number release date gl-112989-01 march cc pa cbs b2 uil date bulletin no collection bankruptcy and summonses bulletin department of the treasury office_of_chief_counsel internal_revenue_service failure_to_file and pay sufficient to deny discharge the eleventh circuit held that a debtor’s failure_to_file tax returns and pay taxes without any other affirmative conduct to evade or defeat taxes was sufficient to deny the debtor a discharge_in_bankruptcy under b c a c in united_states v fretz u s app lexis 11th cir date the debtor a medical doctor failed to file returns or pay taxes from through despite alcohol addiction the debtor continued to work as an emergency-room physician he made no attempt to conceal assets or actively avoid the payment of taxes and in voluntarily signed returns for - in the debtor filed for chapter bankruptcy owing in excess of dollar_figure the bankruptcy court found that the debtor’s conduct did not rise to a level of willfulness that would make the taxes nondischargeable under b c a c the district_court affirmed relying on in re 48_f3d_1153 11th cir since the debtor committed no affirmative acts in an attempt to evade or defeat taxes the district_court concluded there was no willful conduct on appeal the eleventh circuit looked to its recent en_banc decision of in re 206_f3d_1389 11th cir the court initially determined that section a c contains a conduct requirement that the debtor attempt to evade or defeat a tax and a mental requirement that such attempt be willful the court reaffirmed that under haas a simple failure to pay taxes does not satisfy the conduct requirement here the court found the debtor’s failure_to_file returns made his case distinguishable from the debtor in haas the court concluded that section a c does not always require affirmative conduct but covers both acts of commission and acts of omission the debtor’s failure_to_file returns coupled with his failure to pay taxes satisfied the conduct requirement as to the mental state requirement the court reiterated that the government’s burden_of_proof was met if the government could show that the debtor had a duty to file returns and pay taxes knew he had that duty and voluntarily and intentionally violated that duty the court found the government established these requirements by showing the debtor was able to function as a physician despite his alcoholism this demonstrated the debtor had the ability to timely file his returns bankruptcy code cases exceptions to discharge march bulletin no appeal officer may refuse installment_agreement in cdp hearing disagreeing with the holding of mesa oil inc v united_states wl d colo date the court in kitchen cabinets inc v united_states u s dist lexis n d tex date held that the service was not obliged to accept a proposed installment_agreement that the taxpayer offered during a collection_due_process_hearing after receiving a notice_of_intent_to_levy the taxpayer requested and was granted a cdp hearing in its request the taxpayer offered to make installment payments but no such request was repeated during or after the cdp hearing the taxpayer did request time to obtain a loan to which the appeals officer agreed following the hearing the appeals officer followed up several times as to the status of the loan and finally closed the cdp hearing after receiving the notice_of_determination the taxpayer filed suit claiming the service wrongfully refused to consider its request to pay via installment_agreement under the applicable abuse_of_discretion standard the court found no evidence that the appeals officer acted arbitrarily or capriciously and so upheld his decison the court disagreed with the taxpayer that the service is obligated to accept an installment_agreement where there is an indication that a levy may lead to the demise of the taxpayer’s business to the extent that its holding is in conflict with the holding in mesa oil the court stated that it disagreed with mesa oil collection_due_process march bulletin no cases bankruptcy code cases exceptions to discharge transferees fraudulent_conveyances uniform fraudulent conveyance act united_states v westley aftr2d 6th cir date unpublished - taxpayer shareholders received a distribution of corporate assets that liquidated their corporation the service tried to collect the corporation’s outstanding tax_liability by bringing an action under the uniform fraudulent conveyance action to establish transferee_liability the district_court determined the distribution to be constructively fraudulent which the taxpayers did not contest however the sixth circuit found that such a determination did not make the taxpayers personally liable for the corporation’s tax the court held that although a transferee can be required to return fraudulently conveyed property to satisfy an outstanding tax debt his personal obligation is limited to the amount of the property fraudulently received since the service was on notice that the taxpayers filed for bankruptcy but did not file a proof_of_claim or make a request for a determination of dischargeability b c a a did not except the debt from discharge as the fraudulently-conveyed property is no longer in the hands of the debtors and their personal liability was discharged in bankruptcy the court held that the corporation’s taxes no longer are collectible from the debtors bankruptcy code cases exceptions to discharge no late or fraudulent_returns in re waugh u s dist lexis n d tex date - debtor claimed to have sent his tax_return timely to the service which did not receive it the service did receive an unsigned copy of the return in the service finally assessed the taxes in after the debtor’s bankruptcy was closed since the bankruptcy code does not specify what constitutes a filed return the court concluded that internal revenue law was controlling and so that an unsigned return is not a filed return because of this the debtor’s taxes were not dischargeable under b c a b i the court also found the taxes nondischargeable since they qualified under b c sec_507 as not assessed before the commencement of the case but assessable after bankruptcy code cases statute_of_limitations on collection after assessment lee v united_states aftr2d bankr d md date - after converting her bankruptcy case from chapter to chapter debtor argued that taxes assessed more than years earlier were dischargeable under b c a because that would be the result if she had dismissed her chapter case and filed a new chapter the court agreed that had she refiled the taxes would be dischargeable but she did not conversion from one chapter to another does not affect the date of the filing of the original petition which is how the three year period is measured under b c sec_507 thus conversion has no effect on whether a pre-petition tax obligation is dischargeable bankruptcy code cases statute_of_limitations on collection after assessment march bulletin no in re hoppe aftr2d bankr e d tex date - agreeing that the statute_of_limitations under b c sec_507 was not automatically tolled under b c sec_108 the court still found under matter of 19_f3d_163 5th cir that the time period could be equitably tolled under b c sec_105 although the debtor took no action to evade the payment of taxes the service had less than the days provided by sec_507 to collect because of the automatic_stay imposed by the debtor’s prior bankruptcy the court found that tolling the statute_of_limitations promoted public policy and legislative intent by affording the service a reasonable_time to pursue collections collection_due_process dimartino v united_states u s dist lexis d nev date - claiming she was denied a collection_due_process_hearing on a determination of unpaid income taxes taxpayer sued in district_court for injunctive relief the court dismissed the suit for lack of jurisdiction holding that under sec_6320 and sec_6330 where the underlying matter is income_tax_liability only the tax_court has jurisdiction further even if jurisdiction existed the court found that it could not grant injunctive relief by virtue of the anti-injunction_act sec_7421 collection_due_process wylie v commissioner t c memo date - by relying on a form_4340 certificate of assessment and payments to verify the proper assessment of the taxes at issue the appeals officer did not abuse his discretion in determining that collection action was appropriate the court also confirmed that a taxpayer is not entitled to obtain documents or cross-examine witnesses at a cdp hearing compromise settlement binding effect inverworld ltd v united_states u s dist lexis d d c date - during appeal of a tax_court case taxpayer sent a settlement letter to the department of justice in february in september with the settlement offer still under consideration the taxpayer sent a modified offer to an associate area_counsel with a copy to an irs revenue_officer in december justice accepted the original settlement offer the taxpayer objected but the court held that the taxpayer’s modification or withdrawal was not effective because it was not sent to the offeree justice compromise settlement refunds refunds illegally collected property suits jurisdiction roberts v united_states u s app lexis fed cir date - taxpayer claimed the service wrongfully terminated his offer-in-compromise so he filed a claim_for_refund which included various contractual claims against the government denied administrative relief the taxpayer filed suit under u s c sec_1346 in district_court but the government removed the suit to the court of federal claims under the tucker act u s c sec_1491 as a contractual claim exceeding dollar_figure the