Examiners are responsible for identifying all Joint Committee cases in their inventory, or when the case qualifies as the result of the examination. Examiners must ensure that all returns, both source and carryback years, have project code 077 on ERCS/AIMS and CEMIS. See IRM 4.36.2.4.

Only those cases closed agreed are reported to the JCT. At the time an unagreed case is closed to the Office of Appeals, no report is required. However, once an agreement has been reached and the case still meets the JCT criteria, the Appeals Officer is responsible for preparing and submitting a report to the JCT.

The only exception to this is when a case is closed partially agreed. If there are one or more unagreed issues and the agreed issues will result in a minimum refund to which the taxpayer is entitled, regardless of the resolution of the unagreed issues, the Joint Committee Specialist will prepare and submit a report on the minimum refund. See IRM 4.36.3.7.1 for the definition of a minimum refund. A supplemental report will be submitted by the Appeals Officer when the unagreed issues are finally resolved even if the resolution of such issues does not cause an additional refund or credit.

Where a case is under examination or has been examined but not closed out of the examining group and the taxpayer files a claim for refund or application for tentative allowance sufficient to bring the case within the jurisdiction of the Joint Committee, the examination will be extended to such source year. Certain cases can be closed and reported to the JCT prior to the resolution of all issues. See IRM 4.36.3.7.2 for the procedures and criteria for tentative allowances from unexamined source years and IRM 4.36.3.7.3 for the procedures and criteria for claims from unexamined source or refund years.

Upon discovery that an overpayment in excess of $2,000,000 has been refunded without a report to the JCT, the Joint Committee Specialist group must be contacted.

If the refund or credit is for a year previously examined, that year should not be reexamined unless such action is necessary under reopening criteria, also known as case return criteria. See IRM 4.36.4.3.

All pertinent years (both refund and source years) must be covered in a current examination or survey action, even if one or more of the refund years has been previously surveyed or examined. All prior audit or survey reports pertaining to such years must be included in the case file. See IRM 4.36.3.6 for report writing requirements.

Upon completion of the examination, the examiner will solicit an agreement to the findings and inform the taxpayer that a report to the JCT is necessary and additional processing time will be required. The examiner should also advise the taxpayer to expect written notification when the report has been forwarded to the JCT. The examiner should answer any taxpayer questions until Letter 1573A (P) or Letter 1573 (P) is received at which time the Joint Committee Specialist will answer questions.

Joint Committee cases are considered " Excepted Agreed Cases" and as such the reopening procedures do not apply. IRM 4.10.8.4.2 states that Form 870, Waiver of Restriction on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, will be used in Joint Committee cases.

If the taxpayer signs an unqualified Form 870 and the net overassessment is less than $2,000,000, the overassessment (and deficiency, if any) may be processed prior to reporting the IRC section 6405(b) refund to the JCT. This only applies if there is sufficient time open on the statute of limitations to follow deficiency procedures.

Adjustments due to carrybacks will result in restricted interest. Even if there is no tax change to a carryback year, there may be a net interest assessment or abatement. Such computations should be explained to the taxpayer.

The JC Specialist is responsible for the preparation of Part I of Form 2285 (Form 1366 for estate tax).

In cases with complicated tax and credit computations, the examiner should prepare tax analysis worksheet/schedules. These documents will assist in preparing the form. The examiner may use separate and clearly labeled RARs showing:

Because of the time required to process a Joint Committee case, the examiner will not solicit Form 2297, Waiver of Statutory Notification of Claim Disallowance in an agreed claim case involving the disallowance in full or in part of a claim for refund or credit. Such action disadvantages the taxpayer by prematurely starting the running of the two-year period for filing suit. However, Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, should be solicited, if applicable, as well as Form 870.

The examiner should indicate on Form 3198 (or other special handling form) that a statutory notice of claim disallowance should be issued after release from JC.

A closed case review is conducted after the case has been forwarded from the examining group to the local CPS. The local CPS in turn forwards the case to the Joint Committee Specialist Group designated to service that location.

The Joint Committee Specialist conducts a review of the case which includes the Revenue Agent’s Report (RAR) and supporting documentation. This review and the preparation of the report to the JCT takes place at the specialist’s post-of-duty.

On site reviews are conducted at the site of the examination while the examination is in process. The process envisions that the report to JCT will be completed prior to the forwarding of the case to the local CPS. The purpose of the on site process is to improve the efficiency of the review and reduce the time span between the completion of the RAR and forwarding of the report to the JCT.

