All taxpayers under the jurisdiction of LMSB are eligible to apply for a PFA. Both Coordinated Industry and Industry cases are eligible.

Procedures in this manual may affect any or all revenue agents in LMSB since any LMSB taxpayer may apply for a PFA. The term "IRS Examination Team" or "Team" as used in this manual is intended to include all revenue agents, specialists, and team coordinators that may work on the issue. The "Team" may include only one agent or may include several agents depending on the size and nature of the taxpayer and the issue.

Eligible tax issues generally include those that are factual in nature and governed by well-established law. Not all examination issues will qualify for PFA resolution. PFAs are not the vehicle for issues involving questions of law that are more appropriately resolved through the private letter ruling process.

Revenue Procedure 2001-22 provides a list of possible domestic issues (Sec. 3.04), an exclusive list of International issues (Sec. 3.05), and a list of examples of excluded issues (Sec. 3.06). The Industry Director or the Director of Field Operations will make the final decision whether to accept or decline a taxpayer’s request for a PFA (Delegation Order 262 (as revised)). A taxpayer is not entitled to a conference to appeal a decision not to go forward with the PFA process.

A taxpayer not selected for the PFA program, or where no PFA Agreement is reached, remains eligible for other early issue resolution procedures including the Accelerated Issue Resolution (AIR) Program or Early Referral to Appeals.

The Director, Pre-Filing and Technical Guidance will provide executive oversight of the LMSB PFA Program. The Director is responsible for program implementation and providing guidance concerning the PFA Program process.

The Industry Director is responsible for the final determination of acceptance or non-acceptance of a PFA application and the development of Pre-Filing Closing Agreements.

A flowchart depicting the PFA administrative process is included as Exhibit 4.30.1-1. Accompanying the flowchart is Exhibit 4.30.1-2, which describes the various activities and process responsibilities.

There is no prescribed format for a PFA request. However, a request for a PFA must contain the basic identification and other information as outlined in Rev. Proc. 2001-22.

The request for a PFA must also contain a separate written statement for each issue that describes the issue and provides the information as outlined in the revenue procedure.

The request must also include a standard perjury statement.

The request must also include a statement of agreement regarding the subsequent examination or inspection of records. The taxpayer must state that they agree that the PFA inspection of records will not preclude or impede a later examination of a return or inspection of records related to the tax year in question.

The taxpayer or Power of Attorney (POA) must sign the request.

The suitability of the issue presented; i.e., to resolve issues involving factual questions under well established law,

The direct or indirect impact of the PFA upon other years, issues, taxpayers or related cases,

The availability of Service resources,

The ability and willingness of the taxpayer to dedicate sufficient resources to the process,

The likelihood that the PFA may result in contrary positions with respect to an item or transaction ( "whipsaw" ),

The time remaining until the due date of the return, and

Overall probability of completing the process by the date for filing the taxpayer’s return.

Taxpayers are subject to fees only if they are selected to participate in the PFA program. The amount of the graduated fee is based on the amount of assets reported by the taxpayer as determined by its most recently filed return (see Rev. Proc. 2001-22, Sec. 10). The user fee is charged on a per issue basis. If the taxpayer requests a PFA that contains more than one distinct issue, they will be subject to multiple user fees.

The taxpayer must submit payment within 30 business days of written notification that they have been selected to participate in the PFA program. Payment must be made by a check or money order payable to the Internal Revenue Service. User fees are generally not refundable in the event of a withdrawal of the PFA by either the taxpayer or the Service.

A representative, generally the Industry analyst, of the Industry that accepted the PFA will conduct the orientation meeting. The orientation session will cover the procedural aspects of the PFA process for both the taxpayer and the IRS participants.

Additional topics may include the degree of commitment and cooperation needed during the process, pre-planning efforts, developing a time line, fact finding and timely information sharing, monitoring reports required, issue resolution, preparation of the PFA Closing Agreement, evaluation of the process and the role and responsibility of each of the participants.

The PFA team will develop a time line and work plan identifying the information and steps needed to develop the issue,

The PFA team will utilize auditing standards and procedures to develop the issue(s), and

The Industry director will assure that the appropriate technical expertise and needed resources are made available to the PFA team.

The withdrawal must be in writing and signed by the party initiating the withdrawal action, i.e., the taxpayer or his authorized representative or the Industry Director. The Team Coordinator will comment in the work papers regarding the withdrawal of the PFA and the issue and circumstances involved. A copy of the withdrawal notification must be submitted to the PFA Program Manager.

