Internal Revenue Bulletin 2022-39 (PDF rendition): IRS Notices

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Bulletin No. 2022–39
September 26, 2022
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE, EMPLOYMENT TAX,
ESTATE TAX, EXCISE TAX, GIFT TAX,
INCOME TAX
REG-125693-19, page 241.
The proposed regulations provide guidance on the res-
olution of federal tax controversies by the IRS Indepen-
dent Office of Appeals (Appeals) under the Taxpayer
First Act of 2019. Consideration of a federal tax contro-
versy by Appeals is generally available to all taxpayers.
The proposed regulations provide clarification of issues
that do not meet the definition of a federal tax con-
troversy, exceptions to consideration by Appeals, and
procedural and timing requirements that must be met
before Appeals will consider an issue. The proposed
regulations also provide requirements a taxpayer that
received a notice of deficiency must meet to receive
the notice described in section 7803(e)(5) when the
taxpayer requests consideration by Appeals and the
request is denied.
INCOME TAX
Notice 2022-38, page 239.
The notice publishes the inflation adjustment factor for
the carbon oxide sequestration credit under § 45Q for
calendar year 2022. Also, the notice informs taxpay-
ers that pursuant to § 45Q(g), as amended by the IRA,
2022 will be the final calendar year for which a taxpayer
may claim a § 45Q credit under § 45Q(a)(1) and (2) for
qualified carbon oxide that is captured by carbon cap-
ture equipment originally placed in service at a qualified
facility before the date of enactment of the Bipartisan
Budget Act of 2018.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
September 26, 2022 Bulletin No. 2022–39

Part III
Credit for Carbon
Oxide Sequestration
2022 Section 45Q Inflation
Adjustment Factor
Notice 2022-38
SECTION 1. PURPOSE
This notice publishes the inflation
adjustment factor for the credit for car-
bon oxide sequestration under § 45Q of
the Internal Revenue Code (§ 45Q credit)
for calendar year 2022. The inflation
adjustment factor is used to determine
the amount of the credit allowable under
§ 45Q.
This notice also confirms that 2022
will be the final calendar year for which a
taxpayer may claim a § 45Q credit under
§ 45Q(a)(1) and (2) for qualified carbon
oxide that is captured by carbon capture
equipment originally placed in service
at a qualified facility before the date of
enactment of the Bipartisan Budget Act of
2018.
SECTION 2. BACKGROUND
Section 45Q was added to the Code
by § 115 of the Energy Improvement and
Extension Act of 2008, enacted as Divi-
sion B of Pub. L. 110-343, 122 Stat. 3765,
3829 (October 3, 2008), to provide a credit
for the sequestration of carbon dioxide.
Section 45Q was amended by § 1131 of
the American Recovery and Reinvestment
Tax Act of 2009, enacted as Division B of
Pub. L. 111-5, 123 Stat 115 (February 17,
2009), § 41119 of the Bipartisan Budget
Act of 2018 (BBA), Pub. L. No. 115-123
(February 9, 2018), § 121 of the Taxpayer
Certainty and Disaster Tax Relief Act of
2020, enacted as Division EE of the Con-
solidated Appropriations Act, 2021, Pub.
L. 116-260, 134 Stat. 3051 (December 27,
2020), and § 13104 of Pub. L. 117-169,
136 Stat. 1818 (August 16, 2022), com-
monly known as the Inflation Reduction
Act (IRA). As a result of the modifications
made by the BBA amendment, the credit
under § 45Q now applies to the sequestra-
tion of “qualified carbon oxide,” a broader
term than qualified carbon dioxide. The
amount of the credit is also increased for
carbon oxide captured with equipment
originally placed in service on or after the
date of enactment of BBA.
Section 45Q(a)(1) allows a credit of
$20 per metric ton of qualified carbon
oxide (i) captured by the taxpayer using
carbon capture equipment which is orig-
inally placed in service at a qualified
facility before the date of the enactment
of BBA, (ii) disposed of by the taxpayer
in secure geological storage, and (iii) not
used by the taxpayer as a tertiary injectant
in a qualified enhanced oil or natural gas
recovery project.
Section 45Q(a)(2) allows a credit of
$10 per metric ton of qualified carbon
oxide (i) captured by the taxpayer using
carbon capture equipment which is orig-
inally placed in service at a qualified
facility before the date of the enactment
of BBA, and (ii) either (I) used by the
taxpayer as a tertiary injectant in a qual-
ified enhanced oil or natural gas recovery
project and disposed of by the taxpayer in
secure geological storage or (II) utilized
by the taxpayer in a manner described in
§ 45Q(f)(5).
Under § 45Q(f)(7), for taxable years
beginning in a calendar year after 2009,
the dollar amounts contained in § 45Q(a)
(1) and (2) must be adjusted for inflation
by multiplying such dollar amount by the
inflation adjustment factor for such calen-
dar year determined under § 43(b)(3)(B),
determined by substituting “2008” for
“1990.”
Section 43(b)(3)(B) defines the term
“inflation adjustment factor” as, with
respect to any calendar year, a fraction the
numerator of which is the GNP implicit
price deflator for the preceding calendar
year and the denominator of which is the
GNP implicit price deflator for 1990. For
purposes of § 45Q(f)(7), for the 2022 cal-
endar year, the inflation adjustment factor
is a fraction the numerator of which is
the GNP implicit price deflator for 2021
(118.349) and the denominator of which
is the GNP implicit price deflator for 2008
(94.421).
Section 45Q(g), as amended by
§ 13104(f) of the IRA, provides that in
the case of any carbon capture equip-
ment placed in service before the date of
the enactment of BBA, the credit under §
45Q shall apply with respect to qualified
carbon oxide captured using such equip-
ment before the earlier of January 1, 2023,
and the end of the calendar year in which
the Secretary of the Treasury or her del-
egate, in consultation with the Admin-
istrator of the Environmental Protection
Agency, certifies that, during the period
beginning after October 3, 2008, a total
of 75,000,000 metric tons of qualified car-
bon oxide have been taken into account in
accordance with (i) § 45Q(a), as in effect
on the day before the date of the enact-
ment of BBA, and (ii) § 45Q(a)(1) and (2).
SECTION 3. INFLATION
ADJUSTMENT FACTOR
The inflation adjustment factor for
calendar year 2022 is 1.2534. The § 45Q
credit for calendar year 2022 is $25.07
per metric ton of qualified carbon oxide
under § 45Q(a)(1) and $12.53 per met-
ric ton of qualified carbon oxide under §
45Q(a)(2).
SECTION 4. TAX CREDIT
UTILIZATION
Section 6 of Notice 2009-83, 2009-
44 I.R.B. 588, requires taxpayers to file
annual reports that provide (among other
information) the amount (in metric tons)
of qualified carbon oxide for the taxable
year that has been taken into account for
purposes of claiming the § 45Q credit
under § 45Q(a)(1) and (2). The annual
reports must be filed with the Internal
Revenue Service (IRS) not later than the
last day of the second calendar month fol-
lowing the month during which the tax
return on which the § 45Q credit under
§ 45Q(a)(1) and (2) is claimed was due
(including extensions).
Bulletin No. 2022–39 239 September 26, 2022

Pursuant to § 45Q(g), as amended on
August 16, 2022, by § 13104(f) of the
IRA, 2022 will be the final calendar year
for which a taxpayer may claim a § 45Q
credit under § 45Q(a)(1) and (2) for qual-
ified carbon oxide that is captured by car-
bon capture equipment originally placed
in service at a qualified facility before
the date of enactment of the BBA.
Accordingly, 2022 will be the final calen-
dar year for which a taxpayer must file a
report under section 6 of Notice 2009-83.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice is
Maggie Stehn of the Office of Associate
Chief Counsel (Passthroughs & Spe-
cial Industries). For further information
regarding this notice contact Maggie
Stehn at (202) 317-6853 (not a toll-free
number).
September 26, 2022 240 Bulletin No. 2022–39

Bulletin No. 2022–39 241 September 26, 2022
Part IV
Notice of Proposed
Rulemaking
Resolution of Federal
Tax Controversies By the
Independent Office of
Appeals
REG-125693-19
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document contains
proposed regulations relating to the IRS
Independent Office of Appeals’ resolution
of Federal tax controversies without liti-
gation and relating to requests for refer-
ral to that office following the issuance
of a notice of deficiency to a taxpayer by
the IRS. The proposed regulations reflect
amendments to the law made by the Tax-
payer First Act of 2019. The proposed reg-
ulations apply to all persons that request to
have a Federal tax controversy considered
by that office. This document also pro-
vides a notice of a public hearing on these
proposed regulations.
DATES: Written or electronic comments
must be received by November 14, 2022.
Outlines of topics to be discussed at the
public hearing scheduled for November
29, 2022, must be received by Novem-
ber 14, 2022. If no outlines of topics are
received by November 14, 2022, the pub-
lic hearing will be cancelled.
ADDRESSES: Commenters are strongly
encouraged to submit public com-
ments electronically. Submit electronic
submissions via the Federal eRulemaking
Portal at www.regulations.gov (indicate
IRS and REG-125693-19) by following
the online instructions for submitting
comments. Once submitted to the Federal
eRulemaking Portal, comments cannot
be edited or withdrawn. The Department
of the Treasury (Treasury Department)
and the IRS will publish for public avail-
ability any comment to its public docket.
Send paper submissions to: CC:PA:LP-
D:PR (REG-125693-19), room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, D.C.
20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Keith L. Brau at (202) 317-
5437 (not a toll-free number). Concerning
submissions of comments or the public
hearing, Regina Johnson, preferably at
publichearings@irs.gov or (202) 317-
6901 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
This document contains proposed
amendments to the Procedure and Admin-
istration Regulations (26 CFR part 301)
to implement section 7803(e) of the Inter-
nal Revenue Code (Code). The proposed
amendments (proposed regulations) relate
to the resolution by the IRS Independent
Office of Appeals (Appeals) of Federal tax
controversies without litigation, including
guidance regarding requests for referral to
Appeals following the issuance of a notice
of deficiency. (References in this preamble
to “Appeals” include references to the for-
mer Office of Appeals where appropriate.)
Since its establishment by the IRS
in 1927, Appeals’ mission has been
to resolve Federal tax controversies
without litigation on a basis that is fair
and impartial to both the Government
and the taxpayer.
1
In doing so, Appeals
has independently considered disputed
administrative determinations made by
the IRS in administering and enforcing
the internal revenue laws arising from the
IRS’s examination or collection activities
with respect to a particular taxpayer, and
attempted to resolve those disputes with-
out litigation. See House TFA Report, at
29. Appeals generally considers whether
to resolve Federal tax controversies with-
out litigation based on the likelihood of
either the taxpayer’s or the IRS’s posi-
tion prevailing if the Federal tax contro-
versy was resolved before a court. When
Appeals resolves a Federal tax contro-
versy, it does so through an administrative
settlement of the matter.
The IRS Restructuring and Reform
Act of 1998 (RRA), Public Law 105-206
(112 Stat. 685, 689 (1998)) directed the
Commissioner to restructure the IRS by
establishing and implementing an orga-
nizational structure that ensured an inde-
pendent appeals function within the IRS.
Although the Code did not mandate the
existence of an independent office within
the IRS, provisions of the Code have
required the independent administrative
review of certain administrative determi-
nations, such as section 6159 regarding
terminating an installment agreement,
sections 6320 and 6330 regarding notice
and an opportunity for a hearing before a
levy or upon the filing of a notice of lien,
and section 7122 regarding rejections of
an offer in compromise (OIC).
For decades the Internal Revenue
Manual (IRM) has contained the mission
statement of Appeals (Appeals Mission
Statement), which is “to resolve [Federal]
tax controversies, without litigation, on a
basis which is fair and impartial to both
the Government and the taxpayer and
in a manner that will enhance voluntary
compliance and public confidence in the
1
See H.R. Rep. No. 39 Part 1, 116th Cong., 1st Session (House TFA Report), 28-29, fn. 4 (2019). The House TFA Report states that Appeals was established and has operated under the general
authority of the Secretary of the Treasury or her delegate (Secretary) provided by section 7805 of the Code to interpret the Code, and the authority of the Commissioner of Internal Revenue
(Commissioner) provided by section 7803 to, among other things, “administer, manage, conduct, direct, and supervise the execution and application of the internal revenue laws or related
statutes and tax conventions to which the United States is a party,” and by section 7804 to, among other things, “employ such number of persons as the Commissioner deems proper for the
administration and enforcement of the internal revenue laws, and the Commissioner shall issue all necessary directions, instructions, orders, and rules applicable to such person.” Sections
7803(a)(2)(A) and 7804(a).

September 26, 2022 242 Bulletin No. 2022–39
integrity and efficiency of the Service.”
See IRM 8.1.1.1(1) (10-01-2016) (regard-
ing accomplishing the Appeals mission).
On July 1, 2019, the President signed
into law the Taxpayer First Act of 2019
(TFA), Public Law 116-25 (133 Stat. 981
(2019)). Among other things, the TFA
added new section 7803(e) to the Code.
New section 7803(e)(1) establishes the
IRS Independent Office of Appeals “to
codify the role of the independent admin-
istrative appeals function within the IRS.”
See House TFA Report, at 29. New sec-
tion 7803(e)(2) provides rules regarding
the appointment, duties, qualifications,
and compensation of the Chief of Appeals
who is to supervise and direct Appeals,
including that the Chief of Appeals is
appointed by and reports directly to
the Commissioner. In connection with
expressly setting forth the role of Appeals,
the TFA codified in new section 7803(e)
(3) the Appeals Mission Statement, with
the additional duty of resolving Federal
tax controversies on a basis that “pro-
motes a consistent application and inter-
pretation of, and voluntary compliance
with, the Federal tax laws.” See section
7803(e)(3)(B).
To meet Appeals’ mission, new sec-
tion 7803(e)(6)(A) provides that all IRS
employees working within Appeals are
to report to the Chief of Appeals. In addi-
tion, new section 7803(e)(6)(B) provides
the Chief of Appeals with the authority to
obtain legal assistance and advice from the
staff of the IRS Office of the Chief Coun-
sel (Chief Counsel) with regard to cases
pending at Appeals, which, to the extent
practicable, is to be provided by Chief
Counsel staff who were not involved
in advising the IRS employees directly
working on the case prior to its referral to
Appeals or in preparation of the case for
litigation. See House TFA Report, at 30.
The remainder of this Background
describes new sections 7803(e)(4) and
7803(e)(5), which are the primary focus
of the guidance provided in the proposed
regulations.
II. General Availability of the Appeals
Resolution Process
Section 7803(e)(4) of the Code, also
enacted by the TFA, provides that “the
resolution process [to resolve Federal tax
controversies] shall be generally avail-
able to all taxpayers.” For example, a tax-
payer who does not resolve the taxpayer’s
deficiency case with the IRS examiner
assigned to the case usually will receive a
30-day letter of a proposed determination
of tax liability that provides the position
of the IRS regarding the taxpayer’s Fed-
eral tax controversy. Generally, receipt of
the 30-day letter triggers an opportunity
for the taxpayer to request that Appeals
consider the taxpayer’s Federal tax
controversy.
As an alternative to having a court
decide Federal tax controversies without
litigation (or without further litigation
if the taxpayer has petitioned the United
States Tax Court (Tax Court)) and to facil-
itate Appeals’ function, Appeals uses one
or more dispute resolution methods to set-
tle Federal tax controversies. The Appeals
dispute resolution methods may include,
but are not limited to, a conference, corre-
spondence, and certain Appeals-provided
alternative dispute resolution services.
These alternative dispute resolution ser-
vices include fast-track settlement, fast-
track mediation, post-Appeals mediation,
Rapid Appeals Process, or early referral of
issues to Appeals.
The most frequent type of Federal tax
controversy involves a taxpayer disput-
ing a liability that is subject to deficiency
procedures under section 6212. In many
of these cases the taxpayer requests an
Appeals conference after the IRS has
made a determination of the taxpayer’s
liability and sent a preliminary (30-day)
letter to the taxpayer. In another group of
cases, the taxpayer has received a notice
of deficiency and filed a petition in the Tax
Court, after which the docketed case may
be forwarded to Appeals for consideration.
III. Limitation on Access to the Appeals
Resolution Process
As discussed in more detail in section
I.C. of the Explanation of Provisions, the
TFA did not require that the IRS grant all
requests for Appeals to consider any dis-
pute regarding a Federal tax controversy.
The Secretary of the Treasury or her del-
egate (Secretary) may provide exceptions
that allow the IRS to deny requests for
Appeals consideration of a Federal tax
controversy. In general, it has been the
historic practice of the Treasury Depart-
ment and the IRS to publish limitations on
the access to the Appeals resolution pro-
cess in IRS guidance such as regulations,
revenues procedures, and the IRM.
Although the TFA does not prohibit the
IRS from denying requests for Appeals
consideration for Federal tax controver-
sies, the TFA did add new section 7803(e)
(5) to the Code. After the enactment of
the TFA, the IRS must follow the special
notification procedures set forth in section
7803(e)(5) if a taxpayer who is in receipt
of a notice of deficiency requests to have
the Federal tax controversy referred to
Appeals and that request is denied. In
such a case, the IRS is required to provide
the taxpayer a written notice containing a
detailed description of the facts involved
in the controversy, the basis for the deci-
sion to deny the request, a detailed expla-
nation of how the basis for the decision
applies to such facts, and the procedures
for protesting the decision to deny the
request.
Explanation of Provisions
Proposed §§301.7803-2 and
301.7803-3 would implement section
7803(e) as explained in sections I and II
of this Explanation of Provisions, respec-
tively. Proposed §301.7803-2 implements
section 7803(e)(3) and (4) regarding the
resolution of Federal tax controversies by
Appeals. Proposed §301.7803-3 imple-
ments the special notice procedures of
section 7803(e)(5) to be followed by the
IRS upon denying taxpayer requests to
have Federal tax controversies referred to
Appeals for those taxpayers in receipt of a
notice of deficiency.
I. Appeals Resolution of Federal Tax
Controversies Without Litigation
A. Proposed §301.7803-2(a): Functions
of Independent Office of Appeals
As previously mentioned in the Back-
ground, in addition to establishing the
IRS Independent Office of Appeals in
section 7803(e)(1) to codify the role of
the independent administrative appeals
function and providing rules in section
7803(e)(2) regarding the supervision of
Appeals by the Chief of Appeals, the TFA