Both the examiner and the team manager should consider a case for an on site review as soon as they believe a report to the JCT will be required; i.e., refund(s) within the jurisdictional amount and an agreed disposition. On site reviews are recommended for all CIC examinations. Early referral will permit the Joint Committee Team Manager to plan for the assignment of a Joint Committee Specialist to meet the need to complete the report by the closing of the case from the group.

The Joint Committee Specialist may participate in the planning meeting, if there is reasonable assurance at that time that a report to the JCT will be required. At this point the role of the Joint Committee Specialist will be to advise the examiner of the unique requirements for the thorough development and documentation of issues in the RAR and any other requirements the examiner must satisfy at closing.

When it is not apparent that a referral will be required until after the planning and strategy meeting phase, the referral should still be made as soon as possible to permit the Joint Committee Team Manager to ensure a Joint Committee Specialist is available when needed so that the on site review can be performed timely.

The referral form for the on-site program can be accessed electronically on the LMSB PQA Joint Committee website or through the Specialist Referral System (SRS).

The Joint Committee Specialist will plan to be at the examination site to review specific issues at the point where there is sufficient information available that is relevant to the process. For example, there are several Notices of Proposed Adjustment ready to be shared with the taxpayer and the team coordinator would like input from the Joint Committee Specialist. Visits to the examination site must be arranged so that the report to the JCT is completed at or slightly prior to the group’s ability to forward the case to the local CPS.

Returns in Joint Committee cases may be surveyed after assignment if the returns would normally have been surveyed before or after assignment except for the fact that the returns require Joint Committee review. The examiner can survey some or all of the returns.

There must be sufficient documentation in the examiner’s case file to justify that an examination is not warranted. If the reason, economic or otherwise, for the overassessment is not readily available from the return or file, attempts should be made to obtain the necessary information from public sources (e.g., annual report, SEC filings, Moody’s, Standard and Poors etc.) or directly from the taxpayer.

The examiner’s request for retained copies of the taxpayer's tax returns, prior RARs, or information otherwise available from public sources is within the confines of a survey action. If the taxpayer is contacted, the examiner should point out that the Service proposes to accept the return as filed; that such action is subject to review by the JCT; and that certain additional information is needed to properly prepare the report.

However, if the examiner makes an inspection of any portion of the taxpayer's books and records (except as provided in this section) or discusses any potential issues with the taxpayer, the return may not be surveyed under this procedure. See IRM 4.36.3.2 (1), above, for limiting the scope of the examination.

Returns will be surveyed using Form 1900, Income Tax Survey After Assignment. Form 1900 will explain fully the reasons for the survey and include references to pertinent portions of the examiner’s case file.

All pertinent years (the refund years and the source years i.e., NOL, credit, etc.) not currently being examined must be covered in the survey action, even though one or more of the refund years may have been previously closed either by survey or examination. Also, all prior examination reports pertaining to such years must be included in the case file.

Surveys of tax returns may be made on the basis of the taxpayer's retained copies. However, care must be taken to insure that the tax shown on the copies agrees with current transcripts (no more than 30 days old at time of submission).

The documentation requirements of IRM 4.36.3.3.2 are applicable.

Form 3198 or other special handling form will be completed and marked "Mandatory Review" and "Joint Committee Case" .

Form 5351, Examination /Non-Examined Closings, will be signed by the manager and included in the case file.

The case file should contain a detailed explanation justifying the survey action. An explanation of the reason for the overassessment and prior audit history should also be included.

Form 5231, Joint Committee Case Check List, must be prepared.

Form 10484, Joint Committee Case Survey Worksheet, must be prepared and attached to Form 1900.

If an inquiry from the Refund Counsel cannot be resolved without taxpayer contact, the Joint Committee Specialist should contact the Refund Counsel to discuss any problems that exist.

If the Refund Counsel and the Service believe the requested information is critical, the taxpayer's returns will be examined only to the extent necessary to respond to the inquiry. The examination may take the form of a telephone call to the taxpayer, perhaps coupled with a letter of explanation to the taxpayer or representative, or limited in scope to an on-site examination of specific portions of the taxpayer's books and records that are relevant to respond to the inquiry. Therefore, survey procedures are no longer applicable and a RAR is required.

Absent formal instructions to the contrary, requests by Refund Counsel for additional documentation in specific cases will not be considered precedents for similar documentation in other cases involving the same issue.

Restricted consents will not be used in Joint Committee cases since it would restrict the rights of the Joint Committee to perform their oversight function.

