Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 3645 

§ 83.53 How will the Assistant Secretary 

determine which re-petition request to 

consider first? 

(a) OFA shall maintain and make 

available on its website a register of repetition requests that are ready for 

active consideration. 

(b) The order of consideration of repetition requests shall be determined by 

the date on which OFA places each 

request on OFA’s register of requests 

ready for active consideration. 

(c) The Department will prioritize 

review of documented petitions over 

review of re-petition requests, except 

that re-petition requests pending on 

OFA’s register for more than two years 

shall have priority over any 

subsequently filed documented 

petitions. 

§ 83.54 Who will OFA notify when the 

Assistant Secretary begins review of a repetition request? 

OFA will notify the petitioner and 

those listed in § 83.51(b)(2) when AS–IA 

begins review of a re-petition request 

and will provide the petitioner and 

those listed in § 83.51(b)(2) with the 

name, office address, and telephone 

number of the staff member with 

primary administrative responsibility 

for the request. 

§ 83.55 What will the Assistant Secretary 

consider in his/her review? 

(a) In any review, AS–IA will consider 

the re-petition request and evidence 

submitted by the petitioner, any 

comments and evidence on the request 

received during the comment period, 

and petitioners’ responses to comments 

and evidence received during the 

response period. 

(b) AS–IA may also: 

(1) Initiate and consider other 

research for any purpose relative to 

analyzing the re-petition request; and 

(2) Request and consider timely 

submitted additional explanations and 

information from commenting parties to 

support or supplement their comments 

on the re-petition request and from the 

petitioner to support or supplement 

their responses to comments. 

(c) OFA will provide the petitioner 

with the additional material obtained in 

paragraph (b) of this section, and 

provide the petitioner with a 60-day 

opportunity to respond to the additional 

material. The additional material and 

any response by the petitioner will 

become part of the record. 

§ 83.56 Can a petitioner withdraw its repetition request? 

A petitioner can withdraw its repetition request at any point in the 

process and re-submit the request at a 

later date within the five-year time limit 

applicable to the petitioner under 

§ 83.49. Upon re-submission, the repetition request will lose its original 

place in line and be considered after 

other re-petition requests awaiting 

review. 

§ 83.57 When will the Assistant Secretary 

issue a decision on a re-petition request? 

(a) AS–IA will issue a decision within 

180 days after OFA notifies the 

petitioner under § 83.54 that AS–IA has 

begun review of the request. 

(b) The time set out in paragraph (a) 

of this section will be suspended any 

time the Department is waiting for a 

response or additional information from 

the petitioner. 

§ 83.58 Can AS–IA suspend review of a repetition request? 

(a) AS–IA can suspend review of a repetition request, either conditionally or 

for a stated period, if there are technical 

or administrative problems that 

temporarily preclude continuing review. 

(b) Upon resolution of the technical or 

administrative problems that led to the 

suspension, the re-petition request will 

have the same priority for review to the 

extent possible. 

(1) OFA will notify the petitioner and 

those listed in § 83.51(b)(2) when AS–IA 

suspends and when AS–IA resumes 

review of the re-petition request. 

(2) Upon the resumption of review, 

AS–IA will have the full 180 days to 

issue a decision on the request. 

§ 83.59 How will the Assistant Secretary 

make the decision on a re-petition request? 

(a) AS–IA’s decision will summarize 

the evidence, reasoning, and analyses 

that are the basis for the decision 

regarding whether the petitioner meets 

the conditions of §§ 83.47 through 

83.49. 

(b) If AS–IA finds that the petitioner 

meets the conditions of §§ 83.47 through 

83.49, AS–IA will issue a grant of 

authorization to re-petition. 

(c) If AS–IA finds that the petitioner 

has not met the conditions of §§ 83.47 

through 83.49, AS–IA will issue a denial 

of authorization to re-petition. 

§ 83.60 What notice of the Assistant 

Secretary’s decision will OFA provide? 

In addition to publishing notice of 

AS–IA’s decision in the Federal 

Register, OFA will: 

(a) Provide copies of the decision to 

the petitioner and those listed in 

§ 83.51(b)(2); and 

(b) Publish the decision on the OFA 

website. 

§ 83.61 When will the Assistant 

Secretary’s decision become effective, and 

can it be appealed? 

AS–IA’s decision under § 83.59 will 

become effective immediately and is not 

subject to administrative appeal. 

(a) A grant of authorization to repetition is not a final determination 

granting or denying acknowledgment as 

a federally recognized Indian tribe. 

Instead, it allows the petitioner to 

proceed through the Federal 

acknowledgment process by submitting 

a new documented petition for 

consideration under subpart C of this 

part, notwithstanding the Department’s 

previous, negative final determination. 

A grant of authorization to re-petition is 

not subject to appeal. 

(b) A denial of authorization to repetition is final for the Department and 

is a final agency action under the 

Administrative Procedure Act (5 U.S.C. 

704). 

§ 83.62 What happens if some portion of 

this subpart is held to be invalid by a court 

of competent jurisdiction? 

If any portion of this subpart is 

determined to be invalid by a court of 

competent jurisdiction, the other 

portions of the subpart remain in effect. 

For example, if one of the conditions on 

re-petitioning set forth at §§ 83.47 

through 83.49 is held to be invalid, it is 

the Department’s intent that the other 

conditions remain valid. 

Bryan Newland, 

Assistant Secretary—Indian Affairs. 

[FR Doc. 2025–00709 Filed 1–14–25; 8:45 am] 

BILLING CODE 4337–15–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 10030] 

RIN 1545–BP72 

Resolution of Federal Tax 

Controversies by the Independent 

Office of Appeals 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulation. 

SUMMARY: This document contains final 

regulations that provide guidance on the 

resolution of Federal tax controversies 

by the IRS Independent Office of 

Appeals (Appeals) under the Taxpayer 

First Act of 2019 (TFA). The final 

regulations provide that while the 

Appeals resolution process is generally 

available to all taxpayers to resolve 


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Federal tax controversies, there are 

certain exceptions to consideration by 

Appeals. The final regulations also 

address certain procedural and timing 

rules that must be met before Appeals 

consideration is available. The 

regulations affect taxpayers requesting 

Appeals consideration of Federal tax 

controversies. 

DATES: 

Effective date: These regulations are 

effective on January 15, 2025. 

Applicability date: The regulations in 

§§ 301.7803–2 and 301.7803–3 apply to 

all requests for consideration by 

Appeals that are received on or after 

February 14, 2025. 

FOR FURTHER INFORMATION CONTACT: 

Joshua P. Hershman at (202) 317–4311 

(not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Authority 

This document contains amendments 

to the Procedure and Administration 

Regulations under 26 CFR part 301 to 

implement section 7803(e) of the 

Internal Revenue Code (Code), which 

Congress enacted in the TFA (final 

regulations). The final regulations are 

issued under section 7805(a) of the 

Code, which expressly delegates to the 

Secretary of the Treasury or her delegate 

(Secretary) the authority to ‘‘prescribe 

all needful rules and regulations for the 

enforcement of [the Code], including all 

rules and regulations as may be 

necessary by reason of any alteration of 

law in relation to internal revenue.’’ 

Background 

Section 7803(e)(3) provides that it is 

the function of Appeals to resolve 

Federal tax controversies without 

litigation on a basis that is fair and 

impartial to both the Government and 

the taxpayer, promotes a consistent 

application and interpretation of, and 

voluntary compliance with, the Federal 

tax laws, and enhances public 

confidence in the integrity and 

efficiency of the IRS. Section 7803(e)(4) 

states that the resolution process to 

resolve Federal tax controversies 

described in section 7803(e)(3) ‘‘shall be 

generally available to all taxpayers.’’ 

On September 13, 2022, the Treasury 

Department and the IRS published in 

the Federal Register (87 FR 55934) a 

notice of proposed rulemaking (REG– 

125693–19) proposing amendments to 

implement section 7803(e) (proposed 

regulations). The proposed regulations 

proposed to adopt the function of 

Appeals as stated in section 7803(e)(3) 

and that the Appeals resolution process 

is generally available to all taxpayers to 

resolve Federal tax controversies as 

stated in section 7803(e)(4). The 

proposed regulations defined what 

constitutes a Federal tax controversy 

involving disputes over administrative 

determinations made by the IRS and, 

consistent with the historical practice 

and functions of Appeals, listed certain 

additional topics involving disputes 

over administrative determinations by 

the IRS that are treated as Federal tax 

controversies. Proposed § 301.7803– 

2(c)(1) through (24) also proposed an 

exclusive list of twenty-four exceptions 

to consideration of a Federal tax 

controversy by Appeals, almost all of 

which existed before the enactment of 

the TFA. This preamble refers to the 

exceptions in proposed § 301.7803–2(c), 

such as proposed § 301.7803–2(c)(1), (2), 

and (3), for example, as ‘‘Exception 1,’’ 

‘‘Exception 2,’’ and ‘‘Exception 3.’’ 

Additionally, the proposed 

regulations proposed certain procedural 

and timing rules that must be met before 

Appeals consideration is available: the 

originating IRS office must have 

completed its review; a taxpayer must 

have submitted the request for Appeals 

consideration in the prescribed time and 

manner; and Appeals must have had 

sufficient time remaining on the 

appropriate limitations period for it to 

consider the matter. Further, if a Federal 

tax controversy is eligible for 

consideration by Appeals and the 

procedural and timing requirements are 

followed, a taxpayer would generally 

have only one opportunity for Appeals 

consideration. The proposed regulations 

also proposed two special rules for 

docketed cases. First, if Appeals issued 

a notice of deficiency, notice of liability, 

or other determination, without having 

fully considered one or more issues 

because of an impending expiration of 

the statute of limitations on assessment, 

Appeals may choose to have the Office 

of Chief Counsel (Chief Counsel) return 

the case to Appeals for full 

consideration of the issue or issues once 

the case is docketed in the United States 

Tax Court (Tax Court). Second, Appeals 

and Chief Counsel may determine how 

settlement authority is transferred 

between the two offices. Similar 

prerequisites to Appeals consideration 

as those described in this paragraph 

existed before the enactment of the TFA. 

Besides soliciting public comments 

on the rules in the proposed regulations, 

the Treasury Department and the IRS 

also solicited public comments in the 

proposed regulations on whether certain 

exclusions from Appeals’ consideration 

currently provided in the Internal 

Revenue Manual (IRM) relating to 

requests for relief under §§ 301.9100–1 

through 301.9100–22 (9100 relief) and 

requests for a change in accounting 

method (CAM) should be included in 

the list of exceptions in the regulations. 

Lastly, the proposed regulations 

proposed requirements to implement 

section 7803(e)(5). Enacted by the TFA, 

section 7803(e)(5) requires the IRS to 

follow the special notification 

procedures set forth in section 

7803(e)(5) if a taxpayer who is in receipt 

of a notice of deficiency under section 

6212 of the Code requests to have the 

Federal tax controversy referred to 

Appeals and that request is denied. 

The Summary of Comments and 

Explanation of Revisions of these final 

regulations summarizes the provisions 

of the proposed regulations, which are 

explained in greater detail in the 

preamble to the proposed regulations. In 

response to the proposed regulations, 

the Treasury Department and the IRS 

received fourteen comments. A public 

hearing was requested and held on 

November 29, 2022. 

After careful consideration of the 

comments and hearing testimony, the 

Treasury Department and the IRS adopt 

the proposed regulations, as modified 

by this Treasury decision, in response to 

such comments as described in the 

Summary of Comments and 

Explanation of Revisions. The final 

regulations also include minor 

typographical and editorial edits, 

including non-substantive clarifications, 

to the proposed regulations. 

Summary of Comments and 

Explanation of Revisions 

I. Proposed § 301.7803–2 

A. Intent of the TFA To Grant Authority 

To Make Exceptions 

Numerous comments addressed the 

scope of the proposed exceptions to 

Appeals consideration in proposed 

§ 301.7803–2(c) or the authority of the 

Treasury Department and the IRS to 

make exceptions that exclude or limit 

access to Appeals. 

Several comments agreed that the 

TFA generally authorizes the Treasury 

Department and the IRS to provide 

exceptions to Appeals consideration. A 

comment agreed that the statutory text 

and legislative history of the TFA 

confirm Congress did not intend for 

Appeals access to be universally 

available. This comment supported the 

proposed regulations’ identification of 

particular situations in which Appeals 

access should not be available. While 

disagreeing with Exception 19 

(Challenges Alleging That a Treasury 

Regulation Is Invalid) and Exception 20 

(Challenges Alleging That a Notice or 

Revenue Procedure Is Invalid) and 

exceptions for 9100 relief and CAMs, 

another comment generally agreed with 


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the Treasury Department and the IRS 

that not every case is appropriate for 

Appeals consideration. The comment 

also stated that the TFA did not require 

that the IRS grant all requests for 

Appeals to consider any dispute 

because the Secretary may provide 

exceptions to Appeals consideration. 

Another comment stated there was 

‘‘ample reason, rooted in logic and past 

practice, for the majority of [the] 

proposed exceptions.’’ It opined that 

some of the proposed exceptions, which 

were not identified, were not necessary 

to the proper administration of the 

Appeals process or were not consistent 

with the statute’s mandate that the 

Appeals process be generally available. 

Another comment stated that some of 

the historic exclusions in the proposed 

regulations should be accepted and 

specifically mentioned penalties and 

determinations under sections 6702 or 

6682 of the Code. Other comments 

stated that the proposed exceptions or 

exceptions framework laid out in the 

proposed regulations generally ran afoul 

of the intent of the TFA by limiting 

access to Appeals, or that certain 

proposed exceptions such as Exception 

18 (Challenges Alleging That a Statute Is 

Unconstitutional), Exception 19, and 

Exception 20 did so. These comments 

gave several reasons in support of their 

arguments, as described in greater detail 

in section I.D. of this Summary of 

Comments and Explanation of 

Revisions. Two comments claimed that 

providing exceptions to review by 

Appeals would deny taxpayers a 

statutory right to Appeals, and two 

comments claimed exceptions to review 

by Appeals would inappropriately 

restrict Appeals access and suggested 

the proposed regulations should instead 

expand Appeals access. 

As explained in more detail in section 

I.C. of the proposed regulations’ 

Explanation of Provisions, Congress did 

not provide for an absolute right to 

administrative consideration by 

Appeals, which is reflected in the 

statute and the TFA’s legislative history. 

Rather, Appeals review is ‘‘generally 

available,’’ under section 7803(e)(4) and 

the Treasury Department and the IRS 

may provide reasonable exceptions in 

their discretion, whether existing or 

new. In addition to this statutory 

language, TFA’s legislative history also 

reflects the intention of Congress that 

the Treasury Department and the IRS 

retain their historical discretion to 

determine whether the resolution of 

particular types of disputes is 

appropriate for the Appeals resolution 

process, and for the IRS to retain the 

discretion to determine whether a 

particular Federal tax controversy is 

appropriate for the Appeals resolution 

process: 

Independent Appeals is intended to 

perform functions similar to those of the 

current Appeals. Independent Appeals is to 

resolve tax controversies and review 

administrative decisions of the IRS in a fair 

and impartial manner, for the purposes of 

enhancing public confidence, promoting 

voluntary compliance, and ensuring 

consistent application and interpretation of 

Federal tax laws. Resolution of tax 

controversies in this manner is generally 

available to all taxpayers, subject to 

reasonable exceptions that the Secretary may 

provide. Thus, cases of a type that are 

referred to Appeals under present law remain 

eligible for referral to Independent Appeals. 

See H.R. Rep. No. 39, Part 1, 116th 

Cong., 1st Session (House TFA Report), 

30–31 (2019) (emphasis added). 

Contrary to one comment’s 

suggestion, the Committee reports for 

the IRS Restructuring and Reform Act of 

1998, Public Law 105–206 (112 Stat. 

685, 689 (July 22, 1998)), and any earlier 

version of the TFA that Congress did not 

enact, are not informative when 

interpreting the TFA. The legislative 

history of the TFA reflects 

Congressional intent that the Treasury 

Department and the IRS retain their 

historical discretion to determine 

whether the resolution of particular 

types of disputes is appropriate for 

Appeals, and the discretion of the IRS 

to determine whether a particular 

Federal tax controversy is appropriate 

for the Appeals resolution process. See 

House TFA Report, at 29. 

Several comments expressed concern 

that excluding a matter from Appeals 

consideration adversely affects the 

independence or impartiality of 

Appeals. Some of the comments 

specifically asserted that prohibiting 

Appeals from considering validity 

challenges to a regulation, notice, or 

revenue procedure as set forth in 

Exception 19 or Exception 20 

undermines its independence. The 

Treasury Department and the IRS 

disagree with this comment. Exceptions 

from review by Appeals do not inhibit 

the independence or impartiality of 

Appeals for matters or issues under 

consideration. If a matter is not 

reviewed by Appeals, there is no 

independent analysis to be performed. 

Appeals still would be free to settle a 

Federal tax controversy that is referred 

to it using its own standards and an 

exception to review by Appeals would 

have no bearing on the cases or issues 

that are referred to Appeals. 

One comment opined that the 

proposed exceptions in general are not 

reasonable or narrowly construed. The 

Treasury Department and the IRS 

disagree with this comment. As 

reflected in the proposed regulations’ 

Explanation of Provisions in section 

I.C., the proposed exceptions are 

narrowly tailored and are based on 

reasonable rationales. Additionally, the 

proposed regulations and these final 

regulations reinforce the statutory 

presumption that Federal tax 

controversies may be considered by 

Appeals and require a regulatory 

exception for consideration to be 

unavailable. 

