Policy Statement 8-2 (Formerly P-8-49)
(1) New issues not to be raised by Appeals.
(2) Appeals will not raise new issues. Appeals also will not reopen an issue on which the taxpayer and the Service are in agreement.The memorandum implements this policy with new IRM provisions in various contexts -- Collection Due Process, Offers in Compromise, Collection Appeals Program, and Examination Cases. I focus here on Examination Cases. The effect of the new approach on Examination cases is set forth in Attachment 5 to the Memorandum. Key points in attachment 5 are:
- The prohibition on raising new issues also applies in Appeals consideration of docketed cases. (IRM 188.8.131.52.3).
- Guidance is given when the taxpayer raises new issues. Id.
- Guidance is given when an issue not before Appeals is identified; although the Appeals Officer cannot raise it on appeal, if it is a systemic issue, a process for the issue to be reported is provided. "A systemic issue is an issue that requires a change or modification to an established procedure, process or operation (e.g., training issues, computer program, campus procedure for processing claims). These are issues that potentially impact more than one taxpayer." IRM 184.108.40.206(1).
- "Reopening a previously agreed issue or raising a new issue has the same implications, and is, for all practical purposes, one and the same. Therefore, for purposes of this section, treat reopening an agreed issue the same as raising a new issue."
- "A new issue is a matter not raised during Compliance's consideration. (3) A new theory or alternative argument is not a new issue."
- "(1) Appeals will not raise new issues and will focus dispute resolution efforts on resolving the points of disagreement identified by the parties. The Appeals process is not a continuation or an extension of the examination process." IRM 220.127.116.11.2(1). "In resolving disputes, Appeals may consider new theories and/or alternative legal arguments that support the parties' positions when evaluating the hazards of litigation in a case. However, the Appeals hearing officer will not develop evidence that is not in the case file to support the new theory or argument."
- "In docketed cases, the Appeals hearing officer will consider a new issue affirmatively raised by the government in pleadings and may consider any new evidence developed by Compliance or Counsel to support the government's position on the new issue. The Appeals hearing officer's consideration of a new issue in a docketed case will take into account that the government has the burden of proof."
18.104.22.168.2 (Approved 01-05-2007)
Policy Statement 8-2 (Formerly P–8–49)
1. New issues not to be raised unless material
2. An issue, on which the taxpayer and the Service are in agreement, should neither be reopened by Appeals nor should a new issue be raised, unless the ground for such action is a substantial one and the potential effect upon the tax liability is material. The existence of unreported income, deductions, credits, gains, losses, etc. stemming from a tax shelter which is a listed transaction constitutes such a substantial ground with a material effect upon the tax liability.Appeals raising of new issues was extremely rare under this old rule. I have been practicing for over 35 years and have never had a new issue raised on Appeal. But it was a possibility and a risk.