Bulletin No. 2022–39 243 September 26, 2022
codified in section 7803(e)(3) the Appeals
Mission Statement to resolve Federal tax
controversies with respect to taxpayers
without litigation.
2
Section 7803(e)(3)
provides that “[i]t shall be the function of
[Appeals] to resolve Federal tax contro-
versies without litigation on a basis which
(A) is fair and impartial to both the Gov-
ernment and the taxpayer, (B) promotes a
consistent application and interpretation
of, and voluntary compliance with, the
Federal tax laws, and (C) enhances pub-
lic confidence in the integrity and effi-
ciency of the [IRS].” These functions are
consistent with the historical functions
of Appeals prior to the enactment of the
TFA. As further indication that Congress
intended Appeals to generally maintain its
functions as they existed at the time the
TFA was enacted, the legislative history
provides that “Independent Appeals is
intended to perform functions similar to
those of the current Appeals.” See House
TFA Report, at 30. Accordingly, proposed
§301.7803-2(a), consistent with the statu-
tory text of section 7803(e)(3), provides
that Appeals resolves Federal tax contro-
versies without litigation on a basis that is
fair and impartial to the Government and
the taxpayer, promotes a consistent appli-
cation and interpretation of, and voluntary
compliance with, the Federal tax laws,
and enhances public confidence in the
integrity and efficiency of the IRS.
B. Proposed §301.7803-2(b):
Consideration of Federal Tax
Controversies by Appeals Generally
Available to All Taxpayers
Section 7803(e)(4) provides that the
Appeals resolution process described in
section 7803(e)(3) to resolve Federal tax
controversies without litigation “shall be
generally available to all taxpayers.” Pro-
posed §301.7803-2(b)(1), consistent with
the statutory text of section 7803(e)(4),
provides that the Appeals resolution pro-
cess is generally available to all taxpayers
to resolve Federal tax controversies.
The statute does not define the term
“Federal tax controversy.” Consistent
with the excerpts of the House TFA
Report described in the Background, pro-
posed §301.7803-2(b)(2) defines a “Fed-
eral tax controversy” as a dispute over
an administrative determination with
respect to a particular taxpayer made by
the IRS in administering or enforcing the
internal revenue laws, related Federal tax
statutes, and tax conventions to which
the United States is a party (collectively
referred to as internal revenue laws)
that arises out of the examination, col-
lection, or execution of other activities
concerning the amount or legality of the
taxpayer’s income, employment, excise,
or estate and gift tax liability; a penalty;
or an addition to tax under the internal
revenue laws. Under these proposed reg-
ulations, Appeals generally continues to
resolve a Federal tax controversy based
on the likelihood the taxpayer’s or the
IRS’s position with respect to the admin-
istrative determination made by the IRS
would prevail if the Federal tax contro-
versy was resolved by a court, as it did
before enactment of the TFA. In doing
so, Appeals continues to independently
consider disputed administrative deter-
minations made by the IRS in adminis-
tering or enforcing the internal revenue
laws with respect to a particular taxpayer
arising from the IRS’s examination, col-
lection, or execution of other activities
with respect to the particular taxpayer
and attempts to resolve the disputes with-
out litigation.
Consistent with the practice of Appeals
prior to the enactment of the TFA, the
Appeals resolution process is also avail-
able to persons who seek review of certain
administrative determinations made by
the IRS with respect to such persons that
do not directly involve their tax liabilities,
penalties, or additions to tax. Even though
such matters are not within the definition
of a Federal tax controversy in proposed
§301.7803-2(b)(2), proposed §301.7803-
2(b)(3) provides that disputes over admin-
istrative determinations made by the IRS
with respect to a particular person regard-
ing the listed topics are treated as a Federal
tax controversy. Appeals consideration of
such administrative determinations made
by the IRS is consistent with the histor-
ical functions of Appeals prior to the
enactment of the TFA, which Congress
intended to codify in section 7803(e)(3).
Specifically, the legislative history states:
“Independent Appeals is intended to per-
form functions similar to those of the cur-
rent Appeals.” See House TFA Report, at
30. For example, Appeals considers deter-
minations involving initial or continuing
tax exemption or foundation classification
of particular organizations, and initial
or continuing qualification of particular
employee plans, unless the issue under-
lying that determination is addressed by
Chief Counsel through a technical advice
issued by the office of an Associate Chief
Counsel (Associate Office). See proposed
§301.7803-2(b)(3)(iv) and (v); sec. 12.01
of Rev. Proc. 2022-2 (2022-1 I.R.B. 120)
(relating to use of technical advice);
§601.106(a)(1)(v)(a) of the Statement
of Procedural Rules (26 CFR part 601)
(same). In addition to the topics listed in
proposed §301.7803-2(b)(3)(i) through
(vii), proposed §301.7803-2(b)(3)(viii)
includes any other topic that the IRS
determines can be considered by Appeals.
This proposed rule, therefore, allows
Appeals to consider administrative deter-
minations made by the IRS with respect to
a particular person that are not Federal tax
controversies within the meaning of pro-
posed §301.7803-2(b)(2) but that Appeals
has historically considered and attempted
to resolve without litigation. Based on
its limited resources, the only disputes
that are not Federal tax controversies
as defined in proposed §301.7803-2(b)
(2) that Appeals has historically consid-
ered and continues to consider are those
categories of disputes with respect to a
particular person specified in proposed
§301.7803-2(b)(3)(i) through (vii). This
proposed rule also allows the addition of
new categories of administrative determi-
nations made by the IRS with respect to
a particular person that in the future may
become evident as appropriate to fulfill
the function of Appeals. See proposed
§301.7803-2(b)(3)(viii).
2
The TFA’s codification of the Appeals Mission Statement was generally consistent with Appeals Mission described in the Internal Revenue Manual at the time the TFA was enacted. IRM
8.1.1.1(1) (10-1-2016).

September 26, 2022 244 Bulletin No. 2022–39
C. Proposed §301.7803-2(c): Exceptions
to Consideration by Appeals
When the TFA was enacted, the Appeals
resolution process was subject to excep-
tions and requirements that could limit use
of that process. Congress recognized these
limits, and the statute and legislative his-
tory demonstrate that the IRS retains dis-
cretion to have appropriate limits following
the statutory codification of the role of an
independent appeals function within the
IRS (that is, Appeals). As mentioned previ-
ously, section 7803(e)(4) provides that “[t]
he [Appeals] resolution process . . . shall
be generally available to all taxpayers.”
Section 7803(e)(4) (emphasis added). In
choosing to use the words “generally avail-
able” in section 7803(e)(4), Congress made
clear that the statute does not impose an
unqualified requirement that the Appeals
resolution process become a forum for any
dispute with the IRS.
In addition to the statutory language of
section 7803(e)(4), the House TFA Report
also reflects the intention of Congress
that the Treasury Department and the IRS
retain after the enactment of the TFA their
historical discretion to determine whether
the resolution of particular types of dis-
putes is appropriate for the Appeals reso-
lution process, or the discretion of the IRS
to determine whether a particular Federal
tax controversy is appropriate for the
Appeals resolution process:
Independent Appeals is intended to
perform functions similar to those
of the current Appeals. Independent
Appeals is to resolve tax controversies
and review administrative decisions of
the IRS in a fair and impartial manner,
for the purposes of enhancing public
confidence, promoting voluntary com-
pliance, and ensuring consistent appli-
cation and interpretation of Federal tax
laws. Resolution of tax controversies in
this manner is generally available to all
taxpayers, subject to reasonable excep-
tions that the Secretary may provide.
Thus, cases of a type that are referred
to Appeals under present law remain
eligible for referral to Independent
Appeals.
See House TFA Report, at 30-31 (empha-
sis added).
The House TFA Report also explains
that Congress knew the existing backdrop
of Appeals exceptions when it passed
the TFA: “The Committee is aware that
the Code does not currently require that
all taxpayers be provided an opportunity
to contest an administrative decision in
Appeals, although most taxpayers are
afforded that opportunity.” See House
TFA Report, at 29. The House TFA Report
noted some of the existing exceptions:
Exceptions occur, and include cases in
which inadequate time remains on the
limitations period for assessment and
collection or those in which the only
arguments raised by the taxpayer are
frivolous positions. Similarly, if a case
has reached a point at which litigation
is initiated, the availability of consider-
ation by Appeals may be limited. First,
authority to settle cases referred to the
Department of Justice for defense or
initiation of litigation rests solely with
that Department. Therefore, such cases
are not eligible for referral to Appeals.
The terms under which a case pending
in the [United States Tax Court] may
be referred to Appeals are described
in published guidance that centralizes
the decision to withhold a case from
Appeals to assure consistent standards
are applied.
See House TFA Report, at 29 (footnotes
omitted). The footnote to the last quoted
sentence cites the guidance in Rev. Proc.
2016-22 and §601.106 of the Statement of
Procedural Rules (26 CFR part 601) that
sets out some of these exceptions, stating:
“Exceptions to the general rule in favor of
requiring Appeals consideration include
cases that are withheld in the interests of
sound tax administration, among other rea-
sons.” See House TFA Report, at 29, fn. 8.
Proposed §301.7803-2(c) sets forth the
exceptions to consideration of a Federal tax
controversy by Appeals. These exceptions,
which are listed in proposed §301.7803-
2(c)(1) through (24), generally predate the
enactment of the TFA. The proposed excep-
tions to consideration by Appeals involve
Federal tax controversies, or issues arising
in these controversies, that are excepted
from consideration by Appeals and mat-
ters or issues that are otherwise ineligible
for consideration by Appeals because they
are not Federal tax controversies as defined
in proposed §301.7803-2(b)(2) nor treated
as Federal tax controversies in proposed
§301.7803-2(b)(3). To the extent that a
matter or issue not eligible for consider-
ation by Appeals is present in a case that
otherwise is eligible for consideration by
Appeals, the ineligible matter or issue will
not be considered by Appeals in the resolu-
tion of the case.
The Treasury Department and the IRS
request comments on the scope and ratio-
nale for the exceptions described in pro-
posed §301.7803-2(c)(1) through (24). To
the extent any of the proposed exceptions
may differ from prior Appeals practice,
comments are requested on the effects of
such differences and whether the objec-
tives of such exceptions could be accom-
plished by alternative means while still
allowing Appeals to function in accor-
dance with section 7803(e)(3). Comments
are also requested on whether any addi-
tional exceptions to Appeals consideration
are warranted.
1. Frivolous Positions
Proposed §301.7803-2(c)(1) provides
that Appeals consideration is not available
for an administrative determination made
by the IRS with respect to a particular tax-
payer in which the IRS rejects a frivolous
position, which includes any case solely
involving the failure or refusal of the tax-
payer to comply with the tax laws because
of frivolous moral, religious, political,
constitutional, conscientious, or similar
grounds. A frivolous position includes a
position the IRS has identified as frivo-
lous for purposes of section 6702(c) of the
Code (regarding listing of frivolous posi-
tions). A list of positions that the IRS has
determined to be frivolous under section
6702(c) can be found in Notice 2010-33
(2010-17 I.R.B. 609 (April 26, 2010)).
Proposed §301.7803-2(c)(1) codifies the
pre-TFA practice of the IRS of denying
the request of a taxpayer for Appeals res-
olution of frivolous arguments, including
cases based solely on frivolous moral,
religious, political, constitutional, consci-
entious, or similar grounds.
This approach is also consistent with
the restriction in section 7803(e)(5)(D),
also added by the TFA, that the notice and
protest procedures under section 7803(e)