court_of_appeals_for_the_federal_circuit reversed and remanded the case to district_court holding that the true nature of the case was a tax_refund suit because the taxpayer requested a refund based on wrongfully collected taxes and has satisfied the jurisdictional prerequisites under sec_1346 the district_court has jurisdiction although the taxpayer in that forum would not be entitled to contract remedies march bulletin no liens action to quiet title in re greenwell civ no spk d haw date - court held that an action to quiet title under u s c may determine lien priorities but may not be used to determine the amount or validity of a tax_assessment or lien liens priority over mechanic’s liens residential property b d drywall supply inc v i r s u s dist lexis e d mich date - part owner of a construction company wrongfully used the company’s assets to build a personal_residence the company filed a claim against him in but the service in had filed tax_liens against the taxpayer’s property the company argued that it had priority under the michigan construction lien act but the court disagreed finding the company failed to establish that a contract existed between the company and the taxpayer without a contract the court found the lien act inapplicable payment installment payments mckoin v commissioner t c memo date - taxpayer’s installment_agreement for tax years provided that of the taxpayer’s monthly gross_receipts would be applied to current year’s estimated_tax it also provided that any refund would be applied to the tax_liability until satisfied the taxpayer filed a tax_return claiming an overpayment of dollar_figure which was applied to outstanding taxes in the service determined a deficiency in the taxpayer’s tax_return the taxpayer claimed that as the installment_agreement required the service to apply payments to the current years’ tax regardless of when that tax might be determined the deficiency was paid_by the overpayment the court disagreed finding that the service was not precluded from subsequently determining a deficiency for a taxable_year in respect of which an overpayment was originally claimed and allowed the service acted properly under the installment_agreement by applying the refund under sec_6402 to the liability suits against united_states wrongful_levy pereos v united_states no cv-n-99-478 ecr pha d nev date - taxpayer brought suit claiming refund based on a wrongful_levy under u s c sec_1346 the court found the taxpayer could obtain relief in an action for refund on account of a wrongful_levy finding the literal terms of the statute were met the court further found that the service’s fourth delinquency_notice was not a notice_of_intent_to_levy and so the service did not comply with the day requirement of sec_6331 before it levied against the taxpayer the court observed that had the service properly and timely mailed a notice_of_intent_to_levy the taxpayer’s claim that he never received the notice would not make the levy wrongful summonses defenses to compliance united_states v brunet u s app lexis 6th cir date unpublished - the service issued a summons addressed to karen brunet and brunet inc requesting records associated with brunet inc karen brunet and rickey brunet the sixth circuit affirmed enforcement of summons finding no merit to karen brunet’s contentions holding although lack of possession is a defense lack of ownership is not since the service agreed to limit the summons to records it had not already received march bulletin no it could not be argued the service already had the records and the government is entitled to information that has only potential relevance to its investigation summonses defenses to compliance privileges attorney-client segerstrom v united_states u s dist lexis n d cal date - service issued summonses to third-party law firm seeking records on the formation of limited_liability companies formed by the taxpayer the service argued that the documents in question were for the purpose of securing business advice not legal advice and contained non-privileged factual information from which legal advice could be redacted out the court disagreed finding the business advice was incorporated into the legal advice and the non-privileged information was so interwoven that disclosure would lead to disclosure of privileged information summonses defenses to compliance privileges attorney-client pomerantz v united_states u s dist lexi sec_1232 s d fla date - the service sought the taxpayer’s amended tax returns from her accountant which were prepared at the direction of a divorce attorney to be used by the attorney in litigation the court found the records protected under the attorney-client and work product privileges because there was no evidence that the accountant prepared the tax returns in question for filing with the service instead the attorney only intended to use the returns to assist in determining income for the divorce proceeding summonses defenses to compliance other united_states v chai u s app lexis 10th cir date unpublished - the district_court entered an order enforcing a summons against the taxpayer on january on february the taxpayer filed two motions challenging the court’s jurisdiction which were denied on march the service then moved to hold the taxpayer in contempt for not obeying the court’s january order the court overruled the taxpayer’s objections relative to a hearing on the contempt motion on april the taxpayer then appealed all three orders the tenth circuit in this unpublished decision held that the taxpayer’s post-judgment motions did not toll the time for appealing the enforcement order even though the taxpayer argued for leniency because he acted pro_se the court dismissed his appeal as untimely march bulletin no the following material was released previously under sec_6110 portions may be redacted from the original advice chief_counsel_advice trust fund recovery penalty co-obligor agreement offer_in_compromise cc pa cbs br2 gl-705554-00 date uilc memorandum for albert b kerkhove associate area_counsel sb_se from kathryn a zuba chief branch collection bankruptcy summonses subject co-obligor agreements in trust fund recovery penalty cases this refers to your transmittal dated date forwarding for post-review a memorandum dated date from your office to the offer_in_compromise manager in your division this document is not to be cited as precedent issue whether a co-obligor agreement is required in accepting an offer_in_compromise of a_trust fund recovery penalty from a responsible_officer when another responsible_officer also has been assessed a_trust fund recovery penalty conclusion a co-obligor agreement is not required in accepting an offer_in_compromise of a_trust fund recovery penalty from a responsible_officer when another responsible_officer also has been assessed a_trust fund recovery penalty facts the facts as presented indicate that taxpayers a and b exercised complete control_over the finances of corporation c because of the actions of taxpayers a and b corporation c failed march bulletin no to pay employment_tax liabilities the internal_revenue_service separately assessed trust fund recovery penalties against taxpayers a and b pursuant to sec_6672 taxpayer a filed an offer_in_compromise as to the trust fund recovery penalty neither taxpayer b nor corporation c filed offers the offer_in_compromise manager requested your advice with regard to whether the service needs to secure a co-obligor agreement as discussed in irm from taxpayer b as a result of taxpayer a’s offer_in_compromise discussion irm provides that in the case of a joint assessment a co-obligor agreement should be secured from the maker of the offer in order to preserve the ability to collect from the other parties to the joint assessment your advisory memorandum to the offer_in_compromise manager correctly concluded that a co-obligor agreement is not necessary in this case since there has been no joint assessment taxpayers a and b are each liable in his her own capacity as responsible officers of corporation c see 362_f2d_629 8th cir acceptance of an offer_in_compromise from taxpayer a would have no effect on the service’s ability to collect from taxpayer b_trust fund recovery penalty refunds date cc pa cbs br3 gl-121095-00 uil memorandum for willard n timm associate area_counsel sbse - atlanta cc sb atl from subject lawrence h schattner chief branch collection bankruptcy summonses claims for refund abatement of trust fund recovery penalty - handling by collection technical support groups this responds to your request of date for our review of your proposed advice to your local collection technical support group ctsg on a number of issues regarding their future handling of taxpayer claims for refund abatement of trust fund recovery penalty tfrp assessments pursuant to sec_6672 as a preliminary matter we note that your proposed advice is directed primarily at the local ctsg’s future handling of taxpayer claims for refunds of previously paid tfrp amounts pursuant to the procedures and limitations described in sec_6511 sec_6532 sec_6672 and sec_7422 and of any requests for abatement of uncollected tfrp amounts for periods that are related to these pending claims for refunds rather than to taxpayer requests for abatement of uncollected tfrp amounts that are entirely unrelated to any march bulletin no pending claim for a refund under parts of sec_6404 accordingly we suggest that you revise the subject heading of your proposed memorandum as we have our own response to refer to claims for refund abatement of trust fund recovery penalties early in the introduction of your proposed