The same comment suggested there 

would be no ‘‘whipsaw’’ if Appeals 

settles any of the cases or issues 

outlined in the proposed exceptions 

because Appeals settlements are not 

binding on any other taxpayer or on 

Chief Counsel’s litigation position. It is 

unclear what is intended by this 

comment. The term whipsaw refers to 

the situation produced when the 

Government is subjected to conflicting 

claims of taxpayers. The issue of 

whipsaw has no bearing on the Appeals 

exceptions listed in the proposed 

regulations nor on the rationales set 

forth in the proposed regulations that 

support these exceptions and so the 

Treasury Department and the IRS do not 

agree that revisions to the proposed 

regulations are necessary. 

A few comments focused on costs and 

opined that Congress intended for 

Appeals to resolve Federal tax 

controversies without expensive 

litigation. A comment asserted the 

establishment of Appeals was an 

attempt by Congress to make resolving 

controversies less cost-prohibitive for 

lower income individuals. Another 

comment stated the proposed 

regulations’ approach granting 

exceptions to Appeals consideration 

would be a waste of resources of the 

Government and taxpayers. The 

Treasury Department and the IRS agree 

that part of Appeals’ mission is to 

resolve Federal tax controversies 

without litigation, but do not agree that 

exceptions to review by Appeals will 

result in a waste of resources. There is 

no reason to assume that the cost to 

litigate a particular Federal tax 

controversy will significantly increase 

as a result of the proposed regulations, 

or that litigation expenses will increase 

at all in circumstances in which an 

exception existed before the TFA. 

Appeals consideration will still be 

available for most cases, which can be 

resolved without litigation (or without 

further litigation if the taxpayer has 

petitioned the Tax Court). The proposed 

regulations’ procedural requirements, 

timing requirements, and almost all of 

the exceptions to consideration by 


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Appeals already exist in previously 

established guidance regarding Appeals. 

As in the past, the proposed exceptions 

are limited in number and scope. The 

vast majority of taxpayers, including 

low-income taxpayers, will have the 

opportunity to have Appeals consider 

their Federal tax controversies. 

Similarly, two comments asserted that 

Exception 18, Exception 19, and/or 

Exception 20 waste taxpayer and 

Government resources. As discussed in 

more detail in sections I.D.11.a. and 12. 

of this Summary of Comments and 

Explanation of Revisions, in contrast to 

a single decision by Appeals that is 

applicable and communicated only to 

one taxpayer, a final decision from a 

Federal court is publicly available and 

applied consistently to all taxpayers. As 

a result, these exceptions promote 

efficiency rather than wasting taxpayer 

and Government resources. 

Furthermore, even if Appeals were to 

review the matter covered by these 

exceptions, there is no guarantee that 

Appeals would settle or resolve it. 

One comment recommended that the 

Treasury Department and the IRS 

should take a conservative approach to 

Appeals exceptions because recent 

Supreme Court decisions such as CIC 

Services, LLC v. Internal Revenue 

Service, 593 U.S. 209 (2021) and 

Boechler, P.C. v. Commissioner, 596 

U.S. 199 (2022) defined limits on the 

IRS’s contentions concerning its 

prerogatives under the Administrative 

Procedure Act (APA), equitable tolling, 

and Tax Court jurisdiction. The 

Treasury Department and the IRS 

disagree with the premise of this 

comment that a more conservative 

approach is needed or that the 

referenced cases are relevant in 

construing section 7803(e). The 

exceptions in these regulations are 

reasonable and narrowly tailored to 

achieve their purposes. None of the 

cited cases addressed the meaning of 

section 7803(e) or the availability of 

Appeals review. Instead, these cases 

address different issues and have no 

bearing on these regulations. 

Another comment noted that 

litigation arguing that the TFA provides 

taxpayers with access to Appeals is 

pending in the Hancock and Rocky 

Branch cases in the United States Court 

of Appeals for the Eleventh Circuit 

(Eleventh Circuit), implying that the 

regulations should be withheld due to 

the litigation. The Treasury Department 

and the IRS disagree that these two 

cases serve to limit or prevent the 

publication of regulations. Neither case 

is pending any longer. In Hancock, the 

U.S. District Court for the Northern 

District of Georgia held that the taxpayer 

had no absolute right to Appeals 

consideration under the circumstances. 

The Eleventh Circuit upheld the 

decision on Anti-Injunction Act grounds 

(see section 7421 of the Code), and the 

Supreme Court denied certiorari. See 

Hancock County Land Acquisitions LLC, 

et. al. v. United States, 553 F. Supp. 3d 

1284, 1294 fn. 9 (N.D. Ga. 2021), aff’d 

130 AFTR 2d 2022–5529 (11th Cir. Aug. 

17, 2022), cert. denied 143 S.Ct. 577 

(January 9, 2023). Rocky Branch has 

facts similar to the facts in Hancock, 

and as in Hancock the Eleventh Circuit 

upheld the decision on Anti-Injunction 

grounds, and the Supreme Court denied 

certiorari. See Rocky Branch 

Timberlands LLC, et. al. v. United 

States, 129 AFTR 2d 2022–2137 (N.D. 

Ga. 2022), aff’d 132 AFTR 2d 2023–5788 

(11th Cir. Sept. 6, 2023), cert. denied 

144 S.Ct. 812 (Feb. 20, 2024). 

One comment asserted that some of 

the exceptions in the proposed 

regulations, in particular, Exception 3 

(Whistleblower Awards); Exception 4 

(Administrative Determinations Made 

by Other Agencies); Exception 7 (Denial 

of Access Under the Privacy Act); and 

Exception 14 (Authority Over the Matter 

Rests With Another Office) leave a 

taxpayer without any administrative 

recourse. The comment suggested an 

interagency discussion over how and 

whether administrative appeals 

processes, whether residing in the IRS 

Independent Office of Appeals or 

outside of the IRS, could be developed 

for these types of cases. The Treasury 

Department and the IRS agree with the 

comment’s premise that the language of 

section 7803(e) does not cover 

Exception 3, Exception 4, and Exception 

7, or cover Exception 14 with respect to 

referrals to the Department of Justice 

(Justice Department). See sections I.D.2., 

3., 4., and 8. of this Summary of 

Comments and Explanation of 

Revisions. The disputes involved in 

Exception 3, Exception 4, and Exception 

7 are not Federal tax controversies, and 

Appeals lacks settlement authority after 

a referral of a case to the Justice 

Department, as described in Exception 

14. The inclusion of Exception 3, 

Exception 4, Exception 7, and Exception 

14 in the list of proposed exceptions in 

proposed § 301.7803–2(c) was to clarify 

these points. These exceptions to 

Appeals consideration all existed before 

the TFA. Expanding the role of Appeals 

as suggested is not administratively 

feasible and is outside the scope of these 

regulations and section 7803. 

Furthermore, lack of consideration by 

Appeals does not leave the taxpayer 

without an administrative option to 

resolve a controversy as issues can 

always be resolved during an 

examination. Accordingly, these final 

regulations do not adopt this comment. 

B. Definition of a Federal Tax 

Controversy: Proposed § 301.7803– 

2(b)(2) 

Section 7803(e)(3) provides that the 

function of Appeals is ‘‘to resolve 

Federal tax controversies without 

litigation,’’ without defining the term 

‘‘Federal tax controversy.’’ Proposed 

§ 301.7803–2(b)(1), consistent with the 

statutory text of section 7803(e)(4), 

provides that the Appeals resolution 

process is generally available to all 

taxpayers to resolve Federal tax 

controversies. Proposed § 301.7803– 

2(b)(2) defined a Federal tax controversy 

as a dispute over an administrative 

determination with respect to a 

particular taxpayer made by the IRS in 

administering or enforcing the internal 

revenue laws, related Federal tax 

statutes, and tax conventions to which 

the United States is a party (collectively 

referred to as internal revenue laws) that 

arises out of the examination, collection, 

or execution of other activities 

concerning the amount or legality of the 

taxpayer’s income, employment, excise, 

or estate and gift tax liability; a penalty; 

or an addition to tax under the internal 

revenue laws. 

As proposed in the proposed 

regulations and consistent with the 

statute, the definition of a Federal tax 

controversy is broad. Although the 

proposed definition does not 

specifically refer to tax-exempt 

organizations, it includes an IRS 

determination that an organization is 

not tax-exempt because the 

determination concerns whether the 

organization has or will have a tax 

liability in some amount. Similarly, 

determinations of private foundation or 

qualified employee plan status and taxexempt or other tax-advantaged bond 

status are included in the proposed 

regulations’ definition of a Federal tax 

controversy because these 

determinations concern whether there is 

or will be a tax liability for the 

foundation; plan, or its participants; or 

bond issuers or holders. In these final 

regulations, the Treasury Department 

and the IRS have modified the 

definition of a Federal tax controversy 

to clarify that such determinations are 

included in the definition. 

Consistent with section 7803(e), the 

definition of Federal tax controversy 

means that determinations that Appeals 

historically may not have considered 

may now be considered by Appeals. 

These determinations include the 

classification or reclassification of a 

non-exempt charitable trust under 


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section 4947(a)(1) of the Code as 

described in section 509(a)(3) of the 

Code; the classification or 

reclassification of the organization as an 

exempt operating foundation under 

section 4940(d)(2) of the Code; relief 

from retroactive revocation or 

modification of a determination letter 

under section 7805(b) of the Code; 

denials of relief requested under 

§ 301.9100–3 to permit the organization 

to be recognized and treated as taxexempt effective as of a date earlier than 

the date of application; and pursuant to 

section 7611 of the Code relating to 

restrictions on church tax inquiries and 

examinations, revocation of the exempt 

or church status of an organization that 

is listed as, or claims to be, a church. 

C. Disputes Not Meeting the Definition 

of a Federal Tax Controversy That Are 

Treated as Federal Tax Controversies: 

Proposed § 301.7803–2(b)(3) 

Proposed § 301.7803–2(b)(3) provided 

that notwithstanding the definition of a 

Federal tax controversy, disputes over 

administrative determinations made by 

the IRS with respect to a particular 

person regarding certain topics listed in 

proposed § 301.7803–2(b)(3) are treated 

as Federal tax controversies. 

1. Additional Disputes Treated as 

Federal Tax Controversies: Proposed 

§ 301.7803–2(b)(3)(iv) Through (vi) 

As explained previously in section 

I.B. of this Summary of Comments and 

Explanation of Revisions, the final 

regulations clarify that the definition of 

Federal tax controversy includes 

determinations concerning the status of 

tax-exempt organizations, private 

foundations, and qualified plans, and 

the status of tax-exempt or other taxadvantaged bonds. Accordingly, the 

final regulations delete these items from 

proposed § 301.7803–2(b)(3)(iv) through 

(vi), because inclusion would be 

unnecessary and duplicative. The final 

regulations retain the language in 

proposed § 301.7803–2(b)(3)(vi) 

referring to arbitrage claims, because 

such claims do not involve a tax and 

therefore do not meet the definition of 

a Federal tax controversy, as defined in 

§ 301.7803–2(b)(2). That language is 

now included in the final regulations 

and redesignated as § 301.7803– 

2(b)(3)(iv). 

2. FOIA Cases Treated as Federal Tax 

Controversies: Proposed § 301.7803– 

2(b)(3)(ii) 

One comment was received on 

proposed § 301.7803–2(b)(3)(ii) relating 

to a request under the Freedom of 

Information Act (5 U.S.C. 552) (FOIA). 

This comment recommended removing 

proposed § 301.7803–2(b)(3)(ii) because 

FOIA does not affect the collection of 

taxes or the liability for taxes of the 

FOIA requester. The Treasury 

Department and the IRS do not adopt 

this recommendation. Appeals 

consideration of IRS administrative 

determinations listed in proposed 

§ 301.7803–2(b)(3), including in 

proposed § 301.7803–2(b)(3)(ii), is 

consistent with the historical practice 

and functions of Appeals as codified in 

section 7803(e)(3). See § 301.7803– 

2(b)(3)(i) through (vi). As a matter of tax 

policy and administration, it is 

important that FOIA requesters have, 

consistent with past practice, the 

opportunity for consideration by 

Appeals. The TFA does not prohibit 

Appeals from reviewing determinations 

by the IRS that are not Federal tax 

controversies, and retaining the ability 

for review by Appeals is beneficial to 

the public. 

D. Exceptions to Appeals Consideration: 

Exception 1 Through Exception 24 

The Treasury Department and the IRS 

received several comments concerning 

the exceptions to Appeals consideration 

listed in proposed § 301.7803–2(c)(1) 

through (24). The exceptions that were 

subject to the greatest number of 

comments were Exception 19 and 

Exception 20. 

1. Frivolous Position and Penalties 

Related to Frivolous Positions and False 

Information: Exception 1 and Exception 

2 

Two comments were received on 

Exception 1 and Exception 2. Exception 

1 provides that Appeals consideration is 

not available for an administrative 

determination made by the IRS with 

respect to a particular taxpayer in which 

the IRS rejects a frivolous position. 

Similarly, Exception 2 provides that 

Appeals consideration is not available 

regarding a penalty assessed by the IRS 

with respect to a particular taxpayer for 

asserting a frivolous position, for 

making a frivolous submission, or for 

providing false information. 

One comment agreed with excepting 

from Appeals consideration penalties 

and determinations under section 6702 

or section 6682 of the Code. A second 

comment alleged the exceptions would 

curtail the independence of Appeals by 

eliminating its right to review 

determinations of frivolousness because 

such determinations are not infallible. 

That comment recommended Appeals 

should have the option, but not the 

obligation, to decide whether positions 

have been wrongly labeled frivolous to 

strike a balance between its 

independence and the IRS’s need to 

weed out frivolous arguments. 

The Treasury Department and the IRS 

do not adopt this recommendation to 

give Appeals the option to consider 

whether the IRS has mistakenly labeled 

a taxpayer’s position as frivolous or 

wrongly imposed a frivolous filing 

penalty. Referring every frivolous 

argument to Appeals upon the request 

of a taxpayer, for Appeals to then 

determine whether or not to grant 

consideration, would be unnecessarily 

resource intensive and inconsistent with 

the historic, reasonable limitations on 

access to Appeals. Section I.C.1. of the 

proposed regulations’ Explanation of 

Provisions identified similar existing 

restrictions precluding the 

consideration of frivolous positions by 

Appeals that can be found in 

§ 601.106(b) of the Statement of 

Procedural Rules (26 CFR part 601) 

(regarding appeal procedures not 

extending to cases involving solely the 

failure or refusal to comply with tax 

laws because of frivolous moral, 

religious, political, constitutional, 

conscientious, or similar grounds), IRM 

5.14.3.3(1) (10–20–2020) (relating to 

installment agreement requests made to 

delay collection action), and IRM 

8.22.5.5.3 (11–08–2013) (relating to 

frivolous issues). There are sound policy 

reasons for these historic limitations. As 

explained in sections I.C.1. and 2. of the 

proposed regulations’ Explanation of 

Provisions, Appeals consideration of 

frivolous positions would facilitate 

abuse of the tax system by allocating IRS 

and Appeals resources to reviewing 

positions that have already been 

designated as frivolous. Penalties 

imposed under section 6702 or section 

6682 are designed to deter frivolous 

behavior or improper conduct by a 

taxpayer. If Appeals does not consider 

the merits of a taxpayer’s frivolous 

position, it follows that Appeals should 

not consider the IRS’s assessment of a 

penalty with respect to the taxpayer as 

well. The exceptions are consistent with 

the restriction in section 7803(e)(5)(D) 

that the notice and protest procedures 

under section 7803(e)(5) do not apply to 

a request if the issue is frivolous within 

the meaning of section 6702(c). Also, as 

explained in section I.A. of this 

Summary of Comments and 

Explanation of Revisions, excluding a 

matter from Appeals consideration has 

no bearing on its independence. 

2. Whistleblower Awards: Exception 3 

Two comments were received on 

Exception 3, which provides that 

Appeals consideration is not available 

for any administrative determination 

made by the IRS under section 7623 of 


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the Code relating to awards to 

whistleblowers. 

The first comment suggested creating 

an interagency administrative review 

process, and it is discussed in section 

I.A. of this Summary of Comments and 

Explanation of Revisions. 

The second comment asserted that the 

authority relied upon for Exception 3 is 

the proposed definition of Federal tax 

controversy in the proposed regulations 

and alleged that the language of the TFA 

authorizes Appeals to review 

whistleblower matters. The Treasury 

Department and the IRS do not adopt 

this comment. The exception for 

whistleblower awards under section 

7623 in Exception 3 is a historic 

exception that has existed before the 

enactment of the TFA. For example, 

section 7623 was one of the exclusions 

listed in section 4 of Rev. Proc. 2016– 

22, 2016–15 IRB 577 (April 11, 2016), 

which provides procedures for Chief 

Counsel referrals of cases docketed in 

the Tax Court to Appeals for settlement. 

Its inclusion in the list of proposed 

exceptions was to clarify the point that 

section 7803(e) does not cover 

whistleblower awards because they do 

not involve a Federal tax controversy. In 

a whistleblower case, the IRS 

determination involves whether the 

whistleblower is entitled to an award. 

The whistleblower’s tax liability is not 

at issue, and Appeals is not reviewing 

a determination by the IRS in its 

examination, collection, or execution of 

other activities with respect to the 

whistleblower’s tax liability. This award 

determination is separate and distinct 

from a determination of tax liability. 