Bulletin No. 2022–39 245 September 26, 2022
(5) do not apply to an Appeals referral
request if the issue is frivolous within
the meaning of section 6702(c). Appeals
consideration of frivolous positions would
facilitate the abuse of the tax system by
allocating IRS and Appeals resources to
a secondary review of positions that have
already been designated as frivolous.
Similar existing restrictions precluding
the consideration of frivolous positions by
Appeals can be found in §601.106(b) of the
Statement of Procedural Rules (26 CFR
part 601) (regarding appeal procedures
not extending to cases involving solely
the failure or refusal to comply with tax
laws because of frivolous moral, religious,
political, constitutional, conscientious, or
similar grounds), IRM 5.14.3.3(1) (10-20-
2020) (relating to installment agreement
requests made to delay collection action),
and IRM 8.22.5.5.3 (11-08-2013) (relat-
ing to frivolous issues).
2. Penalties Related to Frivolous
Positions and False Information
Similarly, proposed §301.7803-2(c)
(2) provides that Appeals consideration
generally is not available regarding a
penalty assessed by the IRS with respect
to a particular taxpayer for asserting
a frivolous position, making a frivo-
lous submission, or for providing false
information. Examples of such penalties
include sections 6702 relating to friv-
olous tax submissions and 6682 relat-
ing to false information with respect
to withholding. See IRM 8.11.8.2(1),
(3) (10-28-2013) (relating to a section
6702 penalty for frivolous tax submis-
sions); IRM 8.22.8.10.4(1) (08-26-2020)
(relating to a frivolous tax submission
penalty under section 6702 and a false
Form W-2, “Wage and Tax Statement,”
penalty under section 6682). These pen-
alties are immediately assessable. The
IRS notifies the taxpayer of the penalty
assessment and makes a demand for pay-
ment. See sections 6703(b), 6671(a), and
6682(c) (relating to penalty assessment).
A taxpayer seeking judicial review must
first pay the entire penalty and then file
a claim for refund with the IRS within
two years of the date of payment. These
penalties are designed to deter frivolous
behavior or improper conduct by a tax-
payer. If Appeals does not consider the
merits of the taxpayer’s frivolous posi-
tion, it follows that Appeals should not
consider the IRS’s assessment of the pen-
alty with respect to the taxpayer as well.
Similarly, under proposed §301.7803-
2(c)(2) Appeals consideration is not
available regarding the IRS’s assessment
of a penalty with respect to a particular
taxpayer who submits false information.
Appeals consideration of an adminis-
trative determination made by the IRS
to impose a penalty that stems from the
particular taxpayer’s improper conduct
of submitting false information would
be inconsistent with the purpose of the
penalty, which is designed to disincen-
tivize the taxpayer from engaging in this
improper conduct and to encourage volun-
tary compliance.
Although penalties assessed by the
IRS under sections 6702 and 6682 with
respect to particular taxpayer generally
are excepted from Appeals consideration,
proposed §301.7803-2(c)(2) recognizes
that Appeals may obtain verification
that the assessment of the penalties with
respect to a particular taxpayer complied
with sections 6203 (relating to method
of assessment) and 6751(b) (relating to
approval of assessment) of the Code in
a collection due process (CDP) hearing.
See section 6330(c)(1), section 6330(c)
(4)(B), and IRM 8.22.8.10.4(1) and (11)
(relating to Appeals review of certain
limited issues in a CDP action). Appeals
also may consider a non-frivolous chal-
lenge to an administrative decision made
by the IRS in assessing a penalty under
section 6702 or section 6682 with respect
to a particular taxpayer in a CDP hear-
ing. An example of such a non-frivolous
argument that Appeals could consider
is the argument that a section 6702 pen-
alty was erroneously assessed by the IRS
because the return the taxpayer filed does
not fall within section 6702. For instance,
if a taxpayer properly reported the tax-
payer’s income tax liability but included
a statement objecting to pay the amount
of reported liability that would otherwise
go to the military and as a result the tax-
payer is assessed a section 6702 penalty,
Appeals could consider the taxpayer’s
non-frivolous argument that the IRS erro-
neously assessed the penalty because the
return filed does not fall within section
6702.
3. Whistleblower Awards
Proposed §301.7803-2(c)(3) provides
that Appeals consideration is not avail-
able for any administrative determination
made by the IRS under section 7623 relat-
ing to awards to whistleblowers. The IRS
Whistleblower Office provides awards of
up to 30 percent of the amount recovered
in tax enforcement actions to individu-
als who provide credible evidence of tax
fraud to the IRS. A whistleblower files a
claim providing information of alleged
tax fraud involving a taxpayer. The IRS
Whistleblower Office notifies the whis-
tleblower that it has received the claim,
that it will use the information to deter-
mine whether to pursue an investigation,
and that it will inform the whistleblower
as to whether the information meets the
criteria for paying an award. If the IRS
Whistleblower Office subsequently eval-
uates the whistleblower’s claim and deter-
mines that it does not meet the criteria for
an award, Appeals consideration is not
available to the particular whistleblower
for the administrative determination made
by the IRS under section 7623. Proposed
§301.7803-2(b)(2) defines a Federal tax
controversy as a dispute over an admin-
istrative determination with respect to a
particular taxpayer made by the IRS in
administering or enforcing the internal
revenue laws, related Federal tax statutes,
and tax conventions to which the United
States is a party (collectively referred to
as internal revenue laws). An adminis-
trative determination made by the IRS is
only with respect to a particular taxpayer
and arises out of the examination, col-
lection, or execution of other activities
concerning the amount or legality of the
taxpayer’s income, employment, excise,
or estate and gift tax liability; a penalty;
or an addition to tax under the internal
revenue laws. In a whistleblower case,
the whistleblower’s Federal tax liability is
not at issue and Appeals is not reviewing
a determination by the IRS in its exam-
ination, collection, or execution of other
activities with respect to the whistleblow-
er’s Federal tax liability. Consequently, a
whistleblower claim does not fall within
the definition of a Federal tax controversy,
and it is excepted from Appeals con-
sideration consistent with Appeals’ pre-
TFA procedures. See sec. 4 of Rev. Proc.

September 26, 2022 246 Bulletin No. 2022–39
2016-22 (2016-15 I.R.B. 577) (relating to
practices for the administrative appeals
process in Tax Court). It also is not treated
as a Federal tax controversy under pro-
posed §301.7803-2(b)(3), which identifies
certain matters with respect to a particular
person subject to Appeals review that do
not arise from the examination, collection,
or execution of other activities concern-
ing a taxpayer’s Federal tax liability or
directly involve the taxpayer’s Federal tax
liabilities, penalties, or additions to tax.
4. Administrative Determinations Made
by Other Agencies
Proposed §301.7803-2(c)(4) provides
that Appeals consideration is not avail-
able for an administrative determina-
tion issued by an agency other than the
IRS. An example is a determination by
the Alcohol and Tobacco Tax and Trade
Bureau (TTB) concerning an excise tax
administered by and within the jurisdic-
tion of TTB. Such taxes include an excise
tax imposed by Chapter 32 (relating to
firearms and ammunition); by Subtitle E
(relating to alcohol, tobacco, and certain
other excise taxes); or by Subchapter D
of Chapter 78 (relating to U.S. posses-
sions) of the Code, to the extent it relates
to Subtitle E. This exclusion relating to
the excise taxes administered by the TTB
is currently found in §601.106(a)(3) of
the Statement of Procedural Rules (26
CFR part 601). Proposed §301.7803-2(c)
(4) is consistent with the statute and the
definition of a Federal tax controversy in
§301.7803-2(b)(2) because the Appeals
resolution process is available only for
consideration of administrative deter-
minations made by the IRS with respect
to a particular taxpayer. Neither sec-
tion 7803(e) nor the House TFA Report
refers to any agency other than the IRS
or contemplates Appeals consideration
of a decision by any agency other than
the IRS. See House TFA Report, at 31.
Similarly, §301.7803-2(b)(2) defines a
Federal tax controversy as a dispute over
an administrative determination with
respect to a particular taxpayer made by
the IRS in administering or enforcing
the internal revenue laws, related Fed-
eral tax statutes, and tax conventions to
which the United States is a party (col-
lectively referred to as internal revenue
laws). An administrative determination
made by the IRS is only with respect to
a particular taxpayer and arises out of the
examination, collection, or execution of
other activities concerning the amount
or legality of the taxpayer’s income,
employment, excise, or estate and gift tax
liability; a penalty; or an addition to tax
under the internal revenue laws. Appeals
therefore will not consider an adminis-
trative determination of a tax that is not
administered by or within the jurisdiction
of the IRS.
5. Taxpayer Assistance Order
Proposed §301.7803-2(c)(5) provides
that Appeals consideration is not avail-
able for a decision made by the IRS not
to issue a Taxpayer Assistance Order
(TAO) under section 7811 of the Code
(relating to TAOs) with respect to a par-
ticular taxpayer if the taxpayer submits
a request for Taxpayer Advocate Service
assistance. This clarification in the pro-
posed rule is consistent with the general
definition of a Federal tax controversy in
proposed §301.7803-2(b)(2) because the
Office of the Taxpayer Advocate (com-
monly referred to as the Taxpayer Advo-
cate Service) is an independent part of the
IRS, and its decision not to issue a TAO
is a process separate and distinct from
an administrative determination made by
the IRS with respect to a particular tax-
payer that arises out of the examination,
collection, or execution of other activities
concerning the amount or legality of the
taxpayer’s income, employment, excise,
or estate and gift tax liability; a penalty; or
an addition to tax under the internal reve-
nue laws. .
6. Material to Be Deleted from a Written
Determination
Proposed §301.7803-2(c)(6) pro-
vides that Appeals consideration is not
available for any decision by the IRS
concerning material to be deleted from
the text of a written determination with
respect to a particular taxpayer pursuant
to section 6110 of the Code (relating to
public inspection of written determina-
tions) unless the written determination
is otherwise being reviewed by Appeals.
Appeals did not consider these types of
matters before the TFA was enacted, and
these proposed regulations continue this
exception. See sec. 4 of Rev. Proc. 2016-
22. Like whistleblower awards, disputes
under section 6110 do not involve the
type of controversy that Appeals has tra-
ditionally handled, that is, reviewing an
administrative determination made by
the IRS with respect to a particular tax-
payer that arises out of the examination,
collection, or execution of other activ-
ities concerning the amount or legality
of the taxpayer’s income, employment,
excise, or estate and gift tax liability; a
penalty; or an addition to tax under the
internal revenue laws. A section 6110
dispute does not involve the resolution
of a Federal tax controversy but rather
is a dispute limited to whether particular
information in a written determination to
be issued by the IRS to the taxpayer is
information that must be redacted before
the written determination is released to
the public as required by section 6110.
Proposed §301.7803-2(c)(6) permits a
disagreement concerning material to be
deleted under section 6110 from the text
of a written determination to be taken up
at an Appeals conference that is otherwise
scheduled regarding a taxpayer’s determi-
nation. If Appeals is already considering
the substantive content of the determina-
tion, minimal resources and time would be
required to also review the redactions. See
sec. 13.04 of Rev. Proc. 2022-5 (2022-1
I.R.B. 256) (relating to exempt organiza-
tion and private foundation status). This
review would not require the analysis of
an entirely new dispute by Appeals, which
would require significant resources.
7. Denials of Access Under the Privacy
Act
Similarly, proposed §301.7803-2(c)(7)
provides that Appeals consideration is not
available for any dispute regarding a deter-
mination of the IRS resulting in denial of
access under the Privacy Act (5 U.S.C.
552a(d)(1)) (relating to access to records)
to a particular person. Like a dispute
involving section 6110, a dispute involv-
ing the denial of access under the Privacy
Act does not involve the type of contro-
versy that Appeals has traditionally han-
dled. Rather than involving a controversy
regarding an administrative determination

Bulletin No. 2022–39 247 September 26, 2022
made by the IRS with respect to a partic-
ular taxpayer that arises out of the exam-
ination, collection, or execution of other
activities concerning the amount or legal-
ity of the taxpayer’s income, employment,
excise, or estate and gift tax liability; a
penalty; or an addition to tax under the
internal revenue laws, such a dispute
involves whether the Privacy Act prevents
disclosure of records. In addition, 5 U.S.C.
552a(d)(2) and (3) creates administrative
review rights for an agency’s refusal to
amend a record accessed under the Pri-
vacy Act, but there is no similar statutory
authority to obtain administrative review,
including by Appeals, of a denial of access
under the Privacy Act. Rather, 5 U.S.C.
552a(g) provides that a civil action may
be brought in certain cases.
8. Issues Settled by a Closing Agreement
Proposed §301.7803-2(c)(8) provides
that Appeals consideration is not available
for any issue that the IRS and a particular
taxpayer have resolved in an agreement
described in section 7121 of the Code
regarding closing agreements and for
any decision by the IRS to enter into or
not enter into such agreement. Proposed
§301.7803-2(c)(8) further provides that
Appeals may consider the question of
whether an item or items are covered by
a closing agreement, and how the item or
items are covered. Closing agreements are
binding on the IRS and the taxpayer in
accordance with section 7121. Under sec-
tion 7121(b), a closing agreement between
the IRS and a taxpayer is final unless
fraud, malfeasance, or misrepresenta-
tion of a material fact can be shown; the
case cannot be reopened as to the matters
agreed upon or the agreement modified
by any officer, employee, or agent of the
United States. Therefore, any issue that
is resolved by a closing agreement under
section 7121 is statutorily precluded from
being considered by Appeals.
9. The IRS Erroneously Returns or
Rejects an OIC
According to section 7122(f) of the
Code, if an OIC is not rejected within
24 months after submission, it shall be
deemed to be accepted. An offer under
section 7122 will not be deemed to be
accepted if it is rejected or returned as
nonprocessable or no longer processable
within the 24 months. See sec. 1.07 of
Notice 2006-68 (2006-31 I.R.B. 105 (July
31, 2006)) (relating to OICs). Proposed
§301.7803-2(c)(9) provides that Appeals
consideration is not available when the
IRS erroneously returns or rejects a tax-
payer’s OIC submitted under section 7122
as nonprocessable or no longer process-
able and the taxpayer requests Appeals
consideration on the basis that the OIC
should be deemed to be accepted under
section 7122(f). This exception includes,
for example, the claim that the IRS’s mis-
taken rejection or return was in bad faith.
Because the IRS returned or rejected the
offer without making a determination
regarding the OIC, there is no adminis-
trative determination made by the IRS for
Appeals to review.
10. Criminal Prosecution is Pending
Against Taxpayer
Proposed §301.7803-2(c)(10) provides
that Appeals consideration is not available
for a Federal tax controversy with respect
to a taxpayer while a criminal prosecution
or a recommendation for criminal pros-
ecution is pending against the taxpayer
for a tax-related offense other than with
the concurrence of Chief Counsel and
the Department of Justice, as applicable.
Appeals consideration therefore may be
temporarily unavailable, and it may come
later if the other requirements in proposed
§301.7803-2 are met. This proposed
exception to Appeals consideration avoids
any interference or even the appearance
of any interference with a criminal pros-
ecution or an investigation that has been
recommended for criminal prosecution.
A similar existing exception can be found
in §601.106(a)(2)(vi) of the Statement
of Procedural Rules (26 CFR part 601)
(relating to the exclusion of review while
a recommendation for criminal prosecu-
tion is pending).
11. Branded Prescription Drug Fee and
Health Insurance Providers Fee
Proposed §301.7803-2(c)(11) pro-
vides that consideration by Appeals is
not available for issues relating to the
allocation among different fee payers of
the branded prescription drug fee found
in section 9008 of the Patient Protection
and Affordable Care Act (PPACA), Pub-
lic Law 111-148 (124 Stat. 119 (2010)),
as amended by section 1404 of the Health
Care and Education Reconciliation Act
of 2010 (HCERA), Public Law 111-152
(124 Stat. 1029 (2010)), and the health
insurance providers fee found in section
9010 of PPACA, as amended by section
10905 of PPACA, and as further amended
by section 1406 of HCERA. The Further
Consolidated Appropriations Act, 2020,
Division N, Subtitle E, section 502, Pub-
lic Law 116-94 (133 Stat. 2534 (2019)),
repealed the section 9010 fee for calendar
years beginning after December 31, 2020
(fee years after the 2020 fee year). Thus,
Appeals will not consider issues involving
the branded prescription drug fee and the
section 9010 fee because these disputes
do not involve tax issues with respect to a
particular taxpayer, but issues concerning
how a statutory fee is allocated amongst
multiple fee payers.
Each allocated fee in sections 9008
and 9010 (when it was in effect) has a
built-in corrections process that allows
fee payers an opportunity to address
errors and other problems before the final
fee is determined. Allowing the regu-
lar Appeals process to be available with
respect to one fee payer would be incon-
sistent with the process of calculating the
allocated fees, under which adjusting one
fee payer’s fee affects the fees payable
by all other fee payers. Comparatively,
the built-in corrections process allows
for each fee payer’s liability to be deter-
mined in a relatively short time. Appeals
consideration therefore is not appropriate
given the nature of the allocated fee pro-
cess and the impracticality of, and lack of
time for, Appeals consideration. Further-
more, the regulations provide that all fee
determinations by the IRS are final. See
26 CFR §51.7(d) (relating to the finality
of the branded prescription drug fee cal-
culation process) and 26 CFR §57.6(c)
(relating to the finality of the health insur-
ance providers fee calculation process).
Proposed §301.7803-2(c)(11) promotes
efficient and fair tax administration and
enforcement of the internal revenue laws,
leading to the consistent resolution of
issues and conserving IRS and taxpayer
resources.