The statute date of the carryback years should be updated on AIMS with the correct alpha code.

If the case file includes a return on which there is reasonable prospect of a deficiency that could become barred within a six-month period, the examiner will either obtain a consent or take appropriate action necessary to protect the interests of the Government. A memo from the team manager explaining the action taken should be included in the file.

If the case is in the possession of the Joint Committee Specialist group, that group will maintain statute controls under existing procedures throughout the review and reporting process. These controls must be kept until notification is received that the JCT has taken no exception to the Service’s conclusions and any deficiency (if applicable) has been assessed.

A Form 5231, Joint Committee Case Check List, must be completed by the examiner for each case and will be included as an enclosure to the examination report. Also, the long form report, will be prepared for all examined cases, including all of the following:

Per IRM 4.10.8.12.2.3 (Examination of Returns), when there are tentative NOL carrybacks, the RAR should show the correct NOLD amount. If the NOLD is allowed in full, the entire NOLD would be shown as an adjustment. If the NOLD is not allowed, the adjustment would be zero. The taxable income should be before the NOL carryback. The tax as previously adjusted should include the tentative allowance tax decrease.

Closing Agreements, including those based on Competent Authority determinations, must not be executed on behalf of the Government until reviewed by the JCT. See IRM 4.36.4.9.

In those situations where an issue is resolved early in the examination, such as Fast Track Settlement or Early Referral to Appeals, the examiner may request an advanced review of the closing agreement. If the JCT approves of the closing agreement, it may then be executed by the appropriate Service official. If the examiner wishes to pursue this option, the examiner will prepare a cover memo and forward the closing agreement and any relevant supporting documents to the Joint Committee Specialist group. A specialist will forward the documents to the JCT. After review by JCT, the agreement will be returned to the examining group for signature by the appropriate Service official. (See Exhibit 4.36.3-6).

The examiner need not be certain that the case will meet the jurisdictional amount of IRC section 6405 in order to make a request for an advanced review of the closing agreement. An assigned case that does not initially qualify as a Joint Committee case but later qualifies as a result of an examination or other subsequent event requires JCT review of the agreement.

Information concerning the financial history and changes in capital structure of corporations will be furnished in every case. This should include:

If an issue arises as to the proper carryback period of losses or credits of a newly acquired member of a consolidated group, the report should state whether the newly acquired corporation was organized by or for a preexisting member of the consolidated group.

The letter of transmittal will explain the cause or causes of the overassessments. If the overassessments result from a net operating loss, the economic reason for such loss must be briefly explained.

Spreadsheets for regular tax (Exhibit 4.36.3-1) and AMT/environmental tax (Exhibit 4.36.3-2) will be included with each case. For cases with life/non-life insurance groups, spreadsheets should be modified to include separate columns for the life insurance groups and the non-life insurance groups.

Additional spreadsheets should be prepared if the taxpayer has credits carried from numerous years. Separate spreadsheets should also be prepared for foreign tax credits involving different categories or baskets.

While original returns are desirable, a complete copy of the return(s) obtained from the taxpayer will be accepted if accompanied by a current transcript(s).

Current transcripts (no more than 30 days old at time of submission) of the taxpayer's account will be secured for all years covered in the examination or survey report.

The examiner should check the transcript against information in the case file to determine whether all payments of estimated tax, advance payments or deposits, balances due, deficiencies, overassessments, and refunds or credits, including tentative allowances and abatements, are reflected.

Copies of Form 3115, Change of Accounting Method that have been approved by the Office of Chief Counsel should be included in the case file.

The manager's and examiner’s name, address and telephone numbers will be entered on Form 4665, Report Transmittal, or Form 1900. The name and title of the corporate officer who is to receive correspondence must also be included on the Form 4665 or Form 1900.

Short taxable periods have numerous possible tax consequences. In order to fully understand the tax implications of the tax years reported, the examination report should disclose the existence and cause of any short taxable period.

Any large, unusual or questionable items should be fully explained in the examiner's workpapers, even if not adjusted.

Upon completion of the examination, if the taxpayer is entitled to an IRC section 6405(a) refund, and there are unagreed issues, the case will be submitted to the Joint Committee Specialist group if:

Example 1

Example 2

The examiner should include a copy of the unagreed report or include a brief statement as to the nature of the unagreed issues on Form 4665.

A final report will be submitted to the JCT by Appeals when the unagreed issues are finally resolved.

See IRM 4.36.4.12 and 4.36.4.13 for non-TEFRA and TEFRA suspense procedures.

