taxpayer initiated request for technical advice or, alternatively, the National Office may refuse to provide technical advice.

05 If it has not already been done, the taxpayer may submit a statement explaining the taxpayer's position on the issues and citing precedents that the taxpayer believes will bear on the case. This statement will be forwarded to the National Office with the request for technical advice. If the taxpayer's statement is received after the request for technical advice has been forwarded to the National Office, it will be forwarded there to be associated with the request for technical advice. The taxpayer is encouraged to comment on any legislation, tax treaties, regulations, revenue rulings, revenue procedures, or court decisions contrary to the taxpayer's position.

06 At the time the taxpayer is told that the matter is being referred to the National Office, the taxpayer will also be told about the right to a conference in the National Office if an adverse decision is indicated and will be asked to say whether such a conference is desired.

07 In connection with requests for technical advice, the taxpayer also has the same 10 days as in sections 6.03 and 6.04 to submit the statement described in section 6.09 of proposed deletions under section 6110(c) of the Code. If the taxpayer does not submit the statement, the Key District Director or the Chief, Appeals Office, will tell the taxpayer that such a statement is required. If the Key District Director or the Chief, Appeals Office, does not receive that statement within l0 days after such notification, the Key District Director or the Chief, Appeals Office, may decline to submit the request for technical advice. 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).

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

09 To help the National Office make the deletions required by section 6110(c) of the Code in technical advice memoranda to be made open to public inspection under section 6110(a), a deletions statement must accompany requests. The statement must either state that no information other than names, address, and identifying numbers need be deleted, or if more information is proposed to be deleted, the statement must indicate the deletions proposed by the taxpayer. If the latter alternative is chosen, the statement must be made in a separate document, and it must be accompanied by a copy of all statements of facts and supporting documents that are submitted to the National Office under sections 6.03 and 6.04. The material that the taxpayer wants deleted must be shown in brackets. The statement of proposed deletions must show the statutory basis, under section 6110(c), for each proposed deletion. The statement of proposed deletions must not appear or be referred to anywhere in the request for technical advice. If the taxpayer decides to request additional deletions under section 6110(c) before the National Office replies to the request for technical advice, the taxpayer may submit additional statements. The procedures in this paragraph also apply to additional information submitted during consideration of the technical advice request.

10 The provisions of this section (about referring issues upon the tax payer's request, telling the taxpayer about the referral of issues, giving the taxpayer a copy of the arguments submitted by the Key District Director or Chief, Appeals Office, in support of its position on the issue or issues, 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 jeopardy or termination assessment or a criminal or civil fraud investigation. However, in these cases after all proceedings in the investigations or assessments are complete but before the Commissioner mails the notice under section 6110(f)(1), of intention to disclose the technical ad vice memorandum, a copy of the technical advice memorandum will be furnished to the taxpayer and the taxpayer may provide the statement of proposed deletions to the National Office.

11 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 Income Tax Regulations. If a taxpayer requests an extension of time under section 1.9100-1 during an examination or when being considered by an Appeals Office, the procedure of this revenue procedure are applicable, except for section 7. The EP/EO specialist or Appeals Office 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.

12 Form 5565, Request for Technical Advice EP/EO, should be used for transmitting Requests for technical advice to the National Office.

13 Any authorized representative, in described in section 8.13 of Rev. Proc. 90-4, whether or not enrolled to practice, must comply with the conference and practice requirements of the Statement of Procedural Rules (26 CFR 601). Form 2848, Power of Attorney and Declaration of Representative, and Form 2848-D, Tax Information Authorization and Declaration of Representative may be used with regard to requests for technical advice under this revenue procedure.

SEC. 7. APPEAL BY TAXPAYERS OF DISTRICT OR APPEALS OFFICE DETERMINATION NOT TO SEEK TECHNICAL ADVICE

01 If the EP/EO specialist or Appeals Officer thinks 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 by submitting 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. The taxpayer must justify in writing a request for an extension of time beyond the 10 calendar days. The justification must be approved by 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. 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 National Office, Attention: Director, Employee Plans Technical and Actuarial Division, or Director, Exempt Organizations Technical Division, as appropriate. If either Director thinks the circumstances warrant it, he or she may consult the Associate Chief Counsel (Technical) or his or her representatives. After this review, the Key District Office or the Appeals Office is notified whether the proposed denial is approved or disapproved, and, in turn, the Key District Office or the Appeals Office will notify the taxpayer.