September 26, 2022 248 Bulletin No. 2022–39
12. IRS’s Automated Process of Certifying
a Seriously Delinquent Tax Debt
Proposed §301.7803-2(c)(12) pro-
vides that consideration by Appeals is not
available for the certification or issuance
of a notice of certification of a seriously
delinquent Federal tax debt of a particular
taxpayer to the Department of State (State
Department) under section 7345 of the
Code (relating to the revocation or denial
of a taxpayer’s passport in the case of seri-
ous tax delinquencies). The IRS relies on
automated systems to identify every elec-
tronic taxpayer record on an individual’s
account with an unpaid assessed tax lia-
bility that is not statutorily excepted from
the definition of seriously delinquent tax
debt or otherwise in a category excluded
from certification. Once all eligible unpaid
liabilities have been identified, the sys-
tems aggregate the amount of unpaid lia-
bilities. If the total is more than the stat-
utory threshold, the taxpayer is identified
as having a seriously delinquent tax debt,
and the relevant transaction code is posted
to the electronic taxpayer records. The
Commissioner of the IRS’s Small Busi-
ness/Self-Employed Division then cer-
tifies that the identified individuals each
have a seriously delinquent tax debt, and
the IRS sends a list of all certified indi-
viduals to the State Department. The tax-
payer receives Notice CP508C, “Notice of
certification of your seriously delinquent
Federal tax debt to the State Department,”
informing the taxpayer to contact the
IRS at the phone number in that notice
to request reversal of the certification if
the taxpayer believes the certification is
erroneous.
The sole remedy of a taxpayer who
believes that a certification is erroneous or
that the IRS incorrectly failed to reverse a
certification because the tax debt is either
fully satisfied or ceases to be a seriously
delinquent tax debt is to file a civil action
in court under section 7345(e). Although a
taxpayer can challenge the certification in
a Federal district court or the Tax Court,
the taxpayer cannot challenge the under-
lying liabilities because the amounts of
the liabilities that constitute a seriously
delinquent tax debt are not at issue in
the certification process. See Ruesch v.
Commissioner, 154 T.C. 289 (2020). In
a docketed case, Appeals consideration
is not appropriate given the automated
nature of the IRS’s process for identifying
and certifying individuals with seriously
delinquent tax debts and because the cer-
tification of a taxpayer will have been
verified by the assigned Counsel attorney
in answering the docketed case. Conse-
quently, there are no issues for Appeals to
consider. An existing exception similar to
this proposed rule can be found in Notice
2018-01 (2018-2 I.R.B. 299 (January 16,
2018)) (relating to revocation, limitation,
or denial of a passport in the case of cer-
tain tax delinquencies).
13. Issues Barred from Consideration in
CDP Cases
Proposed §301.7803-2(c)(13) provides
that consideration by Appeals is not avail-
able for any issue that is statutorily pro-
hibited from being considered during a
CDP hearing in accordance with section
6320 regarding notice and opportunity for
a hearing upon the filing of a notice of lien,
section 6330 regarding notice and oppor-
tunity for a hearing before levy, the corre-
sponding regulations, or any other admin-
istrative guidance related to CDP hearings.
For example, in a CDP case a taxpayer is
precluded from requesting relief under
section 66 relating to community property
and section 6015 relating to relief from
joint and several liability on a joint return
if the Commissioner has already made a
final determination as to spousal defenses
in a statutory notice of deficiency or final
determination letter. See §§301.6320-1(e)
(2), 301.6330-1(e)(2); §§301.6320-1(e)
(3) Q&A-E4, 301.6330-1(e)(3) Q&A-E4.
In this example, a taxpayer may request
relief, and receive a second final determi-
nation, only if one of the exceptions pro-
vided in §1.6015-5(c) (relating to effect
of a final administrative determination)
or IRM 25.15.17.7 (03-05-2019) (relating
to issuing second preliminary and final
determinations for the same relief request)
apply. In another example, if a taxpayer
received a prior CDP notice under section
6320 or 6330 for the same tax liability
and taxable period, the taxpayer has had
an opportunity to dispute the existence
and amount of that liability and may not
challenge it in a subsequent CDP hear-
ing, regardless of whether the taxpayer
requested a CDP hearing in response to
the prior notice. See §§301.6320-1(e)(3)
Q&A-E7, 301.6330-1(e)(3) Q&A-E7.
The Procedure and Administration Reg-
ulations (26 CFR part 301) provide that
a taxpayer whose CDP hearing request
is untimely is not entitled to a CDP hear-
ing under section 6320 or section 6330
but may receive an “equivalent hearing.”
See §§301.6320-1(i)(1), 301.6330-1(i)(1).
Proposed §301.7803-2(c)(13) also applies
to equivalent hearing requests.
14. Authority Over the Matter Rests with
Another Office
Proposed §301.7803-2(c)(14) provides
that consideration by Appeals is not avail-
able for any case, determination, matter,
decision, request, or issue with respect to a
particular taxpayer that Appeals lacks the
authority to settle. There is no reason for
Appeals to expend resources considering
a Federal tax controversy that it cannot
ultimately resolve.
Proposed §301.7803-2(c)(14)(i)
through (v) provides a non-exclusive list
of examples illustrating this rule. Appeals
does not have authority to resolve an issue
with respect to a particular taxpayer in
a docketed case after a referral has been
made to the Department of Justice. For
instance, Appeals lacks the authority to
settle a tax claim in a bankruptcy court
where the taxpayer has filed a petition
in the bankruptcy court and objected to
the Government’s proof of claim and
requested that the court determine tax lia-
bility. Section 7122(a) provides that set-
tlement authority resides with the Depart-
ment of Justice after a referral is made.
Appeals also lacks authority over deci-
sions that are delegated exclusively to
other offices within the IRS. For exam-
ple, Appeals cannot consider a competent
authority case under a United States tax
treaty that is within the exclusive authority
of the United States Competent Authority.
The term Competent Authority is defined
in U.S. tax treaties as the Secretary or her
delegate. The Secretary has delegated this
authority to the Commissioner, who has
redelegated it to the Commissioner of the
Large Business and International (LB&I)
Division of the IRS, the Deputy Commis-
sioner of LB&I, and specified officials
within LB&I with respect to particular
matters. See IRM 1.2.2.5.11 (06-09-2021)

Bulletin No. 2022–39 249 September 26, 2022
(Delegation Order 4-12 (Rev. 4)). The
United States Competent Authority has
exclusive authority over a competent
authority issue it accepts for consider-
ation or a competent authority resolution
that was previously accepted by the tax-
payer. Therefore, Appeals generally does
not have authority to review these matters.
See sec. 6.04(1) of Rev. Proc. 2015-40
(2015-35 I.R.B. 236) (regarding proce-
dures for requesting competent authority
assistance under U.S. tax treaties).
In another example, Appeals lacks
authority over the discretionary decision
of the Commissioner or the Commission-
er’s delegate whether to rescind a section
6707A penalty for a non-listed reportable
transaction. See section 6707A(d) (relat-
ing to the Commissioner’s authority to
rescind the penalty); §301.6707A-1(e)
(relating to rescission authority); and IRM
8.11.7.6.8(2) (10-29-2013) (relating to
rescission requests).
Similarly, Appeals lacks authority over
an issue when a requesting spouse seeks
relief under section 6015 relating to relief
from joint and several liability on a joint
return and a nonrequesting spouse is a
party to a docketed case in the Tax Court
and does not agree to granting full or par-
tial relief under section 6015. See Chief
Counsel Notice 2013-011 (June 7, 2013)
(relating to litigating cases that involve
claims for Innocent Spouse relief under
section 6015). As explained in Chief
Counsel Notice 2013-011, the IRS, which
includes Appeals, is legally prohibited
from providing section 6015 relief or
settling with the requesting spouse if the
non-requesting spouse is a joint petitioner
or an intervenor in a Tax Court case and is
not a party to the settlement. See Corson
v. Commissioner, 114 T.C. 354 (2000). In
that case, authority to resolve the issues
rests solely with the Tax Court.
Appeals also lacks authority over a
criminal restitution-based assessment
under section 6201(a)(4) of the Code
relating to certain orders of criminal res-
titution and restriction on challenge of
assessment.
15. Certain Technical Advice Memoranda
Proposed §301.7803-2(c)(15) provides
that Appeals consideration is not available
for certain adverse actions related to the
initial or continuing recognition of tax-ex-
empt status, an entity’s classification as a
foundation, the initial or continuing deter-
mination of employee plan qualification,
or a determination involving an obliga-
tion and the issuer of an obligation under
section 103. The proposed exception
regarding the recognition of tax-exempt
status, foundation classification, plan
qualification determination, or determina-
tion involving an obligation and the issuer
of an obligation under section 103 applies
only if the adverse action is based upon
a technical advice memorandum (TAM)
issued by an Associate Office before an
appeal is requested. Appeals may request
that the Associate Office reconsider the
TAM. See sec. of 12.01 Rev. Proc. 2022-2
regarding Appeals submitting a proposed
disposition of an issue contrary to a TAM
as a request for a new TAM.
A TAM is advice furnished by an
Associate Office in a memorandum that
responds to any request for assistance on
any technical or procedural legal ques-
tion involving the interpretation and
proper application of any legal authority
that is submitted in accordance with an
applicable revenue procedure. See Rev.
Proc. 2022-2 (defining the term “Asso-
ciate office” and explaining when and
how an Associate Office provides techni-
cal advice, conveyed in technical advice
memoranda). Chief Counsel has juris-
diction over legal questions. See section
7803(b)(2). If a TAM is furnished con-
cerning an organization’s exempt status
or foundation classification, or concerning
an employee plan’s status or qualification,
Chief Counsel’s decision with respect to
those issues is the final position of the IRS
and therefore excepted from Appeals con-
sideration. See §601.106(a)(1)(v)(a); IRM
8.1.1.2.1(1)(c.) (02-10-2012) (relating to
exceptions to Appeals authority). Accord-
ingly, an IRS field office must process the
taxpayer’s case in accordance with the
conclusions in the TAM. See sec. 12.01
of Rev. Proc. 2022-2. Similarly, if a TAM
provides conclusions involving an obliga-
tion and the issuer of the obligation under
section 103, the field office must apply the
conclusions to the issuer and any holder
of the obligation unless a new TAM is
issued on behalf of the holder for the
same issue addressed in the initial TAM.
See sec. 12.01 of Rev. Proc. 2022-2. As in
the guidance referenced in this paragraph,
proposed §301.7803-2(c)(15) provides
that when these issues and determinations
are the subject of a TAM from an Associ-
ate Office, they are excepted from Appeals
consideration because Chief Counsel has
exclusive authority to resolve these issues.
16. Technical Advice from an Associate
Office in a Docketed Case
For the same reasons as explained in
section C.15. of this Explanation of Pro-
visions, proposed §301.7803-2(c)(16)
provides that Appeals consideration is
not available for any case docketed in
the Tax Court if the notice of deficiency,
notice of liability, or final adverse deter-
mination letter is based upon an Associ-
ate Office TAM in that case involving an
adverse action described in §301.7803-
2(c)(15). Like the exception in proposed
§301.7803-2(c)(15), the exception in pro-
posed §301.7803-2(c)(16) relates to the
initial or continuing recognition of tax-ex-
empt status, an entity’s classification as a
foundation, the initial or continuing deter-
mination of employee plan qualification,
or a determination involving an obligation
and the issuer of an obligation under sec-
tion 103. When these issues and deter-
minations are the subject of a TAM from
an Associate Office, they are final and
excepted from Appeals consideration. See
§601.106(a)(2)(iii) (relating to an excep-
tion if a notice of deficiency, notice of lia-
bility, or final adverse determination letter
is based upon specified ruling or technical
advice); sec. 12.01 of Rev. Proc. 2022-2.
17. Letter Rulings Issued by an Associate
Office
Proposed §301.7803-2(c)(17) provides
that Appeals consideration is not avail-
able for a decision by an Associate Office
whether to issue a letter ruling or the con-
tent of a letter ruling. A taxpayer requests
a letter ruling by submitting a request that
meets the requirements of the revenue
procedure that describes the letter ruling
process, which is updated annually. The
most recent update is Rev. Proc. 2022-1.
As explained in section 2.01 of Rev.
Proc. 2022-1, a letter ruling is a written
determination issued to a taxpayer by
an Associate Office in response to the

September 26, 2022 250 Bulletin No. 2022–39
taxpayer’s inquiry, filed prior to the filing
of returns or reports that are required by
the tax laws, about its status for tax pur-
poses or the tax effects of its acts or trans-
actions. A letter ruling interprets the tax
laws and applies them to the taxpayer’s
specific set of facts. An Associate Office
issues a letter ruling when appropriate and
in the interest of sound tax administration.
A voluntary request for a letter ruling is
not an administrative determination that
is part of the IRS’s compliance function.
The taxpayer is not required to file a return
consistent with the letter ruling. The letter
ruling program is not designed to present a
position of the IRS for Appeals to consider.
The program is designed instead to pro-
vide taxpayers with information regarding
whether the IRS will accept a position
to be taken on the taxpayer’s return. An
exception similar to the exception in pro-
posed §301.7803-2(c)(17) already exists
in section 10.02 of Rev. Proc. 2022-1.
However, proposed §301.7803-2(c)
(17) provides that the subject of the let-
ter ruling may be considered by Appeals
if all other requirements in proposed
§301.7803-2 are met. For example,
assume that a taxpayer submits a letter rul-
ing request pursuant to Rev. Proc. 2022-1
and an Associate Office issues a letter rul-
ing adverse to the taxpayer’s request. If
the taxpayer files a tax return contrary to
the adverse letter ruling and a Federal tax
controversy arises that involves the sub-
ject of the adverse letter ruling, Appeals
could consider the subject of the letter rul-
ing in the dispute if all other requirements
in proposed §301.7803-2 are met.
18. Challenges Alleging that a Statute is
Unconstitutional
Proposed §301.7803-2(c)(18) provides
that Appeals consideration is not avail-
able for any issue based on a taxpayer’s
argument that a statute violates the United
States Constitution unless there is an unre-
viewable decision from a Federal court
holding that the cited statute is unconstitu-
tional. An argument that a statute violates
the United States Constitution includes an
argument that a statute is unconstitutional
on its face or as applied to a specific per-
son. For purposes of the proposed regula-
tions, an unreviewable decision is a deci-
sion that can no longer be appealed to any
Federal court because all appeals in a case
have been exhausted or the time to appeal
has expired and no appeal was filed, such
as a final determination under section
7481 of the Code. Once there is an unre-
viewable decision, no further action can be
taken in the case by any court. In fulfilling
its function of considering hazards of lit-
igation based upon the possibility that an
administrative determination made by the
IRS with respect to a particular taxpayer
would be reversed in a court proceeding,
Appeals may consider such an unreview-
able decision. Proposed §301.7803-2(c)
(18) further provides that this exception
does not preclude Appeals from consid-
ering a Federal tax controversy based on
arguments other than the constitutionality
of the statute, such as whether the statute
applies to the taxpayer’s facts and circum-
stances, and settling the Federal tax con-
troversy weighing the likelihood a court
would agree with the position of the tax-
payer or the Government.
Appeals is not an appropriate forum to
consider constitutional challenges to Fed-
eral tax statutes. Whether the actions taken
to enact a Federal tax statute comport with
the Constitution is initially determined by
Congress and the President. Questions
regarding the constitutionality of a duly
enacted statute are determinations of gen-
eral applicability resolved at the highest
levels of the Treasury Department and
the IRS, in consultation with the Office of
Legal Counsel of the Department of Jus-
tice. Such a determination is not appropri-
ate for Appeals to consider.
In addition, one of the statutory duties
of Appeals is to resolve cases on a basis
that “promotes a consistent application
and interpretation of, and voluntary com-
pliance with, the Federal tax laws.” See
section 7803(e)(3)(B). A Federal court’s
unreviewable decision is a determination
by the judicial branch on the merits of the
constitutional challenge that may reject
the determinations made by Congress, the
President, the Treasury Department, or the
IRS with regard to the constitutionality of
a Federal tax statute, thereby providing
a basis for Appeals to consider constitu-
tional challenges to the Federal tax statute
that is the subject of the taxpayer’s dis-
pute. Unlike a Federal court’s unreview-
able decision, which is publicly available
to all taxpayers, an Appeals resolution
relates only to a single Federal tax contro-
versy and, by law, the outcome generally
can only be communicated by the IRS to
the taxpayer. Any constitutional determi-
nation with respect to a Federal tax law
should be communicated and applied con-
sistently to all taxpayers. Accordingly, the
Treasury Department and the IRS believe
that it would be inappropriate for Appeals
to consider challenges to the constitution-
ality of a statute in the absence of an unre-
viewable decision from a Federal court
holding the statute to be unconstitutional.
The Treasury Department and the
IRS request comments on this proposed
exception.
19. Challenges Alleging that a Treasury
Regulation is Invalid
Proposed §301.7803-2(c)(19) provides
that Appeals consideration is not available
for any issue based on a taxpayer’s argu-
ment that a Treasury regulation is invalid
unless there is an unreviewable decision
from a Federal court invalidating the reg-
ulation as a whole or the provision in the
regulation that the taxpayer is challenging.
As explained previously, an unreviewable
decision is a decision that can no longer
be appealed to any Federal court. As with
the exception for constitutional chal-
lenges, this exception does not preclude
Appeals from considering a Federal tax
controversy based on other arguments.
For example, Appeals may consider
whether the Treasury regulation applies
to a taxpayer’s facts and circumstances
and resolve the Federal tax controversy
by weighing the likelihood a court would
agree with the position of the taxpayer or
the Government.
Questions regarding the validity of a
Treasury regulation are determinations of
general applicability resolved at the high-
est levels of the Treasury Department and
the IRS. Sections 7801 through 7805 of
the Code vest with the Secretary, the Com-
missioner, and other Treasury Depart-
ment officials the authority to administer
the internal revenue laws, including the
power to promulgate regulations. Pursu-
ant to these provisions of the Code and
31 U.S.C. 321(b), the delegated authority
to prescribe Treasury regulations is held
by the Assistant Secretary of the Trea-
sury for Tax Policy (Assistant Secretary