memorandum we also suggest that you highlight for your local ctsg that your discussion is limited to the service’s procedures for handling taxpayer claims for refund of paid tfrp amounts and that it only addresses taxpayer requests for abatement of unpaid tfrp amounts which are related to the service’s consideration of pending tfrp refund claims as described below we also suggest the inclusion of similar issue limiting clarifications in other part of your proposed advice memorandum we now consider the issues in your memorandum slightly out of order issue sec_2 - responding to the loss destruction of the service’s administrative files recommending assertion of tfrp the bulk of your proposed advice memorandum is devoted to a discussion of the issue described above with the minor refinements to your discussion listed further below we agree with your proposed manner of handling this issue locally in the past two years our office has previously opined at some length in two other advice memoranda about how the service could respond appropriately to the loss destruction of the service’s administrative files recommending assertion of the tfrp in procedural contexts that are different from the refund claim circumstances described in your present proposed advice memorandum in an advice memorandum dated date now reproduced pincite irs cca lexi sec_172 our office previously considered how the service’s customer service function should conduct its general project to clean-up the service’s outstanding aged non-master file accounts including many unpaid tfrp assessments where the service knows or has reason to suspect that the service’s original supporting administrative files have now already been destroyed as part of the service’s ordinary document retention policy in that prior advice memorandum we suggested that it would not be appropriate for the service on its own initiative apart from any particular taxpayer request for relief and as part of an effort to address the accuracy of the service’s statement of its overall accounts_receivable to investigate whether the service’s administrative file recommending assertion of the tfrp in each case had been destroyed or abate the unpaid portion of every tfrp assessment on the service’s books where the service’s tfrp file recommending assessment should have or has been destroyed pursuant to the service’s ordinary we understand that the policies and procedures for the service’s handling of taxpayer requests for abatement that are unrelated to a pending claim_for_refund may be quite different than the procedures for considering a claim_for_refund in particular a taxpayer’s opportunity to obtain judicial review of the service’s denial of a request for abatement appears to be more limited and to lie with a different court pursuant to sec_6404 than the opportunities for judicial review and the courts which may consider the service’s denial of a claim_for_refund if you require advice regarding the service’s procedures and policies with regards to sec_6404 you should contact branch of assistant chief_counsel administrative provisions judicial practice march bulletin no document retention policy we gave this advice because many of a taxpayer’s potential grounds for or procedural means of challenging a tfrp assessment do not require the service’s original administrative file or a reconstruction thereof in order to assert a proper defense for the government and because many taxpayers presumably have no issue with the merits of the service’s aged tfrp assessments even though they may not have had the means or the desire to pay these outstanding tax_liabilities to date in our second prior advice memorandum described below we indicated that we stood by the advice memorandum of date in its context in a second advice memorandum dated date now reproduced pincite irs cca lexi sec_134 our office considered how the appeals function and the collection function may appropriately respond to the loss destruction of the service’s original administrative file recommending assessment of the tfrp in the context of a collection_due_process cdp hearing or equivalent_hearing under the collection_due_process regulation temp sec_301_6330-1t in this second advice memorandum we indicated that the appeals function did not need the service’s tfrp assessment file in order to verify the service’s compliance with the requirements of applicable law and administrative procedures for purposes of sec_6330 - that an irs form_4340 could be relied upon by appeals for this purpose we also predicted that many taxpayers would not be eligible to receive a cdp hearing or equivalent_hearing regarding the existence or amount of their unpaid tfrp liabilities because these taxpayers should already have received a prior opportunity for a conference with appeals to dispute their liability for the tfrp issue sec_4 and of this second advice memorandum consider how the appeals and collection functions may respond to the loss destruction of the service’s original tfrp recommendation files when a taxpayer is eligible to contest and has in fact chosen to contest the existence or amount of the taxpayer’s unpaid tfrp liabilities in a cdp hearing or equivalent_hearing after considering and relying upon many of the same cases discussed in your present advice memorandum we concluded that the service’s loss destruction of its original administrative file recommending the tfrp is not fatal to the service’s case that the absence of this file may affect the service’s hazards_of_litigation in defending the merits of its tfrp assessment and that the service may nevertheless often successfully reconstruct its lost destroyed file or an adequate alternative factual legal basis for its old tfrp assessment at issue we further concluded that in a cdp hearing or equivalent_hearing context the initial responsibility for deciding whether to attempt to reconstruct the service’s lost destroyed tfrp recommendation file and how much time and resources to expend in the effort should lie with the collection function and that the affected service functions through coordination within the new sbse structure could also develop selection tolerances to guide them in making these future resource allocation decisions in footnote to this second memorandum we acknowledged that going forward with a levy to collect a tfrp liability which a taxpayer hoped to contest as to existence or amount in a cdp or equivalent_hearing but was ineligible to do so because of a prior opportunity for an appeals hearing could result in the taxpayer obtaining an opportunity to file a claim_for_refund and thereby obtain a hearing with regards to the existence or amount of a disputed tfrp liability notwithstanding this refund claim possibility which is the subject covered by your present proposed discussion we concluded that it would not be appropriate for the appeals function to consider the merits of the tfrp in these issue preclusion circumstances in a cdp hearing or equivalent_hearing context march bulletin no we regard your present proposed advice to your local ctsg in the different context of considering a taxpayer’s claim_for_refund with respect to the tfrp as fully consistent with our two prior advice memoranda discussed above in your present context of a taxpayer’s claim_for_refund a taxpayer who has filed a timely claim will frequently have put the existence and amount of the recently paid within the last two years tfrp liabilities at issue in this context there are clearly some hazards_of_litigation to the service in defending its tfrp assessments when the service’s original tfrp recommendation file has been lost destroyed however as you note the service may expend its time and resources in efforts to reconstruct the file or to develop an alternative adequate factual legal basis for the tfrp liability and the service may ordinarily do so without any change in the applicable burden_of_proof allocation rules for the refund case it is appropriate as you have done for your office to make itself available to advise your local ctsg about the tfrp hazards_of_litigation and the collection function’s lost file reconstruction efforts on a case by case basis if your local ctsg considers a system of local selection tolerances to guide them in making future resource allocation decisions about the types of tfrp missing file cases where it is not likely to be cost effective to pursue file reconstruction development efforts then we assume your office would also be involved in assisting your local ctsg in that task as well the minor refinements that we suggest you consider with regards to your discussion of issue sec_2 and in your proposed memorandum are as follows on page at the end of the first line of your restatement of issue we suggest that you add the words in refund claim situations so that it is clear that you are only addressing the service’s tfrp file reconstruction efforts that are appropriate in this particular context on page at the end of the last line of your statement of the conclusion with respect to issue sec_2 and we suggest that you add the words in connection with refund claims the service intends to deny on page on line of the first paragraph discussing issue sec_2 and we believe you intended to cite the discussion at page of the michaud opinion on page on line of the first full paragraph we believe you intended to say burden of proving on page regarding your willingness to defend statement at the end of the second full paragraph we suggest that you first consult with the tax division’s civil trial section serving your area in order to determine whether it distinguishes between