Chief Counsel (FIP) declines to support an examination adjustment because it would require regulations

Plain-English summary

This is a short internal Chief Counsel Advice email from the Financial Institutions and Products (FIP) branch, responding to an examiner who was weighing whether to adjust a taxpayer's return for two tax years. The specific issue and the Code provision at stake were redacted by the IRS before release (the document is indexed only as a "Miscellaneous" matter). Chief Counsel explains that this issue had already been analyzed and coordinated before the taxpayer took its position, and that the earlier coordinated conclusion was that any adjustment would need to be supported by regulations to keep similarly situated taxpayers treated the same. A coordinated decision had already been made not to propose such regulations. Because of that, FIP advises that it does not support making the adjustment. This is guidance to IRS examiners, not a ruling for the taxpayer, and it grants nothing.

Ruling snapshot

• Question: Should Exam make the proposed adjustment to the taxpayer's return on this coordinated issue?
• Outcome: advice (FIP does not support the adjustment; regulations, which were deliberately not proposed, would be required)
• Key authorities: none cited (issue and Code provision redacted; IRS UILC index 9999.00-00, Miscellaneous)

Full text (IRS public release)

 ID:      CCA_2022070113172307                    Third Party Communication: None
 UILC:    9999.00-00                              Date of Communication: Not Applicable

Number: 202241006
Release Date: 10/14/2022
From: ----------------------
Sent: Friday, July 1, 2022 1:17:23 PM
To: -----------------------
Cc:
Bcc:
Subject: Request for Advice


This email responds to your request for advice regarding a position ---------------------------
---------------- took on its tax return for the ------- and ------- tax years. Exam is evaluating
whether to make an adjustment to taxpayer's ------- return.

This issue had been analyzed and extensively coordinated by the time taxpayer took its
position on its returns for the ------- and ------- tax years, so FIP was familiar with this
issue when we learned of this proposed adjustment. Given the many challenges with
this issue, a conclusion was reached during the prior coordination that guidance would
have had to have been provided to ensure similarly situated taxpayers were not treated
differently. That is, the result reached during the prior coordination was that regulations
would have been necessary to support an adjustment to taxpayer's return. A fully
coordinated decision was previously made not to propose such regulations.
Accordingly, FIP does not support making an adjustment to the taxpayer's return with
respect to this issue.