Bulletin No. 2022–39 251 September 26, 2022
for Tax Policy) and the General Counsel
for the Department of the Treasury (Trea-
sury Department General Counsel). See
Treasury Directive 18-02 (9-4-1986) and
Treasury Order 107-03 (01-30-1978). The
process of reviewing and approving Trea-
sury regulations before they are published
is extensive and involves senior officials
in numerous offices within the Treasury
Department, the IRS, and sometimes
other Federal agencies. See IRM Part 32.1
(Chief Counsel Regulation Handbook) for
a description of the process for drafting
regulations. Before a regulation is pub-
lished in the Federal Register it must be
approved by the Associate Chief Counsel
responsible for drafting the regulation; a
Deputy Chief Counsel; the Deputy Com-
missioner for Services and Enforcement;
multiple individuals in the Treasury
Department’s Office of Tax Policy, includ-
ing the Assistant Secretary for Tax Policy;
the Treasury Department’s Office of Gen-
eral Counsel; the Office of the Executive
Secretary; and, in some cases, the Secre-
tary of the Treasury.
In light of the extensive review and
approval procedures at senior levels in
both the Treasury Department and the
IRS, we believe that it would be inappro-
priate for Appeals to consider arguments
regarding the validity of Treasury regu-
lations in the absence of an unreviewable
Federal judicial decision holding the reg-
ulation invalid. In the absence of an unre-
viewable Federal judicial decision hold-
ing a Treasury regulation invalid, Appeals
consideration of such arguments would
also be inconsistent with the delegation of
the Secretary’s authority to prescribe reg-
ulations to the Assistant Secretary for Tax
Policy and to the Treasury Department
General Counsel. Furthermore, unlike the
authority to apply the tax laws to a specific
set of facts, which, for example, is redel-
egated to the examination function within
the IRS to facilitate examination of a par-
ticular taxpayer, the authority and func-
tion to promulgate regulations rests with
the Assistant Secretary for Tax Policy and
the Treasury Department General Coun-
sel. Such a determination would not be
appropriate for Appeals to consider until
there is an unreviewable decision from a
Federal court invalidating the regulation
as a whole or the provision in the regula-
tion that the taxpayer is challenging.
Treasury regulations are generally
submitted for notice and comment under
the Administrative Procedure Act and
have the force and effect of law once a
Treasury decision containing such regu-
lations is published in the Federal Reg-
ister. Consequently, Treasury regulations
are binding on the Treasury Department,
the IRS and the public, including all
Treasury Department and IRS employ-
ees. This means that Treasury Depart-
ment and IRS employees must follow
the regulations until they are revised,
removed through the notice and comment
process, or invalidated by subsequent
legislation or an unreviewable decision
of a Federal court. As an office within the
Treasury Department and the IRS, these
requirements apply to Appeals and its
employees.
In addition, as with constitutional
challenges to a statute, a determination
with respect to the validity of a reg-
ulation should be communicated and
applied consistently to all taxpayers.
Unlike a non-public Appeals settlement,
an unreviewable decision by a Federal
court is available to all taxpayers and the
IRS regarding the validity of a Treasury
regulation. A settlement before Appeals
is specific to a taxpayer and cannot be
disclosed by the IRS unless an excep-
tion to section 6103 of the Code applies.
Furthermore, unlike most Appeals anal-
ysis, which weigh litigation hazards in
applying the law to specific facts, con-
sidering the validity of a regulation does
not involve taxpayer specific facts. A
Federal court’s unreviewable decision is
a determination by the judicial branch on
the merits of the validity challenge that
may reject the determinations made by
other levels of the Treasury Department
or the IRS with regard to the validity of
a Treasury regulation, thereby providing
a basis for Appeals to consider a regula-
tion’s validity. Accordingly, the Treasury
Department and the IRS believe that it
would be inappropriate for Appeals to
consider challenges to the validity of
a Treasury regulation unless a Federal
court has rendered an unreviewable
decision holding that the regulation is
invalid.
The Treasury Department and the
IRS request comments on this proposed
exception.
20. Challenges Alleging that a Notice or
Revenue Procedure is Invalid
Proposed §301.7803-2(c)(20) pro-
vides that Appeals consideration is not
available for any issue based on a taxpay-
er’s argument that an IRS notice or rev-
enue procedure published in the Internal
Revenue Bulletin is procedurally invalid
unless there is an unreviewable decision
from a Federal court invalidating the
notice or revenue procedure. An unre-
viewable decision is a decision that can
no longer be appealed to any Federal
court, as explained previously. However,
this proposed rule would not prevent
Appeals from considering the likelihood
that a court would agree or disagree with
the interpretation of the tax law asserted
by the taxpayer, even though it may dif-
fer from the interpretation described in a
notice or revenue procedure. Addition-
ally, the proposed rule would not prevent
Appeals from considering a Federal tax
controversy based on arguments other
than the validity of a notice or revenue
procedure. For example, Appeals may
consider whether the notice or the revenue
procedure applies to the taxpayer’s facts
and circumstances and resolve the Federal
tax controversy weighing the likelihood a
court would agree with the position(s) of
the taxpayer or the Government.
Similar to Treasury regulations, the pro-
cess for drafting and publishing notices
and revenue procedures is extensive. See
IRM Part 32.2 (Chief Counsel Publication
Handbook) for a description of the process
for drafting published guidance, including
notices and revenue procedures. Notices
and revenue procedures are approved
within the Treasury Department’s Office
of Tax Policy, involve numerous pol-
icy and implementation determinations,
and involve the coordination and agree-
ment of many offices within the Treasury
Department, the IRS, and sometimes other
Federal agencies. The approval process
includes consideration of administrative
law requirements applicable to such guid-
ance. Furthermore, unlike the application
of the tax law to a specific set of facts and
circumstances during, for example, an
examination, procedural determinations
regarding notices and revenue procedures
must be approved at high levels within the
Treasury Department and are not specific

September 26, 2022 252 Bulletin No. 2022–39
to the facts of a particular case. Ultimately,
whether an IRS notice or revenue proce-
dure is invalid is a determination of gen-
eral applicability resolved at the highest
levels of the Treasury Department and the
IRS. Such a determination thus would not
be appropriate for Appeals to consider.
Furthermore, any determination regard-
ing whether a notice or revenue procedure
failed to comply with administrative law
requirements, such as notice and com-
ment under 5 U.S.C. 553, should be com-
municated and applied consistently. As
with constitutional and regulation validity
challenges, an unreviewable decision of a
Federal court is the appropriate means of
making information accessible to all tax-
payers and the IRS regarding whether a
notice or revenue procedure was prescribed
in accordance with applicable Federal law.
A settlement before Appeals is specific to
a taxpayer and cannot be made available
to other taxpayers. A Federal court’s unre-
viewable decision is a determination by the
judicial branch on the merits of the validity
challenge that may reject the determina-
tions made by other levels of the Treasury
Department or the IRS with regard to the
validity of an IRS notice or revenue proce-
dure, thereby providing a basis for Appeals
to consider the validity of an IRS notice or
revenue procedure. Accordingly, the Trea-
sury Department and the IRS believe that it
would be inappropriate for Appeals to con-
sider challenges alleging that a notice or
revenue procedure is procedurally invalid
unless a Federal court has rendered an
unreviewable decision holding the notice
or revenue procedure to be invalid.
The Treasury Department and the
IRS request comments on this proposed
exception.
21. Case or Issue Designated for
Litigation or Withheld from Appeals
Proposed §301.7803-2(c)(21) provides
that Appeals consideration is not available
for any case or issue designated for litiga-
tion, or withheld from Appeals consider-
ation in a Tax Court case, in accordance
with guidance regarding designating or
withholding a case or issue. Designation for
litigation means that the Federal tax con-
troversy, comprising an issue or issues in a
case, will not be resolved without a full con-
cession by the taxpayer or by decision of the
court. The ability to designate a case for lit-
igation or withhold a Tax Court case from
Appeals existed long before section 7803(e)
was added to the Code. See, e.g., sec. 3.03
of Rev. Proc. 2016-22 and IRM 33.3.6 (12-
10-2010) (relating to designating a case for
litigation). See also NHQ-04-0521-0003
(5-24-2021) (interim guidance on designa-
tion of cases for litigation). Chief Counsel
will not refer to Appeals any case or issue
that has been designated for litigation.
Also, Chief Counsel will withhold
from Appeals a Tax Court case or one or
more issues in a Tax Court case if Chief
Counsel determines referral is not in the
interest of sound tax administration. For
example, Chief Counsel may decide not to
refer a Tax Court case to Appeals when the
Tax Court case involves a significant issue
common to other cases in litigation for
which it is important that the IRS main-
tains a consistent position or when the Tax
Court case is related to a case over which
the Department of Justice has jurisdiction
after referral to the Department of Justice
for prosecution or defense.
While the role of Appeals has been to
review the IRS’s and the taxpayer’s posi-
tions and consider issues based on the
likelihood that the IRS’s or the taxpayer’s
position would prevail if it were resolved
by a court, the processes described earlier
allow Chief Counsel to strategically man-
age its cases, fulfilling Chief Counsel’s
role of ensuring a consistent application
and interpretation of the internal revenue
laws and aiding in the development of the
tax law. See section 7803(b)(2)(E). These
processes are intended to serve the tax
administration interests of the IRS and
taxpayers by improving taxpayers’ under-
standing of and voluntary compliance
with the internal revenue laws, leading to
more effective and fair IRS enforcement.
Unlike an Appeals resolution, a judicial
decision in designated or withheld cases
will provide notice to all taxpayers of any
development in the law, leading to the
early resolution of issues and conserving
IRS and taxpayer resources.
22. Appeals Issued the Determination
that is the Basis of the Tax Court’s
Jurisdiction
Proposed §301.7803-2(c)(22) pro-
vides that except as provided in proposed
§301.7803-2(f)(1) (regarding when the
Tax Court remands a CDP case for recon-
sideration), Appeals consideration is not
available for any case docketed in the Tax
Court if the notice of deficiency, notice of
liability, or other determination was issued
by Appeals officials. Examples of the
cases subject to proposed §301.7803-2(c)
(22) include a case under sections 6320
or 6330, section 6404 (relating to abate-
ment of interest), section 7428 (relating to
declaratory judgment on the classification
of specified organizations), section 7476
(relating to declaratory judgment on qual-
ification of certain retirement plans), sec-
tion 7477 (relating to declaratory judgment
on the value of certain gifts), or section
7479 (relating to declaratory judgment on
the eligibility of an estate with respect to
installment payments under section 6166
(regarding the extension of time for pay-
ment of estate tax where the estate con-
sists largely of an interest in a closely held
business)). This proposed rule is reflected
in Rev. Proc. 2016-22. See secs. 3.01 and
4 of Rev. Proc. 2016-22. Under the pro-
posed rule, Chief Counsel will not refer a
docketed case to Appeals if Appeals pre-
viously reviewed the case and issued the
correspondence stating its determination.
A taxpayer whose case has been reviewed
by Appeals cannot request a duplicative
or second opportunity to have the same
case reviewed by Appeals. It would be a
redundant exercise and a significant mis-
management of time and resources for
the IRS and Appeals to allow a taxpayer
to request consideration by Appeals if
Appeals already has considered the same
matter.
23. Appeals Consideration is a
Prerequisite to the Jurisdiction of Tax
Court
Proposed §301.7803-2(c)(23) provides
that subsequent Appeals consideration is
not available when timely Appeals con-
sideration itself is a prerequisite to Tax
Court jurisdiction over an issue. To meet
the statutory jurisdictional requirements
in cases in which exhaustion of adminis-
trative review is a prerequisite to the Tax
Court’s jurisdiction, and such adminis-
trative review includes consideration by
Appeals, Appeals consideration must be
requested before a petition is filed in the

