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IRS Clarifies Procedures For Furnishing Technical Advice.

JUL. 23, 2001

Rev. Proc. 2001-41; 2001-2 C.B. 173

DATED JUL. 23, 2001
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    For a summary of Rev. Proc. 2000-2, 2000-1 IRB 73, see Tax Notes,

    Jan. 17, 2000, p. 346; for the full text, see Doc 2000-1819 (30

    original pages) or 2000 TNT 12-5.

    Part III

    Administrative, Procedural, and Miscellaneous

    26 CFR 601.05: Examination of returns and claims for refund, credit,

    or abatement; determination of correct tax liability.
  • Subject Area/Tax Topics
  • Index Terms
    employee benefit plans
    exempt organizations
    enforcement
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2001-19955 (3 original pages)
  • Tax Analysts Electronic Citation
    2001 TNT 142-19
Citations: Rev. Proc. 2001-41; 2001-2 C.B. 173

Modified by Rev. Proc. 2002-2

Rev. Proc. 2001-41

SECTION 1. PURPOSE

.01 This revenue procedure modifies Rev. Proc. 2001-2 to clarify that Technical Advice will not be issued on frivolous issues and to provide a procedure for expedited review of denials of Technical Advice where the taxpayer requests Technical Advice on frivolous issues.

SECTION 2. MODIFICATIONS

.01 Section 3 of Rev. Proc. 2001-2, On What Issues May Technical Advice be Requested Under This Procedure, is modified by the addition of subsection .03 below, which provides that technical advice will not be issued on frivolous issues.

     Technical advice will not be issued on frivolous issues. For

 

     purposes of this program, a "frivolous issue" is one without

 

     basis in fact or law, or that espouses a position which has been

 

     held by the courts to be frivolous or groundless. Examples of

 

     frivolous or groundless issues include, but are not limited to:

 

 

     1. frivolous "constitutional" claims, such as claims that the

 

     requirement to file tax returns and pay taxes constitutes an

 

     unreasonable search barred by the Fourth Amendment; violates

 

     Fifth and Fourteenth Amendment protections of due process;

 

     violates Thirteenth Amendment protections against involuntary

 

     servitude; or is unenforceable because the Sixteenth Amendment

 

     does not authorize nonapportioned direct taxes or was never

 

     ratified;

 

 

     2. claims that income taxes are voluntary, that the term

 

     "income" is not defined in the Internal Revenue Code, or that

 

     preparation and filing of income tax returns violates the

 

     Paperwork Reduction Act;

 

 

     3. claims that tax may be imposed only on coins minted under a

 

     gold or silver standard or that receipt of Federal Reserve Notes

 

     does not cause an accretion to wealth;

 

 

     4. claims that a person is not taxable on income because he or

 

     she falls within a class entitled to "reparation claims" or an

 

     extra-statutory class of individuals exempt from tax, e.g.,

 

     "free-born" individuals;

 

 

     5. claims that a taxpayer can refuse to pay taxes on the basis

 

     of opposition to certain governmental expenditures;

 

 

     6. claims that taxes apply only to federal employees; only to

 

     residents of Puerto Rico, Guam, the U.S. Virgin Islands, the

 

     District of Columbia, or "federal enclaves"; or that the

 

     Internal Revenue Code imposes taxes on U.S. citizens and

 

     residents only on income derived from foreign based activities;

 

 

     7. claims that wages or personal service income are not

 

     "income," are "nontaxable receipts," or "are a nontaxable

 

     exchange for labor;" or

 

 

     8. other claims the courts have characterized as frivolous or

 

     groundless.

 

 

.02 Section 11 of Rev. Proc. 2001-2, How Does a Taxpayer Appeal a Director's or Area Director, Appeals', Decision not to Seek Technical Advice, is modified by adding subsection .05 below, which provides for expedited review procedures where the denial of technical advice is because the requested advice concerns frivolous issues.

     Special procedures applicable to appeals regarding frivolous

 

     issues. If the request for technical advice concerns a

 

     "frivolous issue," as described in Section 3.03 of this Revenue

 

     Procedure, technical advice will not be given, and the examining

 

     officer or appeals officer will deny the taxpayer's request for

 

     referral. The taxpayer may appeal the decision of the examining

 

     officer or the appeals officer; however, if the territory

 

     manager or area director, appeals, determines that no technical

 

     advice will be sought, an expedited review procedure will be

 

     followed.

 

 

     This expedited review procedure will consist of the following:

 

     1) the territory manager or area director, appeals, will inform

 

     the appropriate official described in section 11.04 above (the

 

     Industry Director, LMSB; the Director, Field Compliance, SB/SE;

 

     the Director, Compliance, W&I; the Director, International,

 

     LMSB; the Director, Federal, State, and Local Governments; the

 

     Director, Tax Exempt Bonds; the Director, Indian Tribal

 

     Governments; or the Chief, Appeals) of the request for review

 

     and the basis for the denial, but will not forward the

 

     taxpayer's written request and statements, unless requested to

 

     do so by the official; 2) the field office or area office will

 

     not suspend action on the issue; 3) within 15 days, the official

 

     will notify the territory manager or area director, appeals,

 

     whether the proposed denial is approved or disapproved. The

 

     official may also determine that the expedited process is not

 

     warranted and request all of the information supplied by the

 

     taxpayer and allow suspension of action on the item while the

 

     denial is reviewed; and 4) the field office or area office will

 

     then notify the taxpayer of the result of the review of the

 

     denial.

 

 

SECTION 3. EFFECTIVE DATE

This revenue procedure is effective July 23, 2001, the date this revenue procedure was released to the news media.

SECTION 4. DRAFTING INFORMATION

The principal author of this revenue procedure is George Bowden of the Office of the Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue procedure contact Mr. Bowden on 202-622-3400 (not a toll free call).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    For a summary of Rev. Proc. 2000-2, 2000-1 IRB 73, see Tax Notes,

    Jan. 17, 2000, p. 346; for the full text, see Doc 2000-1819 (30

    original pages) or 2000 TNT 12-5.

    Part III

    Administrative, Procedural, and Miscellaneous

    26 CFR 601.05: Examination of returns and claims for refund, credit,

    or abatement; determination of correct tax liability.
  • Subject Area/Tax Topics
  • Index Terms
    employee benefit plans
    exempt organizations
    enforcement
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2001-19955 (3 original pages)
  • Tax Analysts Electronic Citation
    2001 TNT 142-19
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