defense of tfrp cases with lost destroyed files on the one hand and situations where the service makes an affirmative request to pursue a suit to reduce its tax claims to judgment or to foreclose its tax_liens if the original tfrp recommendation files no longer exist if the files have not already been reconstructed or alternatively recreated by the service and if the taxpayer would not be precluded by res_judicata from attempting to contest the existence or amount of the tfrp in an affirmative action of this type then the civil trial section serving your area may believe the service would be inappropriately shifting the onus of developing the facts to the tax_division if the civil trial section serving your area requires the service to recreate the lost tfrp files before making a request for the tax march bulletin no division to bring an independent suit requesting affirmative relief of this type then you may wish to add a footnote to this effect along with an explanation of the tax division’s reasons for such an approach also on page on the second line of the final paragraph we suggest the line end with the words in the refund abatement request cases issue - time limit for filing claims for refund for tfrp we agree with your answer - that sec_6511 requires that a claim_for_refund for a tfrp liability be filed within two years of payment - and the cases you have cited for this principle 17_f3d_1029 7th cir clark v united_states a f t r 2d 11th cir as you have indicated a taxpayer responsible_person does not file a return that establishes his liability for the tfrp so any claim for a refund of an overpayment of the tfrp must be filed by the taxpayer within two years from the time the tax was paid as described at the end of the first sentence of sec_6511 and in treas reg a -1 a however we do suggest that you consider the minor modifications described below to your discussion of this issue in framing the issue initially you apparently relied upon and repeated the client’s wording to describe the issue however we find this statement of the issue a little confusing in light of the wording and structure of sec_6511 in place of your proposed statement of the issue on page and your statement of the conclusion on page we suggest you consider something along the following lines issues issue what is the time limit for a taxpayer responsible_person to file a claim_for_refund of the trust fund recovery penalty pursuant to sec_6511 conclusion issue the trust fund recovery penalty tfrp is not a tax for which the taxpayer responsible_person files a return to establish his liability accordingly under sec_6511 a claim_for_refund of an overpayment of the tfrp must be filed by the taxpayer no later than two years from the time the payment was made against the tfrp liability taxpayer claims for refund of overpayments of the tfrp are limited to those amounts paid no earlier than two years before the claim_for_refund is filed a narrow exception to these limitations may exist when a taxpayer shows he was financially disabled during the applicable two year period within the meaning of sec_6511 see irm in addition to considering the revision described above we also believe that you were referring to sec_6511 on page line sec_5 and and on page lines and issue - an appropriate ctsg form letter to advise taxpayers the irs has denied their refund abatement claims for the tfrp march bulletin no first consistent with our introductory comments we suggest that you revise the proposed statement of issue on page of your memorandum to indicate that the form letter being considered is to notify a taxpayer that the taxpayer’s claim_for_refund abatement has been disallowed second thank you again for calling to our attention several of the mistakes you found in irm and for also providing us with an opportunity to review your proposed form letter from ctsg to advise taxpayers that the service has denied their refund abatement claims with respect to the tfrp coincidentally it happens that the service is now in the process of updating revising chapter sec_3 through of irm and our office has been asked by the service to comment on the new proposed drafts of these chapters of the manual in the course of our review we will try to correct the errors you have pointed out in the manual and we intend to suggest that the service include a form letter as a new exhibit to chapter of irm along the lines of that you provided to us for review with the revisions discussed further below third you make a good point on the last lines of page of your memorandum that the service should send its letters disallowing a taxpayer’s claim_for_refund via certified or registered mail to the taxpayer as authority for this advice you may want to add a citation at the end of the sentence to sec_6532 fourth we have made a few changes to the revised form letter described in the body of your proposed memorandum to provide taxpayers with notice that the service has denied their claims for refund abatement of the tfrp our revised proposed form letter for this purpose is attached hereto at the end of this memorandum as exhibit in keeping with the instruction in irm that the service should modify its usual letter p in tfrp refund disallowance cases in order to explain taxpayer rights related to sec_6672 tax_liabilities our two offices have added to the typical letter p some further paragraphs which are intended to provide the taxpayer with a plain english notice of the taxpayer’s rights and obligations to request a conference with the local office of appeals continue the protections of sec_6672 after claim disallowance by filing suit within days of the letter disallowing the claim and cause the service pursuant to new sec_6331 to suspend most of its otherwise allowable collection activities with respect to unpaid tfrp liabilities for periods beginning or transaction occurring after date by filing a proper lawsuit seeking a refund of the tfrp paid for such periods you will note that our proposed exhibit strikes the following sentence that was suggested by your local ctsg for this new letter to describe the information a taxpayer should submit in order to obtain a conference with the office of appeals your request must contain new or additional facts that were not previously considered and a statement explaining why you believe the claim should be reconsidered we believe that this proposed description of what is required of a taxpayer to obtain an appeals_conference with respect to a disallowed tfrp refund claim is not consistent with the independent review role the office of appeals serves in these cases see irm irs policy statement p-8-50 prop proc rule b ii the third paragraph of our attached exhibit contains a revised description of what we understand the taxpayer should provide to request a conference with the office of appeals to discuss a disallowed tfrp refund claim we hope that the reasons for the remainder of our suggested revisions to this proposed letter will be self-explanatory from our earlier comments this revised proposed letter should be suitable march bulletin no for your local ctsg to use for its tfrp refund cases where claims for refund are denied until the service prescribes a national form letter for this purpose eg as an exhibit to revised chapter of irm march bulletin no exhibit person to contact name contact telephone number number certified mail salutation we have considered your request for a refund of dollar_figure amount and abatement of dollar_figure amount assessed against you for the tax period s ended date s we assessed this amount under sec_6672 because taxpayer name primarily responsible for the tax eg the employer did not pay the federal type of tax eg employment excise_tax es due for the tax period s ended dates this is your legal notice that your claim_for_refund and abatement is disallowed if you do not accept our conclusion you may request reconsideration with the internal revenue service’s local office of appeals you should make the request for an appeals_conference within days of the date of this letter a request for an appeals_conference should describe the reasons why you do not agree with our determination and should contain identifying information regarding the tax_liability you wish to discuss along the lines contained in this letter you should provide a statement containing your view of the facts please mail your request for an appeals_conference to the appropriate address if you wish to bring suit or proceedings for the recovery_of any_tax penalties or other moneys that were paid and for which this notice of disallowance is issued you may do so by filing such a suit with the united_states district_court having jurisdiction or the united_states court of federal claims the law permits you to do this within two years of the mailing date of this letter please note however that even if you have previously complied with the requirements of sec_6672 up to this point the internal_revenue_service may initiate collection action for the remaining unpaid portion of this liability if you now fail to file suit in the appropriate court within days from the date of this letter for any part of your unpaid sec_6672 liability that arises from periods beginning or transactions occurring after date the internal_revenue_service is also required to suspend most of its otherwise allowable collection activities if you file a proper lawsuit seeking a refund with respect to your disallowed refund claim for the liability while the internal_revenue_service is prohibited from collecting the unpaid portion of your liability by levy the limitation period for the