Bulletin No. 2022–39 253 September 26, 2022
Tax Court. Such a case is excluded from
Appeals at the docketed stage because
the taxpayer failed to take advantage of
the earlier administrative opportunity to
request Appeals review. Failure to request
prior Appeals consideration will consti-
tute a failure to exhaust available adminis-
trative remedies and the failure cannot be
cured while the case is docketed.
Proposed §301.7803-2(c)(23) lists
some examples of such cases. Appeals
consideration must be requested before a
petition is filed in the Tax Court regard-
ing a declaratory judgment request under
section 7428 relating to declaratory judg-
ments on the classification of specified
organizations. See section 7428(b)(2)
(regarding exhaustion of administrative
remedies prior to seeking declaratory
judgment pursuant to section 7428); sec.
10.05 of Rev. Proc. 2022-5 (regarding
the same). Other examples are cases to
which section 7476(b)(3) applies regard-
ing exhausting administrative remedies
prior to seeking declaratory judgment pur-
suant to section 7476 relating to declara-
tory judgment on qualification of certain
retirement plans. See §601.201(o)(6)
(i) of the Statement of Procedural Rules
(26 CFR part 601) (regarding the same);
section 7477(b)(2) (regarding exhausting
administrative remedies prior to seeking
declaratory judgment pursuant to section
7477 relating to declaratory judgment on
the value of certain gifts); see §301.7477-
1(d)(4)(ii) (regarding the same).
24. An Administrative Determination to
Deny or Revoke a CPEO Certification
Proposed §301.7803-2(c)(24) pro-
vides that Appeals consideration of an
administrative determination made by the
IRS to deny or revoke a Certified Profes-
sional Employer Organization (CPEO)
certification is not available because the
IRS has established another independent
review process to review the determi-
nation. It is excepted from Appeals con-
sideration because review by Appeals
would be duplicative when a non-Appeals
office has an established process to inde-
pendently review the matter. The CPEO
certification procedures established the
IRS Office of Professional Responsibility
(OPR) as the independent reviewer of the
IRS’s decision to deny or revoke a CPEO
certification. The CPEO program under
sections 3511 (relating to the rules for
CPEOs) and 7705 (relating to the defini-
tion of CPEOs) of the Code involves the
certification of a Professional Employer
Organization as having met certain tax
status, background, experience, business
location, financial reporting, bonding, and
other requirements described in statutes
and regulations. An applicant for certifi-
cation that received a notice of proposed
denial of certification can request review
by OPR. Current procedures are in Rev.
Proc. 2016-33 (2016-25 I.R.B. 1034). A
CPEO that received a notice of suspen-
sion and proposed revocation of certifica-
tion can also request review by OPR. Cur-
rent procedures are in Rev. Proc. 2017-14
(2017-3 I.R.B. 426).
D. Request for Comments on Other
Exclusions
The list of exclusions in proposed
§301.7803-2(c) does not include certain
exclusions from Appeals review cur-
rently provided in the IRM. The Treasury
Department and the IRS are evaluat-
ing whether these items, which relate to
requests for relief under §§301.9100-1
through 301.9100-22 of the Procedure and
Administration Regulations (9100 relief)
and requests for a change in accounting
method, should be included on the list.
1. 9100 Relief
The IRM currently provides that
Appeals consideration is not available for
a decision issued by an Associate Office
regarding 9100 relief relating to a request
for an extension of time for making an
election or other application for relief
where the decision is reviewable by a
court under an abuse of discretion stan-
dard. See IRM 8.6.3.11(4) (10-06-2016)
(relating to procedures if Appeals con-
clusion is contrary an IRS position) and
IRM 8.6.3.11(4) (10-06-2016) (relating
to extension of time for making certain
elections). Under this rule, Appeals will
not settle any case or matter contrary to
the Associate Office’s decision to deny the
extension request, nor will Appeals con-
sider any hazards of litigation based upon
the possibility that Chief Counsel’s denial
of the 9100 relief would be reversed in a
court proceeding. The 9100 relief regu-
lations provide that the decision to grant
taxpayers an extension to make a regula-
tory election is left to the Commissioner’s
discretion. See §301.9100-1(c) (regarding
Commissioner’s discretion to grant an
extension to make a regulatory election).
The Commissioner has delegated this
authority to Chief Counsel.
2. Changes of Accounting Method
Section 1.446-1(a)(2) of the Income
Tax Regulations provides that no method
of accounting is acceptable unless, in the
opinion of the Commissioner, it clearly
reflects income. See section 446(b). Rev.
Proc. 2015-13 (2015-5 I.R.B. 419) pro-
vides the automatic and non-automatic
procedures to obtain the consent of the
Commissioner to change a method of
accounting. Section 11.02 of Rev. Proc.
2015-13 states that the Associate Office
will deny a request to make a change in
method of accounting if the requested
change would not clearly reflect income
or would otherwise not be in the interest
of sound tax administration.
The IRM currently provides that
Appeals consideration is not available for
a decision issued by an Associate Office
regarding a change of accounting method
where the decision is reviewable by a
court under an abuse of discretion stan-
dard. See IRM 8.6.3.3(2) (10-06-2016)
(relating to procedures if Appeals conclu-
sion is contrary to Service position) and
IRM 8.6.3.10(3) (10-06-2016) (relating to
change in accounting practice or method).
Thus, Appeals will not settle any case or
matter contrary to the Associate Office’s
decision to deny the method change,
nor will Appeals consider any hazards
of litigation based upon the possibility
that a court would reverse Chief Coun-
sel’s denial of the request for a change in
accounting method.
When a taxpayer receives a letter ruling
approving a change in method of account-
ing, the IRS and the taxpayer typically
enter into a consent agreement regard-
ing the change. The terms of the consent
agreement are binding on the IRS and the
taxpayer and are not subject to Appeals
consideration. See IRM 8.1.1.2.1(1)(d.)
(02-10-2012) (relating to some exceptions
to Appeals authority).

September 26, 2022 254 Bulletin No. 2022–39
3. Comments Requested
The Treasury Department and the
IRS request comments on whether items
relating to requests for changes in meth-
ods of accounting and requests for 9100
relief should continue to be excluded
from Appeals review. In addition to gen-
eral comments, comments are specifically
requested on the following:
A. whether the binary nature of deci-
sions regarding 9100 relief and changes
in method of accounting make these deci-
sions unsuitable for Appeals review,
B. whether a different review standard
should apply if Appeals considers 9100
relief or changes of accounting method,
and
C. what impact would Appeals review
of 9100 relief and changes in accounting
method have on later years that are not
before Appeals?
E. Originating Office Has Completed Its
Review
Proposed §301.7803-2(d)(1) provides
a prerequisite requirement that a taxpayer
must meet before Appeals may consider
the taxpayer’s Federal tax controversy.
Appeals consideration of a matter or issue
is appropriate only after the originating
IRS office has completed its action on
the Federal tax controversy and issued
a final administrative determination or
a proposed administrative determina-
tion that is accompanied by an offer for
Appeals consideration. This requirement
is necessary because a case or issue is not
ready for Appeals consideration until the
originating IRS office has completed its
factfinding and developed a position. If
the originating office has not set out its
position, there is no administrative deter-
mination made by the IRS with respect to
the particular taxpayer for Appeals to con-
sider. If the originating office has not set
out its position regarding the Federal tax
controversy, the request for Appeals con-
sideration is premature and the taxpayer
may request Appeals consideration after
the originating office has set out its posi-
tion if the other requirements in proposed
§301.7803-2 are met.
Circumstances in which Appeals con-
sideration is premature arise in many con-
texts. For example, Appeals consideration
is premature if a taxpayer petitions the Tax
Court in a deficiency case under section
6213(a) and raises for the first time a claim
for relief under section 6015. Because the
issue was first raised in litigation, the IRS
does yet not have a position regarding the
taxpayer’s eligibility for relief under sec-
tion 6015. In another example, a taxpayer
files a claim with the IRS for abatement
of interest under section 6404 and after
180 days pass without a determination,
the taxpayer files a petition with the Tax
Court. Appeals consideration would be
premature before the IRS has considered
the merits. Another example is a relevant
new issue raised during Appeals consider-
ation for which the originating office has
not set out its position. Similarly, Appeals
consideration is premature if during an
examination a decision is made to return
an OIC that was submitted by the tax-
payer. In yet another example, as part of an
examination the IRS requests documents
that the taxpayer does not provide, and the
IRS refers the matter to the Department of
Justice to bring a summons enforcement
action. An administrative determination
regarding the taxpayer’s liability has not
been made by the IRS. The decision to
bring a summons enforcement action is
part of the process that leads to an admin-
istrative determination that will be made
by the IRS, and Appeals consideration
would be premature because the position
of the originating office has not been set
out.
Proposed §301.7803-2(d)(2) provides
that the requirement that the originating
office must have completed its review will
be treated as satisfied when the person
requests to participate in an Appeals early
consideration program and such request is
granted. Where administrative guidance
permits the originating office to engage
Appeals prior to completing its action on
the case, Appeals may consider the con-
troversy under the terms of that admin-
istrative guidance. For example, Appeals
may consider the Federal tax controversy
in mediation under a fast track settle-
ment program or early consideration of
some issues under an early referral pro-
gram. These programs existed prior to
the TFA. See, e.g., Rev. Proc. 2003-40
(2003-25 I.R.B. 1044) (relating to medi-
ation under the LB&I Division Fast Track
Settlement Program), as modified by Rev.
Proc. 2015-40 (regarding procedures for
requesting competent authority assistance
under U.S. tax treaties); Rev. Proc. 99-28
(1999-29 I.R.B. 109) (relating to early
consideration of some, but not all, issues
in case under Early Referral Program).
These programs promote a more efficient
disposition of a taxpayer’s case by leading
to the early resolution of issues or devel-
oping or narrowing the issues in dispute.
F. Procedural and Timing Requirements
are Followed
Proposed §301.7803-2(e) provides
the procedural and timing requirements
that a taxpayer must meet before Appeals
may consider the taxpayer’s Federal
tax controversy. Specifically, proposed
§301.7803-2(e) provides that a request
for Appeals consideration must be sub-
mitted in the time and manner prescribed
in applicable forms, instructions, or other
administrative guidance and that all pro-
cedural requirements must be complied
with for Appeals to consider a Federal tax
controversy. These proposed requirements
existed prior to the enactment of the TFA.
An example of specific procedural require-
ments are the special claim procedures for
penalties under sections 6694(b), 6700,
and 6701. For instance, a CP 15 Notice
and Demand letter is sent to a promoter
upon assessment of the penalties advising
the promoter of the special claim proce-
dures pursuant to section 6703(c). Section
6703(c)(1) allows the promoter to pay
at least 15 percent of the amount of the
penalty within 30 days and file a claim for
refund of the amount paid. If the claim for
refund is disallowed and a written request
for Appeals consideration is received
timely, Appeals may consider the claim
for refund in the same manner as any other
claim for refund. The special claim proce-
dures, including the requirement to pay at
least 15 percent, are part of the required
claims process. Appeals review is unavail-
able to a claimant unless the claimant fol-
lows the special claim procedures.
Another example of procedural require-
ments is the refund procedures under
section 6402. Appeals review is unavail-
able to a claimant that submits a claim
for refund under section 6402 unless the
claimant follows the required claims pro-
cedures in section 7422(a) regarding the

Bulletin No. 2022–39 255 September 26, 2022
requirement to file an administrative claim
according to IRS procedures before filing
suit and §§301.6402-2 and 301.6402-3
regarding general procedures for making
a claim for a refund of income tax. To
promote compliance and an orderly pro-
cess, the proposed rule would ensure that
the taxpayer complies with statutory and
regulatory requirements and Appeals has
sufficient information to consider the tax-
payer’s claim.
In addition, proposed §301.7803-2(e)
provides that there must be sufficient time
remaining on the appropriate limitations
period for Appeals to consider the matter,
as provided in administrative guidance.
Consideration of a case by Appeals can
take a significant amount of time. Appeals
needs to correspond with the taxpayer and
in some cases the IRS office that made the
administrative determination or proposed
administrative determination, understand
and evaluate both parties’ legal arguments,
in some cases negotiate with the taxpayer,
and make a determination. This all must
be completed with sufficient time for an
assessment to be made if a settlement
cannot be reached. If there is insufficient
time remaining on the assessment limita-
tions period, Appeals will not have time
to conduct an independent review before
the period expires. This requirement was
in place well before the TFA was enacted
and is necessary for tax administration.
See, e.g., IRM 8.20.5.3.1.3(1) (03-01-
2016) (relating to cases not accepted by
Appeals); IRM 8.21.2.3(2)b (10-15-2014)
(same). Similarly, proposed §301.7803-
2(e) also provides that in a case docketed
in Tax Court, if Chief Counsel has recalled
the case from Appeals or, if not recalled,
Appeals has returned the case to Chief
Counsel so that it is received by Chief
Counsel prior to the date of the calendar
call for the trial session, further consid-
eration by Appeals will not be available
if there is insufficient time for such con-
sideration. See sec. 3.07 of Rev. Proc.
2016-22.
G. One Opportunity for Consideration by
Appeals
Proposed §301.7803-2(f)(1) provides
that if a Federal tax controversy is eli-
gible for consideration by Appeals and
the procedural and timing requirements
are followed, a taxpayer generally has
one opportunity for Appeals to consider
such matter or issue in the same case for
the same period or in any type of future
case for the same period. According to
proposed §301.7803-2(f)(1), Appeals has
considered a Federal tax controversy if
the Federal tax controversy was before
Appeals for consideration and Appeals
issued a determination or made a settle-
ment offer, decided the Federal tax con-
troversy was not susceptible to settlement,
or the person who requested consideration
failed to respond to Appeals’ communica-
tions and as a result of that failure Appeals
issued or made a determination. Appeals
also has considered a Federal tax contro-
versy if the taxpayer notifies Chief Coun-
sel or the IRS that the taxpayer wants to
discontinue settlement consideration by
Appeals or requests to transfer settlement
consideration of a Federal tax controversy
that is currently before the Tax Court from
Appeals to Chief Counsel. Additionally,
a taxpayer with a Federal tax contro-
versy who previously failed to respond
to Appeals’ communications with respect
to that Federal tax controversy is treated
as having had a prior opportunity for
Appeals consideration. This proposed rule
is intended to deter and not reward nonre-
sponsive taxpayers and to avoid wasting
Appeals resources.
Appeals therefore generally will con-
sider a Federal tax controversy only once.
A taxpayer whose Federal tax controversy
has been reviewed by Appeals cannot
request a duplicative or second opportu-
nity to have it reviewed by Appeals. Nei-
ther section 7803(e) nor its legislative his-
tory indicates that Congress intended for
a taxpayer whose case already has been
considered by Appeals to have multiple
opportunities for Appeals consideration. It
would be duplicative to allow a taxpayer
to request consideration by Appeals if
Appeals already has considered the same
matter. This one-bite-at-the-apple rule is
a practical, longstanding rule that existed
prior to the TFA. See secs. 3.01 and 4 of
Rev. Proc. 2016-22.
There are several exceptions to this
proposed rule. Proposed §301.7803-2(f)
(1) provides an exception to the pro-
posed general rule where the Tax Court
remands a CDP case for reconsider-
ation. This exception to the general rule
accounts for the Tax Court’s ability to
remand CDP cases for further Appeals
consideration. Proposed §301.7803-2(f)
(2) provides an exception for a taxpayer
that participated in an Appeals early con-
sideration program but did not reach an
agreement with Appeals. See, e.g., Rev.
Proc. 99-28 (1999-29 I.R.B. 109) (relat-
ing to early consideration of some, but
not all, issues in case under Early Referral
program); Rev. Proc. 2003-40 (2003-25
I.R.B. 1044) (relating to the Large Busi-
ness and International Division Fast Track
Settlement (FTS) program), as modified
by Rev. Proc. 2015-40 (2015-35 I.R.B.
236) (regarding procedures for request-
ing competent authority assistance under
U.S. tax treaties); Rev. Proc. 2017-25
(2017-14 I.R.B. 1) (relating to the Small
Business/Self-Employed Division FTS
program); Rev. Proc. 2016-57 (2016-49
I.R.B. 707) (relating to the FTS program
for certain collection cases and issues);
and Announcement 2012-34 (2012-36
I.R.B. 334) (relating to the Tax-Exempt
and Government Entities Division FTS
program). It also provides an exception
for a taxpayer that may be able to request
post-Appeals mediation under the terms
of administrative guidance after a tradi-
tional appeal if no agreement was reached
between the taxpayer and Appeals. See,
e.g., Rev. Proc. 2014-63 (2014-53 I.R.B.
1014) (relating to Appeals mediation).
The exception to the general rule in
proposed §301.7803-2(f)(2) that carves
out early consideration programs is a crit-
ical part of these programs. As previously
mentioned, these fast track and early con-
sideration programs promote a more effi-
cient disposition of a taxpayer’s case by
leading to the early resolution of issues
or developing or narrowing the issues in
dispute. If a taxpayer who unsuccessfully
participated in one of these programs was
unable later to have Appeals consider the
taxpayer’s case, it is unlikely the taxpayer
would take advantage of these programs.
Similarly, post-Appeals mediation pro-
motes a more efficient disposition of a
taxpayer’s case.
Proposed §301.7803-2(f)(2) also pro-
vides an exception to the general rule in
proposed §301.7803-2(f)(1) for taxpay-
ers who provide new information to the
IRS and who meet the conditions and
requirements for audit reconsideration or

