PS 95(1.1)

Procedures in Handling Requests for Issuance of Technical Advice Memoranda

This publication has been superseded by PS 95(1.2)

BACKGROUND: On January 30, 1995 the Department issued Policy Statement 95(1), which described procedures for requests for and issuance of technical advice memoranda for audit disputes involving the interpretation and application of Conn. Gen. Stat. §12-407(2)(i) (enumerated services). The initial period during which PS 95(1) was in effect ended on July 1, 1995. On August 2, 1995 the Department issued Announcement 95(7), extending the procedures of PS 95(1) until December 31, 1995.

PURPOSE: This Policy Statement revises and modifies PS 95(1) by extending the period during which technical advice memoranda may be requested, by expanding the scope of the subject matter of technical advice memoranda, and by indicating circumstances under which the Department will decline to issue a technical advice memorandum.

The purpose of this Policy Statement is to describe procedures under which a taxpayer or authorized representative may request the issuance of a technical advice memorandum and the procedures that the Department of Revenue Services will follow in issuing technical advice memoranda. These procedures, which will remain in force until December 31, 1996, will be reviewed (and may be revised) at that time by the Department. Until December 31, 1996, however, (1) technical advice memoranda will be issued where the dispute involves the interpretation and application of any provision of the Sales and Use Taxes Act, Conn. Gen. Stat. §12-406 et seq., arising during the audit examination process at the field examination level, and (2) both the request for a technical advice memorandum and the technical advice memorandum will be treated by the Department as return information, as defined in Conn. Gen. Stat. §12-15(d)(2), the disclosure of which is prohibited by Conn. Gen. Stat. §12-15(a).

EFFECTIVE DATE: This Policy Statement will take effect January 1, 1996.

POLICY: A technical advice memorandum will be issued by the Legal Division of the Department of Revenue Services to provide guidance to a taxpayer where a dispute over the interpretation and application of Connecticut tax statutes (and regulations thereunder) that are administered by the Department of Revenue Services arises during the audit examination process. The policy of issuing technical advice memoranda is intended to ensure that the Department's interpretation and application of Connecticut tax statutes is made clear to the taxpayer during the audit examination so that audit examinations may be concluded more expeditiously.

REQUESTING TECHNICAL ADVICE: A request for a technical advice memorandum may be made when there is a lack of guidance concerning the proper tax treatment of a particular issue or the issue is so complex that it warrants special consideration. While a technical advice memorandum may be requested at any time (preferably early on) during the audit examination, a technical advice memorandum will not be issued after a notice of assessment has been mailed to a taxpayer by the Department. The following must accompany the request:

1. A Statement of Facts should contain all relevant facts relating to the transaction(s) in question. Such facts include names, addresses, taxpayer registration numbers, and employer identification or social security numbers of all interested parties; the taxable period(s) involved and the amount of tax in dispute, if known; and a carefully detailed description of the transaction. Pertinent documents must be appended, but the relevant facts that are reflected in those documents must be included in the description of the transaction and not merely incorporated by reference. The Statement of Facts must be in the form of an affidavit, under penalties of false statement, and must be signed by an individual (but not by the tax practitioner, if any) who has personal knowledge of the facts. The individual who must sign for a taxpayer that is a corporation, trust or estate, or partnership must be a corporate officer, fiduciary or general partner, respectively.
2. An Issue Statement should contain a precise statement of the issue or issues for which a technical advice memorandum is requested.
3. An Analysis (in the case of a request by a business or by a tax practitioner, whether or not the client is a business) should contain the taxpayer's analysis of the issue or issues for which the request for technical advice memorandum was made. The Analysis is comprised of the Statement of Law, an Analysis of the Law as applied to the issue, and a Conclusion. The Statement of Law should contain a detailed and complete statement of relevant law, including a discussion of the implications of any relevant legislation, court decisions, regulations or any declaratory rulings, rulings, Special Notices, Policy Statements, Informational Publications, or Announcements issued by the Department, that the taxpayer finds to be either in accord with or contrary to the taxpayer's conclusion. If the taxpayer determines that there are no contrary authorities, a statement to that effect must be made. The Analysis of the Law should also contain a detailed and complete discussion of the bearing of the relevant facts and legal authorities upon the issue or issues sought to be resolved. The Analysis should also contain a Conclusion as to the taxpayer's views of the proper tax results of the transaction, including any relevant authority for such views.

