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TAX CLINIC

unconstitutional, a Treasury regulation meet certain requirements to trigger the
The proposed is invalid, or a notice or revenue proce- IRS’s obligation, including receiving a
dure is invalid.
statutory notice of deficiency and not
regulations would The proposed regulations asked for having previously requested Appeals
implement statutory comments on whether Appeals ought consideration for the same matter or
to be able to consider two types of cases
issue in a tax year or period. If the
language requiring listed as exclusions in the Internal Rev- taxpayer fulfills those requirements,
the IRS to enue Manual but not in the proposed the IRS would have to provide the
notify a taxpayer regulations — those requesting “9100 taxpayer a written notice with a detailed
description of the facts involved, the
relief ” extending the time to make an
of the reasons election (under Regs. Secs. 301.9100-1 basis for the decision to deny the re-
for denying through -3) and those requesting quest, a detailed explanation of how
the basis for the decision applies to
changes of accounting method. In both
a request circumstances, the IRM currently denies those facts, and the procedures for
for referral Appeals consideration for a decision protesting the decision to deny
the request.
issued by an Associate Office where the
to Appeals. decision is reviewable by a court under
an abuse-of-discretion standard. Implications
The proposed regulations would for-
issued the statutory notice of deficiency; Notification of reasons for malize what constitutes a “federal tax
(5) cases designated for litigation; and denying a referral to Appeals controversy” and clarify which cases will
(6) cases withheld on the basis of sound The proposed regulations would also be excluded from going to Appeals —
tax administration, among others. implement statutory language requir- notably including challenges to statutes
The proposed regulations would also ing the IRS to notify a taxpayer of the and the validity of regulations and sub-
exclude from Appeals consideration reasons for denying a request for referral regulatory guidance. This clarity should
challenges alleging that a statute is to Appeals. The taxpayer would have to help taxpayers determine whether to ap-
peal an IRS decision and the arguments
a taxpayer might make in an appeal.
The proposed regulations also identi-
fy the requirements for both the taxpayer
and the IRS when a request for Appeals
consideration is denied. This added
transparency into the IRS’s decision-
making and information concerning the
basis for denial will assist taxpayers in
understanding more about how the IRS
views their case and issues, as well as
determining whether to protest the deci-
sion to deny the request.
From Kirsten Wielobob, J.D., and
John Dilorio, J.D., LL.M., Washington,
D.C. ■
PHOTO BY MINT IMAGES/GETTY IMAGES Editor

Susan Minasian Grais, CPA, J.D., LL.M.,
is a managing director at Ernst & Young
LLP in Washington, D.C.

22 January 2023 The Tax Adviser