internal_revenue_service to collect this liability is also suspended pursuant to sec_6331 and sec_6672 if you have any questions please contact the person whose name and telephone number are shown above appropriate signature block bulletin no cc pa cbs br3 tl-n-5617-00 u i l - march third party contacts partnerships s_corporations date memorandum for associate area_counsel sb_se area louisville from lawrence schattner chief branch collection bankruptcy summonses subject application of sec_7602 to flow-through entities this memorandum is in response to your date request for field_service_advice regarding the application of sec_7602 to flow-through entities such as tefra partnerships non-tefra partnerships_and_s_corporations we have coordinated this advice within the office of the associate chief_counsel procedure and administration and the office of the associate chief_counsel passthroughs and special industries since sec_7602 is relevant to all audits involving flow-through entities we agree that uniform guidance must be provided to examining agents issue sec_1 with respect to a tefra partnership how should reasonable notice in advance be provided to the taxpayer under sec_7602 with respect to a tefra partnership what contacts must be reported under sec_7602 with respect to a non-tefra partnership or an s_corporation how should reasonable notice in advance be provided to the taxpayer under sec_7602 with respect to a non-tefra partnership or an s_corporation what contacts must be reported under sec_7602 conclusion sec_1 with respect to a tefra partnership reasonable notice in advance that contacts with third parties may be made should be provided by sending the appropriate letter to the tax_matters_partner if the service is looking at transactions between the partnership and specific identified partners or transactions with third parties for the benefit of specific identified partners which will affect only the separate tax_liability of these partners rather than the tax_liability of all of the partners then those specific partners should also be provided advance notice of any third party contacts relating to such transactions march bulletin no with respect to a tefra partnership contacts made with any partner are not sec_7602 contacts because they are considered the equivalent of contacting the partnership contacts made with persons other than the partners or employees of the partnership who are acting within the scope of their duties are sec_7602 contacts and a record of such contacts must be made third-party_contacts that relate to adjustments that flow through to all the partners should be recorded as contacts with respect to the partnership third-party_contacts that relate to transactions that will affect only the separate tax_liability of specific partners should be recorded as contacts with respect to those specific partners with respect to a non-tefra partnership or s_corporation the person s who should be sent advance notice of third party contacts depends on whether the examination of the entity is being conducted at the entity level or as part of the examination of a particular partner or shareholder’s return if the former reasonable notice in advance that contacts with third parties may be made should be provided by sending the appropriate letter to the partnership or s_corporation if the latter then a letter should be sent to the particular partner or shareholder whose return is being examined in addition to the letter being sent to the partnership or s_corporation with respect to a non-tefra partnership or s_corporation the contacts that must be reported similarly depends on whether the examination of the entity is being conducted at the entity level or as part of the examination of a particular partner or shareholder’s return if the former contacts made with any partner or shareholder are not sec_7602 contacts because they are considered the equivalent of contacting the partnership or s_corporation contacts made with persons other than the partners or shareholders or employees of the partnership or s_corporation who are acting within the scope of their employment are sec_7602 contacts and a record of such contacts must be made if the latter then contacts with any partner or shareholder other than the particular partner or shareholder whose return is being examined should be treated as sec_7602 contacts with respect to the particular partner or shareholder whose return is being examined such contacts would still be considered the equivalent of contacting the partnership or s_corporation and therefore would not be considered sec_7602 contacts with respect to the partnership or s_corporation facts in the course of providing training to service personnel on the subject of third party contacts under sec_7602 you have been asked questions about how the statute applies to flow-through entities such as partnerships tefra and non-tefra and s_corporations currently these issues are not specifically addressed in the internal_revenue_manual the third party contacts course book that was prepared for examination cpes catalog number 85104l or the sec_7602 - notice of irs contact of third parties - revised procedures dated date because you are seeking general guidance in this area no specific facts were included in your request law analysis under sec_7602 as enacted by rra section an officer_or_employee of the service may not contact any person other than the taxpayer with respect to the determination or collection of the tax_liability of such taxpayer without providing reasonable notice in advance to the taxpayer march bulletin no the statute also requires the service to provide the taxpayer with a record of persons contacted both periodically and upon the taxpayer’s request sec_7602 the congressional intent behind these requirements is to provide taxpayers with the opportunity to come forward with information before third parties are contacted and the means to address any reputational concerns arising from such contacts without impeding the ability of the service to make those contacts that are necessary to enforce the internal revenue laws with this intent in mind we have adopted an interpretative approach to sec_7602 that balances taxpayers’ business and reputational interests with third parties’ privacy interests and the service’s responsibility to administer the internal revenue laws effectively the first requirement of the statute is to provide reasonable notice in advance to the taxpayer that contacts with third parties may be made letters have been developed by the service in order to comply with this requirement in most field_audit situations either letter 3164f or letter 3164g should be used depending upon whether the service needs to obtain information from third parties or to verify information that the service has received the second requirement providing the taxpayer with a record of persons contacted is accomplished in part by completing a form third party contact report form and submitting it to the appropriate third party contact coordinator application of sec_7602 to tefra partnerships the audit of tefra partnerships is conducted at the partnership entity level pursuant to sec_6221 through but any resulting liability is ultimately assessed against the individual partners the tax_matters_partner tmp is responsible for certain administrative duties during the course of the examination including keeping the other partners informed to the extent and in the manner provided by regulations see sec_6223 additionally under sec_6223 each partner whose name and address is furnished to the service is entitled to receive notice of the beginning of an administrative procedure at the partnership level with respect to partnership items and the final_partnership_administrative_adjustment from any such proceeding the issuance of the letter the advance notice of potential third party contacts is not one of the events specified in the regulations that the tmp must provide notice of or information with respect to to other partners see temp sec_301_6223_g_-1t however sec_7602 requires that the service provide reasonable notice in advance to the taxpayer that third party contacts may be made thus the issue with respect to this first requirement under sec_7602 is what constitutes reasonable notice to the taxpayer in a tefra partnership proceeding the tax treatment of partnership items is at issue although the respective tax_liabilities of the partners may be affected by the results of the partnership-level proceeding and thus they are parties to the proceeding a third party contact relating to the tax treatment of partnership items is not with respect to the determination of the specific tax_liability of any of the partners hence the partnership should generally be viewed as the taxpayer for purposes of giving notice under sec_7602 notice should be given to the tmp because the tmp is the statutory representative of the partnership and the partners further when the service makes third party contacts in connection with a tefra partnership proceeding any sec_6103 disclosures to third parties will generally be with respect to the partnership or possibly a dba eg the abc partnership or the xyz restaurant it would be march bulletin no unusual to make third party inquiries using the names of the individual investors partners to the extent that this does occur the partner would probably be an employee of the partnership ie actively involved in the conduct of the partnership’s business under those circumstances notice to the partnership should suffice as notice to the partner employee as well finally as is true with respect to