The taxpayer must determine whether the time within which the Department may lawfully mail a notice of assessment to the taxpayer ("the statute of limitations") will expire during the 150-day period following the mailing by the taxpayer of the technical advice memorandum request to the Department. If the statute of limitations will expire during that 150-day period, the taxpayer must execute (and include with the request) a Form AU-112-B (Consent to Extend the Statute of Limitations), extending the statute of limitations so that the notice of assessment may be lawfully mailed by the Department to the taxpayer at any time prior to the expiration of the 150-day period.

The Legal Division will not issue a technical advice memorandum where, in its judgment, clear and adequate guidance concerning the issue already exists. In addition, the Legal Division, in its sole discretion, may deem it inadvisable to issue a technical advice memorandumfor other reasons. If the Legal Division decides not to issue a technical advice memorandum for any reason, it will promptly notify the taxpayer.

WHERE A REQUEST FOR A TECHNICAL ADVICE MEMORANDUM SHOULD BE SENT: The request should be sent to: Director, Audit Division, Department of Revenue Services, 25 Sigourney Street, Hartford, Connecticut 06106-5032.

PROCEDURE SUBSEQUENT TO THE FILING OF THE REQUEST FOR A TECHNICAL ADVICE MEMORANDUM: Upon receipt of a request for a technical advice memorandum, the Audit Division will review it for completeness and, with respect to what has been provided, will submit written comments to the Legal Division concerning (1) its disagreement, if any, with the taxpayer's Statement of Facts or (2) its disagreement, if any, with the taxpayer's Analysis of the Law.

Upon receipt of the request for a technical advice memorandum and the Audit Division's written comments, the Legal Division may, if the Audit Division has disagreed with the Statement of Facts, send a copy of those comments to the taxpayer, requesting a reply to those comments within 20 days from the date of such letter. The reply should be sent to: Department of Revenue Services, 25 Sigourney Street, Hartford, Connecticut 06106, Attention: Legal Division. The Legal Division will also independently review the request for completeness. If a request does not fully comply with the requirements set out in this document, the Legal Division will send a letter to the taxpayer, identifying the items that must be submitted and requesting those items within 20 days from the date of such letter.

Technical advice memoranda will be mailed within 120 days of receipt of a properly completed request. This 120-day period may be extended by the Legal Division, in which case the person requesting the memorandum will be notified of the extension and the reason therefor. Any modification of the request (such as modifying the Statement of Facts in response to written comments from the Audit Division disagreeing therewith) will begin anew the 120-day period within which the memorandum will be issued.

BINDING EFFECT OF TECHNICAL ADVICE MEMORANDA: A technical advice memorandum is binding on the Department only with respect to the taxpayer and for the taxable period(s) to which the technical advice memorandum pertains (the audit examination period). A technical advice memorandum is not binding on the Department with respect to the same taxpayer for succeeding taxable periods. In short, technical advice memoranda have no precedential value for any taxpayer. (The taxpayer to which a memorandum was issued may choose to request a ruling for prospective transactions in accordance with PS 91(6.2).) Even with respect to the taxpayer to which the memorandum was issued, the memorandum is not binding on the Department if there has been a misstatement or omission of material facts in the Statement of Facts.

EFFECT OF THIS DOCUMENT: A Policy Statement is a document that explains in depth a current Department policy or practice affecting the Connecticut tax liability of taxpayers. A Policy Statement indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.

EFFECT ON OTHER DOCUMENTS: This Policy Statement supersedes PS 95(1). 

PS 95(1.1)
Sales and use taxes
Issued: 2/28/96