In situations where a taxpayer or their practitioner are in a disagreement with an agent over a specific item involved in an audit, the taxpayer may request to bring in advice from the IRS National Office. This type of situation must be unique and complex in order to warrant the National Offices attention.
A Technical Advice Memorandum is basically written advice that the IRS National Office has given on a specific problem that the taxpayer and an audit agent cannot come to an agreement on. Remember that the IRS National Office will only furnish advice when the problem is both unique and complex; simply not agreeing to disagree is not enough.
Requesting a Technical Advice Memorandum
If a taxpayer chooses to request a Technical Advice Memorandum there are a few things they need to know.
The taxpayer has the ability to request a Technical Advice Memorandum at any time during an IRS preceding that involves the interpretation or application of any tax law, regulation, ruling or something similar in nature.
If you choose to file a request for a TAM, you must do so by requesting the Director or Appeals Area Director that is assigned to your case to file it for you. In a situation where your request is denied by a Director or Appeals Area Director of the IRS, you have the option of appealing the decision.
If your request for a TAM is accepted, the advice that is provided by the IRS National Office is binding to the IRS if the advice is adverse to the IRS. In a situation where the advice is adverse to the taxpayer, that advice is not binding and can basically be appealed if necessary.
Preparing a Request for a TAM
Depending on who initiates the request for a TAM will determine how the preparation will be conducted. In the case where the IRS initiates the TAM, the taxpayer will be given a copy of the request and is allowed the ability to modify the statement by the IRS or submit an additional statement to the National Office. If the request is initiated by the taxpayer, the taxpayer must prepare a statement of facts that will be presented to the IRS National Office. IRS is given the right to submit an additional statement to the National Office if it wishes to do so.
Warning for Requesting a TAM
There is a risk involved when requesting a Technical Advice Memorandum. This risk stems from the possibility the IRS will favor the IRS over the taxpayer. If the National Office rules in favor of the IRS, the taxpayer will have a significantly reduced chance of having their case settled with the Appeals Office.