subchapter_k the tefra partnership provisions sometimes adopt an entity approach and other times an aggregate approach for the reasons set forth above we believe that an entity approach should be adopted for purposes of applying the notice requirements under sec_7602 to tefra partnerships for purposes of providing notice under sec_7602 differentiating between certain classes of partners would be inappropriate regardless of the status or position of the partner the business and reputational interests arising from the making of third party contacts would be the same for all partners hence the service should either give notice to all partners or none of the partners except the tmp the rules regarding notice partners only apply with respect to the nbap and the fpaa neither of which is at issue here notifying all partners of third party contacts could be quite burdensome for the service particularly if there are a large number of partners or there are tiers etc additionally this burden would be exacerbated by the administrative decision to generally provide notice before each separate third party contact to the extent that different information is being sought or verified consequently this could pose resource problems and would not be an efficient way to administer the internal revenue laws in contrast if the service is looking at transactions between the partnership and specific partners or transactions with third parties for the benefit of specific partners that will affect the separate tax_liability of those partners and not the tax_liability of all of the partners then the advance notice should also be provided to those specific partners in this situation contacts are being made with respect to the determination of the separate tax_liabilities of specific identified partners therefore the appropriate letter should be provided to those partners before any such contacts are made application of sec_7602 to tefra partnerships contacts made with the partners of a tefra partnership are not treated as contacts with persons other than the taxpayer since a partnership is not a natural_person it can only speak or act through authorized agents or representatives similarly contacts with a partnership generally must be through a natural_person ie an individual by virtue of their owning a partnership_interest the partners are afforded certain rights and charged with certain responsibilities relating to the partnership by state laws such as the uniform_partnership_act and the uniform_limited_partnership_act as well as under the partnership_agreement that they entered into with respect to the specific partnership of which they are a partner in addition in tefra partnerships each partner has the right to participate in any administrative_proceeding relating to the determination of the proper tax treatment of partnership items at the partnership level i r c a hence the partners may be viewed as being in privity with the partnership at least for purposes of the administrative tax proceeding consequently a contact made with any partner of a tefra partnership should be treated as a contact of the partnership rather than as a third party contact therefore service employees need not complete a form with respect to contacts made with partners however in the situation where the contact relates solely to a particular partner’s separate tax_liability and not to flow-through items that affect all of the partners a form march bulletin no should be completed concerning that contact even if that contact is made with another partner for these purposes the particular partner whose tax_liability is at issue should be treated as the taxpayer in this regard contacts made with current officers employees or fiduciaries of the taxpayer who are acting within the scope of their employment or relationship with the taxpayer are not considered contacts with persons other than the taxpayer see prop sec_301_7602-2 thus it is only necessary to prepare a record of contacts on form regarding contacts made with persons other than the partners or employees of the partnership who are acting within the scope of their employment such record must be provided to partners upon their request the periodic record of contacts may be sent to the tmp as the statutory representative of the partnership and the partners application of sec_7602 to non-tefra partnerships_and_s_corporations while non-tefra partnerships_and_s_corporations file information returns at the entity level there is no statutorily mandated unified examination at the entity level as prescribed under sec_6221 for tefra partnerships and under former sec_6241 for s_corporations nonetheless as a practical matter both prior to the effective date of tefra as well as with respect to non-tefra entities currently the service often conducts an examination at the entity level and then applies the results as part of the audit of the tax returns of the partners or shareholders other times however the service may examine the entity’s return in connection with its examination of the tax_return of a particular partner or shareholder under either approach there generally is only one examination conducted of the entity’s return a separate examination of the entity’s return is not normally conducted with respect to each partner or shareholder whose return is being audited notwithstanding the above unlike a tefra partnership proceeding the partners or shareholders in a non-tefra partnership or s_corporation do not have the right to participate in any administrative proceedings conducted at the entity level moreover separate proceedings must ultimately be conducted with respect to each partner or shareholder in order for the service to make any adjustments relating to a non-tefra partnership or s_corporation thus if the contact is made in the context of an entity-level examination then the entity should be considered the taxpayer for purposes of sec_7602 on the other hand if the contact is made in the context of an examination of a particular partner or shareholder’s return then both that partner or shareholder and the partnership or s_corporation should be considered taxpayers for purposes of sec_7602 with respect to satisfying the advance notice requirement there is no tmp to serve as a representative of a non-tefra partnership or s_corporation as well as the partners or shareholders nonetheless under state law the entity generally has an affirmative obligation to keep its partners or shareholders informed about matters regarding the business or affairs of the entity the revised_uniform_partnership_act of provides that each partner and the partnership shall furnish to a partner and to the legal_representative of a deceased partner or partner under legal disability without demand any information concerning the partnership’s business and affairs reasonably required for the proper exercise of the partner’s rights and duties under the partnership_agreement with respect to s_corporations and their shareholders the corporation has a fiduciary duty to keep shareholders informed concerning matters involving the corporation because the entities in question are obligated to inform their beneficial owners as to information that they would reasonably require to carry out their obligations as either partners or shareholders notice to the entity will be deemed notice to the partners and shareholders for march bulletin no purposes of sec_7602 consequently if an entity-level examination is being conducted reasonable notice in advance to the partners or shareholders may be provided by sending the appropriate letter to the partnership at the partnership address or to the s_corporation at the corporation’s address however if the examination of the entity is being done as part of the examination of a particular partner or shareholder’s return then the letter should be sent to that particular partner or shareholder in addition to sending the letter to the partnership or s_corporation application of sec_7602 to non-tefra partnerships_and_s_corporations under sec_7602 the issue is whether a contact with a person other than the taxpayer is made when a partner or shareholder is contacted with respect to adjustments to the partnership or s corporation’s return that may be flowed through to all of the partners or shareholders once again the answer will depend upon whether the examination of the entity is being conducted at the entity level or as part of the examination of a particular partner or shareholder’s return if an entity-level examination is being conducted for the reasons discussed in connection with tefra partnerships eg entities may only speak or act through natural persons a contact made with any partner or shareholder should be considered as a contact of the partnership or s_corporation rather than as a contact of a person other than the taxpayer contacts with persons other than the partners or shareholders however are sec_7602 contacts and a record of such contacts must be made and provided to the partners or shareholders upon their request the periodic reporting requirement under sec_7602 may be met by sending the record of contacts to the partnership or the s_corporation on the other hand if the examination of the entity is being done as part of the examination of a particular partner or shareholder’s return then contacts with any other partner or shareholder should be treated as third party contacts which must be recorded on a form and reported to the partner or shareholder under examination in accordance with the periodic reporting requirement of sec_7602 in this situation the record of contacts should be sent to the partner or