1949 - Internal Revenue Service

52 REPORT OF COMMISSIONER OF INTERNAL REVENUE
All case dispositions are based upon consideration of the merits of
fact and law. A settlement upon the basis of nuisance value to either
party is prohibited by published rules of the Staff. There is not and
never has been a Staff policy requiring taxpayers, regardless of merits,
to concede some or any fixed percentage of the disputed deficiency in
order to effect a settlement of a case.
Under established policy, no case closed as the result of action by a
field division of the Staff will be reopened under post-review by the
Washington headquarters office unless the disposition involves fraud,
malfeasance, concealment, or misrepresentation of a material fact or
an important mistake in mathematical calculation. There has been no
breach of or departure from this policy by the Staff over the 10 years
1940 to 1949, inclusive, during which time 37,975 nondocketed cases
have been closed by agreement as a result of Staff field division action.
Coordination of field activities. —A central group is maintained in the
Washington headquarters office of the Staff to examine and analyze
the work of the 12 field divisions in order to maintain uniformity in
procedure and consistency in treatment of taxpayers by all field
divisions. This coordinating group, comprised of several coordinators,
each with one technical advisor as chief assistant and other technical
employees, operates under the direction of the Commissioner, through
the head of the Staff. The action taken by the field divisions in nondocketed
and docketed cases is post-reviewed by the Washington
headquarters office, including not only cases settled but also decisions
in unagreed cases. In this way field operations are scrutinized and
changes and suggestions made for the future guidance of the field
offices.
The Washington headquarters office is responsible for establishing
and improving the procedure for the handling and control of cases in
the field in conformity with the procedure in effect in the other offices
and units of the Bureau. In this manner general operating policies
are determined in Washington for the benefit of the field offices both
as to technical matters of general interest and as to matters of administrative
practice.
Records are maintained for reference purposes and quarterly reports
of the work of the field divisions are examined and consolidated in
Washington. Details and transfers of personnel between divisions
are arranged by the Staff headquarters office.
—
Compromise, extension of time, and closing agreements. The field
divisions of the Technical Staff consider offers in compromise of
liability in income and profits tax and certain other types of cases,
except where criminal prosecution, court proceedings, or delinquency
penalties only may be involved. The head of each field division has
final authority to reject any such offer or to recommend its acceptance
by the Commissioner. These rejections are post-reviewed by a
central compromise group in the Staff headquarters office in Washington.
This group also assists in the coordination of field procedure
and in determining operating policy in compromise matters. The
Washington office of the Staff also considers applications for extension
of time within which to pay income taxes, and reviews for the Commissioner
final closing agreements executed under the provisions of
section 3760 of the Internal Revenue Code.
REPORT. OF COMMISSIONER OF INTERNAL REVENUE 53
There were 1,197 compromise cases on hand July 1, 1948. During
the year, 2,434 cases were received and 1,942 cases were disposed of,
leaving 1,689 cases on hand June 30, 1949. There were 7 extensionof-time
cases on hand at the beginning of the year. During the year
108 were received and 111 were disposed of, leaving 4 cases on hand
June 30, 1949. With respect to closing agreement cases, the number
on hand for review July 1, 1948, was 27. During the year 183 were
received and 160 disposed of, leaving a balance of 50 on hand June 30,
1949. A summary of work done on compromise, extension of time,
and final closing agreement cases is shown in table 119 on page 221.
OFFICE OF THE CHIEF COUNSEL
The activities of the office of the Chief Counsel for the Bureau of
Internal Revenue include the defense of all Federal tax cases appealed
to The Tax Court of the United States; the review of refunds, credits,
and abatements in excess of $75,000; consideration of various administrative
and internal revenue tax matters referred to that office by
the Secretary of the Treasury, the Commissioner of Internal Revenue,
and other officials of the Treasury Department and the Bureau of
Internal Revenue in Washington and in the field. They include also
the preparation, at the request of the Department of Justice or of the
United States attorneys, of data for use in the prosecution or defense
of tax cases (civil and criminal) in suit, and compliance with requests
for assistance in such cases; and the preparation, revision, and review
of regulations, Treasury decisions, mimeographs, and rulings for the
guidance of the officers and employees of the Bureau of Internal
Revenue and others concerned. The office is made up of the Chief
Counsel's Committee, the Engineers and Auditors Section, and eight
divisions, viz, Alcohol Tax, Appeals, Civil, Claims, Interpretative,
Legislation and Regulations, Penal, and Review. A detailed statement,
in statistical form, of the work handled by certain of the
divisions will be found in the statistical tables in the Appendix under
the heading "Office of Chief Counsel."
CHIEF COUNSEL'S COMMITTEE.—The committee serves in an
advisory capacity to the Chief Counsel and his principal assistants
who refer to it cases from all divisions of the office. The committee
considers these cases and makes written recommendations as to their
proper disposition. The committee is also charged with the final
review of cases involving compromises and closing agreements previous
to their being sent to the Secretary of the Treasury for his approval,
and from the beginning of the fiscal year until May 20, 1949, when
that work was transferred to the Penal Division of the Chief Counsel's
office, the committee was charged with the consideration of claims
for reward under section 3463 of the Revised Statutes and section
3792 of the Internal Revenue Code. At the beginning of the fiscal
year 1949 the committee had on hand (exclusive of reward claims)
66 cases; during the year it received 2,032 and closed 1,980, leaving
118 pending at the close of the year. The report with respect to
claims for reward for information relative to violations of the internal
revenue laws is included in the report from Penal Division.
ENGINEERS AND AUDITORS SECTION.—This section, consisting of s
grmrp- of engineers, accountants, and auditors operating directly
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