Ezel / IRS Rulings / 200848038

CCA 200848038: Settlement cover letter should retain statutory term malfeasance

Number
200848038
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Settlement Agreement
Topics
Procedure, penalties, and administration
Code sections
§ 6224, § 7121
Ruling dated
July 15, 2008
Publicly released
November 28, 2008
Source
View Official PDF

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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2008, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2008
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised retaining “malfeasance” in a cover letter describing when a settlement agreement is not final. Both the closing-agreement and TEFRA-settlement statutes use that term, and the operative forms would continue to do so. Courts had interpreted malfeasance in this context as conduct amounting or similar to fraud. Replacing it with “misconduct,” a term not judicially construed in this setting, could inaccurately broaden or alter the stated exception.

Ruling snapshot

  • Question: Should a settlement cover letter replace “malfeasance” with “misconduct”?
  • Outcome: Advice given. No; retain the statutory and judicially construed term “malfeasance.”
  • Key authorities: IRC §§ 6224(c) and 7121; H-Graphics v. Commissioner, T.C. Memo. 1992-345.

Full text (IRS public release)

1

ID: CCA-715114-08 Number: 200848038
Office: --------------
Release Date: 11/28/2008

UILC: 6224.01-01

From: -------------------
Sent: Tue 7/15/2008 11:45 AM
To: --------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
------------------------
Subject: FW: Wordsmiths

The exception to finality in a settlement agreement is specified by statute in both section 7121 (governing closing agreements) and 6224(c)(TEFRA settlement agreements). See H-Graphics v. Commissioner, T.C. Memo. 1992-345. Both use the term "malfeasance" rather than "misconduct." Since the operative TEFRA settlement forms will continue to use the word "malfeasance", the change in language to the cover letter could actually be misleading since "malfeasance" has different alternative meanings than "misconduct." The courts have construed "malfeasance" as amounting to or similar to fraud in this context, but have not construed the word "misconduct" in this context.

I recommend sticking with the word "malfeasance" since it is more accurate, it is the legally correct term, and the term "misconduct" may not accurately describe the circumstances in which the agreement will not be considered binding.

ATTACHMENT 1 (REDACTED)

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