shareholder whose return is being audited bankruptcy automatic_stay innocent spouse date cc el gl br2 gl-705872-00 memorandum for associate area_counsel - st louis small_business self-employed from joseph w clark senior technical reviewer branch collection bankruptcy summonses subject automatic_stay violation notice of final_determination of denial of innocent spouse relief march bulletin no this constitutes our response to your date request for advice on whether a notice of final_determination denying innocent spouse relief to a taxpayer in bankruptcy constitutes a potential violation of the automatic_stay we believe that the issuance of this type of determination generally does not violate the stay issue whether the issuance of a notice of final_determination denying relief from joint_and_several_liability on a joint income_tax return pursuant to sec_6015 constitutes a potential violation of the stay on various actions imposed upon the filing of a bankruptcy petition pursuant to b c sec_362 conclusion no since the issuance of a notice of final_determination denying innocent spouse relief generally does not fall within any of the categories of activities proscribed by b c sec_362 it generally does not constitute a stay violation statutory background the internal_revenue_service restructuring and reform act of eased the requirements for obtaining relief from joint_and_several_liability on a tax_return jointly filed by a husband and wife the new provisions are set forth in the current version of sec_6015 sec_6015 provides that with respect to a jointly-filed return an individual may be partially or fully relieved of liability for an understatement_of_tax if the understatement is attributable to erroneous items of the individual’s spouse the spouse seeking relief establishes that in signing the return he or she did not know and had no reason to know that the understatement existed taking into account all the facts and circumstances it would be inequitable to hold the spouse seeking relief liable for the deficiency in tax attributable to such understatement and relief is sought within two years of the date the service has commenced collection activities with respect to the spouse seeking the relief alternative avenues of relief available to spouses filing jointly are afforded by sec_6015 and sec_6015 these provisions respectively limit liability for taxpayers no longer married legally_separated or no longer living together sec_6015 and allow for potential relief on an equitable basis where subsections b and c do not afford relief sec_6015 once an individual or entity files a bankruptcy petition the bankruptcy code imposes a stay applicable to all entities against various actions b c sec_362 these actions are enumerated in subsections through of sec_362 and include inter alia the commencement or continuation of a judicial administrative or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title or to recover a claim against the debtor that arose before the commencement of the case under this title any act to create perfect or enforce any lien against property of the estate march bulletin no any act to create perfect or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title any act to collect assess or recover a claim against the debtor that arose before the commencement of the case under this title the commencement or continuation of a proceeding before the united_states tax_court concerning the debtor b c sec_362 sec_362 also renders the stay inapplicable to certain specific activities these include inter alia conducting audits issuing notices of deficiency and making assessments if such activities are undertaken by governmental units b c sec_362 law and analysis your request for advice presents the novel issue of whether a notice of final_determination denying innocent spouse relief to an individual in bankruptcy violates the automatic_stay for purposes of this memorandum we assume that the determination is of an administrative nature issued by the service in general the issuance of this type of administrative determination does not constitute a stay violation spouses who file joint tax returns are jointly and severally liable for any deficiency of tax for the period encompassed by that return pursuant to sec_6013 thus in the innocent spouse context a determination adverse to the individual seeking relief while denying the relief sought fails to have the effect of imposing any additional liability upon him or her since the individual is already liable for the full amount of the deficiency thus the determination issued by the service arguably does not violate the automatic_stay because it does not constitute action taken against the debtor or his or her property as is generally required under sec_362 moreover the issuance of a determination denying innocent spouse relief would not for other reasons violate any of the individual subsections of b c sec_362 the issuance of the determination would not violate the automatic_stay under sec_362 as it would not constitute a proceeding against the debtor that was or could have been commenced before the commencement of the bankruptcy case or to recover a claim against the debtor that arose before the commencement of the case even if we were to agree that an administrative_proceeding determining innocent spouse relief constituted a proceeding against the debtor the ultimate denial of relief would not violate the stay because the proceeding which culminated in the determination would have been initiated by the debtor rather than by someone else the majority view in this regard is that where a given proceeding is initiated by the debtor himself or herself the ultimate outcome of the proceeding -- regardless of whether it is favorable or unfavorable to the debtor -- does not violate the automatic_stay see eg roberts v commissioner 175_f3d_3 we are aware of no case law addressing this issue march bulletin no 11th cir 799_f2d_1091 5th cir cases involving appeals of tax_court cases -- since the tax_court case was determined to have been initiated by the debtor the appeal of the tax_court decision was not stayed see also 68_f3d_1131 9th cir 959_f2d_1194 3d cir 48_br_276 e d pa nontax cases in which denials of actions requested by debtors were found not to violate the stay issuance of a determination denying innocent spouse liability also would not violate subsections a or a of sec_362 since the determination would not address or attempt to affect property of the bankruptcy_estate nor would the determination even indirectly affect estate property since as has previously been noted both the spouse seeking relief and the other spouse are already jointly and severally liable for the tax at issue by denying innocent spouse relief the service essentially reaffirms that liability and maintains the status quo resulting in no impact on either the estate’s assets or its liabilities similarly the determination denying innocent spouse relief would not violate the stay under subsections a and a the determination would have no impact on any lien against the debtor-spouse’s property rendering subsection a inapplicable it also would not be tantamount in itself to an act to collect assess or recover a claim against the individual seeking innocent spouse relief as it would be only embody a decision not purport to lead to imminent collection action one possible exception to the conclusion that these subsections do not stay issuance of a determination denying innocent spouse relief might exist if the determination were issued as part of a letter notice_of_determination concerning collection actions under sec_6320 and or otherwise known as a collection_due_process cdp determination innocent spouse liability may be determined as part of a cdp proceeding undertaken pursuant to sec_6320 or sec_6330 the position of this office is that the service should not institute any aspect of a cdp proceeding during bankruptcy as doing so could be characterized as an act to collect a liability on the debtor’s part and thus as a stay violation under sec_362 under the minority view on this issue an appeal of a tax_court decision is stayed on the rationale that an investigation into an individual’s tax_liability is inherently an action taken against that individual and thus a continuation of that proceeding including an appeal of a tax_court decision ruling on the individual’s liability is prohibited by sec_362 see 18_f3d_768 9th cir we think it is possible although unlikely that courts adopting this rationale might view the issuance of a determination of innocent spouse liability as a continuation of an investigation into a couple’s tax_liability and analogous to the delpit situation as an action accordingly prohibited by the stay under sec_362 because this appears to be an attenuated extension of what is already a minority view however we recommend assuming that innocent spouse determinations may be issued in bankruptcy even in districts where delpit would apply we have been told that in many instances the innocent spouse determination is reported on a form separate from the cdp determination and may even be sent to the taxpayer at a different time from the time the cdp determination is sent in that march bulletin no accordingly where the notice of final_determination denying innocent spouse relief is inseparable from a cdp determination the notice should not be issued during bankruptcy the legislative_history relevant to the bankruptcy code reflects that the automatic_stay was never intended to prohibit the type of action at issue here the house report accompanying the bankruptcy reform act of through which the