CCA 200933037: Assessment timing during an FPAA proceeding

Plain-English summary

Chief Counsel Advice addressed whether the Service should assess amounts shown on taxable amended returns while a related FPAA proceeding was pending. The advice stated that the restriction on assessment under section 6225 did not apply because of section 6222(c)(2), so the Service could assess immediately, although waiting could avoid duplicate work. Any payment accompanying an amended return would make an assessment unnecessary for that amount. The advice also noted that an amended return generally counts as a return for deficiency purposes unless it indicates that the additional amount is disputed, and that a purported payment treated as a deposit would require waiting until the TEFRA proceeding ended.

Ruling snapshot

• Question: Should the Service assess amended-return amounts before a related FPAA or TEFRA proceeding is complete?
• Outcome: Advice given
• Key authorities: IRC §§ 6211, 6222, and 6225; Treas. Reg. § 301.6211-1(a)

Full text (IRS public release)

ID: CCA_2009071614313837 Number: 200933037
Release Date: 8/14/2009
Office: --------------
UILC: 6222.03-00, 6211.02-00

From: -------------------
Sent: Thursday, July 16, 2009 2:31:46 PM
To: --------------------
Cc: -----------
Subject: RE: Taxable Amended Returns

---------- we should probably continue to follow our existing procedures, but not precisely for the reasons you state.

1. Correct

2. The Service can wait and probably should, but can assess immediately if it wants to since the
   restriction on assessment under section 6225 does not apply due to the operation of section 6222(c)(2). Once the FPAA proceeding becomes complete, however, that proceeding will control over section 6222. Consequently, we would have to conform any prior section 6222 assessments to the amount determined in the FPAA as issued (or as redetermined by a court pursuant to an FPAA petition). Since the eventual assessment is controlled by the FPAA proceedings, we should probably wait and make only one assessment to save resources.

3. If the amended return is accompanied by a payment, the issue is moot, since an assessment is only
   necessary in order to collect a deficiency. A "deficiency" does not include amounts paid (i.e., amounts "collected without assessment"). I.R.C. 6211(a)(1)(B). A "deficiency" also does not include amounts shown on the taxpayer's return. "Return" for this purpose includes an amended return, unless the amended return indicates that the amounts are disputed. Treas. Reg. 301.6211-1(a)(last sentence).

So If there is any possibility that the "payment" can be construed as merely a "deposit" rather than a payment, or if the amended return indicates that the additional amount is being disputed, then we cannot assess until the TEFRA proceeding is complete.

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