3. Administrative Determinations Made 

by Other Agencies: Exception 4 

One comment concerned Exception 4, 

which provides that Appeals 

consideration is not available for an 

administrative determination issued by 

an agency other than the IRS. An 

example is a determination by the 

Alcohol and Tobacco Tax and Trade 

Bureau (TTB) concerning an excise tax 

administered by and within its 

jurisdiction. The comment suggested 

creating an interagency administrative 

review process, and it is discussed in 

section I.A. of this Summary of 

Comments and Explanation of 

Revisions. 

4. Denials of Access Under the Privacy 

Act: Exception 7 

One comment was received on 

Exception 7, which provides that 

Appeals consideration is not available 

for any dispute regarding a 

determination of the IRS resulting in 

denial of access under the Privacy Act 

(5 U.S.C. 552a(d)(1)) (relating to access 

to records) to a particular person. The 

comment suggested creating an 

interagency administrative review 

process, and it is discussed in section 

I.A. of this Summary of Comments and 

Explanation of Revisions. 

5. IRS Erroneously Returns or Rejects an 

Offer in Compromise: Exception 9 

Exception 9 provides that Appeals 

consideration is not available regarding 

the application of section 7122(f) of the 

Code when the IRS erroneously returns 

or rejects a taxpayer’s offer in 

compromise (OIC) submitted under 

section 7122 as nonprocessable. As 

explained in section I.C.9. of the 

proposed regulations’ Explanation of 

Provisions, Exception 9 includes, for 

example, the claim that the IRS’s 

mistaken rejection or return was in bad 

faith. Because the IRS returned or 

rejected the offer without making a 

determination regarding the OIC, there 

is no administrative determination 

made by the IRS for Appeals to review. 

Two comments were received 

concerning OICs. The first comment 

recommended that Appeals should be 

authorized to review when the IRS 

erroneously returns or rejects a 

taxpayer’s OIC as nonprocessable or no 

longer processable. The comment stated 

that such a return or rejection is an 

administratively reviewable 

determination, that not allowing 

Appeals review is a significant loss of 

rights for the taxpayer including lowincome taxpayers in particular, that 

excepting this issue from Appeals 

review circumvents section 7122(f), and 

that Appeals review would promote 

consistency. 

The Treasury Department and the IRS 

do not adopt this comment. Appeals has 

not historically reviewed such returned 

or rejected OICs. Exception 9 is narrow, 

and it is consistent with the pre-existing 

OIC regulations. Section 301.7122– 

1(f)(5)(ii) states, in part, that if an OIC 

is returned following a ‘‘determination’’ 

that the offer was nonprocessable, that 

return of the OIC ‘‘does not constitute a 

rejection of the offer for purposes of this 

provision and does not entitle the 

taxpayer to appeal the matter to appeals 

under the provisions of this paragraph 

(f)(5) . . .’’ Also, the comment’s 

recommendation is not consistent with 

the function of Appeals, which is to 

weigh litigation hazards in applying the 

law to specific facts. Reviewing the 

completeness of an OIC is not a 

weighing of hazards. There would be no 

hazards of litigation for Appeals to 

consider or merits to weigh—either the 

OIC request is complete or not 

complete. Further, the recommendation, 

if adopted, would conflict with the OIC 

regulations. The return of an OIC as 

nonprocessable is an example of a 

premature review in § 301.7803–2(d)(1) 

because the originating IRS office has 

not completed its action. It has been a 

longstanding practice of the IRS to 

return incomplete or otherwise 

nonprocessable OICs that taxpayers fail 

to perfect. See for example, sec. 5 of 

Rev. Proc. 2003–71, 2003–36 I.R.B. 517 

(September 8, 2003) (relating to offers in 

compromise). 

The second comment opined that 

Exception 9 is too loosely defined and 

its focus should be limited to those 

taxpayers who are abusing the process 

such as by creating undue delay. This 

comment is not adopted. Exception 9 is 

narrowly limited to a case in which the 

IRS erroneously returns or rejects an 

OIC as nonprocessable or no longer 

processable and the taxpayer requests 

Appeals consideration to assert that the 

OIC should be deemed to be accepted 

under section 7122(f). This exception is 

narrowly defined to sufficiently meet 

the administrative goals of the rule. 

6. Criminal Prosecution Is Pending 

Against Taxpayer: Exception 10 

One comment was submitted on 

Exception 10, which provides that 

Appeals consideration is not available 

for a Federal tax controversy with 

respect to a taxpayer while a criminal 

prosecution or a recommendation for 

criminal prosecution is pending against 

the taxpayer for a tax-related offense 

other than with the concurrence of Chief 

Counsel and the Justice Department, as 

applicable. 

The comment recommended that the 

final regulations should limit Exception 

10 to only cases in which the pending 

criminal matter pertains to the same 

subtitle of the Code and that Exception 

10 not be applied to matters within a 

single subtitle that are completely 

unrelated to each other and do not 

involve common facts or tax 

transactions. The Treasury Department 

and the IRS do not adopt this comment. 

Exception 10 allows for Appeals 

consideration with the concurrence of 

Chief Counsel and the Justice 

Department, as applicable. Such 

concurrence is fact-based and case 

specific and would accommodate the 

situations addressed in the comment 

because if they were to arise, Chief 

Counsel and/or the Justice Department 

could determine whether concurrence 

would be appropriate under the facts 

and circumstances of the particular 

case. Limiting the exception as 

suggested in the comment could require 

that Appeals consideration be afforded, 

when such consideration could interfere 


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with a pending criminal matter. It 

would also be contrary to regulations 

under 26 CFR part 601, which provide 

general procedural rules for Appeals 

functions and limit Appeals’ authority 

to act in a case in which criminal 

prosecution is recommended, except 

with the concurrence of Chief Counsel. 

See § 601.106(a)(2)(vi). 

7. IRS’s Automated Process of Certifying 

a Seriously Delinquent Tax Debt: 

Exception 12 

One comment was received on 

Exception 12, which provides that 

consideration by Appeals is not 

available for the certification or issuance 

of a notice of certification of a seriously 

delinquent Federal tax debt of a 

particular taxpayer to the Department of 

State (State Department) under section 

7345 of the Code (relating to the 

revocation or denial of a taxpayer’s 

passport in the case of serious tax 

delinquencies). According to the 

comment, if Appeals consideration is 

not available for certification or 

issuance of a notice of certification of a 

seriously delinquent tax debt, the 

taxpayer lacks an important check on 

the automated system and does not have 

an opportunity to contest whether the 

statutory requirements for passport 

certification have been met under 

section 7345(b). 

The Treasury Department and the IRS 

do not adopt this comment. In the event 

of a mistake in the automated process, 

a taxpayer has the opportunity to 

contact the IRS personnel identified in 

the notice, which provides a check on 

the automated process. Specifically, the 

taxpayer receives Notice CP508C, Notice 

of certification of your seriously 

delinquent Federal tax debt to the State 

Department, informing the taxpayer to 

contact the IRS at the phone number in 

that notice to request reversal of the 

certification if the taxpayer contends the 

certification is erroneous. The role of 

Appeals is to review administrative 

determinations and to weigh the 

hazards of litigation, not to provide a 

backstop to an automated process. This 

exception existed before the TFA. See 

Notice 2018–1, 2018–3 I.R.B. 299 

(January 16, 2018). 

The comment also alleged Exception 

12 violates the Taxpayer Bill of Rights 

(TBOR). See https://www.irs.gov/ 

taxpayer-bill-of-rights. The Treasury 

Department and the IRS do not adopt 

this comment; this exception is 

consistent with the TBOR. The TBOR 

does not grant new enforceable rights 

but instead it obligates the IRS to ensure 

that its employees are familiar with and 

act in accord with rights established in 

other Code provisions. See Facebook, 

Inc. v. Internal Revenue Service, 2018 

WL 2215743, at *13–14 (N.D. Cal. 2018). 

See also Hancock County Land 

Acquisitions LLC, et. al. v. United 

States, 553 F. Supp. 3d 1284, 1296 n. 11 

(N.D. Ga. 2021). As discussed in section 

I.A. of this Summary of Comments and 

Explanation of Revisions, section 

7803(e)(4) does not confer an absolute 

right to Appeals consideration. 

8. Authority Over the Matter Rests With 

Another Office: Exception 14 

One comment was received on 

Exception 14. Exception 14 provides 

that consideration by Appeals is not 

available for any case, determination, 

matter, decision, request, or issue with 

respect to a particular taxpayer that 

Appeals lacks the authority to settle. 

Proposed § 301.7803–2(c)(14)(i) through 

(v) provides a non-exclusive list of 

examples illustrating this rule, 

including the example in proposed 

§ 301.7803–2(c)(14)(i) that Appeals does 

not have authority to resolve an issue 

with respect to a particular taxpayer in 

a docketed case after a referral has been 

made to the Justice Department. The 

comment suggested creating an 

interagency administrative review 

process, which is discussed in section 

I.A. of this Summary of Comments and 

Explanation of Revisions. The 

settlement authority for any litigation 

under the jurisdiction of the Justice 

Department already vests with the 

Justice Department. 

9. Certain Technical Advice Memoranda 

and Technical Advice From an 

Associate Office in a Docketed Case: 

Exception 15 and Exception 16 

One comment was submitted 

concerning Exception 15 and Exception 

16. Exception 15 provides that Appeals 

consideration is not available for certain 

adverse actions related to the initial or 

continuing recognition of tax-exempt 

status, an entity’s classification as a 

foundation, the initial or continuing 

determination of employee plan 

qualification, or a determination 

involving an obligation and the issuer of 

an obligation under section 103 of the 

Code, when the adverse action is based 

upon a technical advice memorandum 

(TAM) issued by an Associate Office of 

Chief Counsel (Associate Office) before 

an appeal is requested. Similarly, 

Exception 16 provides that Appeals 

consideration is not available for any 

case docketed in the Tax Court if the 

notice of deficiency, notice of liability, 

or final adverse determination letter is 

based upon a TAM issued by an 

Associate Office in that case involving 

an adverse action described in 

Exception 15. 

The comment asserted that granting 

an exception for an appeal in cases of 

tax-exempt status in which a TAM has 

been issued would unnecessarily 

narrow an already small area of appeal 

rights, and suggested that it would be 

beneficial to all parties to bring the 

matter to Congress’ attention if this is 

more a matter in need of statutory 

clarification. 

The Treasury Department and the IRS 

do not adopt this comment, which 

suggested a change but did not provide 

a rationale for a change, refute the 

rationale given in the proposed 

regulations, or explain its conclusion 

that the two proposed exceptions would 

unnecessarily narrow Appeals review. 

As reflected in the proposed regulations’ 

Explanation of Provisions in sections 

I.C.15. and 16., these two exceptions are 

supported by reasonable rationales and 

are narrowly tailored to achieve their 

purposes. If the legal issues and 

determinations in Exception 15 and 

Exception 16 are the subject of a TAM 

from an Associate Office, they are 

excepted from Appeals consideration 

because traditionally Chief Counsel has 

exclusive authority over the dispute 

administratively or upon litigation. A 

TAM is advice furnished by an 

Associate Office in a memorandum that 

responds to any request for assistance 

on any technical or procedural legal 

question involving the interpretation 

and proper application of any legal 

authority that is submitted in 

accordance with an applicable revenue 

procedure. Chief Counsel’s decision 

with respect to the issues related to the 

initial or continuing recognition of taxexempt status, an entity’s classification 

as a foundation, the initial or continuing 

determination of employee plan 

qualification, or a determination 

involving an obligation and the issuer of 

an obligation under section 103 is the 

legal position of the IRS with respect to 

the particular facts and circumstances 

that are the subject of the TAM. These 

exceptions are important to preserving 

Chief Counsel’s authority to resolve 

these sensitive legal issues. As noted in 

section I.C.15. of the proposed 

regulations’ Explanation of Provisions, 

these exceptions are consistent with 

historical practice as found in 

§ 601.106(a)(1)(v)(a) and IRM 

8.1.1.2.1(1)(c.) (02–10–2012) (currently 

found in IRM 8.1.1.3.1 (01–09–2024)). 

Furthermore, a broad range of taxexempt status issues are reviewable by 

Appeals under these final regulations. 

10. Letter Rulings Issued by Associate 

Office: Exception 17 

Two comments were received on 

Exception 17, which excepts from 


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Appeals consideration a decision by an 

Associate Office regarding whether to 

issue a letter ruling or the content of a 

letter ruling. However, the subject of the 

letter ruling may be considered by 

Appeals if all other requirements in 

§ 301.7803–2 are met. For example, if 

the taxpayer subsequently files a return 

taking a position that is contrary to the 

letter ruling and that position is 

examined by the IRS, Appeals could 

consider that Federal tax controversy if 

all other requirements in § 301.7803–2 

are met. 

The first comment stated that the 

provision in Exception 17 helpfully 

makes clear that the subject of the letter 

ruling may be considered by Appeals if 

all other requirements in proposed 

§ 301.7803–2 are met, and 

recommended that this provision 

should be strengthened to offer an 

affirmative safe harbor for appeals for 

taxpayers who in good faith attempt to 

fulfill the terms of § 301.7803–2. The 

Treasury Department and the IRS do not 

adopt this recommendation. The criteria 

for a ‘‘safe harbor’’ would not be 

practical because meeting some but not 

all of the requirements would not be 

sufficient. A taxpayer must comply with 

all the requirements in § 301.7803–2 in 

order to have Appeals consider the 

taxpayer’s Federal tax controversy. The 

second comment on Exception 17 

relates to 9100 relief and CAMs and is 

discussed in section I.H. of this 

Summary of Comments and 

Explanation of Revisions. 

11. Challenges Alleging That a Statute Is 

Unconstitutional: Exception 18 

Exception 18 provides that Appeals 

consideration is not available for any 

issue based on a taxpayer’s argument 

that a statute violates the United States 

Constitution unless there is an 

unreviewable decision from a Federal 

court holding that the cited statute is 

unconstitutional. Exception 18 does not 

preclude Appeals from considering a 

Federal tax controversy based on 

arguments other than the 

constitutionality of a statute, such as 

whether the statute applies to the 

taxpayer’s facts and circumstances. 

Proposed § 301.7803–2(c)(18) defined 

the phrase unreviewable decision as a 

decision of a Federal court that can no 

longer be appealed to any Federal court 

because all appeals in a case have been 

exhausted or the time to appeal has 

expired and no appeal was filed, and no 

further action can be taken in the case 

by any Federal court once there is an 

unreviewable decision. An 

unreviewable decision means an 

unreviewable decision of any Federal 

court, regardless of where the taxpayer 

resides. The proposed language ‘‘and no 

further action can be taken in the case 

by any Federal court once there is an 

unreviewable decision’’ has been 

deleted in the final regulations because 

it is inaccurate in certain circumstances. 

For example, even if a district court 

grants a motion to dismiss and the 

decision is appealed and a reversal of 

that motion becomes unreviewable, the 

case would have further action such as 

discovery, dispositive motions, or trial. 

See § 301.7803–2(c)(18). 

The Treasury Department and the IRS 

received several comments on 

Exception 18. One comment agreed with 

Exception 18 to not allow Appeals to 

consider constitutional challenges to 

Federal tax statutes unless there is an 

unreviewable court decision. It 

recommended the final regulations 

should strengthen the concept of an 

‘‘unreviewable decision.’’ See section 

I.D.11.a. of this Summary of Comments 

and Explanation of Revisions regarding 

the phrase unreviewable decision. 

Two comments objected to Exception 

18 as inconsistent with the TFA and 

recommended Appeals should be 

allowed to consider constitutional 

challenges to Federal tax statutes in the 

absence of an unreviewable decision. 

One objected that denial of Appeals 

consideration in Exception 18 strips 

taxpayers of a statutory right to Appeals. 

The other objected that Exception 18 

improperly restricts access to Appeals 

and forces taxpayers to sacrifice legal 

arguments. 

The Treasury Department and the IRS 

do not adopt these two comments; 

Exception 18 is consistent with the 

TFA. As discussed previously, the TFA 

does not provide an absolute statutory 

right to an administrative appeal. 

Rather, the Treasury Department and 

the IRS have the statutory authority to 

provide exceptions to Appeals 

consideration. Exception 18 is one such 

exception, and it is narrowly tailored 

and supported with reasonable 

rationales. As proposed, Exception 18 

does not exclude the constitutionality 

issue from Appeals consideration totally 

but merely provides that Appeals will 

not be the first forum to hear such a 

challenge because it is not the 

appropriate forum without a final 

decision from a Federal court. The 

Treasury Department and the IRS still 

agree with the rationales in section 

I.C.18. of the proposed regulations’ 

Explanation of Provisions, namely that 

questions within the IRS regarding the 

constitutionality of a statute, and 

positions taken by the IRS in light of 

such questions, are determinations of 

general applicability resolved at the 

highest levels of the Treasury 

Department and the IRS, in consultation 

with the Office of Legal Counsel of the 

Justice Department, and subject to the 

ultimate resolution by a court of 

relevant jurisdiction. Moreover, a 

constitutional determination should be 

communicated and applied consistently 

to all taxpayers. It would be 

inappropriate for Appeals to consider 

the constitutionality of a statute for a 

particular taxpayer in the absence of an 

unreviewable court decision, which is 

accessible to all taxpayers and the IRS. 

A comment asserted Appeals has 

historically analyzed legal arguments 

concerning tax statutes, regulations, and 

IRS procedures and so Appeals is 

capable of considering these arguments. 

