Mitigation may address a double allowance of research and work opportunity credits

Plain-English summary

The Office of Chief Counsel analyzed whether the mitigation provisions of IRC Sections 1311 through 1314 could address a taxpayer's potential double benefit from research and work opportunity credits. Chief Counsel explained that mitigation requires, among other things, a barred correction, a determination under Section 1313(a), a circumstance of adjustment under Section 1312, and the conditions in Section 1311(b). The advice found that the limitations period barred correction and that part of the double-credit circumstance was present, but no qualifying determination had yet been made. It concluded that the requirements were either met or could be met, allowing one year after the determination to assess and collect the resulting deficiency.

Ruling snapshot

• Question: Could the IRC mitigation provisions address an alleged double allowance of research and work opportunity credits?
• Outcome: Advice, mitigation may provide a valid avenue if the remaining requirements are satisfied
• Key authorities: IRC §§ 39, 41, 51, 1311, 1312, 1313, 1314, 6501, 7121; Thrifty Oil Co. v. Commissioner, 139 T.C. 198 (2012)

Full text (IRS public release)

ID: CCA_2026012611413200
UILC: 1311.00-00, 1312.03-00,
1313.00-00, 1314.00-00
Number: 202634013
Release Date: 8/21/2026
From: ------------------
Sent: Monday, January 26, 2026 11:41:33 AM
To: ----------------------
Cc: ------------------------
Bcc:
Subject: Requested National Office Coordination re Denial of Double Benefit

Hi -----,

Good morning! Below are our findings on the applicability of mitigation to the double-credit issue in --------------------------. Our written findings on the other methods of recovery discussed are forthcoming pending implementation of additional comments.

Issue:

Whether the mitigation rules of I.R.C. §§ 1311-1314 permit the Internal Revenue Service (IRS)
to open the Taxpayers ---------------, a closed TY, to prevent the Taxpayer from getting a double
benefit of the research credit under I.R.C § 41 (RC) and a double credit of the work opportunity
credit under I.R.C. § 51 (WOC).

Analysis:

Sections 1311 through 1314 of the Internal Revenue Code provide that the Service may apply
mitigation provisions to make adjustments to tax items that would otherwise be prohibited by
operation of law, such as where the period of limitation under section 6501 has run. In order for
mitigation to apply, (1) correction of the error must be barred at the date of determination by
operation of law, (2) there must be a determination as defined under section 1313(a), (3) there
must be a circumstance of adjustment as defined under section 1312, and (4) there must be a
condition necessary for adjustment as defined under section 1311(b). I.R.C. § 1311.

Section 1313(a) consists of a list of four determinations which satisfy requirement (2) above.
There are three relevant determinations for the purposes of this analysis; a closing agreement
made under section 7121; a final disposition by the Secretary of a claim for refund; and a written
agreement under Treasury Regulation 1.1313(a)-4. The Service has developed Form 2259,
Agreement as Determination, for use in the latter scenario, although use of this form is rare.

Section 1312 consists of a list of seven circumstances under which adjustments are authorized.
The second circumstance is a double allowance of a deduction or credit, wherein a
determination under section 1313(a) allows a taxpayer to claim a credit in one year which was
erroneously granted in a separate year. I.R.C. § 1312(2). This is limited to situations in which the
credit in question could be applied in one year but for the other, taking into account the double
benefit rule. Id.; Thrifty Oil Co. v. Commissioner, 139 T.C. 198, 205 (2012) (holding that
double allowances of the same deduction are impermissible absent a showing of congressional
intent).

Section 1311(b) establishes the conditions which are necessary for an adjustment under the
mitigation provisions to apply. Section 1311(b)(1)(B) applies to adjustments assessed and
collected in a like manner to a deficiency, and requires that the position maintained by the
taxpayer and adopted in the determination be inconsistent with the erroneous double allowance
of the credit.

In the case at hand, requirement one is met. The year in which the excess allowance of the
research credit occurred, -----------, is barred from correction by the running of the period of
limitation under section 6501. Requirement two is not met, as there has not been a
determination as defined in section 1313(a). However, once the Service reaches a
determination with respect to taxpayer’s refund claim on the amended return, there will be a
determination under section 1313(a)(3). Alternatively, it is still possible to enter a closing
agreement under section 7121, or Form 2259. Requirement three, a circumstance of adjustment
under section 1312, is also met, but only as to a portion of the erroneously overstated credit.
The double credit scenario of section 1312(2) requires not only that a credit have been
erroneously allowed, but that the service or taxpayer attempt to apply that same credit correctly
in another year. It is therefore not enough that the taxpayer incorrectly applied -----------------------
--------------------------------------------------------------------------------------------------------worth of research
credit to -----------; that credit must be correctly applied somewhere else. This precise scenario
fits ----------------worth of excess research credit calculated by the Service for -----------; to apply
correctly, it should be carried back under section 39 to ------------and applied there. However, the
Taxpayer erroneously carried it forward first to -----------, and then as part of the -----------------
worth of excess research credit to -----------. Since the taxpayer amended their return to claim
that amount in the correct year, then there would be a double allowance of credit as described in
section 1312(2) that the mitigation provisions could address. If the taxpayer agrees to do so,
and maintain this position in the closing agreement (that the appropriate year to apply the --------
---------------worth of research credit is -----------), then requirement four could be met and
mitigation could present a valid avenue to reducing the erroneously overstated research credit
in ------------by ---------------. Finally, section 1311(b)(1) requires the maintenance of an
inconsistent position. Here, the adjustment to ------------would be assessed and collected in the
same manner as a deficiency under section 1314. Therefore, the determination (i.e., the closing
agreement or disposition of the refund claim) would need to adopt the position maintained by the
taxpayer with respect to whom the determination is made. The taxpayer’s position in the
amended return is that the taxpayer is entitled to research credits for tax years -----------------------
-------------------------------------------------------------------------------------------------------------------.
Granting the refund claim on the amended return would adopt the taxpayer’s position with
respect to the research credit available for the --------------------------tax years.

Conclusion:

Since each element of the mitigation provisions are either already met or can be met here, the
Secretary shall have one year from the date of the determination to assess and collect the
resulting deficiency from ------------------. I.R.C. § 1314(b).

Best wishes,

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