04 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) until it is notified that the proposed denial is approved or disapproved. This notification is made within 45 calendar days after receipt of the data. The review is solely on the basis of the written record and no conference is held on the matter.

SEC. 8. WITHDRAWAL OF REQUESTS

01 Only a Key District Director or Chief, Appeals Office, may withdraw a request for technical advice, even a request initiated by the taxpayer. The withdrawal request may be made at any time before the responding transmittal memorandum 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 procedure in section 7 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. In appropriate cases, the subject matter may be published as a revenue ruling or as a revenue procedure.

SEC. 9. CONFERENCES IN THE NATIONAL OFFICE

01 If after an analysis of the technical advice request it appears that advice adverse to the taxpayer will be given, and if a conference has been requested, the taxpayer will be told, by telephone if possible, the time and place of the conference. The conference must be held within 21 calendar days after such contact has been made. Telephone conferences may be held at a time mutually agreeable to both parties within the 21-day period. 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. An extension of the 21-day period will be granted where the taxpayer justifies it in writing and the appropriate Branch Chief or his or her delegate approves it. Because the purpose of these procedures is to facilitate the technical advice process, requests for extensions should be justified by compelling facts and circumstances. The request for extension should be submitted before the end of the 21-day period. If unusual circumstances near the end of the 21-day period make a written request impractical, within the 21-day period the National Office should be told orally about the problem and of the forthcoming written request for extension. These requests must be promptly submitted. The taxpayer or taxpayer's representative will be told promptly and later in writing of the approval or denial of the requested extension. There is no right to appeal the denial of an extension request. If it 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 Service will process the case on the basis of the existing record.

02 A taxpayer is entitled by right to only one conference in the National Office unless one of the circumstances discussed in this section 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 10.10 on behalf of the Branch Chief. In appropriate cases, the EP/EO Specialist or the Appeals Officer may also attend the conference to clarify the facts in the case. 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 an opportunity to study the case. However, the taxpayer may request that the conference of right be held at a stage 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 official of the Service.

03 In order to issue technical advice memoranda in a more efficient manner, the Branch representatives may offer the taxpayer an option of delaying the conference in order to submit a brief requesting section 7805(b) relief, discussed in section 13 of this revenue procedure, in the event of a final adverse determination by the Service. In such cases, a conference on the tentatively adverse position and the section 7805(b) relief request normally will be scheduled within 10 days of receipt of the taxpayer's section 7805(b) request.

04 Because conference procedures are informal, no tape, stenographic, or other verbatim recording of a conference is made.

05 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 Service's tentative decision on the substantive issues and the reasons for it. If prospective application under section 7805(b) of the Code is advanced by the taxpayer, the Service 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.

06 An invitation to an additional conference is made if, after the conference of right, an adverse holding is proposed either (1) on a new issue, or (2) 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 inviting a taxpayer to attend further conferences when National Office personnel think they are necessary. These additional conferences are held only at the invitation of the National Office.

07 The taxpayer is responsible for furnishing in writing to the National Office within 21 calendar days after the conference any additional data, lines of reasoning, precedents, etc., that the taxpayer proposed and that were discussed at the conference but not previously or adequately presented in writing. A copy of the additional material submitted by the taxpayer must be sent by the taxpayer to the Key District Director or the Chief, Appeals Office, for comment. If the additional information is not received within 21 days, or other agreed-upon period, the technical advice memorandum will be issued on the basis of the existing record. An extension of the 21-day period may be granted if the taxpayer justifies it in writing and the appropriate Branch Chief to whom the case is assigned approves it. Procedures for requesting an extension of the 21-day period and notifying the taxpayer or the taxpayer's representative of the Service's decision are the same as those in section 9.01. Any additional material should be submitted in duplicate to the National Office. If the additional information would have a significant impact on the facts in the request for technical advice, the National Office must send a copy to 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, gives the matter prompt attention.