This comment insinuated that 

Exception 18, Exception 19, and 

Exception 20 are premised on Appeals’ 

training, skills, or competency to review 

legal arguments related to statutes, 

regulations, or IRS procedures. The 

rationales for Exception 18, Exception 

19, and Exception 20 provided in 

sections I.C.18., 19., and 20. of the 

proposed regulations’ Explanation of 

Provisions do not relate to Appeals’ 

training, skills, or competency. Appeals 

will continue to review taxpayer 

arguments about whether the relevant 

statutes, regulations, or IRS procedures 

apply to the taxpayer’s factual 

circumstances just as Appeals has 

historically done. 

A comment construed the definition 

of an unreviewable decision to mean an 

unreviewable decision only from a 

Federal court within the circuit in 

which the taxpayer resides. Neither the 

proposed regulations, nor these final 

regulations, require the unreviewable 

decision to be in the taxpayer’s own 

circuit. Another comment 

recommended eliminating Exception 19 

and Exception 20 but, in the alternative, 

it recommended clarifying the phrase 

unreviewable decision. The comment 

interpreted the phrase as the proposed 

regulations intended, that is, as an 

unreviewable decision of any Federal 

court, regardless of where the taxpayer 

resides, but stated it was unclear and 

should be clarified. In response to these 

comments, the language in the proposed 

regulations, ‘‘a decision of a Federal 

court,’’ is clarified in the final 

regulations to ‘‘a decision of any Federal 

court regardless of where the taxpayer 

resides.’’ See § 301.7803–2(c)(18). 

A comment recommended the final 

regulations modify the definition of 

unreviewable decision to provide the 

decision must be one that would govern 

the taxpayer’s case. In other words, the 

final regulations should ensure, 

according to the comment, that Appeals 

access is available only if there is a 


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relevant decision that would bind the 

taxpayer and the Government if the 

dispute proceeded to litigation. The 

Treasury Department and the IRS do not 

adopt this comment because it is too 

limiting. If the only unreviewable 

decision that Appeals should consider 

is one that is binding on the IRS and the 

taxpayer, then it would not be a matter 

of Appeals weighing the hazards of 

litigation because that decision would 

be controlling on the taxpayer. Also, 

such a rule would prevent Appeals from 

weighing the hazards of litigation by 

evaluating how a court in another 

circuit ruled on the issue. Like the 

proposed regulations would have done, 

the final regulations allow Appeals to 

consider that final decision in 

considering the hazards of litigation. 

A comment stated that the Treasury 

Department and the IRS have no basis 

to hold Appeals to a different, and 

higher standard than that of the Justice 

Department or the Solicitor General. 

The comment’s reference to the Justice 

Department and Solicitor General 

appeared to be a reference to those 

offices resolving cases in a manner that 

Appeals could not under Exception 19 

and Exception 20. The comment 

appeared to suggest that Appeals should 

be able to do the same in fulfilling its 

function of considering hazards of 

litigation. 

The Treasury Department and the IRS 

do not adopt this comment because the 

authority of employees of the Justice 

Department and the Solicitor General to 

take certain actions in fulfilling their 

distinct functions and roles does not 

mean employees of Appeals, like 

Appeals Officers (AO), can take the 

same actions. As explained in section 

I.D.12. of this Summary of Comments 

and Explanation of Revisions, questions 

regarding the validity of a regulation, or 

the procedural validity of a notice or 

revenue procedure, involve 

determinations of general applicability 

resolved at the highest levels of the 

Treasury Department and the IRS and 

must be followed by all IRS employees, 

including AOs. Such validity decisions 

should be communicated and applied 

consistently to all taxpayers. It would be 

inappropriate for Appeals to act in 

contravention with those decisions in a 

specific case involving one taxpayer and 

consider validity issues in the absence 

of an unreviewable court decision. 

Three comments recommended 

Appeals be allowed to consider the 

hazards of litigation on a validity issue 

for a notice or regulation based on a 

similar or analogous court decision on 

a different notice or regulation. The 

comments mentioned Green Valley 

Investors v. Commissioner, 159 T.C. 5 

(2022) (Tax Court setting aside Notice 

2017–10, 2017–4 IRB 544 for failure to 

comply with the Administrative 

Procedure Act’s (APA’s) notice and 

comment requirements) as an example 

and suggested that if a court decision 

invalidated a notice for the same APA 

reason that a taxpayer is raising to 

challenge the validity of other guidance, 

Appeals should consider the hazards of 

litigation in the taxpayer’s analogous 

case. 

The Treasury Department and the IRS 

do not adopt these comments because it 

would defeat the purposes of Exception 

18, Exception 19, and Exception 20. 

Appeals consideration is limited to 

unreviewable decisions involving the 

validity of the particular regulation, 

notice, or revenue procedure being 

challenged. As described previously, in 

this Summary of Comments and 

Explanation of Revisions and sections 

I.C.18., 19., and 20. of the proposed 

regulations’ Explanation of Provisions, 

the promulgation of a regulation, notice, 

or revenue procedure consists of 

multiple levels of review at the highest 

levels within the Treasury Department 

and the IRS, and taxpayers are not wellserved by confidential decisions by 

Appeals on a validity matter that is 

applicable to only a single taxpayer. 

Appeals does not have the authority to 

unilaterally contradict the decisions 

made through the regulatory or 

subregulatory process. In addition, there 

may be other defenses to APA 

challenges that the IRS might assert, and 

therefore the Tax Court having ruled on 

an unrelated notice or regulation is not 

a reason to provide the carve-out 

suggested here. 

A comment recommended 

eliminating the unreviewable decision 

requirement and allowing Appeals to 

consider a judicial decision in weighing 

the hazards of a case. Similarly, another 

comment recommended allowing 

Appeals to consider hazards pending 

the appeal of a decision. The Treasury 

Department and the IRS do not adopt 

these recommendations because they 

would defeat the purpose of the 

unreviewable decision rule in Exception 

18, Exception 19, and Exception 20. 

Until the pending decision becomes 

unreviewable by a Federal court, as 

described in proposed § 301.7803– 

2(c)(18), it would not be sufficiently 

final. The finality of the judicial 

decision is important because the 

judicial branch is charged with 

independently interpreting Federal 

statutes and a Federal court’s decision 

on the merits may reject the 

determinations made by the Treasury 

Department or the IRS. There must be a 

final decision, however, before Appeals 

can weigh the hazards of litigation with 

respect to these specific challenges 

because a lower court decision that is 

not final might be overturned on appeal 

and the challenges under Exception 18, 

Exception 19, and Exception 20 relate to 

determinations of general applicability 

resolved at the highest levels of the 

Treasury Department and the IRS. Until 

a judicial decision is unreviewable and 

final, Appeals must respect the decision 

of the Secretary and the Commissioner 

of Internal Revenue (Commissioner). In 

that regard, the final regulations clarify 

that the definition of unreviewable 

decision includes decision of any 

Federal court regardless of where the 

taxpayer resides. 

12. Challenges Alleging That a Treasury 

Regulation Is Invalid and Challenges 

Alleging That a Notice or Revenue 

Procedure Is Invalid: Exception 19 and 

Exception 20 

Exception 19 provides that Appeals 

consideration is not available for any 

issue based on a taxpayer’s argument 

that a Treasury regulation is invalid 

unless there is an unreviewable decision 

from a Federal court invalidating the 

regulation as a whole or the provision 

in the regulation that the taxpayer is 

challenging. Exception 20 provides that 

Appeals consideration is not available 

for any issue based on a taxpayer’s 

argument that a notice or revenue 

procedure published in the Internal 

Revenue Bulletin is procedurally 

invalid unless there is an unreviewable 

decision from a Federal court holding it 

to be invalid. As proposed, Exception 19 

and Exception 20 do not preclude 

Appeals from considering a Federal tax 

controversy based on arguments other 

than the validity of a regulation, or 

procedural validity of a notice or 

revenue procedure, such as whether the 

regulation, notice, or revenue procedure 

applies to the taxpayer’s facts and 

circumstances. 

The Treasury Department and the IRS 

received several comments on 

Exception 19 and Exception 20. In 

response to these comments, the 

Treasury Department and the IRS have 

modified the language in proposed 

§ 301.7803–2(c)(19) and (20), as 

explained below. 

A comment agreed with the rationales 

described in the proposed regulations 

for Exception 19 and Exception 20 that 

Appeals should not consider these types 

of challenges. Another comment made 

the same objection it made to Exception 

18 that denial of Appeals consideration 

in Exception 19 and Exception 20 strips 

taxpayers of a statutory right to Appeals. 

Another comment made the same 

objection it made to Exception 18 that 


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Exception 19 and Exception 20 

improperly restrict access to Appeals 

and forces taxpayers to sacrifice legal 

arguments. 

Like Exception 18, Exception 19 and 

Exception 20 are consistent with the 

TFA, which does not provide an 

absolute statutory right to an 

administrative appeal, and permits the 

Treasury Department and the IRS to 

provide exceptions. The rationales for 

Exception 19 and Exception 20 are 

similar to the rationales for Exception 

18, as discussed previously. See 

sections I.C.18., 19., and 20. of the 

proposed regulations’ Explanation of 

Provisions. Questions regarding the 

validity of a regulation, or the 

procedural validity of a notice or 

revenue procedure, involve 

determinations of general applicability 

resolved at the highest levels of the 

Treasury Department and the IRS and 

must be followed by IRS employees, 

including AOs. Such validity decisions 

also should be communicated and 

applied consistently to all taxpayers. It 

therefore would be inappropriate for 

Appeals to act in contravention with 

those institutional decisions in a 

specific case involving one taxpayer and 

consider the validity issues in the 

absence of an unreviewable court 

decision. 

A comment stated Exception 19 and 

Exception 20 are not narrowly tailored 

because they encompass any challenge 

to almost any level of published 

guidance. The Treasury Department and 

the IRS do not adopt this comment. 

Exception 19 and Exception 20 are 

narrowly tailored and expressly allow 

Appeals to consider arguments other 

than the validity of a regulation, or 

procedural validity of a notice or 

revenue procedure, such as whether the 

regulation, notice, or revenue procedure 

applies to the taxpayer’s facts and 

circumstances. They do not exclude the 

validity challenges from Appeals 

consideration totally but merely provide 

Appeals will not be the first forum to 

hear these challenges because it is not 

the appropriate forum for such 

challenges without an unreviewable 

decision of a court. Further, Exception 

20 is even narrower in scope, applying 

only to a taxpayer’s argument that a 

notice or revenue procedure published 

in the Internal Revenue Bulletin is 

procedurally invalid. 

A comment asserted that Exception 19 

and Exception 20 did not exist prior to 

the TFA and taxpayers historically 

could at least raise validity challenges to 

published IRS guidance and have those 

challenges be considered by Appeals; 

therefore Exception 19 and Exception 20 

appear contrary to the TFA’s intent to 

expand taxpayer access to Appeals. As 

explained previously, Exception 19 and 

Exception 20 are consistent with the 

intent of the TFA to grant the Treasury 

Department and the IRS the authority to 

make exceptions, which includes the 

authority to provide new exceptions 

that did not exist before the enactment 

of the TFA. 

A comment asserted that Exception 19 

and Exception 20 are contrary to 

Appeals’ mission or function because 

they will force the parties into litigation 

instead of providing an opportunity for 

Appeals to resolve the case. Another 

comment similarly stated that Exception 

20 tries to cast the validity 

determination as a high-level policy 

decision, while Appeals’ function is to 

hear and settle cases and in doing so it 

is not making policy. 

The Treasury Department and the IRS 

do not adopt these comments. Unlike 

most Appeals analyses that weigh 

litigation hazards in applying the law to 

specific facts, Appeals’ potential 

consideration of the validity of a 

regulation or the procedural validity of 

a notice or revenue procedure does not 

necessarily involve taxpayer-specific 

facts. As explained in section I.C.20. of 

the proposed regulations’ Explanation 

of Provisions, the issue of whether an 

IRS notice or revenue procedure is 

procedurally valid involves a 

determination regarding whether 

specific IRS subregulatory guidance 

complied with administrative law 

requirements, such as notice and 

comment under 5 U.S.C. 553. Whether 

a notice or revenue procedure was 

properly issued involves facts solely 

related to the Treasury Department and 

the IRS and is unlike the application of 

the tax law to a taxpayer’s specific facts. 

Furthermore, the procedurally validity 

of a notice or revenue procedure is a 

determination of general applicability 

resolved at the highest levels of the 

Treasury Department and the IRS and 

such a determination would not be 

appropriate for Appeals to consider in a 

specific case involving one taxpayer. 

The latter comment regarding 

Exception 20 did not address the other 

rationale in support of Exception 20, 

namely, that the issue of whether a 

notice or revenue procedure failed to 

comply with administrative law 

requirements should be communicated 

and applied consistently. As explained 

in the proposed regulations, an 

unreviewable decision of a Federal 

court is the appropriate means of 

accomplishing this objective because a 

settlement before Appeals is specific to 

a taxpayer and cannot be made available 

to other taxpayers. An unreviewable 

decision makes information accessible 

to all taxpayers and the IRS regarding 

whether a notice or revenue procedure 

was prescribed in accordance with 

applicable Federal law. A determination 

by the judicial branch on the merits of 

the validity challenge may reject the 

determinations made by the Treasury 

Department or the IRS with regard to the 

validity of a regulation or the procedural 

validity of a notice or revenue 

procedure, thereby providing a basis for 

Appeals to consider those issues. If no 

unreviewable decision has been issued 

on the validity challenge, Appeals 

would not be weighing hazards with 

respect to that particular guidance of 

general applicability because it has not 

been successfully challenged in court 

yet. Instead, absent an unreviewable 

decision, Appeals would be 

contravening the decision made at the 

highest levels of the Treasury 

Department and the IRS. 

Four comments related to Appeals’ 

competency to consider validity 

challenges to a regulation, notice, or 

revenue procedure. A comment alleged 

Appeals has historically analyzed legal 

arguments concerning statutes, tax 

regulations, and IRS procedures. A 

similar comment asserted that under 

Exception 19 and Exception 20 Appeals 

is unable to assess the hazards of 

litigation in a way that a Chief Counsel 

trial attorney is not restricted and that 

specialists within Appeals are 

competent to consider these arguments 

when evaluating other hazards of 

litigation in the case. A comment stated 

that AOs have the training and 

qualifications to consider all hazards of 

litigation, including challenges to the 

validity of regulations, notices, or 

revenue procedures, or if they lack such 

training and qualifications, the IRS 

should provide them instead of 

preventing Appeals from considering 

these issues. Another comment asserted 

Appeals is familiar with considering all 

arguments made by a taxpayer regarding 

the applicability of regulations, notices, 

and revenue procedures, and it should 

be able to consider in docketed cases 

credible arguments about hazards 

involving validity challenges to a 

regulation, notice, or revenue procedure 

because the APA and ordinary judicial 

methods for review of legislative rules 

apply to tax cases. 

The Treasury Department and the IRS 

do not adopt these comments. None of 

these exceptions relate to Appeals’ 

training, skills, or competency. Appeals’ 

competency does not pertain to the 

rationales of Exception 19 and 

Exception 20 to prevent a decision for 

one taxpayer regarding guidance of 

general applicability, which has been 

approved at the highest levels within 


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the Treasury Department and the IRS. 

Also, like Appeals employees, Chief 

Counsel attorneys handling docketed 

cases in Tax Court must follow 

regulations, notices, and revenue 

procedures. See Chief Counsel 

Directives Manual (CCDM) or IRM 

32.1.1.2.5(1) (08–02–2018) (relating to 

Treasury decisions); CCDM/IRM 

32.2.2.10 (08–11–2004) (relating to force 

and effect of specified publications). 

Further, Appeals applying the APA and 

ordinary judicial methods to invalidate 

guidance would lack consistency 

because Appeals’ action, unlike an 

unreviewable decision, is not public 

and is applicable to only that taxpayer 

challenging the guidance. A final court 

decision is applicable to, and accessible 

by, all taxpayers and the IRS, which 

promotes consistency. Furthermore, a 

final, unreviewable court decision 

ensures that Appeals does not act in 

contravention of a decision made at the 

highest levels of the Treasury 

Department and the IRS. In the absence 

of an unreviewable decision, Appeals 

would not have a court decision with 

respect to a particular document to 

weigh or evaluate any hazards. 

Two comments recommended that if 

the Justice Department has conceded 

that an unrelated notice was invalid on 

the same basis as in the holding by the 

United States Court of Appeals for the 

Sixth Circuit (Sixth Circuit) in Mann 

Construction Inc. v. United States, 27 

F.4th 1138 (6th Cir. 2022) (holding a 

different notice invalid because it was 

required to follow APA notice and 

comment procedures and failed to do 

so), Appeals should consider the 

hazards of litigation on a notice validity 

issue in a taxpayer’s case involving a 

different notice. Similarly, another 

comment recommended allowing 

Appeals to consider the hazards of 

litigation on a regulation validity issue 

in a taxpayer’s case if the Justice 

Department has settled or conceded that 

an unrelated regulation was invalid. 

The Treasury Department and the IRS 

do not adopt these comments for the 

same reasons they disagree with the 

similar comments regarding analogous 

court decisions. See section I.D.11.a. of 

this Summary of Comments and 

Explanation of Revisions. If adopted, 

these recommendations would defeat 

the purposes of Exception 19 and 

Exception 20. Moreover, there are 

numerous factors that go into 

determining whether a case should be 

settled, and a recommendation for a 

settlement in one case may not dictate 

the same result in another case. There 

may be other defenses to APA 

challenges that the IRS might assert and 

therefore the Justice Department having 

settled an issue based on hazards of 

litigation involving an unrelated notice 

or regulation is not a reason to provide 

the suggested carve-out. Regarding the 

transaction in the case cited by the 

comment, for cases within the Sixth 

Circuit, the Treasury Department and 

the IRS have represented in court that 

APA matters conceded by the 

Government in the Mann case would 

not be subject to examination by the IRS 

in other listed transaction cases and 

therefore such cases would not come up 

for Appeals review. 

