CCA 1211022: Counsel analyzes whether transaction codes established a tax assessment

Plain-English summary

Chief Counsel analyzes whether the IRS made a valid assessment of tax that was later involved in an erroneous refund. The advice explains that the existence of a collection statute expiration date depends on whether the relevant amount was included in the summary record of assessment. It concludes that a credit reversal recorded with a TC 300 assessment code would establish an assessment if the reversal appeared in the assessment certificate or summary record, while a TC 300 alone without that amount would not. The advice also describes how Form 5344, the Master File, and RRACS contribute to the assessment records.

Ruling snapshot

• Question: Did the transaction codes and supporting records establish a valid assessment of the amount later refunded?
• Outcome: Advice given.
• Key authorities: IRC § 6203; Treas. Reg. § 301.6203-1

Full text (IRS public release)

ID: CCA_2011081817112320 Number: 201211022
Release Date: 3/16/2012
Office: --------------
UILC: 6201.01-00

From: --------------------
Sent: Thursday, August 18, 2011 5:12:24 PM
To: ----------------
Cc: -------------------
Subject: Record of Assessment

You requested our views on your advice regarding the CSED in the above-referenced
reparations erroneous refund case. Technical Services asked whether ----------------------
was the correct CSED for the $----------erroneously refunded to the taxpayer. We
advised that under the facts -------------------could not be the CSED. The issue remained
whether there is a CSED at all, i.e., whether there was a valid assessment of the $-------
------------refunded to the taxpayer in -------. The pertinent facts can be summarized as
follows: In -------, the taxpayer filed an amended ------- return seeking a $--------------------
refund based on a claim for slavery reparations. In 2004, the Service examined the
taxpayer’s ------- returns and issued a notice of deficiency in the amount of $---------.
The taxpayer did not file a petition with the Tax Court. The taxpayer’s transcript shows
a TC 300 with $-----------in August 2004. In the same cycle, there is TC 767 credit
reversal for $-----------as of -------------------(corresponding with the ------- credit that
resulted in the erroneous refund).
If there were no valid assessment of the erroneously refunded $---------, there would be
no CSED as there would be no assessment to collect. You concluded that there was no
assessment of the $---------, finding that the TC 300 with $-------and the TC 767 with $----
------------is “an indication that the Service did not make the assessment of additional tax
in the amount of $----------after the taxpayer defaulted her Notice of Deficiency.” In
discussing the case with you previously, we suggested that the opposite conclusion
might be reached in light of the transaction codes—although there is a $--------
corresponding with the TC 300 assessment code, the TC 300 along with the reversal of
$----------in the same cycle is sufficient to demonstrate an assessment.
Clarifying our earlier comments, it is not a matter of whether an argument can be
constructed that the two transaction codes amount to an assessment, but rather
whether, given those transaction codes, an amount ($---------) was included in the
summary record of assessment. Section 6203 provides that assessments “shall be
made by recording the liability of the taxpayer in the office of the Secretary in
accordance with rules or regulations prescribed by the Secretary.” The Treasury
Regulations further provide, in relevant part:
 2

     The assessment shall be made by an assessment officer signing the
     summary record of assessment. The summary record, through supporting
     records, shall provide identification of the taxpayer, the character of the
     liability assessed, the taxable period, if applicable, and the amount of the
     assessment. … The date of the assessment is the date the summary
     record is signed by an assessment officer.

Assessments are made on assessment certificates/summary records of assessments
Form 23C/RRACS Report 006 which aggregate all assessments for a particular
assessment date as current assessments (generally TC 150s) or deficiency
assessments (adjustments). Information on the assessments against particular
taxpayers is found in supporting documentation. If the $----------credit reversal is
reflected in the summary record of assessment/assessment certificate, there was an
assessment. If, on the other hand, the summary record of assessment/assessment
certificate pulls in only the TC 300 with its corresponding $------, nothing was assessed.
We contacted personnel in one of the service centers and also the Office of the Deputy
Chief Financial Officer to determine what information gets rolled up into the summary
record of assessment/assessment certificate. We have been advised that the
assessment certificate would include in the deficiency assessment total the $------------
credit reversal. The Form 5344 is used to input information, including the TC 300
assessment code showing $-------and the TC 767 credit reversal transaction code
showing $----------into the Master File. In your case, the two transaction codes were in
the same cycle, sharing the same DLN ----------------------------------. The Master File
would transmit the $----------to RRACS for posting to its database. RRACS in turn would
include that dollar amount in the aggregate deficiency assessment on the summary
record of assessment report for that assessment date.

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------

If you have questions or comments, please contact me.