08 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.

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

 Official                                Telephone Numbers

01 Requests for technical advice generally are given priority and processed expeditiously. As soon as the request for technical advice is assigned, the tax law specialist analyzes the file to see whether it meets all requirements of section 6. If it does not comply with the requirements of section 6.09, relating to the statement of proposed deletions, the National Office makes the deletions from the technical advice memorandum that the Commissioner determines are required by section 6110(c) of the Code.

02 If the taxpayer has requested a conference in the National Office, the procedures in section 9 will be followed.

03 Usually, upon initial review within 2l calendar days, the Branch Office receives the request for technical advice, or if a request for technical advice is incomplete, a representative of the Branch telephones the Key District or Appeals Office to discuss the procedural and substantive problems in the request that come within the Branch's jurisdiction. The Branch representative informs the Key District or Appeals Office:

(1) that the case is being returned because substantial additional information is required to resolve an issue, because significant unresolved factual variances exist between the statement of facts submitted by the Key District or Appeals Office and the taxpayer, or because major procedural problems cannot be resolved by phone (A request for technical advice will not be returned or reply delayed merely because additional information not essential to the preliminary assessment of the case is needed.): or

(2) that the case is not being returned but more information is needed or minor procedural deficiencies exist.

04 After the Branch receives the additional information requested in section 10.03(2), the Branch representative may telephone the Key District or Appeals Office to discuss the procedural and substantive issues in the request that come within the jurisdiction of the Branch.

05 A tentative conclusion may be discussed with the Key District or Appeals Office. But, because the Branch representative's tentative conclusion may change during the preparation and review of the technical advice memorandum, it is not, under any circumstances, considered final. The Key District or Appeals Office may not tell the taxpayer what the tentative conclusion is.

06 When the technical advice request concerns matters within the jurisdiction of more than one Division, a representative of the Division that received the original technical advice request informs the Key District or Appeals Office as soon as possible: (1) that the matters within the jurisdiction of another Division have been referred to the other Division or office for consideration, and (2) that a representative of the other Division may contact the Key District or Appeals Office about the technical advice request.

07 If during the analysis and development of the case it is determined after discussion with the appropriate Branch Chief or reviewer, that additional information essential to the preliminary assessment of the case is needed, a Branch representative will obtain the additional information in the most expeditious manner possible from the taxpayer or the Key District Director or Chief, Appeals Office. Any additional information requested from the taxpayer by the National Office must be submitted by letter appended by a penalties of perjury statement within 21 calendar days or other agreed-upon period, after the request for information is made. Section 8.13 of Rev. Proc. 90-4 sets out the requirements as to who can sign documents supplying information to the Service. A written request for an extension of time to submit additional material must be received by the National Office within the 21-day period, setting forth compelling facts and circumstances justifying the proposed extension. The 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 submission 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.

08 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.

09 Generally, 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 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 Service 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 technical advice request.

10 Replies to requests for technical advice are addressed to the Key District Director or the Chief, Appeals Office. When a request for technical advice is from Appeals, the response to the appropriate Appeals Office will be routed through the National Director of Appeals, CC:AP. The replies to technical advice requests are in two parts. Each part identifies the taxpayer by name, address, tax 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 District or Appeals Office administrative information 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 in 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. Where applicable, accompanying the technical advice 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)). The District Director of a Key District Office or the Chief, Appeals Office, forwards this notice to the taxpayer when the District Director of a Key District Office or the Chief, Appeals Office, gives a copy of the technical advice memorandum to the taxpayer according to section 10.09.

11 A copy of the technical advice memorandum will be given to the taxpayer only after it has been adopted by the District Director of a Key District Office or the Chief, Appeals Office. However, in the case of technical advice memoranda described in section 6110(g)(5)(A) of the Code, relating to cases involving criminal or civil fraud investigations and jeopardy or termination assessments, a copy of the technical advice memorandum is not given to the taxpayer until all proceedings in the investigations or assessments are completed.