A comment agreed with the policy 

expressed in Exception 19, but with a 

caveat that ‘‘invalidity’’ should be 

further defined. Specifically, the 

comment asked whether a change in the 

law would make regulations invalid or 

would fit within the provision in 

proposed § 301.7803–2(c)(19) that states 

Exception 19 would not prevent a 

taxpayer from arguing that a regulation 

does not apply to their position. 

Generally, a regulation would still be 

valid for prior tax years before any 

repeal of or amendment to the statute 

upon which the regulation is based, and 

a change in the statute would have 

precedent over the regulation for tax 

years after the change. These regulations 

do not prohibit a taxpayer from arguing 

whether the statute applies to the 

taxpayer’s own facts and circumstances. 

In that case, Appeals is considering the 

applicability of the statute to the 

taxpayer for the relevant period. In 

response to this comment, the Treasury 

Department and the IRS have revised 

the language in Exception 19 and 

Exception 20 by adding a reference to 

the statute to clarify that Appeals may 

consider arguments based on whether a 

statute applies to the taxpayer’s facts 

and circumstances. See § 301.7803– 

2(c)(19) and (20). Also, for the sake of 

clarity, Exception 19 is revised to define 

the term invalid. See § 301.7803– 

2(c)(19). 

The same comment asked that if 

regulations overlap in a factual situation 

whether reconciliation of such a 

situation would involve a determination 

that a regulation is invalid. As 

proposed, Exception 19 would still 

allow Appeals to consider whether the 

regulations apply to a taxpayer’s facts 

and circumstances, but to the extent the 

taxpayer argues that the regulations are 

invalid, Exception 19 would preclude 

Appeals from considering that validity 

issue in the absence of an unreviewable 

decision. The concern raised in this 

comment appeared to relate to ensuring 

consistency. Appeals is not the only 

administrative function within the IRS; 

there are other offices and other ways 

within the IRS to ensure such 

consistency short of consideration by 

Appeals or litigating the issue. 

A comment on Exception 20 

expressed some confusion as to the 

meaning of the term procedurally 

invalid and stated the comment had 

little concern regarding Exception 20 if 

its intent is only that Appeals would not 

be allowed to consider whether a notice 

or revenue procedure was properly 

adopted or promulgated. As explained 

in section I.C.20. of the proposed 

regulations’ Explanation of Provisions, 

the term procedurally invalid in 

proposed § 301.7803–2(c)(20) was 

intended to mean challenges to 

procedural determinations regarding 

notices and revenue procedures, 

including determinations regarding 

compliance with administrative law 

requirements. This comment 

recommended defining the term 

procedurally invalid for the sake of 

clarity. The Treasury Department and 

the IRS adopt this recommendation and 

have defined the term to mean ‘‘any 

determination regarding whether a 

notice or revenue procedure failed to 

comply with administrative law 

requirements, such as notice and 

comment under 5 U.S.C. 553.’’ See 

§ 301.7803–2(c)(20). 

The same comment noted that the 

rationale behind Exception 19 is 

generally sound but opined that that 

rationale does not support Exception 20 

because a notice or revenue procedure 

does not undergo the public notice and 

comment process under the APA, lacks 

the same approval process, and does not 

carry the same weight or level of 

authority of a regulation. The Treasury 

Department and the IRS do not adopt 

this comment. The same rationale for 

Exception 19 applies to Exception 20 

because whether a notice or revenue 

procedure is procedurally valid is a 

determination of general applicability 

resolved at the highest levels of the 

Treasury Department and the IRS. As 

discussed previously, such a 

determination would not be appropriate 

for Appeals to consider in a specific 

case involving one taxpayer. 

A comment asserted that Appeals has 

historically heard arguments about the 

application of Treasury regulations and 

that the meaning of a regulation, notice, 

or revenue procedure is not exclusively 

determined by senior officials at the 

Treasury Department and the IRS. This 

comment appears to misperceive the 

scope of Exception 19 and Exception 20. 

These exceptions do not preclude 

Appeals from considering a Federal tax 

controversy based on arguments other 

than the validity of a Treasury 

regulation or procedural validity of a 

notice or revenue procedure. As stated 


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in the text of Exception 19 and 

Exception 20, such arguments include 

whether the Treasury regulation, notice, 

or revenue procedure applies to the 

taxpayer’s facts and circumstances. 

Appeals may resolve the Federal tax 

controversy by weighing the likelihood 

a court would agree with the position of 

the taxpayer or the Government. As for 

the comment’s suggestion that guidance 

is not exclusively determined by senior 

officials at the Treasury Department and 

the IRS, the final regulations do not 

adopt this comment. While employees 

of all levels of the Treasury Department 

and the IRS have a role in promulgating 

a regulation, notice, or revenue 

procedure, such guidance is reviewed 

and approved by senior officials in the 

Treasury Department and the IRS, 

including the Assistant Secretary of the 

Treasury (Tax Policy) and the Deputy 

Commissioner of the IRS as appropriate. 

See generally IRM 32.1.1 (November 13, 

2019). 

Two comments related to consistency 

by Appeals. A comment alleged the 

proposed regulations did not explain 

why consistency cannot be 

accomplished if Appeals reviews the 

validity issues. The same comment 

argued Exception 19 and Exception 20 

will result in bad policy because they 

will make the Appeals process more 

inconsistent, random, and less 

responsive to legal developments, 

causing additional costs and delay for 

taxpayers who otherwise could access 

Appeals while invalidity arguments 

work through the court system. Another 

comment stated that Appeals can reach 

a coordinated position on validity 

challenges and forcing taxpayers to 

litigate will decrease uniformity of tax 

administration because the IRS can 

settle or concede issues to avoid adverse 

opinions and because years may pass 

before there is an unreviewable judicial 

decision deciding the validity challenge. 

Sections I.C.18., 19., and 20. of the 

proposed regulations’ Explanation of 

Provisions, provides the Treasury 

Department and the IRS’ position on 

consistency. Any determinations with 

respect to constitutional challenges to a 

statute, the validity of a regulation, or 

procedural validity of a revenue 

procedure or notice should be 

communicated and applied consistently 

to all taxpayers. An unreviewable 

decision of a Federal court is the 

appropriate means of making 

information accessible to taxpayers, and 

the Treasury Department and the IRS do 

not agree that Exception 19 and 

Exception 20 will result in bad policy. 

A court’s unreviewable decision on the 

validity of a regulation, or procedural 

validity of a revenue procedure or 

notice ensures the judicial branch 

decides questions of law. The Treasury 

Department and the IRS recognize the 

deliberateness of the judicial process, 

but absent that process, Appeals lacks 

the authority to take actions contrary to 

the reasoned decisions of the Secretary 

and the Commissioner. An 

unreviewable decision is publicly 

available, and generally applicable, to 

all taxpayers and the IRS, which 

promotes consistency and uniformity. 

Having Appeals weigh hazards of 

litigation based on an unreviewable 

decision that is publicly available and 

generally applicable to all taxpayers is 

sounder policy than a confidential 

decision by Appeals on a matter that is 

applicable to only a single taxpayer. The 

question of whether Appeals can reach 

a coordinated position on validity 

challenges is irrelevant because under 

these exceptions the issues would not 

be considered by Appeals in the first 

place in the absence of an unreviewable 

decision. 

A comment opined that Appeals 

should have the right to determine all 

hazards of litigation, including 

challenges to all levels of IRS published 

guidance on an unlimited basis and 

including rationale from all court 

opinions because this approach is 

consistent with the Treasury 

Department’s 2019 Policy Statement on 

the Tax Regulatory Process (Policy 

Statement). Policy Statement on the Tax 

Regulatory Process (March 5, 2019), 

https://home.treasury.gov/policy-issues/ 

tax-policy/tax-regulatory-process. The 

Treasury Department and the IRS do not 

adopt this comment. An unreviewable 

decision is necessary because it is 

publicly available to the IRS and 

taxpayers and generally applicable, 

which promotes consistency and 

uniformity. The Policy Statement is 

unrelated to Exception 19 and 

Exception 20 because it concerns the tax 

regulatory process and does not address 

Appeals or its function. The Policy 

Statement also explicitly states it does 

not create any right or benefit, either 

substantive or procedural. 

A comment alleged that Exception 19 

and Exception 20 undercut the key 

focus area for Appeals in fiscal year 

2023 to improve taxpayer experience. 

To the contrary, Exception 19 and 

Exception 20 are consistent with the 

TFA as it relates to taxpayer experience. 

Section 1101 of the TFA requires the 

IRS to develop a comprehensive strategy 

for customer service and submit the 

plan to Congress. The strategy will 

include best practices of customer 

service provided in the private sector, 

including, online services, telephone 

call back, and training of employees, 

and the strategy must incorporate best 

practices of businesses to meet 

reasonable customer expectations. The 

strategic plan, updated guidance, and 

training materials must also be available 

to the public. The taxpayer experience 

requirement does not address whether a 

taxpayer can have the taxpayer’s case or 

issue considered by Appeals. The 

strategic plan addresses topics like 

communications with the IRS and 

taxpayer information services, such as 

expanded digital services, guides to 

taxpayer resources and IRS 

communication channels, and outreach 

and education. See Publication 5426, 

Taxpayer First Act Report to Congress 

(January 2021). 

A comment alleged that Appeals’ 

consideration of all of a taxpayer’s 

arguments, including validity 

challenges, does not harm the 

Government but instead provides the 

taxpayer and the Government the 

opportunity to resolve the issue without 

litigation. Appeals’ consideration of 

validity challenges would harm the 

Government because in the absence of 

an unreviewable decision, such 

consideration would undermine the 

decisions based on the regulatory and 

subregulatory guidance process as 

described in sections I.C.19. and I.C.20. 

of the proposed regulations’ 

Explanation of Provisions, and result in 

a decision by Appeals for one taxpayer 

on an issue that is not related to the 

taxpayer’s specific facts and that would 

not be publicly available to other 

taxpayers and the IRS. 

Another comment recommended that 

Appeals should consider APA 

challenges as part of its weighing of 

hazards of litigation. The comment 

argued that Treasury regulations are not 

necessarily in compliance with the APA 

because they go through an extensive 

review process involving numerous 

offices within the Treasury Department 

and the IRS. The comment alleged that 

challenges to a regulation’s validity is 

taxpayer specific because any 

controversy before Appeals will involve 

the IRS enforcing an agency rule against 

a taxpayer based on that taxpayer’s 

facts. Finally, the comment also 

suggested that the exceptions would 

prove unworkable because final, 

unreviewable decisions may be limited 

to one district court or circuit. 

The Treasury Department and the IRS 

do not adopt this comment. As 

explained previously in this section and 

section I.D.12. of this Summary of 

Comments and Explanation of 

Revisions, the promulgation of a 

regulation, or publication of a notice or 

revenue procedure goes through 

multiple levels of review within the 


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1Since the TFA was enacted on July 1, 2019, the 

IRS has denied three requests for referral to 

Appeals, as described in section 7803(e)(5)(A), on 

the basis of sound tax administration. Because 

section 7803(e)(5)(A) is limited to denials of a 

request for referral to Appeals by those taxpayers 

in receipt of a notice of deficiency authorized under 

section 6212, fewer than 130 cases not subject to 

section 7803(e)(5)(A) were otherwise withheld from 

Appeals review during that period by Division 

Counsel under section 3.03 of Rev. Proc. 2016–22. 

For example, these cases include cases involving 

partnerships in which a final partnership 

administrative adjustment was issued instead of a 

notice of deficiency. 

Treasury Department and the IRS. An 

individual AO does not have the 

authority to unilaterally contradict the 

decisions made through the regulatory 

or subregulatory process. Furthermore, 

as explained above and in section 

I.C.20. of the proposed regulations’ 

Explanation of Provisions, the validity 

of a regulation or the procedural validity 

of a notice of revenue procedure does 

not involve taxpayer-specific facts. The 

validity of a regulation or the 

procedurally validity of a notice or 

revenue procedure is a determination of 

general applicability and does not 

involve the application of tax law to a 

specific set of facts and circumstances. 

Lastly, as explained in section I.D.11. of 

this Summary of Comments and 

Explanation of Revisions, the Treasury 

Department and the IRS have clarified 

the final regulations to specify that an 

unreviewable decision means ‘‘a 

decision of any Federal court regardless 

of where the taxpayer resides.’’ See 

§ 301.7803–2(c)(18). 

13. Cases or Issues Designated for 

Litigation or Withheld From Appeals: 

Exception 21 

Four comments were received on 

Exception 21, which provides that 

Appeals consideration is not available 

for any case or issue designated for 

litigation, or withheld from Appeals 

consideration in a Tax Court case, in 

accordance with guidance regarding 

designating or withholding a case or 

issue. As proposed, designation for 

litigation means that the Federal tax 

controversy, comprising an issue or 

issues in a case, will not be resolved 

without a full concession by the 

taxpayer or by decision of the court. 

A comment proposed that Chief 

Counsel attorneys should have the 

flexibility to refer all docketed cases to 

Appeals for resolution. This comment is 

not adopted. To the extent this comment 

invites a Chief Counsel attorney to 

disregard the Office of Chief Counsel’s 

decision to designate or withhold a case, 

trial attorneys do not operate 

independently of managerial direction. 

In addition, such flexibility would 

defeat the exception’s purpose. As 

explained in section I.C.21. of the 

proposed regulations’ Explanation of 

Provisions, cases are designated for 

litigation or withheld in the interest of 

sound tax administration to establish 

judicial precedent, promote consistency, 

conserve resources, or reduce litigation 

costs for the taxpayers and the IRS. 

Moreover, section 3.01 of Rev. Proc. 

2016–22 provides that docketed cases 

are not referred to Appeals if Appeals 

issued the notice of deficiency or made 

the determination that is the basis of the 

Tax Court’s jurisdiction. This exclusion 

also is set forth in Exception 22, see 

§ 301.7803–2(c)(22), and prevents 

duplicative review by Appeals. 

Two comments stated that Exception 

21 provides too much deference to Chief 

Counsel and recommended that the 

exception delete the reference to 

withheld cases. The Treasury 

Department and the IRS do not adopt 

these comments. The withholding of 

cases or issues from Appeals has been, 

and will continue to be, limited and 

rare.1 The determination to withhold a 

case or issue from Appeals requires a 

high-level review, with the decision 

ultimately resting with the Division 

Counsel or a higher-level Chief Counsel 

official. See section 3.03 of Rev. Proc. 

2016–22. When Congress enacted the 

TFA, it was aware of the historic 

exceptions to Appeals consideration, 

including Chief Counsel’s authority to 

designate a case for litigation or 

withhold a case from Appeals 

consideration on the basis of a referral 

not being in the interest of sound tax 

administration under Rev. Proc. 2016– 

22. Congress recognized that the 

Treasury Department and the IRS retain 

their historical discretion to determine 

whether the resolution of particular 

types of disputes is appropriate for 

Appeals, and the discretion of the IRS 

to determine whether a particular 

Federal tax controversy is appropriate 

for the Appeals resolution process. As 

proposed, Exception 21 is narrowly 

tailored, and it does not encroach on 

Appeals’ independence for the reasons 

discussed previously in section I.A. of 

this Summary of Comments and 

Explanation of Revisions. 

Two comments that objected to 

Exception 19 and Exception 20, in the 

alternative, recommended the 

regulations provide notice and protest 

rules for any taxpayer with a case or 

issue withheld or designated for 

litigation. One of the comments 

recommended at least requiring 

meetings with Chief Counsel executives 

to explain the decision. Similarly, 

another comment recommended that 

low-income taxpayers should receive a 

written explanation and given an 

opportunity to object. 

The Treasury Department and the IRS 

do not adopt these comments. If Chief 

Counsel determines that a docketed case 

or issue will be withheld from Appeals, 

Chief Counsel will notify the taxpayer 

that the case will not be referred to 

Appeals. See section 3.03 of Rev. Proc. 

2016–22. Taxpayer cases that are 

withheld from Appeals consideration 

under Exception 21 and meet the 

requirements of proposed § 301.7803–3 

already would receive a written notice 

detailing the facts of the case, the reason 

for the denial, and the opportunity to 

protest the denial pursuant to section 

7803(e)(5). As discussed in section 2 of 

this Summary of Comments and 

Explanation of Revisions, section 

7803(e)(5) only requires notice and 

denial protest rights be given to a 

taxpayer in receipt of a notice of 

deficiency. Consistent with the statute, 

these final regulations do not extend 

notice and denial protest rights to 

taxpayers who did not receive a notice 

of deficiency. With respect to situations 

involving low-income taxpayers, as 

described by the comment, such 

taxpayers would similarly receive an 

explanation and opportunity to protest 

under proposed § 301.7803–3 after they 

receive a notice of deficiency. 

Another comment alleged that the 

designation of cases or issues for 

litigation is not rare and prevents sound 

tax administration in thousands of cases 

because Appeals could arrive at the 

correct amount of tax or a deduction 

and the IRS’s approach of settling a 

designated case only if taxpayers 

concede all issues, including all 

penalties, has created a backlog in the 

IRS and the court. The comment is 

factually incorrect because designation 

of a case or issue is rare. The IRS has 

designated fewer than 10 cases since 

2013. 