In the event the Industry Director and the taxpayer cannot reach agreement and/or a closing agreement cannot be executed, the Industry Director will notify the taxpayer in writing of the Service’s decision to withdraw from the PFA process. The notification should include the reason for such action.

One original Closing Agreement will be provided to the taxpayer.

The second original will be maintained by the Industry Planning and Special Programs analyst until such time as a suspense unit is established at the Ogden Service Center.

A copy of the executed Closing Agreement will be provided to the PFA Program Manager.

Assist IRS and taxpayer participants and other interested parties as needed,

Receive the PFA Transmittal Memo, a copy of the PFA application, and the copy of the PFA Recommendation Template from the Team Manager for cases where a team is on site (originals to Industry Director),

Receive and acknowledge within 14 days of receipt of the original PFA applications directly from taxpayers when no team is on site,

Facilitate the selection of applicants through the Tier One screening process,

Provide Tier One screening recommendation(s) to the Industry Director to aid in the decision to accept or not accept a PFA application,

Administer oversight of operations and activities through entry and maintenance of the PFA Information Management System,

Coordinate and consult with Counsel as necessary,

Monitor and troubleshoot when appropriate,

Receive input and reports from the Industry Director regarding the PFA Process,

Update the Director, Pre-Filing and Technical Guidance on a regular basis,

Assist the Industry Director concerning exit interviews or questionnaires of both the taxpayer and audit team members,

Monitor, measure and report Program Results, and

Collect and process user fees.

Screen applications within 10 days of receipt and respond with any comments, concerns and recommendations,

Participate in the PFA process when expertise would be appropriate,

Participate in the orientation as appropriate, and

Respond to questions and issues as requested.

Review PFA application eligibility,

Consult with the PFA Program Manager on policy issues,

Participate in the Tier One screening process and coordinate with other Chief Counsel functions as appropriate,

Participate in the orientation, if appropriate,

Respond to questions and issues as appropriate, and

Assist in the drafting, review and execution of the PFA Closing Agreement.

Reinforce the PFA Program as an IRS priority,

Receive the original PFA Transmittal Memo with Recommendation Template and the original PFA application from the Team Manager for review and evaluation (team on site case).

Receive copy of PFA application and Tier One screening results (no team on site) from the PFA Program Manager,

Confer with the taxpayer as requested or needed,

Contact the Territory Manager to insure resources are available. For accepted cases where there is no team on site, assign Team Manager,

After the screening process, make the final acceptance decision and advise the taxpayer in writing as to acceptance or non-acceptance into the program and provide the reason for such action and the amount of user fee if accepted,

Coordinate with other LMSB Industries and Field Specialists as appropriate,

Secure additional resources, including Field Specialists and outside consultants, as necessary,

Designate an Industry Analyst to conduct orientations, to monitor and facilitate the overall process and evaluate Program results, and

Execute (sign and date) the PFA Closing Agreement if it is consistent with LMSB goals.

Assist IRS, taxpayer participants and other interested parties as needed,

Facilitate the securing of resources, including team members with appropriate technical expertise, and other needed support for the team,

Participate, optionally, in the orientation,

Coordinate the submission of monthly status reports, and

Suggest process improvements through exit interviews and/or questionnaires.

Proactively discuss the program and potential issue(s) with the taxpayer,

Assist with the preparation of the PFA application as requested,

Review the taxpayer’s PFA application,

Discuss any administrative or procedural concerns with the PFA Program Manager prior to transmitting the PFA request for consideration,

Send a copy of the PFA application and the recommendation transmittal/template to the PFA Program Manager and send the original application to the Industry Director,

Determine the necessary resources needed, including Technical Advisors, Field Specialists and outside consultants,

Participate in the orientation,

Establish, with the taxpayer, the audit plan and time line for completing the process,

Consult with internal experts such as Technical Advisors and Counsel,

Review documentation, evaluate facts and develop issues for resolution,

Insure that approved auditing techniques and auditing standards are adhered to,

Update the Industry Analyst via monthly time and status reports as prescribed by the PFA Program Manager,

Participate, with the assistance of Counsel, in drafting and discussing the Closing Agreement with the taxpayer, and

Suggest process improvements through exit interviews and/or questionnaires.

Prepare and submit a PFA application,

Participate in the orientation,

Establish, with the team, the audit plan and time line for completing the process,

Cooperate with the team on issue development and provide necessary information/resources on a timely basis,

Participate in the resolution process,

Work with the team to draft the closing agreement,

Provide, on a voluntary basis, monthly status reports to the PFA Program Manager, and

Suggest process improvements through exit interviews and/or questionnaires.