12 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 that are proposed by the taxpayer but that have not been made by the National Office. Generally, the National Office does not consider the deletion of any material that the taxpayer has not proposed be deleted before the National Office reply is sent to the request for technical advice to the District Director of a Key District Office 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.

SEC. 11. ACTION ON TECHNICAL ADVICE IN DISTRICT AND APPEALS OFFICES

01 The District Director of a Key District Office 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 District Director of a Key District Office 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.

02 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.

03 The District Director of a Key District Office or the Chief, Appeals Office, gives the taxpayer (1) a copy of the technical advice memorandum described in section 10.10, 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 6.10; or documents to which section 6104 applies.

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

SEC. 12. EFFECT OF TECHNICAL ADVICE

01 A taxpayer may not rely on a ruling issued to, or a technical advice memorandum received from the Service by, another taxpayer. Except in rare or unusual circumstances, a holding in a technical advice memorandum is applied retroactively. Moreover, where the taxpayer had previously been issued a favorable ruling or determination letter, whether or not it was based on a previous technical advice memorandum concerning the transaction, purpose, or method of operations, the holding in a technical advice memorandum is applied retroactively unless the Assistant Commissioner (Employee Plans and Exempt Organizations) exercises the discretionary authority under section 7805(b) of the Code to limit the retroactive effect of the holding.

02 As to the effective date in cases involving rulings or determination letters regarding exempt organizations and employee plans (including actuarial matters) see section 15 of Rev. Proc. 90- 4, section 12.01 of Rev. Proc. 84-46, and section 13 of Rev. Proc. 80-30.

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, it is ordinarily 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 such 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 that industry. By the same reasoning, a tax practitioner may not obtain the non-retroactive 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 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 reasons why the revocation is being applied retroactively.

SEC. 13. PROCEDURES FOR REQUESTING APPLICATION OF SECTION 7805(b) IN THE CASE OF TECHNICAL ADVICE

01 Pursuant to section 7805(b) of the Code, it is within the discretion of the Commissioner or the Commissioner's delegate to prescribe the extent, if any, to which any ruling (including technical advice) will be applied without retroactive effect.

A taxpayer who has received a technical advice memorandum or with respect to 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.

02 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 ruling when the request is submitted before the return is examined that contains the transaction that is the subject of the request for ruling. See section 18.02 of Rev. Proc. 90-4.

03 When a taxpayer is informed of the modification or revocation of a technical advice memorandum, ruling letter, or determination letter during the course of an examination of the taxpayer's return by the District Director of a Key District Office 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, ruling letter, or determination letter must itself be made in the form of a request for technical advice. See section 6 of this revenue procedure. However, the taxpayer must also submit a statement, which will be forwarded to the National Office with the request for technical advice, that the request for technical advice is being made pursuant to section 7805(b) of the Code. This statement must also set forth the relief sought and an explanation of the reasons and arguments in support of the relief requested, and it must be accompanied by any documents bearing on the request. The explanation in support of the application of section 7805(b) should include a discussion of the five items enumerated in section 12.05 of this revenue procedure as they relate to the taxpayer's particular situation. The taxpayer's request for relief pursuant to section 7805(b) is forwarded by the District Director of a Key District Office or the Chief, Appeals Office, to the National Office for consideration.

04 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 13.03 above.

05 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 9 of this revenue procedure. If the request for application of section 7805(b) 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) is made as part of a pending technical advice request after a conference has been held on the substantive issue, 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. 14. EFFECT ON OTHER DOCUMENTS

01 Rev. Proc. 80-26, 1980-1 C.B. 671, is superseded.

02 Rev. Proc. 83-41, 1983-1 C.B. 775 is modified to the extent necessary to conform to this revenue procedure.

DRAFTING INFORMATION

The principal authors of this revenue procedure are Michael Rubin of the Employee Plans Technical and Actuarial Division, and Stan Margolies 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 service between the hours of 1:30 p.m. and 4 p.m. Eastern time, Monday through Thursday on (202) 566-6783/6784 (not a toll-free call). Mr. Rubin's telephone number is (202) 343-0729 and Mr. Margolies' telephone number is (202) 566-3729 (also not toll-free calls).