A comment recommended the IRS 

make public a list of all designated cases 

docketed in Tax Court and all 

designated issues and publish the total 

number of taxpayers affected by cases or 

issues being designated for litigation. 

The Treasury Department and the IRS 

do not adopt this comment. The 

comment raises potential disclosure 

concerns under section 6103 of the Code 

relating to the prohibition of the 

disclosure of return information. Even if 

such disclosure was not prohibited by 

law, it is beyond the scope of these 

regulations. 


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14. Appeals Consideration Is a 

Prerequisite to Jurisdiction of the Tax 

Court: Exception 23 

One comment was received on 

Exception 23. Exception 23 provides 

that Appeals consideration is not 

available for a case in which timely 

consideration by Appeals must be 

requested before a petition is filed in the 

Tax Court because exhaustion of 

administrative review, including 

Appeals consideration, is a prerequisite 

for the Tax Court’s jurisdiction, and the 

taxpayer failed to timely request 

Appeals consideration. 

The comment opined the heading for 

this exception in the proposed 

regulations’ preamble (that is, Appeals 

Consideration is a Prerequisite to the 

Jurisdiction of Tax Court) did not 

mention whether there could be 

exceptions to the requirement to 

exhaust administrative remedies. The 

comment recommended adding 

language to the regulation’s text to 

explicitly indicate that Exception 23 

does not apply when there is an 

exception to the requirement to exhaust 

administrative remedies as provided in 

a statute or other guidance. The 

Treasury Department and the IRS do not 

adopt this recommendation. The text of 

the regulation adequately covers the 

comment’s point, as the text makes clear 

that this exception applies only when 

timely Appeals consideration itself is a 

prerequisite to the Tax Court’s 

jurisdiction. 

E. Procedural and Timing Requirements 

Are Followed: Proposed § 301.7803–2(e) 

One comment was received on 

proposed § 301.7803–2(e), which 

provides the procedural and timing 

requirements that a taxpayer must meet 

before Appeals may consider the 

taxpayer’s Federal tax controversy. 

Specifically, proposed § 301.7803–2(e) 

provides that a request for Appeals 

consideration must be submitted in the 

time and manner prescribed in 

applicable forms, instructions, or other 

administrative guidance and that all 

procedural requirements must be 

complied with for Appeals to consider 

a Federal tax controversy. 

The comment recommended that the 

final regulations explicitly direct the 

IRS to list specific requirements that the 

IRS must meet for accessibility, to 

explain the processes in a way that is 

easy to understand for the 

unrepresented taxpayer and feasible for 

all taxpayers, including low-income 

taxpayers who may face financial and 

other barriers to following traditional 

mailing processes. The comment 

suggested including notices with appeal 

rights delivered by mail and to a 

taxpayer’s online IRS account if they 

have one; deadlines to file an appeal 

should be clearly and accurately stated 

in plain language on the first page of a 

notice that has an appeal right; the IRS 

should have an easy-to-understand fillin form that contains all required 

elements to request an appeal, and the 

form should be available for every level 

of appeal; each notice from the IRS that 

carries an appeal right should enclose a 

copy of the simple form along with an 

envelope and instructions for certified 

mailing to prove the mailing date; and 

each notice from the IRS that carries an 

appeal right should also include both a 

simple URL link and QR code link to 

the online simplified form, the form 

should be easily fillable on a computer 

or a smartphone and be available in 

multiple languages, and the taxpayer 

should be able to submit this form 

online to meet the deadline for the 

Appeals request. 

The Treasury Department and the IRS 

do not adopt this comment’s 

recommendations because they are 

outside the scope of these final 

regulations. The comment is better 

suited to be addressed in the specific 

correspondence sent from the IRS to 

taxpayers. Promoting taxpayer 

communication, understanding, and 

efficiency, including in accessing 

Appeals, are important topics that the 

IRS will continue to look at as it 

improves and develops its systems and 

procedures. In that regard, the IRS will 

carefully consider the suggestions in 

this comment as part of that process. 

F. One Opportunity for Consideration 

by Appeals: Proposed § 301.7803–2(f) 

One comment was received with a 

suggestion relating to the general rule of 

one opportunity for Appeals 

consideration in proposed § 301.7803– 

2(f)(1). Another comment was received 

on the exceptions to that general rule. 

Those comments are addressed in this 

section I.F. of the Summary of 

Comments and Explanation of 

Revisions. 

1. In General. Proposed § 301.7803– 

2(f)(1) 

Proposed § 301.7803–2(f)(1) provides 

that if a Federal tax controversy is 

eligible for consideration by Appeals 

and the procedural and timing 

requirements are followed, a taxpayer 

generally has one opportunity for 

Appeals to consider such matter or issue 

in the same case for the same period or 

in any type of future case for the same 

period. The comment on proposed 

§ 301.7803–2(f)(1) recommended that 

the final regulations should explicitly 

include the situation in which the 

taxpayer and the Government have run 

out of time for Appeals consideration 

prior to the expiration of the statute of 

limitations and a notice of deficiency 

being issued, thereby confirming that a 

taxpayer’s case can be heard by Appeals 

either before or after a case is docketed 

(although not both). 

The Treasury Department and the IRS 

agree that if there is insufficient time 

remaining on the limitations period for 

Appeals consideration, a taxpayer in 

receipt of a notice of deficiency would 

have the opportunity to have Appeals 

consider the taxpayer’s case after the 

taxpayer has filed a petition with the 

Tax Court and the case is docketed, 

assuming the issue being considered by 

Appeals is not subject to an exception 

described in the final regulations. An 

example has been added to § 301.7803– 

2(e) to illustrate this point, which is a 

more appropriate place in the 

regulations for this addition. 

2. Exceptions. Proposed § 301.7803– 

2(f)(1) and (2) 

There are several exceptions to the 

general rule in proposed § 301.7803– 

2(f)(1). Proposed § 301.7803–2(f)(1) 

provides an exception to the proposed 

general rule in a case in which the Tax 

Court remands a collection due process 

(CDP) case for reconsideration. 

Proposed § 301.7803–2(f)(2) provides an 

exception for a taxpayer that 

participated in an Appeals early 

consideration program but did not reach 

an agreement with Appeals. Proposed 

§ 301.7803–2(f)(2) also provides an 

exception to the general rule in 

proposed § 301.7803–2(f)(1) for 

taxpayers who provide new information 

to the IRS and who meet the conditions 

and requirements for audit 

reconsideration or for reconsideration of 

liability issues previously considered by 

Appeals. Appeals may consider the new 

information. 

A comment recommended clarifying 

in proposed § 301.7803–2(f)(2) that a 

new development in the law is ‘‘new 

information’’ that would allow Appeals 

reconsideration of the same matter. The 

Treasury Department and the IRS 

recognize that the original phrasing in 

the paragraph was unclear. For purposes 

of these final regulations, new 

information is intended to mean 

additional facts that the taxpayer did 

not provide during the original 

examination. It is not intended to mean 

a new development in the law. 

Additional language has been added to 

§ 301.7803–2(f)(2) in the final 

regulations to clarify the intended 

meaning. 


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G. Special Rules. Proposed § 301.7803– 

2(g) 

A comment suggested that Chief 

Counsel delaying Appeals review of a 

case was tantamount to a denial of 

Appeals review. The Treasury 

Department and the IRS disagree. As 

explained in section I.H.2. of the 

proposed regulations’ Explanation of 

Provisions regarding the special rule in 

proposed § 301.7803–2(g), Chief 

Counsel may delay forwarding a 

docketed case to Appeals when Chief 

Counsel anticipates filing a dispositive 

motion such as a motion for summary 

or partial summary judgment, or a 

motion to dismiss for lack of 

jurisdiction, in which case Chief 

Counsel will retain jurisdiction over the 

case until the Tax Court rules on the 

motion. This flexibility to respond to 

the needs of specific Federal tax 

controversies promotes the efficient 

disposition of a taxpayer’s case, 

including developing or narrowing the 

issues in dispute. The taxpayer will 

continue to be eligible for consideration 

by Appeals if the litigation continues 

and all other requirements in 

§ 301.7803–2 are met. Accordingly, 

these final regulations do not adopt this 

comment. 

H. Section 9100 Relief and Change of 

Accounting Method 

The list of exclusions in proposed 

§ 301.7803–2(c) does not include certain 

exclusions from Appeals consideration 

currently provided in the IRM relating 

to requests for 9100 relief and CAMs. In 

the proposed regulations, the Treasury 

Department and the IRS requested 

comments on whether these items 

should be included in the list of 

exclusions. Specifically, comments were 

requested on whether the binary nature 

of decisions by an Associate Office 

regarding 9100 relief or CAM requests 

makes these decisions unsuitable for 

Appeals review; whether a different 

review standard should apply if 

Appeals considers the decisions; and 

what impact would Appeals review of 

the decisions have on later years that are 

not before Appeals. 

In response, the Treasury Department 

and the IRS received four comments. 

One comment in support of adopting an 

Appeals exception recommended that 

Exception 17 relating to letter rulings 

issued by an Associate Office be 

finalized as proposed so that the 

regulations ensure, consistent with the 

historical IRS position, that Appeals not 

be permitted to consider an Associate 

Office decision concerning whether to 

issue 9100 relief or CAM letter rulings. 

See section I.D.10. of this Summary of 

Comments and Explanation of Revisions 

regarding Exception 17. According to 

this comment, letter ruling decisions 

regarding 9100 relief and CAMs should 

not be considered by Appeals for the 

reasons described in the proposed 

regulations that apply to other types of 

letter rulings. In particular, a letter 

ruling interprets internal revenue laws 

and applies them to the taxpayer’s 

specific set of facts. A voluntary request 

for a letter ruling is not an 

administrative determination that is a 

part of the IRS’s compliance function. A 

taxpayer receiving a letter ruling is not 

obligated to file a return consistent with 

that letter ruling. Generally, the program 

is designed instead to provide taxpayers 

with information regarding whether the 

IRS will accept a position to be taken on 

the taxpayer’s return. For letter rulings 

responding to a taxpayer’s request for a 

CAM, the letter ruling grants or denies 

consent under section 446(e) of the 

Code. The Treasury Department and the 

IRS adopt this recommendation for 

those reasons and added language to 

clarify this point that Exception 17 

includes Associate Office decisions on 

9100 relief requests and CAM requests. 

See § 301.7803–2(c)(17). While Appeals 

cannot consider an Associate Office’s 

decision on whether to issue a letter 

ruling or the content of a letter ruling, 

Exception 17 recognizes that Appeals 

may consider the subject of the letter 

ruling if all other requirements in 

§ 301.7803–2 are met. For example, if an 

Associate Office issues an adverse letter 

ruling to a taxpayer, the taxpayer cannot 

immediately appeal the issuance of the 

adverse letter ruling. If the taxpayer 

later files a return taking a position that 

is contrary to the letter ruling and that 

position is examined by the IRS, 

Appeals can consider that Federal tax 

controversy if all other requirements in 

§ 301.7803–2 are met. 

The comment also recommended a 

separate exclusion for Appeals 

consideration of decisions by an 

Associate Office regarding 9100 relief or 

CAM requests. The Treasury 

Department and the IRS do not adopt 

this recommendation. As previously 

described, if a taxpayer files a tax return 

contrary to the Associate Office’s 

decision and a Federal tax controversy 

arises that involves the subject of the 

adverse decision, Appeals could 

consider the subject of that Associate 

Office’s decision in the dispute if all 

other requirements in § 301.7803–2 are 

met. 

Another comment suggested the final 

regulations should empower Appeals to 

consider an Associate Office’s decisions 

regarding 9100 relief or CAM requests 

because Appeals consideration would 

protect taxpayer rights. Two comments 

suggested the final regulations should 

allow Appeals to consider such cases 

because judicial review is costly and 

time consuming and Appeals 

consideration would reduce litigation. 

The Treasury Department and the IRS 

agree Appeals review as described in 

the preceding paragraph is consistent 

with the function of Appeals to resolve 

Federal tax controversies without 

litigation and is consistent with the 

provision that such resolution be 

generally available to all taxpayers. A 

comment suggested the final regulations 

should empower Appeals to consider 

such cases because Appeals 

consideration would promote impartial 

resolution. The Treasury Department 

and the IRS disagree with this reasoning 

because, as explained previously in this 

Summary of Comments and 

Explanation of Revisions, impartiality 

presupposes that the matter is being 

considered by Appeals in the first place. 

Once a Federal tax controversy is 

referred to Appeals, Appeals will 

consider the hazards of litigation while 

impartially considering the positions of 

the taxpayer and of the IRS. 

A comment asserted accounting 

method issues do not have to be viewed 

as binary and noted Appeals already 

reviews adjustments initiated by the IRS 

through an examination. According to 

this comment, Appeals should review 

accounting method issues consistently 

regardless of whether the originating 

function was through an IRS 

examination or an Associate Office. 

Similarly, another comment asserted 

that Appeals consideration of a CAM 

letter ruling denial that was issued on 

the basis that the requested change 

would not clearly reflect income or 

would otherwise not be in the interest 

of sound tax administration would 

allow Appeals review of the substantive 

positions in these cases, similar to 

Appeals review of the substantive issue 

in cases arising in examination or a 

docketed case, and that foreclosing 

Appeals consideration would create 

inconsistencies and be 

counterproductive to tax administration. 

The Treasury Department and the IRS 

agree that Appeals should have the 

ability to review accounting method 

issues arising in an examination, even 

when the accounting method issue 

relates to an Associate Office’s denial of 

a CAM letter ruling request. 

Another comment suggested Appeals 

consideration of an Associate Office’s 

decisions regarding 9100 relief or CAM 

requests would promote consistent 

application of laws and public 

confidence in the IRS. Appeals 

consideration of an Associate Office’s 


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decisions regarding 9100 relief or CAM 

requests would promote public 

confidence in the IRS and is consistent 

with the purpose of the TFA. 

A comment asserted the ultimate 

decision may be binary, in that an 

Associate Office either does or does not 

permit 9100 relief or a CAM. According 

to this comment, the binary nature of 

decisions on these matters should not 

automatically exclude them from 

Appeals review. To the extent an 

Associate Office’s decision regarding a 

9100 relief or CAM request is viewed as 

a binary decision, the Treasury 

Department and the IRS agree with the 

comment’s general premise that the 

binary nature of such decisions would 

not automatically exclude them from 

Appeals review. If a taxpayer files a tax 

return contrary to the Associate Office’s 

decision and a Federal tax controversy 

arises that involves the subject of the 

adverse decision, Appeals may consider 

the subject of that Associate Office’s 

decision in the dispute if all other 

requirements in § 301.7803–2 are met. 

The IRM currently provides that 

Appeals will not partially or fully 

concede an issue in a case in which an 

Associate Office’s decision would be 

reviewed by a court using an abuse of 

discretion standard. One comment 

urged that if Appeals is permitted to 

consider a decision by an Associate 

Office that denied a 9100 relief or a 

CAM request, then the final regulations 

should apply a different standard of 

review than the abuse of discretion 

standard used for other administrative 

determinations. The comment 

recommended that Appeals should only 

be permitted to make concessions if it 

determines there is a significant risk 

that, if litigated, a court would find that 

the IRS abused its discretion in issuing 

an adverse letter ruling. Another 

comment observed that a CAM request 

may be denied by an Associate Office 

for many different reasons, including, 

for example, on the basis of substantive 

issues or due to procedural issues when 

the Associate Office determines that the 

taxpayer has not complied with all the 

procedural terms and conditions, such 

as filing requirements and deadlines. 

The comment urged the Treasury 

Department and the IRS to look through 

the superficial similarities of these 

denials to the underlying legal issues 

when determining whether Appeals 

review is warranted. The Treasury 

Department and the IRS agree that an 

Associate Office may issue a denial 

letter on a 9100 relief request or CAM 

request for a variety of different reasons, 

which are generally expressed in the 

applicable statute, regulations, or other 

guidance published in the Internal 

Revenue Bulletin. A decision to deny 

such a request, whether on a procedural 

or a substantive basis, is based on all the 

facts and circumstances. The final 

regulations do not provide a standard of 

review because it is outside the scope of 

these regulations, and the Treasury 

Department and the IRS expect the 

existing review standard would be used 

by Appeals for such cases. 

A comment stated Appeals may need 

to enter into closing agreements with 

taxpayers to ensure that future taxable 

years are consistent with the request 

that was denied by the Associate Office, 

but that closing agreements would be 

more difficult for the taxpayer and the 

Government to reverse in future years 

compared to a letter ruling issued by an 

Associate Office. These regulations do 

not alter the authority delegated to the 

Associate Offices over 9100 relief or 

CAM requests or to restrict Appeals’ 

ability to use its existing settlement 

authority to review or settle such cases. 

See, e.g., Rev. Proc. 2002–18, 2002–1 

C.B. 678 (regarding procedures relating 

to the settling of method change issues). 

Likewise, these regulations do not alter 

the IRS’s authority to review these 

issues during an examination of a 

taxpayer’s Federal income tax return. 

I. Miscellaneous Recommendations 

Regarding Proposed § 301.7803–2 

A comment expressed concern that 

the proposed regulations could make 

the Appeals review process more 

confusing and stressful for taxpayers, 

including low-income taxpayers, but 

did not specify how or why this could 

happen. The Treasury Department and 

the IRS disagree with this comment. The 

procedural requirements, timing 

requirements, and almost all of the 

exceptions to consideration by Appeals 

already exist in previously established 

guidance regarding Appeals. As in the 

past, the proposed exceptions are 

limited in number and the vast majority 

of taxpayers, including low-income 

taxpayers, would have the opportunity 

to have Appeals consider their Federal 

tax controversies. 

