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Administrative, Procedural, and Miscellaneous
26 CFR 601.05: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability.
SECTION 1. PURPOSE
.01 This revenue procedure modifies Rev. Proc. 2001-2 to clarify that Technical
Advice will not be issued on frivolous issues and to provide a procedure for
expedited review of denials of Technical Advice where the taxpayer requests
Technical Advice on frivolous issues.
SECTION 2. MODIFICATIONS
.01 Section 3 of Rev. Proc. 2001-2, On What Issues May Technical Advice be
Requested Under This Procedure, is modified by the addition of subsection .03
below, which provides that technical advice will not be issued on frivolous
Technical advice will not be issued on frivolous issues. For purposes of this
program, a "frivolous issue" is one without basis
in fact or law, or that espouses a position which has been
held by the courts to be frivolous or groundless. Examples
of frivolous or groundless issues include, but are not limited
1. frivolous "constitutional" claims, such as claims that the requirement
to file tax returns and pay taxes constitutes an
unreasonable search barred by the Fourth Amendment; violates Fifth and Fourteenth
Amendment protections of due process; violates Thirteenth Amendment protections
against involuntary servitude; or is unenforceable because the Sixteenth Amendment
does not authorize nonapportioned direct taxes or was never ratified;
2. claims that income taxes are voluntary, that the term "income"
is not defined in the Internal Revenue Code, or that preparation
and filing of income tax returns violates the Paperwork Reduction
3. claims that tax may be imposed only on coins minted under a gold or silver
standard or that receipt of Federal Reserve Notes does not cause an accretion
4. claims that a person is not taxable on income because he or she falls within
a class entitled to "reparation claims" or an extra-statutory
class of individuals exempt from tax, e.g., "free-born"
5. claims that a taxpayer can refuse to pay taxes on the basis of opposition
to certain governmental expenditures;
6. claims that taxes apply only to federal employees; only to residents of
Puerto Rico, Guam, the U.S. Virgin Islands, the District of
Columbia, or "federal enclaves"; or that the Internal
Revenue Code imposes taxes on U.S. citizens and residents
only on income derived from foreign based activities;
7. claims that wages or personal service income are not "income,"
are "nontaxable receipts," or "are a nontaxable
exchange for labor;" or
8. other claims the courts have characterized as frivolous or groundless.
.02 Section 11 of Rev. Proc. 2001-2, How Does a Taxpayer Appeal a Director's
or Area Director, Appeals', Decision not to Seek Technical Advice, is modified
by adding subsection .05 below, which provides for expedited review procedures
where the denial of technical advice is because the requested advice concerns
Special procedures applicable to appeals regarding frivolous issues. If the
request for technical advice concerns a
frivolous issue," as described in Section 3.03 of this Revenue Procedure,
technical advice will not be given, and the examining officer or appeals officer
will deny the taxpayer's request for referral. The taxpayer may appeal the
decision of the examining officer or the appeals officer; however, if the territory
manager or area director, appeals, determines that no technical advice will
be sought, an expedited review procedure will be followed.
This expedited review procedure will consist of the following: 1) the territory
manager or area director, appeals, will inform the appropriate
official described in section 11.04 above (the Industry Director,
LMSB; the Director, Field Compliance, SB/SE; the Director,
Compliance, W&I; the Director, International, LMSB; the
Director, Federal, State, and Local Governments; the Director,
Tax Exempt Bonds; the Director, Indian Tribal Governments;
or the Chief, Appeals) of the request for review and the basis
for the denial, but will not forward the taxpayer's written
request and statements, unless requested to do so by the official;
2) the field office or area office willnot suspend action
on the issue; 3) within 15 days, the official will notify
the territory manager or area director, appeals, whether the
proposed denial is approved or disapproved. The official may
also determine that the expedited process is not warranted
and request all of the information supplied by the taxpayer
and allow suspension of action on the item while the denial
is reviewed; and 4) the field office or area office will then
notify the taxpayer of the result of the review of the denial.
SECTION 3. EFFECTIVE DATE
This revenue procedure is effective July 23, 2001, the date this revenue procedure
was released to the news media.
SECTION 4. DRAFTING INFORMATION
The principal author of this revenue procedure is George Bowden of the Office
of the Associate Chief Counsel (Procedure & Administration).
For further information regarding this revenue procedure contact
Mr. Bowden on 202-622-3400 (not a toll free call).
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