CCA 201312035: excise tax could be assessed for open years of a continuing transaction
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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2013, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.
Plain-English summary
Chief Counsel advised that a continuing transaction could support assessment of the IRC § 4975 excise tax for taxable years that remained open under the statute of limitations. The expiration of the limitation period for the first years of the transaction did not prevent assessment for later open years. The advice also stated that the excise tax could not be assessed for closed years. It referred to IRM guidance and Rev. Rul. 2002-43 concerning a loan treated as a continuing transaction.
Ruling snapshot
- Question: Could section 4975 excise tax be assessed for open years of a continuing transaction after earlier years closed?
- Outcome: Advice given, tax could be assessed for open years but not closed years.
- Key authorities: IRC § 4975; Rev. Rul. 2002-43; IRM 4.71.9.5.2(d)
Full text (IRS public release)
ID: CCA_2012102212160650 Number: 201312035
Release Date: 3/22/2013
Office: --------------------------
UILC: 4975.06-01, 4975.08-00
From: -------------------
Sent: Monday, October 22, 2012 12:16:07 PM
To: ------------------
Cc: ----------------------------------
Subject: RE: Guidance on Case
Look at the attached IRM cite 4.71.9.5.2 d that says: "Unlike a discrete act, the statutory period may expire for the act engaged in the first year, but the tax may be assessed for subsequent acts deemed to have occurred for which the statutory period has not expired." Thus, although the statute has expired for the taxable years ------- through -------, you can still assess the tax on tax years that are opened, however, you cannot assess the section 4975 excise tax on the closed years.
This is also consistent with the attached Rev. Rul. 2002-43 in which the excise tax was different on a loan that was a continuing transaction. See the taxable years 1997 and 1998 in the revenue ruling.
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ATTACHMENTS: IRM 4.71.9; Rev. Rule 2002-43
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