Taxpayer FSA use.

• Author: Smith, Annette B.
• Position: IRS Field Service Advice

After field service advice (FSA) memoranda began appearing regularly during 1999 in IRS weekly releases, and as older such documents began appearing in tax research services over the last several years, the taxpayer community has become acquainted with the reference "FSA." However, questions continue to arise as to the effect an FSA has on taxpayers' returns or on the Service's audits.

FSA Definition

The IRS makes FSAs public because, although not specifically defined in the Code, they are part of a more generically defined category of Chief Counsel Advice (CCA). In 1998, CCAs became a category of "written determinations" required by Sec. 6110 to be released routinely to the public. In addition, the Internal Revenue Service Restructuring and Reform Act of 1998 provided a timetable for the release of FSAs issued prior to 1999.

An FSA is "case-specific written advice provided to field personnel by the Offices of the Associate Chief Counsel [located in the IRS National Office] ... in response to a request for assistance from any field office." For example, an FSA may help taxpayers (1) interpret and apply the Code and the regulations, (2) develop factual information necessary to apply the law to a particular case properly or (3) assess litigation hazards or strategies (Chief Counsel Directives Manual (CCDM) 35.2.7.4.3.A and Chief Counsel Advice Notice CC-2002-226 (5/16/02)).

FSAs are usually initiated by Chief Counsel attorneys in local offices. An FSA request is made by informal written memorandum or e-mail to the National Office (CCDMs 35.3.15.4 and 35.3.19.4), where it is assigned to a National Office attorney whose branch is responsible for the principal issues raised in the request. The attorney may coordinate with other National Office attorneys familiar with the issue, communicate and discuss the issues informally with the local IRS office and develop further factual information.

In most cases, the National Office does not receive any factual or legal presentation from the taxpayer, and there is no requirement that the taxpayer be advised that an FSA is being requested. However, if the taxpayer is advised, the National Office will receive and consider written submissions if forwarded by the requester (see CCDM 35.2.7.4.3.B).

A National Office attorney drafts the FSA in a format used for letter rulings and technical advice memoranda (TAMs), with letters and numbers representing the taxpayer's identifying details. The FSA is reviewed by...