September 26, 2022 256 Bulletin No. 2022–39
for reconsideration of liability issues pre-
viously considered by Appeals. Appeals
may consider the new information. See
IRM 8.7.7.17 (12-17-2019) (relating to
audit reconsideration cases); IRM 8.7.7.16
(12-17-2019) (relating to reconsideration
of claims for liabilities previously consid-
ered by Appeals).
H. Special Rules
The following are proposed special
rules.
1. Appeals Reconsideration
Proposed §301.7803-2(g)(1) provides
a special rule that notwithstanding the
exception in proposed §301.7803-2(c)
(22), if Appeals issued a notice of defi-
ciency, notice of liability, or other deter-
mination, without having fully considered
one or more issues because of an impend-
ing expiration of the statute of limitations
on assessment, Appeals may choose to
have Chief Counsel return the case to
Appeals for full consideration of the issue
or issues once the case is docketed in the
Tax Court. This is a longstanding rule that
existed prior to the enactment of the TFA
and can be found in section 3.02 of Rev.
Proc. 2016-22. The proposed rule pro-
motes the efficient disposition of cases by
leading to the early resolution of issues
and developing or narrowing the issues in
dispute.
2. Coordination Between Chief Counsel
and Appeals
Proposed §301.7803-2(g)(2) provides
a special rule that Appeals and Chief
Counsel may determine how settlement
authority in a Federal tax controversy that
is before the Tax Court will be transferred
between the two offices. For example, to
promote a more efficient disposition of
a case in the Tax Court, the case may be
transferred from Chief Counsel to Appeals
or from Appeals to Chief Counsel by agree-
ment between them. This is a longstanding
practice that has been used to efficiently
manage resources and respond to devel-
opments in litigation. Details regarding
this practice are most recently described
in Rev. Proc. 2016-22. In another exam-
ple, if Chief Counsel determines that the
case is needed for trial preparation, Chief
Counsel may request that Appeals return
the case (including settlement authority)
to Chief Counsel before Appeals has com-
pleted its consideration of the case. See
sec. 3.08 of Rev. Proc. 2016-22. Ensur-
ing adequate time to prepare for trial is
pragmatic and beneficial to taxpayers and
Chief Counsel attorneys. Chief Coun-
sel also may delay forwarding a case to
Appeals when Chief Counsel anticipates
filing a dispositive motion (for example,
a motion for summary or partial summary
judgment, or a motion to dismiss for lack
of jurisdiction), in which case Chief Coun-
sel will retain the case until the Tax Court
rules on the motion. See sec. 3.04 of Rev.
Proc. 2016-22. Allowing Chief Counsel
and Appeals the flexibility to respond to
the needs of specific Federal tax contro-
versies promotes the efficient disposition
of a taxpayer’s case, including developing
or narrowing the issues in dispute.
I. Applicability Date
These regulations are proposed to
apply to all requests for consideration by
Appeals that are received on or after the
date 30 days after a Treasury Decision
finalizing these rules is published in the
Federal Register. The Treasury Depart-
ment and the IRS request comments on
the proposed applicability date.
II. Requests for Referral to Appeals
Following Issuance of a Notice of
Deficiency
A. Notice and Protest
If a taxpayer received a notice of defi-
ciency authorized under section 6212, sec-
tion 7803(e)(5) requires the Commissioner
to explain the basis for denying an Appeals
referral request and provide procedures to
protest the denial. Proposed §301.7803-
3(a) implements section 7803(e)(5) and
provides that if any taxpayer requests
Appeals consideration of a matter or issue
and the request is denied, the Commis-
sioner or the Commissioner’s delegate
must provide the taxpayer a written notice
that provides a detailed description of the
facts involved, the basis for the decision
to deny the request, a detailed explanation
of how the basis for the decision applies to
such facts, and the procedures for protest-
ing the decision to deny the request if the
requirements of proposed §301.7803-3(a)
are met. These requirements are listed in
proposed §301.7803-3(a)(1) through (5).
1. Notice of Deficiency
Proposed §301.7803-3(a)(1) provides
that the taxpayer must have received a
notice of deficiency authorized under sec-
tion 6212 for the notice and protest proce-
dures to apply.
2. Frivolous Positions
Proposed §301.7803-3(a)(2) requires
that, for the notice and protest proce-
dures to apply, the taxpayer’s issue must
not involve a frivolous position. This
proposed requirement follows from the
restriction on Appeals access in pro-
posed §301.7803-2(c)(1), which makes
Appeals review unavailable for frivo-
lous positions. Also, pursuant to section
7803(e)(5)(D), the protest procedures
under section 7803(e)(5) do not apply to
an Appeals referral request if the issue is
frivolous. Like the exception in proposed
§301.7803-2(c)(1), this proposed rule
prevents taxpayers from continuing to
propose frivolous arguments. Allowing a
taxpayer to protest the IRS’s decision to
deny the taxpayer’s request for Appeals
consideration of frivolous positions would
result in wasted IRS time and resources.
3. Multiple Requests for Referral to
Appeals
Proposed §301.7803-3(a)(3) requires
that the taxpayer must not have previously
requested Appeals consideration for the
same matter or issue in a taxable year or
period for the notice and protest procedures
to apply. Thus, when a taxpayer already
has requested Appeals consideration and
filed a valid protest under section 7803(e)
(5), the notice and protest procedures in
proposed §301.7803-3(a) do not apply
if the taxpayer submits another Appeals
referral request concerning the same mat-
ter or issue in a taxable year or period. It
would be redundant to allow the taxpayer
to submit multiple referral requests and
protests under section 7803(e)(5), includ-
ing when the taxpayer’s prior protest was

Bulletin No. 2022–39 257 September 26, 2022
either rejected or allowed in a final deci-
sion by the Commissioner or the Commis-
sioner’s delegate.
4. Previous Appeals Consideration
Except as provided in proposed
§301.7803-2(f)(2), proposed §301.7803-
3(a)(4) provides that for the notice and
protest procedures to apply, Appeals must
not have previously considered the matter
or issue in a taxable year or period that is
the subject of the request and determined
that it could not be settled. This require-
ment follows from the prerequisite in
proposed §301.7803-2(f), which provides
that Appeals will consider a Federal tax
controversy only once. Since a taxpayer
receives only one opportunity for Appeals
review, it would be redundant to allow a
taxpayer to submit a protest under section
7803(e)(5) if Appeals already has consid-
ered the same matter or issue in a taxable
year or period and decided that it could
not be settled or a settlement offer was
rejected.
5. Notice of Deficiency with More Than
One Matter or Issue
Proposed §301.7803-3(a)(5) requires
that if the notice of deficiency for which
the taxpayer requests Appeals consider-
ation includes more than one matter or
issue in a taxable year or period, the tax-
payer must request referral and submit
all matters or issues sought for Appeals
consideration at the same time. This pro-
posed rule will ensure the efficient use of
Appeals’ time and resources and help to
prevent unnecessary delays and potential
abuse. For example, without this pro-
posed rule, a taxpayer in a case with three
issues could potentially seek sequential
Appeals consideration for each issue sep-
arately, thereby wasting Appeals’ time and
resources, creating unnecessary delay, and
abusing the referral process. Such a piece-
meal approach, if allowed, also would
undermine the one-bite-at-the-apple rule
in proposed §301.7803-2(f)(1).
6. Applicability Date
The regulations in this section are pro-
posed to apply to all relevant requests for
consideration by Appeals that are received
on or after a Treasury Decision finalizing
these rules is published in the Federal
Register.
Statement of Availability of IRS
Documents
For copies of recently issued revenue
procedures, revenue rulings, notices, and
other guidance published in the Internal
Revenue Bulletin, please visit the IRS
website at http://www.irs.gov.
Special Analyses
This regulation is not subject to review
under section 6(b) of Executive Order
12866 pursuant to the Memorandum of
Agreement (April 11, 2018) between
the Treasury Department and the Office
of Management and Budget regarding
review of tax regulations.
In accordance with the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.) it
is hereby certified that these proposed
rules will not have a significant economic
impact on a substantial number of small
entities.
The proposed rules affect any person
who would like to have a Federal tax con-
troversy considered by Appeals, including
any small entity. Because any small entity
could potentially request consideration by
Appeals, these proposed regulations are
expected to affect a substantial number
of small entities. However, the IRS has
determined that the economic impact on
small entities affected by the proposed
rules would not be significant.
The proposed rules provide procedural
and timing requirements for consider-
ation by Appeals. The proposed rules
also establish the general availability of
consideration by Appeals and exceptions
to that consideration. The procedural
requirements, timing requirements, and
the vast majority of the exceptions to
consideration by Appeals already exist in
previously established guidance regarding
Appeals. The proposed regulations also
provide rules regarding certain circum-
stances in which a written explanation will
be provided regarding why Appeals con-
sideration was not provided. None of the
proposed rules affect entities’ substantive
tax liability nor do they affect the process
that Appeals follows when it considers
an eligible Federal tax controversy. Any
significant economic impact on small
entities will result from the application of
the substantive tax provisions and will not
be as a result of the proposed regulations.
Accordingly, the Secretary hereby certi-
fies that the proposed rules will not have a
significant economic impact on a substan-
tial number of small entities. The Treasury
Department and the IRS invite comment
from members of the public about poten-
tial impacts on small entities.
Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking
has been submitted to the Chief Counsel
for the Office of Advocacy of the Small
Business Administration for comment on
its impact on small business.
Comments and Public Hearing
Before these proposed amendments
to the regulations are adopted as final
regulations, consideration will be given
to comments that are submitted timely
to the IRS as prescribed in the preamble
under the “ADDRESSES” section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations, particularly circumstances
where Appeals consideration is not avail-
able. Any electronic comments submit-
ted, and to the extent practicable any
paper comments submitted, will be made
available at www.regulations.gov or upon
request.
The public hearing is being held by
teleconference on November 29, 2022,
beginning at 10 a.m. EST. Requests to
speak and outlines of topics to be dis-
cussed at the public hearing must be
received by November 14, 2022. If no
outlines are received by November 14,
2022, the public hearing will be can-
celled. Requests to attend the public hear-
ing must be received by 5:00 p.m. EST
on November 22, 2022. The telephonic
hearing will be made accessible to peo-
ple with disabilities. Requests for special
assistance during the telephonic hearing
must be received by November 22, 2022.
Announcement 2020-4, 2020-17 I.R.B.
1, provides that until further notice, pub-
lic hearings conducted by the IRS will be
held telephonically. Any telephonic hear-
ing will be made accessible to people with
disabilities.

September 26, 2022 258 Bulletin No. 2022–39
Drafting Information
The principal author of these proposed
regulations is Keith L. Brau of the Office
of the Associate Chief Counsel (Proce-
dure and Administration). Other person-
nel from the Treasury Department and the
IRS participated in their development.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 301 as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 is amended by adding entries for
§§301.7803-2 and 301.7803-3 in numeri-
cal order to read, in part, as follows:
Authority: 26 U.S.C. 7805.
* * * * *
Section 301.7803-2 also issued under
26 U.S.C. 7803.
Section 301.7803-3 also issued under
26 U.S.C. 7803.
* * * * *
Par. 2. Sections 301.7803-2 and
301.7803-3 are added to read as follows:
§301.7803-2 Appeals resolution of
Federal tax controversies without
litigation.
(a) Function of Independent Office of
Appeals. Appeals resolves Federal tax
controversies without litigation on a basis
that is fair and impartial to both the Gov-
ernment and the taxpayer, promotes a con-
sistent application and interpretation of,
and voluntary compliance with, the Fed-
eral tax laws, and enhances public confi-
dence in the integrity and efficiency of the
Internal Revenue Service (IRS).
(b) Consideration of a Federal tax
controversy by the Independent Office
of Appeals--(1) In general. The Appeals
resolution process is generally available
to all taxpayers to resolve Federal tax
controversies.
(2) Definition of Federal tax contro-
versy. For purposes of this section, a Fed-
eral tax controversy is defined as a dispute
over an administrative determination with
respect to a particular taxpayer made by
the IRS in administering or enforcing the
internal revenue laws, related Federal tax
statutes, and tax conventions to which
the United States is a party (collectively
referred to as internal revenue laws) that
arises out of the examination, collection,
or execution of other activities concerning
the amount or legality of the taxpayer’s
income, employment, excise, or estate and
gift tax liability; a penalty; or an addition
to tax under the internal revenue laws.
(3) Other administrative determina-
tions treated as Federal tax controversies.
Notwithstanding the definition of a Fed-
eral tax controversy in paragraph (b)(2)
of this section, disputes over administra-
tive determinations made by the IRS with
respect to a particular person regarding the
following topics are treated as Federal tax
controversies for purposes of this section:
(i) Liabilities and penalties admin-
istered by the IRS that are outside the
Internal Revenue Code (Code), such as
a liability or penalty pursuant to section
5321 of title 31 of the United States Code
(relating to civil Report of Foreign Bank
and Financial Accounts or Bank Secrecy
Act penalties);
(ii) A request under the Freedom of
Information Act (5 U.S.C. 552);
(iii) Application to become, or the
sanction of, an Electronic Return Origina-
tor or Authorized IRS e-file Provider;
(iv) The initial or continuing qual-
ification of an organization as exempt
from tax under section 501(a) (relating
to tax-exempt organizations) or section
521 of the Code (relating to tax-exempt
farmers’ cooperatives), or as an organi-
zation described in section 170(c)(2) of
the Code (relating to charitable organi-
zations); the classification or reclassifica-
tion of an organization’s foundation status
under section 509(a) of the Code (relating
to private foundations); and the classifica-
tion of an organization as a private oper-
ating foundation under section 4942(j)
(3) of the Code (relating to an operating
foundation);
(v) The qualification of an employee
plan;
(vi) An IRS proposed determination
to a bond issuer that interest on an obli-
gation the bond issuer previously issued
is not tax-exempt under section 103 of
the Code (relating to interest on State or
local bonds), that an issue of bonds fails
to qualify for the tax credits for the bond-
holders or direct payments to the issuer
with respect to the bonds under provi-
sions of the Code applicable to tax-ad-
vantaged bonds, or that denies a claim for
recovery of an asserted overpayment of
arbitrage rebate under section 148 of the
Code (relating to arbitrage) with respect
to tax-exempt bonds or under section 148
as modified by relevant provisions of the
Code with respect to other tax-advantaged
bonds;
(vii) Administrative costs under section
7430 of the Code (relating to awarding of
costs and certain fees); or
(viii) Any other topic that the IRS has
determined can be considered by Appeals.
(c) Exceptions to consideration by
Appeals. The following are Federal tax
controversies that are excepted from con-
sideration by Appeals or matters or issues
that are otherwise ineligible for consider-
ation by Appeals because they are neither
a Federal tax controversy nor treated as a
Federal tax controversy under paragraph
(b)(3) of this section. If a matter or issue
not eligible for consideration by Appeals
is present in a case that otherwise is eligi-
ble for consideration by Appeals, the inel-
igible matter or issue will not be consid-
ered by Appeals during resolution of the
case. The exceptions are:
(1) An administrative determination
made by the IRS rejecting a position of
a taxpayer that the IRS has identified as
frivolous for purposes of section 6702(c)
of the Code (regarding listing of frivolous
positions) and any case solely involving
the taxpayer’s failure or refusal to com-
ply with the tax laws because of frivolous
moral, religious, political, constitutional,
conscientious, or similar grounds.
(2) Penalties assessed by the IRS
under section 6702 (relating to frivolous
tax submissions) or section 6682 of the
Code (relating to false information with
respect to withholding) or any other pen-
alty imposed for a frivolous position or
false information. Appeals, however, may

