CCA 200036022: Deficiency notice should go to successor corporation

Plain-English summary

One corporation merged into another, which survived the merger and became responsible for the predecessor's obligations under the merger documents and the cited state statute. The predecessor had filed a final return for a short tax year, and the IRS wanted to issue a statutory notice of deficiency for that period. Chief Counsel advised the IRS to address the notice to the surviving corporation as successor in interest to the predecessor. The advice concerns the recipient of the notice, not the amount of the tax deficiency.

Ruling snapshot

• Question: Which corporation should receive a deficiency notice for the predecessor's final short tax year?
• Outcome: Advice: issue the notice to the surviving successor corporation.
• Key authorities: IRC § 6213 (indexed issue); the merger documents and the redacted state statute.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224

June 7, 2000

Number: 200036022
Release Date: 9/8/2000
CC:DOM:FS:PROC
TL-N-2360-00
UILC: 6213.03-03

INTERNAL REVENUE SERVICE NATIONAL OFFICE FIELD SERVICE ADVICE

MEMORANDUM FOR DISTRICT COUNSEL
DISTRICT COUNSEL, NORTH FLORIDA CC:SER:NFL:JAX

FROM: Assistant Chief Counsel
(Field Service) CC:DOM:FS:PROC

SUBJECT: Request for Chief Counsel Advice
Issuance of Statutory Notice of Deficiency to Successor Corporation

This Chief Counsel Advice responds to your memorandum dated May 19, 2000. Chief Counsel Advice is not binding on Examination or Appeals and is not a final case determination. This document is not to be cited as precedent.

LEGEND:

A=
B=
C=
D=
Date 1=
Date 2=
Statute 1=

ISSUE:

To which party should the Internal Revenue Service (Service) issue the statutory notice of deficiency?

CONCLUSION:

The Service should issue the statutory notice of deficiency to B, as successor in interest to A.

2

FACTS:

A was incorporated in State C. B is a taxable corporation organized under tribal law. B was incorporated on Date 1 when the certificate of incorporation was filed with the Secretary of D. The articles of merger dated Date 2 between A and B were prepared and filed with the Secretary of State of State C. The articles of merger provide that A will merge into B, with B the surviving entity. The articles further provide that B shall succeed to all the rights, privileges, immunities, and franchises and all the property, real, personal, and mixed of A without the necessity for any separate transfer and that B shall be responsible and liable for all obligations of A and neither the rights of the creditors nor any liens on the property of A shall be impaired by the merger. Statute 1 renders the surviving corporation responsible and liable for all the liabilities and obligations of each corporate party to the merger. A filed its final return for the short year ending Date 2. It is this period for which the Service wishes to issue a statutory notice of deficiency for A’s tax liability. LAW AND ANALYSIS

The statutory notice of deficiency for A’s tax liability for the short year ending Date 2, should be issued to B, as successor in interest to A.

CASE DEVELOPMENT, HAZARDS AND OTHER CONSIDERATIONS:

None.

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