bankruptcy code was added to the united_states_code states in pertinent part the automatic_stay is one of the fundamental debtor protections provided by the bankruptcy laws it gives the debtor a breathing spell from his creditors it stops all collection efforts all harassment and all foreclosure actions it permits the debtor to attempt a repayment or reorganization plan or simply to be relived of the financial pressures that drove him into bankruptcy h_r rep no 95th cong 1st sess reprinted in u s code cong ad news the type of action at issue here issuance of a determination on innocent spouse relief constitutes one which was precipitated by a taxpayer and which - even if the determination is adverse and the spouse seeking relief is in bankruptcy -- has no impact on the debtor-spouse’s creditors property or rights in bankruptcy in this respect it is analogous to issuance of a notice_of_deficiency which is specifically rendered not subject_to the automatic_stay pursuant to b c sec_362 a notice of final_determination denying innocent spouse relief is not the type of action which was contemplated by congress when the automatic_stay provisions were included in the bankruptcy code for this reason and for the other reasons discussed herein the issuance of a determination denying innocent spouse relief would not generally constitute a violation of the automatic_stay event issuance of the innocent spouse determination in itself clearly would not be a violation of sec_362 of note however is that this division has issued chief_counsel_advice reflecting the position that issuance of a cdp_notice in which the taxpayer is notified of the service’s proposed action for example the service’s intention to levy on the taxpayer’s property and the taxpayer’s right to be heard on the proposed action is violative of the automatic_stay under sec_362 see general litigation bulletin date pincite therefore we believe that the final cdp determination may also violate the stay as would the determination as to innocent spouse relief if it is issued within the cdp determination


department of the treasury internal_revenue_service washington d c bp rag aqa tax_exempt_and_government_entities_division date uil re plan local a local b local c local d dear this is in response to a request for a letter_ruling dated date submitted on behalf of the company by its authorized representative requesting a determination that the proposed amendments to the plan are reasonable and provide for only de_minimis increases in plan liabilities within the meaning of sec_401 of the internal_revenue_code the code and section i of the employee_retirement_income_security_act_of_1974 erisa the following facts and representations have been submitted under penalty of perjury in support of the ruling requested the taxpayer is a manufacturer supplier and recycler of paper and corrugated packaging products the taxpayer has locations throughout the country and negotiates with a variety of unions with respect to the level of benefits under the plan on date the taxpayer filed a voluntary petition under chapter of the us bankruptcy code the taxpayer continues to operate its business as debtor-in- possession the taxpayer has current and future liabilities under the plan the plan is a single_plan consisting of six plan documents and supplements thereto benefit factors for a location are determined pursuant to collective bargaining between the taxpayer and the union representing the employees at that location as part of the collective bargaining process the taxpayer and applicable unions enter into a memorandum of agreement moa which is a binding amendment to a collective bargaining agreement that has been approved by the taxpayer and the applicable union s on date the taxpayer entered into a moa covering local a the local a moa eliminated plan benefits for employees hired after date changed to a medical plan that is less costly and made work rule changes such as eliminating double time on sunday additionally it increased the benefit factor for applicable employees on date the taxpayer entered into a moa covering local b the local b moa eliminated plan benefits for employees hired after date changed to a medical plan that is less costly and made work rule changes such as eliminating double time on sunday in addition it increased the benefit factor for applicable employees on date the taxpayer entered into a moa covering local c the local c moa provides that employees hired after date will not be eligible to participate in the plan further it changed to a medical plan that is less costly and made work rule changes such as eliminating double time on sunday in addition it increased the benefit factor for applicable employees on date the taxpayer entered into a moa covering local d the local d moa provides that employees hired after date are not eligible to participate in the plan further it changed to a medical plan that is less costly and made work rule changes such as eliminating double time on sunday in addition it increased the pension benefit factor for applicable employees contingent upon the secretary's approval information submitted with the request indicates that the aggregate increase in target liability attributable to the amendments is less than and the aggregate increase in target_normal_cost is section i of erisa provides that in the case of a plan maintained by an employer that is a debtor under title united_states_code or similar federal or state law no amendment of the plan which increases the liabilities of the plan by reason of a any increase in benefits b any change in the accrual_of_benefits or c any change in the rate at which benefits become nonforfeitable under the plan with respect to employees of the debtor shall be effective prior to the effective date of such employer's plan_of_reorganization section i of erisa provides that section i shall not apply to certain plan amendments including any plan amendment that the secretary_of_the_treasury determines to be reasonable and that provides for only de_minimis increases in the liabilities of the plan with respect to employees of the debtor sec_401 of the code provides that a plan is not a qualified_plan if an amendment is adopted while the employer is a debtor in a case under title united_states_code or similar federal or state law if such amendment increases liabilities of the plan by reason of i any increase in benefits ii any change in accrual_of_benefits - or iii any change in the rate at which benefits become nonforfeitable under the plan with respect to employees of the debtor and such amendment is effective prior to the effective date of such employer's plan of organization sec_401 of the code provides that sec_401 will not apply to certain plan amendments including in accordance with sec_401 any plan amendment if the secretary for the treasurer determines that such amendment is reasonable and provides for only de_minimis increases in the liabilities of the plan with respect to employees of the debtor section g of erisa and sec_436 of the code impose additional restrictions on amendments to underfunded plans in general these restrictions prevent amendments to the plan if such amendments would cause relevant funding levels to drop below the information presented and the documentation submitted by the taxpayer are consistent with their claim that the amendments are reasonable the increases in the benefit factors were negotiated within the collective bargaining process during which the parties agreed to changes in other_benefits and work rules that will result in a net savings to the taxpayer the actuarial information provided indicates that the aggregate increase in target liability and in target_normal_cost attributable to the amendments is negligible based on the information submitted the amendments outlined in this letter are reasonable and in aggregate provide for only de_minimis increases in the liabilities of the plan with respect to the employees of the company therefore the prohibition on benefit increases while the plan_sponsor is in bankruptcy under section i of erisa and sec_401 of the code does not apply to these amendments this ruling considers only the application of section i of erisa and sec_401 of the code to the amendments described above and does not consider any other issues that may arise in connection with the plan or the proposed amendment specifically this ruling does not address whether the plan is in compliance with restrictions on plan amendments under section g of erisa or sec_436 of the code this ruling letter is directed only to the taxpayer requesting it code sec_61 k provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact sincerely ---- david m zieglf manager ep actuarial group


washington dc department of the treasury internal_revenue_service number release date index number x person to contact telephone number refer reply to cc psi - plr-134494-01 date date a d1 year dear this letter responds to a letter dated date submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year a is the president and sole shareholder of x a represents that it was always intended for x to be an s_corporation however no timely completed form_2553 election by a small_business_corporation was filed on behalf of x for year sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x's first taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x's year taxable_year a copy of this letter should be attached to the form_2553 plr-134494-01 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours matthew lay senior technician reviewer branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes