Tax Court docket suspended limitations period without deficiency notice

Plain-English summary

IRS Counsel considered whether § 6503(a) suspends the assessment limitations period when a deficiency proceeding is placed on the Tax Court's docket even though the IRS never issued a statutory notice of deficiency for that deficiency. Counsel concluded that the docketing itself triggers the statute's parenthetical rule. The period remains suspended until 60 days after the Tax Court's decision becomes final, regardless of whether a deficiency notice was issued. Counsel also stated that contrary language in the Internal Revenue Manual was incorrect.

Ruling snapshot

• Question: Does § 6503(a) suspend the limitations period when a deficiency case is docketed in Tax Court without a statutory notice of deficiency?
• Outcome: advice given, the period is suspended
• Key authorities: IRC §§ 6212(a), 6501, 6502, and 6503(a)

Full text (IRS public release)

Office of Chief Counsel
Internal Revenue Service
Memorandum
Number: 201644020
Release Date: 10/28/2016
CC:PA:02:EMISHORY
POSTS-132602-15

UILC:     6503.00-00

date:    September 16, 2016

to:      Adam L. Flick
         Associate Area Counsel
         (Small Business/Self-Employed)

from:    Blaise Dusenberry
         Senior Technician Reviewer
         (Procedure & Administration)


subject: The application of the suspension of the period of limitation in section 6503 when a
         case is docketed in Tax Court but no statutory notice of deficiency was issued

This Chief Counsel Advice responds to your request for assistance. This advice may
not be used or cited as precedent.

ISSUE

Does the suspension of the period of limitations provided in section 6503(a) apply when
a proceeding in respect of a deficiency is docketed in Tax Court, but the Service did not
issue a statutory notice of deficiency under section 6212(a) (“SND”) regarding that
deficiency to the taxpayer?

CONCLUSION

Yes. Section 6503(a) provides that the period of limitations on assessment is
suspended if a proceeding in respect of the deficiency is placed on the docket of the
Tax Court, until 60 days after the decision of the Tax Court becomes final, and this
suspension applies regardless of whether a SND was issued to the taxpayer for that
deficiency or not.

BACKGROUND

IRM section 8.20.7.21.2 discusses closing procedures that Service Appeals officers
should follow in closing cases docketed in Tax Court that were dismissed for lack of

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jurisdiction. Paragraph four states if a petition is dismissed for lack of jurisdiction
because the Service did not issue a SND, the period of limitation on assessment is not
suspended. This indicates that the suspension of the period of limitation on assessment
in section 6503(a) does not apply in a case where a proceeding is docketed in tax court
but the Service did not issue a SND. You requested advice regarding the applicability
of the 6503(a) suspension to such cases.

LAW AND ANALYSIS

Section 6503(a) provides that

      The running of the period of limitations provided in section 6501 or
      6502 . . . shall (after the mailing of a notice under section 6212(a)) be
      suspended for the period during which the Secretary is prohibited from
      making the assessment or from collecting by levy or a proceeding in court
      (and in any event, if a proceeding in respect of the deficiency is placed on
      the docket of the Tax Court, until the decision of the Tax Court becomes
      final), and for 60 days thereafter.

The second parenthetical above, beginning “and in any event”, extends the suspension
to cases where the Service was not prohibited from making the assessment or
collection. It also extends the suspension to cases where the Service did not mail a
SND to the taxpayer regarding that deficiency. Therefore, if a proceeding in respect of
a deficiency is docketed in Tax Court, the suspension of the periods of limitation on
assessment applies even if the Service did not mail a SND. Any indication in the IRM
that the suspension does not apply if the Service did not mail a SND is incorrect.

CASE DEVELOPMENT, HAZARDS AND OTHER CONSIDERATIONS

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