Bulletin No. 2022–39 259 September 26, 2022
obtain verification that the assessment of
the penalties complied with sections 6203
(relating to method of assessment) and
6751(b) (relating to approval of assess-
ment) of the Code in a collection due
process (CDP) hearing under sections
6320 (relating to a hearing upon filing of
a notice of lien) and 6330 (relating to a
hearing before levy) of the Code. Appeals
also may consider a non-frivolous sub-
stantive challenge to a section 6702 or
section 6682 penalty in a CDP hearing.
(3) Any administrative determina-
tion made by the IRS under section
7623 of the Code (relating to awards to
whistleblowers).
(4) An administrative determination
issued by an agency other than the IRS,
such as a determination by the Alcohol
and Tobacco Tax and Trade Bureau (TTB)
concerning an excise tax administered by
and within the jurisdiction of TTB.
(5) A decision made by the IRS not to
issue a Taxpayer Assistance Order (TAO)
under section 7811 of the Code (relating
to TAOs).
(6) Any decision made by the IRS con-
cerning material to be deleted from the
text of a written determination pursuant to
section 6110 of the Code (relating to pub-
lic inspection of written determinations)
unless the written determination is other-
wise being considered by Appeals.
(7) Any denial of access under the Pri-
vacy Act (5 U.S.C. 552a(d)(1)).
(8) Any issue resolved in an agreement
described in section 7121 of the Code
(regarding closing agreements) that the
taxpayer entered into with the IRS, and
any decision made by the IRS to enter into
or not enter into such agreement. Appeals
may consider the question of whether an
item or items are covered, and how the
item or items are covered, in a closing
agreement.
(9) A case in which the IRS erroneously
returns or rejects an offer in compromise
(OIC) submitted under section 7122 of
the Code (relating to compromises) as
nonprocessable or no longer processable
and the taxpayer requests Appeals con-
sideration to assert that the OIC should
be deemed to be accepted under section
7122(f).
(10) Any case in which a criminal pros-
ecution, or a recommendation for crim-
inal prosecution, is pending against the
taxpayer for a tax-related offense, except
with the concurrence of the Office of
Chief Counsel or the Department of Jus-
tice, as applicable.
(11) Issues relating to allocation among
different fee payers of the branded pre-
scription drug and health insurance pro-
viders fees in section 9008 of the Patient
Protection and Affordable Care Act
(PPACA), Public Law 111-148 (124 Stat.
119 (2010)), as amended by section 1404
of the Health Care and Education Recon-
ciliation Act of 2010 (HCERA), Public
Law 111-152 (124 Stat. 1029 (2010)), and
section 9010 of PPACA, as amended by
section 10905 of PPACA, and as further
amended by section 1406 of HCERA.
(12) A certification or issuance of a
notice of certification of a seriously delin-
quent Federal tax debt to the Department
of State under section 7345 of the Code
(relating to the revocation or denial of
a passport in the case of serious tax
delinquencies).
(13) Any issue barred from consider-
ation under section 6320 or section 6330
of the Code, §§301.6320-1 and 301.6330-
1, or any other administrative guidance
related to collection due process hearings
or equivalent hearings.
(14) Any case, determination, matter,
decision, request, or issue that Appeals
lacks the authority to settle. The following
is a non-exclusive list of examples:
(i) A case or issue in a case that has
been referred to the Department of Justice.
(ii) A competent authority case (includ-
ing a competent authority resolution pre-
viously accepted by the taxpayer) under a
United States tax treaty that is within the
exclusive authority of the United States
Competent Authority.
(iii) A decision of the Commissioner
of Internal Revenue or the Commission-
er’s delegate to not rescind a section
6707A penalty for a non-listed reportable
transaction.
(iv) A request for relief under section
6015 of the Code (relating to relief from
joint and several liability on a joint return)
when the nonrequesting spouse is a party
to a docketed case in the United States Tax
Court (Tax Court) and does not agree to
granting full or partial relief under section
6015 to the requesting spouse.
(v) A criminal restitution-based assess-
ment under section 6201(a)(4) of the Code
(relating to certain orders of criminal res-
titution and restriction on challenge of
assessment).
(15) An adverse action related to the
initial or continuing recognition of tax-ex-
empt status, an entity’s classification as a
foundation, the initial or continuing deter-
mination of employee plan qualification,
or a determination involving an obligation
and the issuer of an obligation under sec-
tion 103. This exception applies only if
the tax-exempt recognition, classification,
determination of employee plan quali-
fication, or determination involving an
obligation and the issuer of an obligation
under section 103 is based upon a tech-
nical advice memorandum issued by an
Office of Associate Chief Counsel before
an appeal is requested.
(16) Any case docketed in the Tax
Court if the notice of deficiency, notice of
liability, or final adverse determination let-
ter is based upon a technical advice mem-
orandum issued by an Office of Associate
Chief Counsel in that case involving an
adverse action described in paragraph (c)
(15) of this section.
(17) A decision by an Office of Asso-
ciate Chief Counsel regarding whether to
issue a letter ruling or the content of a let-
ter ruling. The subject of the letter ruling
may be considered by Appeals if all other
requirements in this section are met. For
example, if an Office of Associate Chief
Counsel issues an adverse letter ruling to
a taxpayer, the taxpayer cannot immedi-
ately appeal the issuance of the adverse
letter ruling. If the taxpayer subsequently
files a return taking a position that is con-
trary to the letter ruling and that position is
audited by the IRS, Appeals can consider
that Federal tax controversy if all other
requirements in this section are met.
(18) Any issue based on a taxpayer’s
argument that a statute violates the United
States Constitution unless there is an unre-
viewable decision from a Federal court
holding that the cited statute is unconstitu-
tional. For purposes of this paragraph, an
argument that a statute violates the United
States Constitution includes any argument
that a statute is unconstitutional on its face
or as applied to a particular person. This
exception does not preclude Appeals from
considering a Federal tax controversy
based on arguments other than the con-
stitutionality of a statute, such as whether

September 26, 2022 260 Bulletin No. 2022–39
the statute applies to the taxpayer’s facts
and circumstances. For purposes of this
section, the term unreviewable decision
is a decision of a Federal court that can
no longer be appealed to any Federal
court because all appeals in a case have
been exhausted or the time to appeal has
expired and no appeal was filed. Once
there is an unreviewable decision no fur-
ther action can be taken in the case by any
Federal court.
(19) Any issue based on a taxpayer’s
argument that a Treasury regulation is
invalid unless there is an unreviewable
decision from a Federal court invalidating
the regulation as a whole or the provision
in the regulation that the taxpayer is chal-
lenging. This exception does not preclude
Appeals from considering a Federal tax
controversy based on arguments other than
the validity of a Treasury regulation, such
as whether the Treasury regulation applies
to the taxpayer’s facts and circumstances.
(20) Any issue based on a taxpayer’s
argument that a notice or revenue proce-
dure published in the Internal Revenue
Bulletin is procedurally invalid unless
there is an unreviewable decision from
a Federal court holding it to be invalid.
This exception does not preclude Appeals
from considering a Federal tax contro-
versy based on arguments other than the
validity of a notice or revenue procedure,
such as whether the notice or revenue pro-
cedure applies to the taxpayer’s facts and
circumstances.
(21) Any case or issue designated for
litigation, or withheld from Appeals con-
sideration in a Tax Court case, in accor-
dance with guidance regarding designat-
ing or withholding a case or issue. For
purposes of this section, designation for
litigation means that the Federal tax con-
troversy, comprising an issue or issues in
a case, will not be resolved without a full
concession by the taxpayer or by decision
of the court.
(22) Any case docketed in the Tax
Court if the notice of deficiency, notice
of liability, or other determination was
issued by Appeals unless the exception in
paragraph (f)(1) of this section (regarding
when the Tax Court remands a CDP case
for reconsideration) applies.
(23) A case in which timely Appeals
consideration must be requested before a
petition is filed in the Tax Court because
exhaustion of administrative review,
including consideration by Appeals, is
a prerequisite for the Tax Court to have
jurisdiction, and the taxpayer failed to
timely request Appeals consideration.
For example, Appeals consideration must
be requested before a petition is filed in
the Tax Court regarding a declaratory
judgment request under sections 7428
(relating to declaratory judgment on the
classification of specified organizations),
7476 (relating to declaratory judgment on
qualification of certain retirement plans),
or 7477 (relating to declaratory judgment
on the value of certain gifts) of the Code.
(24) An administrative determination
made by the IRS to deny or revoke a Cer-
tified Professional Employer Organization
certification.
(d) Originating office has completed its
review--(1) In general. Appeals consid-
eration of a matter or issue is appropriate
only after the originating IRS office has
completed its action on the Federal tax
controversy and issued an administrative
determination or a proposed administra-
tive determination accompanied by an
offer for consideration by Appeals. If the
originating office has not completed its
action regarding the Federal tax contro-
versy, the request for Appeals consider-
ation is premature. Appeals may consider
the Federal tax controversy if the taxpayer
requests consideration after the originat-
ing office’s action is complete and if all
requirements in this section are met.
(2) Exception for early consideration
programs. Where administrative guidance
permits the originating office to engage
Appeals prior to completing its action
regarding the Federal tax controversy,
Appeals may consider the Federal tax con-
troversy under the terms of that adminis-
trative guidance, such as mediation under
a fast track settlement program or early
consideration of some issues under an
early referral program.
(e) Procedural and timing require-
ments are followed. A request for Appeals
consideration of a Federal tax contro-
versy must be submitted in the time and
manner prescribed in applicable forms,
instructions, or other administrative
guidance. All procedural requirements
must be complied with before Appeals
will consider a Federal tax controversy.
In addition, there must be sufficient time
remaining on the appropriate limita-
tions period for Appeals to consider the
Federal tax controversy, as provided in
administrative guidance. In a case dock-
eted in the Tax Court, if the Office of
Chief Counsel has recalled the case from
Appeals or, if not recalled, Appeals has
returned the case to the Office of Chief
Counsel so that it is received by the
Office of Chief Counsel prior to the date
of the calendar call for the trial session,
further consideration by Appeals will not
be available if there is insufficient time
for such consideration.
(f) One opportunity for consideration
by Appeals--(1) In general. If a Federal
tax controversy is eligible for consider-
ation by Appeals and the procedural and
timing requirements are followed, a tax-
payer generally has one opportunity for
Appeals to consider such matter or issue
in the same case for the same period or
in any type of future case for the same
period, unless the Tax Court remands for
reconsideration in a collection due process
case. Appeals has considered a Federal tax
controversy if the Federal tax controversy
was before Appeals for consideration and
Appeals issued a determination or made
a settlement offer, Appeals decided the
Federal tax controversy was not suscep-
tible to settlement, or the person who
requested consideration was issued and
failed to respond to Appeals’ communica-
tions and as a result of that failure Appeals
issued or made a determination. Appeals
also has considered a Federal tax contro-
versy if the taxpayer notified the Office of
Chief Counsel or the IRS that the taxpayer
wanted to discontinue settlement consid-
eration by Appeals or requested to transfer
from Appeals to the Office of Chief Coun-
sel settlement consideration of a Federal
tax controversy that is currently before the
Tax Court.
(2) Exceptions. Notwithstanding para-
graph (f)(1) of this section, taxpayers
retain the opportunity for a traditional
appeal after participating in an early con-
sideration program as described in para-
graph (d)(2) of this section if no agreement
was reached between the taxpayer and the
IRS originating office. Taxpayers may be
able to request post-Appeals mediation
under the terms of administrative guid-
ance after a traditional appeal if no agree-
ment was reached between the taxpayer

Bulletin No. 2022–39 261 September 26, 2022
and Appeals. Notwithstanding paragraph
(f)(1) of this section, taxpayers who pro-
vide new information to the IRS and who
meet the conditions and requirements
for audit reconsideration or for reconsid-
eration of issues previously considered
by Appeals may have an opportunity for
Appeals consideration.
(g) Special rules. The following special
rules apply to this section:
(1) Appeals reconsideration. Notwith-
standing the exception in paragraph (c)
(22) of this section, if Appeals issued a
notice of deficiency, notice of liability, or
other determination without having fully
considered one or more issues because of
an impending expiration of the statute of
limitations on assessment, Appeals may
choose to have the Office of Chief Coun-
sel return the case to Appeals for full con-
sideration of the issue or issues once the
case is docketed in the Tax Court.
(2) Coordination between Office of
Chief Counsel and Appeals. Appeals and
the Office of Chief Counsel may determine
how settlement authority in a Federal tax
controversy that is before the Tax Court is
transferred between the two offices.
(h) Applicability date. This section is
applicable to requests for consideration
by Appeals made on or after [insert date
30 days after a Treasury decision finaliz-
ing these rules is published in the Federal
Register].
§301.7803-3 Requests for referral to
Appeals following the issuance of a
notice of deficiency.
(a) Notice and protest. If any taxpayer
requests consideration by Appeals of any
matter or issue eligible for consideration
by Appeals under section 7803(e)(5) of
the Internal Revenue Code (Code) (relat-
ing to limitation on designation of cases
as not eligible for referral to Appeals) and
the request is denied, the Commissioner
of Internal Revenue or Commission-
er’s delegate shall provide the taxpayer
a written notice that provides a detailed
description of the facts involved, the
basis for the decision to deny the request,
a detailed explanation of how the basis
for the decision applies to such facts, and
the procedures for protesting the decision
to deny the request if the requirements of
paragraphs (a)(1) though (5) of this sec-
tion are met:
(1) Notice of deficiency. The taxpayer
received a notice of deficiency authorized
under section 6212 of the Code (relating
to notice of deficiency).
(2) Frivolous positions. The issue
involved is not a frivolous position within
the meaning of section 6702(c) of the Code
(regarding listing of frivolous positions).
(3) Multiple requests for referral to
Appeals. The taxpayer has not previ-
ously requested consideration by Appeals,
pursuant to section 7803(e)(5), of the
same matter or issue in a taxable year or
period.
(4) Previous Appeals consideration.
Appeals has not previously considered the
matter or issue in a taxable year or period
that is the subject of the request and deter-
mined that the matter or issue could not be
settled or a settlement offer was rejected,
except as provided in §301.7803-2(f)(2)
with respect to a taxpayer participating in
an early consideration program.
(5) Notice of deficiency with more than
one matter or issue. If the notice of defi-
ciency for which the taxpayer requests
Appeals consideration includes more than
one matter or issue in a taxable year or
period, the taxpayer must request referral
for Appeals consideration and submit all
such matters or issues at the same time.
(b) Applicability date. This section is
applicable to relevant requests for con-
sideration by Appeals made on or after
[insert date of Treasury decision finaliz-
ing these rules is published in the Federal
Register].
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on Sep-
tember 9, 2022, 11:15 a.m. and published in the issue
of the Federal Register for September 13, 2022, 83
FR 55934)

Bulletin No. 2022–39 i September 26, 2022
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

September 26, 2022 ii Bulletin No. 2022–39
Numerical Finding List
1
Bulletin 2022–39
Announcements:
2022-14, 2022-31 I.R.B. 136
2022-15, 2022-31 I.R.B. 136
2022-16, 2022-33 I.R.B. 144
2022-17, 2022-35 I.R.B. 179
2022-18, 2022-36 I.R.B. 190
2022-19, 2022-36 I.R.B. 191
2022-20, 2022-38 I.R.B. 238
Notices:
2022-29, 2022-28 I.R.B. 66
2022-30, 2022-28 I.R.B. 70
2022-31, 2022-29 I.R.B. 85
2022-32, 2022-32 I.R.B. 137
2022-33, 2022-34 I.R.B. 147
2022-34, 2022-34 I.R.B. 150
2022-35, 2022-36 I.R.B. 184
2022-36, 2022-36 I.R.B. 188
2022-37, 2022-37 I.R.B. 234
2022-38, 2022-39 I.R.B. 239
Proposed Regulations:
REG-130975-08, 2022-28 I.R.B. 71
REG 130675-17, 2022-30 I.R.B. 104
REG-125693-19, 2022-39 I.R.B. 241
Revenue Procedures:
2022-25, 2022-27 I.R.B. 3
2022-28, 2022-27 I.R.B. 65
2022-26, 2022-29 I.R.B. 90
2022-32, 2022-30 I.R.B. 101
2022-30, 2022-31 I.R.B. 112
2022-29, 2022-33 I.R.B. 141
2022-34, 2022-33 I.R.B. 143
Revenue Rulings:
2022-12, 2022-27 I.R.B. 1
2022-13, 2022-30 I.R.B. 99
2022-14, 2022-31 I.R.B. 110
2022-15, 2022-35 I.R.B. 152
2022-17, 2022-36 I.R.B. 182
Treasury Decisions:
9963, 2022-34 I.R.B. 145
9964, 2022-35 I.R.B. 172
9965, 2022-37 I.R.B. 192
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

Bulletin No. 2022–39 iii September 26, 2022
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2022–39
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

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