Section 6222 inconsistent-treatment assessment is an administrative proceeding

Plain-English summary

Chief Counsel considered whether an assessment based on a partner's inconsistent treatment under section 6222 is an administrative proceeding for the disclosure rule in section 6103(h)(4). The advice identified three elements: a procedure or action, a determination or collection of tax liability, and notice plus an opportunity for the affected person to provide information. It concluded that a section 6222 assessment meets all three elements. The email therefore advised that the assessment is an administrative proceeding for purposes of section 6103(h)(4).

Ruling snapshot

• Question: Is an assessment for inconsistent treatment under IRC § 6222 an administrative proceeding for IRC § 6103(h)(4)?
• Outcome: advice given
• Key authorities: IRC §§ 6103(h)(4), 6222, and 6223

Full text (IRS public release)

ID: CCA_2016102809052543
UILC: 6103.08-04, 6222.03-00, 6222.00- 00
Number: 201711010
Release Date: 3/17/2017
From:
Sent: Friday, October 28, 2016 9:05:25 AM
To:
Cc:
Bcc:
Subject: RE: Disclosure -------------

Hi -------,

I am familiar with the Disclosure Manual. While an audit is also an administrative proceeding, it is not limited to audits. The language you cite is (emphasis added):

Administrative proceeding pertaining to tax administration under section 6103(h)(4) means any procedure or other action arising out of or in connection with a determination of a person’s liability or potential liability, or in connection with the collection of that person’s liability, under the internal revenue laws or related statutes and tax conventions to which the United States is a party, and in which a person, whose liability or potential liability, or collection of that person’s liability, is or may be at issue, is given notice and an opportunity to present information to the IRS. In First W. Gov’t Sec, Inc.. v. United States, 578 F. Supp. 212, 217-18 (D. Colo. 1984), aff'd, 796 F.2d 356 (10th Cir. 1986), and in Nevins v. United States, No. 84-4147, 1987 WL 47316, at *3 (D. Kan. Aug. 26, 1987), audits were found to be administrative tax proceedings for purposes of the statute. See also Abelein v. United States, 323 F.3d 1210, 1214-15 (9th Cir. 2003) (by statute – I.R.C. § 6223 – TEFRA audits are administrative tax proceedings).

So, there are several elements:

1. Procedure or other action
2. In which liability is determined or collected under the Code 3. In which the person is given notice and opportunity to present information

If we assess following an inconsistent treatment:

1. It’s a procedure or other action
2. Liability is determined under the Code 2

3. The person is given notice and has an opportunity to present information

I am comfortable saying that an assessment for inconsistent treatment under 6222 is an administrative proceeding for purposes of 6103(h)(4). I also discussed this issue with my other senior counsel colleague (cc’d on this email) who also specializes in disclosure, and she is in full agreement as well.

Thanks,
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