The same comment suggested 

considering the impact of the 

regulations on closed cases in Appeals. 

To the extent this comment is 

suggesting these regulations should 

cover procedures for reopening a closed 

case, that topic is beyond the scope of 

these regulations. Procedures for 

reopening closed Appeals cases already 

exist in other guidance. See IRM 8.6.1.7 

(09–25–2019). 

A comment suggested that the 

proposed regulations overlap with 

§ 601.106. To the extent that the 

Treasury Department and the IRS are 

not repealing or revising § 601.106, the 

comment recommended Treasury 

explicitly harmonize areas of overlap 

and consolidate all Appeals regulations 

into adjacent sections of the regulations 

to prevent ambiguity and controversy. 

In the alternative, even if no actual or 

perceived conflict exists, the comment 

recommended adding cross-references 

in § 301.7803–2 to avoid creating a trap 

for the unwary. 

The Treasury Department and the IRS 

do not agree with this comment and do 

not adopt these recommendations. The 

Statement of Procedural Rules, 26 CFR 

part 601, are procedural rules governing 

internal IRS affairs. Those rules do not 

concern the substantive resolution of 

Federal tax controversies by Appeals. 

Two comments recommended 

additional funding, including funding 

for Appeals in order to more effectively 

and fairly serve taxpayers, and limit the 

need for the exceptions in these 

regulations. The recommendation 

addresses operational matters of 

Appeals and is beyond the scope of 

these regulations because it does not 

address the proposed regulations or 

recommend any changes. 

One comment addressed the Interim 

Guidance (IG) Memorandum (Control 

Number AP–08–0922–0011) that 

Appeals issued on September 14, 2022, 

relating to validity challenges to 

regulations and relating to procedural 

validity challenges to notices or revenue 

procedures. This comment alleged that 

the IRS has already begun to make the 

substance of Exception 19 and 

Exception 20 effective even though, as 

proposed in the proposed regulations, 

they would not take effect until 30 days 

after the publication of a final 

regulation. The comment recommended 

that Appeals pause using these 

exceptions before the regulations are 

finalized. 

The Treasury Department and the IRS 

decline to adopt the comment’s 

recommendation because it is outside 

the scope of these regulations. The IG 

Memorandum provides interim 

guidance by Appeals to AOs and does 

not have bearing on these final 

regulations. 

II. Notice and Protest of Denial 

Procedures Following Issuance of a 

Notice of Deficiency: Proposed 

§ 301.7803–3 

Two comments were received on 

proposed § 301.7803–3, which 

implements the notice and protest 

procedures of section 7803(e)(5). As 

proposed, these procedures apply if any 

taxpayer requests Appeals consideration 

of a matter or issue, the request is 

denied, and the taxpayer meets the 


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requirements of proposed § 301.7803– 

3(a)(1) through (5). Proposed 

§ 301.7803–3(a)(1) adopts the statutory 

language in section 7803(e)(5)(A), which 

refers to any taxpayer in receipt of a 

notice of deficiency authorized under 

section 6212 (relating to notice of 

deficiency). 

The comments recommended that the 

notice and protest procedures should 

not be limited to taxpayers in receipt of 

a notice of deficiency. The Treasury 

Department and the IRS do not adopt 

this recommendation because it is 

contrary to the TFA. Section 7803(e)(5) 

does not grant the right to notice and 

protest a denial to all taxpayers. That 

statute requires the provision of such 

rights when the taxpayer is in receipt of 

a notice of deficiency, the taxpayer 

requests referral to Appeals, and that 

request is denied. Thus, a taxpayer 

would not be entitled to notice and 

protest procedures under section 

7803(e)(5) and proposed § 301.7803–3 in 

the absence of a notice of deficiency. 

A comment described the notice and 

protest procedures in proposed 

§ 301.7803–3 as not applying when a 

taxpayer is ineligible for Appeals 

consideration because one of the 

exceptions listed in proposed 

§ 301.7803–2(c) applies to the taxpayer. 

This description is incorrect. As written 

and intended, proposed § 301.7803–3 

does not except such cases or issues 

from the notice and protest procedures. 

Thus, that one of the exceptions listed 

in proposed § 301.7803–2(c) applies to a 

taxpayer does not prevent these 

procedures from applying if the 

taxpayer otherwise meets the 

requirements of proposed § 301.7803– 

3(a)(1) through (5), although it may be 

a reason why the request for referral to 

Appeals was denied. In response to the 

comments, the final regulations make 

clarifying edits to the text of § 301.7803– 

3(a). 

III. Comments on Topics That Are 

Outside the Scope of These Regulations 

Although the Explanation of 

Provisions of the proposed regulations 

discussed other new sections of the 

TFA, such as section 7803(e)(6) relating 

to Appeals’ authority to obtain legal 

assistance and advice from Chief 

Counsel attorneys with regard to cases 

pending at Appeals, the proposed 

regulations stated that sections 

7803(e)(4) and 7803(e)(5) were the 

primary focus of the guidance provided 

in the proposed regulations. Some 

comments received in response to the 

proposed regulations concerned topics 

and issues that are outside the scope of 

these final regulations. 

One such comment recommended 

that these final regulations include the 

assurances currently provided in 

subregulatory guidance regarding the ex 

parte rules; limitations on the IRS 

examination function or Appeals raising 

new issues; conference rights; or the 

longstanding policies regarding the 

reopening of mutual concession cases. A 

comment was offered on access to 

administrative files under new section 

7803(e)(7). Another comment 

recommended that the Treasury 

Department should adopt the National 

Taxpayer Advocate’s proposal that a 

taxpayer has the right to a conference 

with Appeals that does not include 

personnel from Chief Counsel or the IRS 

examination function unless the 

taxpayer specifically consents to the 

participation of those parties in the 

conference, and another comment 

recommended that neither Appeals nor 

any IRS personnel involved in the 

Appeals conference should offer 

‘‘nuisance’’ settlement offers of zero or 

small numbers. 

The Treasury Department and the IRS 

do not adopt these comments because 

their topics are outside the scope of 

sections 7803(e)(4) and 7803(e)(5), 

which were the primary focus of the 

proposed regulations. Section 7803(e)(4) 

provides for the general availability of 

Appeals consideration for taxpayers and 

section 7803(e)(5) provides for the 

limitation on designation of cases as not 

eligible for referral to Appeals. These 

comments do not address those areas 

and are already contained in other 

existing guidance. The IRS will consider 

and evaluate the comments for 

inclusion in the IRM or other guidance, 

as appropriate. 

Special Analyses 

I. Regulatory Planning and Review 

Pursuant to the Memorandum of 

Agreement, Review of Treasury 

Regulations under Executive Order 

12866 (June 9, 2023), tax regulatory 

actions issued by the IRS are not subject 

to the requirements of section 6 of 

Executive Order 12866, as amended. 

Therefore, a regulatory impact 

assessment is not required. 

II. Regulatory Flexibility Act 

In accordance with the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) it 

is hereby certified that these regulations 

will not have a significant economic 

impact on a substantial number of small 

entities. 

These regulations affect any person 

who would like to have a Federal tax 

controversy considered by Appeals, 

including any small entity. Because any 

small entity could potentially request 

consideration by Appeals, these 

regulations are expected to affect a 

substantial number of small entities. 

However, the IRS has determined that 

the economic impact on small entities 

affected by these regulations would not 

be significant. 

The regulations provide procedural 

and timing requirements for 

consideration by Appeals. The 

regulations also establish the general 

availability of consideration by Appeals 

and exceptions to that consideration. 

The procedural requirements, timing 

requirements, and the vast majority of 

the exceptions to eligibility for 

consideration by Appeals already exist 

in previously established guidance 

regarding Appeals. The regulations also 

provide rules regarding certain 

circumstances in which a written 

explanation will be provided regarding 

why Appeals consideration was not 

provided. None of the regulations affect 

entities’ substantive tax liability nor do 

they affect the process that Appeals 

follows when it considers an eligible 

Federal tax controversy. Any significant 

economic impact on small entities will 

result from the application of the 

substantive tax provisions and will not 

be a result of these final regulations. 

Accordingly, the Secretary hereby 

certifies that these regulations will not 

have a significant economic impact on 

a substantial number of small entities. 

Pursuant to section 7805(f) of the 

Code, the notice of proposed rulemaking 

was submitted to the Chief Counsel for 

the Office of Advocacy of the Small 

Business Administration for comment 

on its impact on small business, and no 

comments were received. 

III. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a State, local, or Indian tribal 

government, in the aggregate, or by the 

private sector, of $100 million (updated 

annually for inflation). These final 

regulations do not include any Federal 

mandate that may result in expenditures 

by State, local, or Indian tribal 

governments, or by the private sector in 

excess of that threshold. 

IV. Executive Order 13132: Federalism 

Executive Order 13132 (Federalism) 

prohibits an agency from publishing any 

rule that has federalism implications if 

the rule either imposes substantial, 

direct compliance costs on State and 


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3662 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

local governments, and is not required 

by statute, or preempts State law, unless 

the agency meets the consultation and 

funding requirements of section 6 of the 

Executive order. These final regulations 

do not have federalism implications and 

do not impose substantial direct 

compliance costs on State and local 

governments or preempt State law 

within the meaning of the Executive 

order. 

V. Congressional Review Act 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs 

designated this rule as not a major rule 

as defined by 5 U.S.C. 804(2). 

Statement of Availability of IRS 

Documents 

IRS Revenue Procedures, Revenue 

Rulings notices, and other guidance 

cited in this document are published in 

the Internal Revenue Bulletin (or 

Cumulative Bulletin) and are available 

from the Superintendent of Documents, 

U.S. Government Publishing Office, 

Washington, DC 20402, or by visiting 

the IRS website at https://www.irs.gov. 

Drafting Information 

The principal author of these 

regulations is Joshua Hershman of the 

Office of the Associate Chief Counsel 

(Procedure and Administration). Other 

personnel from the Treasury 

Department and the IRS participated in 

their development. 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, the Treasury Department 

and the IRS amend 26 CFR part 301 as 

follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

■ Paragraph 1.The authority citation for 

part 301 is amended by adding entries 

in numerical order for §§ 301.7803–2 

and 301.7803–3 to read, in part, as 

follows: 

Authority: 26 U.S.C. 7805. 

* * * * * 

Section 301.7803–2 is also issued under 26 

U.S.C. 7803(e). 

Section 301.7803–3 is also issued under 26 

U.S.C. 7803(e). 

* * * * * 

■ Par. 2. Sections 301.7803–2 and 

301.7803–3 are added to read as follows: 

§ 301.7803–2 Internal Revenue Service 

Independent Office of Appeals resolution of 

Federal tax controversies without litigation. 

(a) Function of the Internal Revenue 

Service Independent Office of Appeals. 

The Internal Revenue Service 

Independent Office of Appeals 

(Appeals) resolves Federal tax 

controversies without litigation on a 

basis that is fair and impartial to both 

the Government and the taxpayer, 

promotes a consistent application and 

interpretation of, and voluntary 

compliance with, the Federal tax laws, 

and enhances public confidence in the 

integrity and efficiency of the Internal 

Revenue Service (IRS). 

(b) Consideration of a Federal tax 

controversy by Appeals—(1) In general. 

The Appeals resolution process is 

generally available to all taxpayers to 

resolve Federal tax controversies. 

(2) Definition of Federal tax 

controversy. For purposes of this 

section, a Federal tax controversy is 

defined as a dispute over an 

administrative determination with 

respect to a particular taxpayer made by 

the IRS in administering or enforcing 

the internal revenue laws, related 

Federal tax statutes, and tax 

conventions to which the United States 

is a party (collectively referred to as 

internal revenue laws) that arises out of 

the examination, collection, or 

execution of other activities concerning 

the amount or legality of the taxpayer’s 

income, employment, excise, or estate 

and gift tax liability; a penalty; or an 

addition to tax under the internal 

revenue laws. For purposes of this 

section, a Federal tax controversy 

includes, for example, a dispute over an 

administrative determination made by 

the IRS concerning a taxpayer’s 

proposed deficiency, a taxpayer’s claim 

for credit or refund, the tax-exempt 

nature of a particular organization, 

private foundation, or qualified 

employee plan under the internal 

revenue laws, or the status of a taxexempt or other tax-advantaged bond. 

(3) Other administrative 

determinations treated as Federal tax 

controversies. Notwithstanding the 

definition of a Federal tax controversy 

in paragraph (b)(2) of this section, 

disputes over administrative 

determinations made by the IRS with 

respect to a particular person regarding 

the following topics are treated as 

Federal tax controversies for purposes of 

this section: 

(i) Liabilities and penalties 

administered by the IRS that are outside 

the Internal Revenue Code (Code), such 

as a liability or penalty pursuant to 31 

U.S.C. 5321 (relating to Report of 

Foreign Bank and Financial Accounts or 

Bank Secrecy Act civil penalties); 

(ii) A request under the Freedom of 

Information Act (5 U.S.C. 552); 

(iii) Application to become, or the 

sanction of, an Electronic Return 

Originator or Authorized IRS e-file 

Provider; 

(iv) An IRS-proposed determination to 

a bond issuer that denies a claim for 

recovery of an asserted overpayment of 

arbitrage rebate, yield reduction 

payment, or penalty in lieu of rebate 

under section 148 of the Code (relating 

to arbitrage) with respect to tax-exempt 

bonds or under section 148 as modified 

by relevant provisions of the Code with 

respect to other tax-advantaged bonds; 

(v) Administrative costs under section 

7430 of the Code (relating to awarding 

of costs and certain fees); or 

(vi) Any other topic that the IRS has 

determined may be considered by 

Appeals. 

(c) Exceptions to consideration by 

Appeals. The following are Federal tax 

controversies that are excepted from 

consideration by Appeals or matters or 

issues that are otherwise ineligible for 

consideration by Appeals because they 

are neither a Federal tax controversy nor 

treated as a Federal tax controversy 

under paragraph (b)(3) of this section. If 

a matter or issue not eligible for 

consideration by Appeals is present in 

a case that otherwise is eligible for 

consideration by Appeals, the ineligible 

matter or issue will not be considered 

by Appeals during resolution of the 

case. The exceptions are: 

(1) Any administrative determination 

made by the IRS rejecting a position of 

a taxpayer that the IRS has identified as 

frivolous for purposes of section 6702(c) 

of the Code (regarding listing of 

frivolous positions) and any case solely 

involving the taxpayer’s failure or 

refusal to comply with the internal 

revenue laws because of frivolous 

moral, religious, political, 

constitutional, conscientious, or similar 

grounds. 

(2) Penalties assessed by the IRS 

under section 6702 (relating to frivolous 

tax submissions) or section 6682 of the 

Code (relating to false information with 

respect to withholding) or any other 

penalty imposed for a frivolous position 

or false information. Appeals, however, 

may obtain verification that the 

assessment of the penalties complied 

with sections 6203 (relating to method 

of assessment) and 6751(b) (relating to 

supervisory approval of assessment) of 

the Code in a collection due process 

(CDP) hearing under sections 6320 

(relating to a hearing upon filing of a 

notice of lien) and 6330 (relating to a 

hearing before levy) of the Code. 


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Appeals also may consider a nonfrivolous substantive challenge to a 

section 6702 or section 6682 penalty in 

a CDP hearing. 

(3) Any administrative determination 

made by the IRS under section 7623 of 

the Code (relating to awards to 

whistleblowers). 

(4) Any administrative determination 

issued by an agency other than the IRS, 

such as a determination by the Alcohol 

and Tobacco Tax and Trade Bureau 

(TTB) concerning an excise tax 

administered by and within the 

jurisdiction of TTB. 

(5) Any decision made by the IRS not 

to issue a Taxpayer Assistance Order 

(TAO) under section 7811 of the Code 

(relating to TAOs). 

(6) Any decision made by the IRS 

concerning material to be deleted from 

the text of a written determination 

pursuant to section 6110 of the Code 

(relating to public inspection of written 

determinations) unless the written 

determination is otherwise being 

considered by Appeals. 

(7) Any denial of access under the 

Privacy Act (5 U.S.C. 552a(d)(1)). 

(8) Any issue resolved in an 

agreement described in section 7121 of 

the Code (regarding closing agreements) 

that the taxpayer entered into with the 

IRS, and any decision made by the IRS 

to enter into or not enter into such 

agreement. Appeals may consider the 

question of whether an item or items are 

covered, and how the item or items are 

covered, in a closing agreement. 

(9) Any case in which the IRS 

erroneously returns or rejects an offer in 

compromise (OIC) submitted under 

section 7122 of the Code (relating to 

compromises) as nonprocessable or no 

longer processable and the taxpayer 

requests Appeals consideration to assert 

that the OIC should be deemed to be 

accepted under section 7122(f). 

(10) Any case in which a criminal 

prosecution, or a recommendation for 

criminal prosecution, is pending against 

the taxpayer for a tax-related offense, 

except with the concurrence of the 

Office of Chief Counsel or the 

Department of Justice, as applicable. 

(11) Any issues relating to allocation 

among different fee payers of the 

branded prescription drug and health 

insurance providers fees in section 9008 

of the Patient Protection and Affordable 

Care Act (PPACA), Public Law 111–148 

(124 Stat. 119 (2010)), as amended by 

section 1404 of the Health Care and 

Education Reconciliation Act of 2010 

(HCERA), Public Law 111–152 (124 Stat. 

1029 (2010)), and section 9010 of 

PPACA, as amended by section 10905 of 

PPACA, and as further amended by 

section 1406 of HCERA. 