A case will be submitted to the Joint Committee Specialist group with tentative allowances from unexamined source years, if:

When an NOL, capital loss, or credit carryback is allowed subject to future examination of the subsequent year, the examination report, (Form 4549-A) should contain the following statement: "The net operating loss (or capital loss or credit) carryback from the year ending xx/xx/xxxx, reflected herein, is subject to correction upon examination of the tax return from which it originated."

If, because of the examination, the tentative allowances are reduced to less than the jurisdictional amount, the examiner will notify the Joint Committee Specialist group in writing. Otherwise, these source years and their carrybacks will be submitted for review at the completion of their examination or survey.

If the current examination would not be a Joint Committee case but for those carrybacks, the case should not be submitted to the Joint Committee Specialist group for review until the examination action is completed on those source years.

Pursuant to established procedures the Service can issue a conditional refund in excess of $2,000,000 prior to the completion of the examination or survey action if:

This procedure is also applicable if the taxpayer files a claim after the due date to correct errors on its original return. An amended return filed before the due date does not require that a report be submitted to the JCT.

A Modified Expedite Refund Report will be prepared by the Specialist and submitted to the JCT.

A Supplemental Report may be required at the completion of the examination.

See Exhibit 4.36.3-3 for the procedures to be followed.

The taxpayer is required to post a bond or other similar security for the amount of the refund as a condition for submitting a Modified Expedite Refund Report. The Director of Field Operations (LMSB) or Area Director (SBSE) is responsible for determining the sufficiency of collateral. Refer to IRC section 7101, the Regulations thereunder and IRM 5.6, Collateral Agreements and Security Type Collateral for further guidance. At the discretion of the Director of Field Operations (LMSB) or Area Director (SBSE), an additional amount of bond or security may be required with respect to interest on the refund in the event all or part of the refund must be repaid. This amount should be measured by the reasonably anticipated time to complete the examination and the interest rate currently in effect under IRC section 6621. The posting of the bond must be accomplished prior to the submission of the claim to the Joint Committee Specialist group. A copy of the security agreement signed by the taxpayer must accompany the Modified Expedite Refund Report. The security agreement will be executed on behalf of the Service subsequent to the expiration of the 30-day period after the submission of the report. The refunds must not be released until the Joint Committee Specialist notifies the examiner that the appropriate documents may now be executed and such action has been taken.

It is necessary to submit a copy of the executed security or collateral agreement with the modified expedite refund report. The agreement should reflect the amount of the proposed refund, plus previously assessed interest, if any, and estimated refund interest, if required. The agreement must be executed by the taxpayer prior to submission. Upon expiration of the 30-day period after submission of the report, the Director of Field Operations or Area Director having jurisdiction over the case should execute the agreement on behalf of the Service. Coordination with local Counsel in the development of the security agreement is required.

Any security or collateral agreement needs to specify that in fully agreed cases the agreement will not terminate until the JCT determines (if required by law) that it has taken no exception to the results of the examination. See Exhibit 4.36.3-4 for a sample security agreement.

If, for some reason, the case cannot be submitted to the Joint Committee Specialist group within the 30-day timeframe, a memorandum containing the case name, years, earliest statute of limitations, reason for the delay, and expected submission date should be submitted to the appropriate Joint Committee Specialist group.

Check the Joint Committee Specialist web site at http://lmsb.irs.gov/hq/pqa/Joint-Committee/index.asp for current Joint Committee Specialist contact information. Also see Exhibit 4.36.3-5 for more information on timeframes and case submission procedures.

There are two types of inquiries:

See IRM 4.36.4.3 for case return criteria and Exhibit 4.36.4-5 for guidance on dispute resolution.

Every attempt should be made to respond to the inquiry in a timely manner. Telephone inquiries should be addressed within 3 working days. Formal written inquiries should be resolved within 30 days.

If the response will take longer than 30 days, a short memorandum providing a status report should be submitted every 30 days to the Joint Committee Specialist group and to the responsible Territory Manager. The memorandum should contain the case name, tax years, earliest statute of limitations, status explanation/reason for delay, and expected completion date. See Exhibit 4.36.3-5 for a summary of all applicable timeframes.

If the examiner and the team manager do not agree with the position of the Joint Committee Specialist, the situation will be discussed with the Joint Committee Team Manager. If a solution cannot be resolved on a mutually satisfactory basis, the dispute will be elevated according to the schedule in Exhibit 4.36.4–4.