(12) Any certification or issuance of a 

notice of certification of a seriously 

delinquent Federal tax debt to the 

Department of State under section 7345 

of the Code (relating to the revocation or 

denial of a passport in the case of 

serious tax delinquencies). 

(13) Any issue barred from 

consideration under section 6320 or 

section 6330, §§ 301.6320–1 and 

301.6330–1, or any other administrative 

guidance related to CDP hearings or 

equivalent hearings. 

(14) Any case, determination, matter, 

decision, request, or issue that Appeals 

lacks the authority to settle. The 

following is a non-exclusive list of 

examples: 

(i) Any case or issue in a case that has 

been referred to the Department of 

Justice. 

(ii) Any competent authority case 

(including a competent authority 

resolution previously accepted by the 

taxpayer) under a United States tax 

treaty that is within the exclusive 

authority of the United States 

Competent Authority. 

(iii) Any decision of the 

Commissioner of Internal Revenue or 

the Commissioner’s delegate to not 

rescind a penalty under section 6707A 

of the Code for a non-listed reportable 

transaction. 

(iv) Any request for relief under 

section 6015 of the Code (relating to 

relief from joint and several liability on 

a joint return) when the nonrequesting 

spouse is a party to a docketed case in 

the United States Tax Court (Tax Court) 

and does not agree to granting full or 

partial relief under section 6015 to the 

requesting spouse. 

(v) Any criminal restitution-based 

assessment under section 6201(a)(4) of 

the Code (relating to certain orders of 

criminal restitution and restriction on 

challenge of assessment). 

(15) Any adverse action related to the 

initial or continuing recognition of taxexempt status, an entity’s classification 

as a foundation, the initial or continuing 

determination of employee plan 

qualification, or a determination 

involving an obligation and the issuer of 

an obligation under section 103 of the 

Code. The exception in this paragraph 

(c)(15) applies only if the tax-exempt 

recognition, classification, 

determination of employee plan 

qualification, or determination 

involving an obligation and the issuer of 

an obligation under section 103 is based 

upon a technical advice memorandum 

issued by an Office of Associate Chief 

Counsel before an appeal is requested. 

(16) Any case docketed in the Tax 

Court if the notice of deficiency, notice 

of liability, or final adverse 

determination letter is based upon a 

technical advice memorandum issued 

by an Office of Associate Chief Counsel 

in that case involving an adverse action 

described in paragraph (c)(15) of this 

section. 

(17) Any decision by an Office of 

Associate Chief Counsel regarding 

whether to issue a letter ruling or the 

content of a letter ruling. This includes 

decisions regarding requests for relief 

under §§ 301.9100–1 through 301.9100– 

22 and requests for a change in method 

of accounting. The subject of the letter 

ruling may be considered by Appeals if 

all other requirements in this section are 

met. For example, if an Office of 

Associate Chief Counsel issues an 

adverse letter ruling to a taxpayer, the 

taxpayer cannot immediately appeal the 

issuance of the adverse letter ruling. If 

the taxpayer subsequently files a return 

taking a position that is contrary to the 

letter ruling and that position is audited 

by the IRS, Appeals may consider that 

Federal tax controversy if all other 

requirements in this section are met. 

(18) Any issue based on a taxpayer’s 

argument that a statute violates the 

United States Constitution unless there 

is an unreviewable decision from a 

Federal court holding that the cited 

statute is unconstitutional. For purposes 

of this paragraph (c)(18), an argument 

that a statute violates the United States 

Constitution includes any argument that 

a statute is unconstitutional on its face 

or as applied to a particular person. The 

exception in this paragraph (c)(18) does 

not preclude Appeals from considering 

a Federal tax controversy based on 

arguments other than the 

constitutionality of a statute, such as 

whether the statute applies to the 

taxpayer’s facts and circumstances. For 

purposes of this section, the phrase 

unreviewable decision is a decision of 

any Federal court regardless of where 

the taxpayer resides that can no longer 

be appealed to any Federal court 

because all appeals in a case have been 

exhausted or the time to appeal has 

expired and no appeal was filed. 

(19) Any issue based on a taxpayer’s 

argument that a Treasury regulation is 

invalid unless there is an unreviewable 

decision from a Federal court 

invalidating the regulation as a whole or 

the provision in the regulation that the 

taxpayer is challenging. The exception 

in this paragraph (c)(19) does not 

preclude Appeals from considering a 

Federal tax controversy based on 

arguments other than the validity of a 

Treasury regulation, such as whether 

the Treasury regulation applies to the 

taxpayer’s facts and circumstances. For 

purposes of this paragraph (c)(19), the 

term invalid means any challenge to 


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validity, whether substantively invalid 

or procedurally invalid in scope. See 

paragraph (c)(20) of this section for 

definition of the term procedurally 

invalid. 

(20) Any issue based on a taxpayer’s 

argument that a notice or revenue 

procedure published in the Internal 

Revenue Bulletin is procedurally 

invalid unless there is an unreviewable 

decision from a Federal court holding it 

to be invalid. This exception does not 

preclude Appeals from considering a 

Federal tax controversy based on 

arguments other than the procedural 

validity of a notice or revenue 

procedure, such as whether the notice 

or revenue procedure applies to the 

taxpayer’s facts and circumstances. For 

purposes of this section, the term 

procedurally invalid is defined as any 

determination regarding whether a 

notice or revenue procedure failed to 

comply with administrative law 

requirements, such as notice and 

comment under 5 U.S.C. 553. 

(21) Any case or issue designated for 

litigation, or withheld from Appeals 

consideration in a Tax Court case, in 

accordance with guidance regarding 

designating or withholding a case or 

issue. For purposes of this section, 

designated for litigation means that the 

Federal tax controversy, comprising an 

issue or issues in a case, will not be 

resolved without a full concession by 

the taxpayer or by decision of the court. 

(22) Any case docketed in the Tax 

Court if the notice of deficiency, notice 

of liability, or other determination was 

issued by Appeals unless the exception 

in paragraph (f)(1) of this section 

(regarding when the Tax Court remands 

a CDP case for reconsideration) applies. 

(23) Any case in which timely 

Appeals consideration must be 

requested before a petition is filed in the 

Tax Court because exhaustion of 

administrative review, including 

consideration by Appeals, is a 

prerequisite for the Tax Court to have 

jurisdiction, and the taxpayer failed to 

timely request Appeals consideration. 

For example, Appeals consideration 

must be requested before a petition is 

filed in the Tax Court regarding a 

declaratory judgment request under 

section 7428 (relating to declaratory 

judgment on the classification of 

specified organizations), section 7476 

(relating to declaratory judgment on 

qualification of certain retirement 

plans), or section 7477 (relating to 

declaratory judgment on the value of 

certain gifts) of the Code. 

(24) Any administrative 

determination made by the IRS to deny 

or revoke a Certified Professional 

Employer Organization certification. 

(d) Originating office has completed 

its review—(1) In general. Appeals 

consideration of a matter or issue is 

appropriate only after the originating 

IRS office has completed its action on 

the Federal tax controversy and issued 

an administrative determination or a 

proposed administrative determination 

accompanied by an offer for 

consideration by Appeals. If the 

originating office has not completed its 

action regarding the Federal tax 

controversy, the request for Appeals 

consideration is premature. Appeals 

may consider the Federal tax 

controversy if the taxpayer requests 

consideration after the originating 

office’s action is complete and if all 

requirements in this section are met. 

(2) Exception for early consideration 

programs. If administrative guidance 

permits the originating office to engage 

Appeals prior to completing its action 

regarding the Federal tax controversy, 

Appeals may consider the Federal tax 

controversy under the terms of that 

administrative guidance, such as 

mediation under a fast track settlement 

program or early consideration of some 

issues under an early referral program. 

(e) Procedural and timing 

requirements are followed—(1) In 

general. A request for Appeals 

consideration of a Federal tax 

controversy must be submitted in the 

time and manner prescribed in 

applicable forms, instructions, or other 

administrative guidance. All procedural 

requirements must be complied with 

before Appeals will consider a Federal 

tax controversy. In addition, there must 

be sufficient time remaining on the 

appropriate limitations period for 

Appeals to consider the Federal tax 

controversy, as provided in 

administrative guidance. In a case 

docketed in the Tax Court, if the Office 

of Chief Counsel has recalled the case 

from Appeals or, if not recalled, 

Appeals has returned the case to the 

Office of Chief Counsel so that it is 

received by the Office of Chief Counsel 

prior to the date of the calendar call for 

the trial session, further consideration 

by Appeals will not be available if there 

is insufficient time for such 

consideration. 

(2) Example. The following example 

illustrates the application of the rule of 

insufficient time remaining on the 

limitations periods for Appeals 

consideration: The IRS examines 

Taxpayer X’s Form 1040, U.S. 

Individual Income Tax Return, and 

determines a deficiency in income tax 

due to the IRS disallowing some of the 

deductions reported on the return. 

Because the expiration date of the 

assessment period of limitations with 

respect to the proposed deficiency is 

imminent, there is insufficient time for 

Appeals to receive the case and 

determine whether the case is 

susceptible to settlement. Consequently, 

the IRS issues a notice of deficiency 

under section 6212 of the Code to 

Taxpayer X. Under section 6213(a) of 

the Code, the issuance of this notice 

suspends the running of the assessment 

period while a taxpayer seeks judicial 

review of the notice. Taxpayer X timely 

files a petition with the Tax Court. After 

the case is docketed in the Tax Court, 

Taxpayer X generally would have the 

opportunity to have Appeals consider 

the case. 

(f) One opportunity for consideration 

by Appeals—(1) In general. If a Federal 

tax controversy is eligible for 

consideration by Appeals and the 

procedural and timing requirements are 

followed, a taxpayer generally has one 

opportunity for Appeals to consider 

such matter or issue in the same case for 

the same period or in any type of future 

case for the same period, unless the Tax 

Court remands for reconsideration in a 

CDP case. Appeals has considered a 

Federal tax controversy if the Federal 

tax controversy was before Appeals for 

consideration and Appeals issued a 

determination or made a settlement 

offer, Appeals decided the Federal tax 

controversy was not susceptible to 

settlement, or the person who requested 

consideration was issued and failed to 

respond to Appeals’ communications 

and as a result of that failure Appeals 

issued or made a determination. 

Appeals also has considered a Federal 

tax controversy if the taxpayer notified 

the Office of Chief Counsel or the IRS 

that the taxpayer wanted to discontinue 

settlement consideration by Appeals or 

requested to transfer from Appeals to 

the Office of Chief Counsel settlement 

consideration of a Federal tax 

controversy that is currently before the 

Tax Court. 

(2) Exceptions. Notwithstanding 

paragraph (f)(1) of this section, 

taxpayers retain the opportunity for a 

traditional appeal after participating in 

an early consideration program as 

described in paragraph (d)(2) of this 

section if no agreement was reached 

between the taxpayer and the IRS 

originating office. Taxpayers may be 

able to request post-Appeals mediation 

under the terms of administrative 

guidance after a traditional appeal if no 

agreement was reached between the 

taxpayer and Appeals. Notwithstanding 

paragraph (f)(1), taxpayers who provide 

new factual information to the IRS and 

who meet the conditions and 

requirements for audit reconsideration 

or for reconsideration of issues 


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previously considered by Appeals may 

have an opportunity for Appeals 

consideration, as provided in 

administrative guidance. 

(g) Special rules. The following 

special rules apply to this section: 

(1) Appeals reconsideration. 

Notwithstanding the exception in 

paragraph (c)(22) of this section, if 

Appeals issued a notice of deficiency, 

notice of liability, or other 

determination without having fully 

considered one or more issues because 

of an impending expiration of the 

statute of limitations on assessment, 

Appeals may choose to have the Office 

of Chief Counsel return the case to 

Appeals for full consideration of the 

issue or issues once the case is docketed 

in the Tax Court. 

(2) Coordination between Office of 

Chief Counsel and Appeals. Appeals 

and the Office of Chief Counsel may 

determine how settlement authority in a 

Federal tax controversy that is before 

the Tax Court is transferred between the 

two offices. 

(h) Applicability date. This section is 

applicable to requests for consideration 

by Appeals made on or after February 

14, 2025. 

§ 301.7803–3 Requests for referral to the 

Internal Revenue Service Independent 

Office of Appeals following the issuance of 

a notice of deficiency. 

(a) Notice and protest. If any taxpayer 

requests consideration by the Internal 

Revenue Service Independent Office of 

Appeals (Appeals) of any matter or issue 

under section 7803(e)(5) of the Internal 

Revenue Code (Code) (relating to 

limitation on designation of cases as not 

eligible for referral to Appeals) and the 

request is denied, the Commissioner of 

Internal Revenue (Commissioner) or the 

Commissioner’s delegate must provide 

the taxpayer a written notice that 

provides a detailed description of the 

facts involved, the basis for the decision 

to deny the request, a detailed 

explanation of how the basis for the 

decision applies to such facts, and the 

procedures for protesting the decision to 

deny the request, but only if the 

requirements of paragraphs (a)(1) 

through (5) of this section are met: 

(1) Notice of deficiency. The taxpayer 

received a notice of deficiency 

authorized under section 6212 of the 

Code (relating to notice of deficiency) 

before the taxpayer requested 

consideration by Appeals. 

(2) Frivolous positions. The issue 

involved is not a frivolous position 

within the meaning of section 6702(c) of 

the Code (regarding listing of frivolous 

positions). 

(3) Multiple requests for referral to 

Appeals. The taxpayer has not 

previously requested consideration by 

Appeals, pursuant to section 7803(e)(5), 

of the same matter or issue in a taxable 

year or period. 

(4) Previous Appeals consideration. 

Appeals has not previously considered 

the matter or issue in a taxable year or 

period that is the subject of the request 

and determined that the matter or issue 

could not be settled or a settlement offer 

was rejected, except as provided in 

§ 301.7803–2(f)(2) with respect to a 

taxpayer participating in an early 

consideration program. 

(5) Notice of deficiency with more 

than one matter or issue. If the notice 

of deficiency for which the taxpayer 

requests Appeals consideration includes 

more than one matter or issue in a 

taxable year or period, the taxpayer 

must request referral for Appeals 

consideration and submit all such 

matters or issues at the same time. 

(b) Applicability date. This section is 

applicable to relevant requests for 

consideration by Appeals made on or 

after February 14, 2025. 

Douglas W. O’Donnell, 

Deputy Commissioner. 

Approved: January 3, 2025. 

Aviva R. Aron-Dine, 

Deputy Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2025–00426 Filed 1–14–25; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

29 CFR Part 1910 

[Docket No. OSHA–2020–0004] 

RIN 1218–AD36 

Occupational Exposure to COVID–19 in 

Healthcare Settings 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor 

ACTION: Final rule; termination of 

rulemaking 

SUMMARY: OSHA is terminating its 

COVID–19 rulemaking. 

DATES: 

Effective dates: The termination of the 

rulemaking is effective January 15, 2025. 

Compliance dates: There are no 

relevant compliance dates. 

ADDRESSES: In accordance with 28 

U.S.C. 2112(a), the Agency designates 

Edmund C. Baird, Associate Solicitor of 

Labor for Occupational Safety and 

Health, Office of the Solicitor, U.S. 

Department of Labor, to receive 

petitions for review of this final agency 

action. Service can be accomplished by 

email to zzSOLCovid19ruleterm@

dol.gov. 

Docket: To read or download 

comments or other material in the 

docket, go to Docket No. OSHA–2020– 

0004 at www.regulations.gov index; 

however, some information (e.g., 

copyrighted material) is not publicly 

available to read or download through 

that website. All comments and 

submissions, including copyrighted 

material, are available for inspection 

through the OSHA Docket Office. 

Documents submitted to the docket by 

OSHA or stakeholders are assigned 

document identification numbers 

(Document ID) for easy identification 

and retrieval. The full Document ID is 

the docket number plus a unique fourdigit code. For example, the Document 

ID number for OSHA’s COVID–19 

Healthcare ETS is OSHA–2020–0004– 

1033. Some Document ID numbers also 

include one or more attachments. 

When citing exhibits in the docket, 

OSHA includes the term ‘‘Document 

ID’’ followed by the last four digits of 

the Document ID number. For example, 

document OSHA–2020–0004–1033 

would appear as Document ID 1033. 

Citations also include the attachment 

number or other attachment identifier, if 

applicable, page numbers (designated 

‘‘p.’’ or ‘‘Tr.’’ for pages from a hearing 

transcript), and in a limited number of 

cases a footnote number (designated 

‘‘Fn.’’). In a citation that contains two or 

more Document ID numbers, the 

Document ID numbers are separated by 

semi-colons (e.g., ‘‘Document ID 1231, 

Attachment 1, p. 6; 1383, Attachment 1, 

p. 2’’). 

This information can be used to 

search for a supporting document in the 

docket at www.regulations.gov. Contact 

the OSHA Docket Office at (202) 693– 

2350 (TTY number: 877–889–5627) for 

assistance in locating docket 

submissions. 

FOR FURTHER INFORMATION CONTACT: 

For press inquiries: Contact Frank 

Meilinger, Director, Office of 

Communications, Occupational Safety 

and Health Administration, U.S. 

Department of Labor; telephone (202) 

693–1999; email oshacomms@dol.gov. 

For general information: Contact 

Andrew Levinson, Director, Directorate 

of Standards and Guidance, 

Occupational Safety and Health 

Administration, U.S. Department of 

Labor; telephone (202) 693–1950; email: 

osha.dsg@dol.gov. 


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