Section 6166 Computations in IRS Field Examination, IRS Appeals, and Tax Court Cases
In his career as an Estate Tax Attorney with the IRS, Mr. Blakely set up and ran some two thousand section 6166 computations. Many were at the service center level in response to supplemental returns or billing problems, while the rest involved field examination deficiency computations, Appeals settlement computations, or computations for IRS Counsel or the Department of Justice. Some service center computations resulted in adjustments to the deferral accounts after Tax Court decisions with section 7481(d) stipulations had been entered. Not one of those Tax Court or Appeals section 6166 computations reviewed by Mr. Blakely was correct. While some of the errors were de minimis, others were quite significant. In the same vein, very few of the IRS field examination section 6166 deficiency computations were correct. Since every section 6166 case seems to present some unique twist to the computation based on the facts, the election, the service center billings and the payment history, and considering that field examining Estate Tax Attorneys infrequently encounter these cases to begin with, it is not surprising that some computational errors might occur.
The author did not review every section 6166 computation done by others, however, so it could be presumed that many of those were correct or were close enough to being correct so as not to have presented significant problems, but there were no means by which the author could test this presumption. The Appeals Tax Computation Specialists in certain parts of the country might have been better at 6166 computations than those in other parts, or some Estate Tax Attorneys in the field might have called Cincinnati Campus to ask a Transfer Tax Technician to help them with the computations (the Cincinnati Campus Technicians are, as a rule, the best IRS personnel in the country at running 6166 computations because they do them every day), or a few Estate Tax Attorneys might have been well-versed in 6166 computations. In the end, however, it is just as likely that the same proportion of those other computations exhibited the same types of errors as in those that were actually reviewed by the author.
The point being made here is that, when one is presented with an interrelated section 6166 computation by an IRS Estate Tax Attorney at the field examination level, or by an IRS Appeals Officer in a settlement proposal, or as part of Tax Court settlement negotiations, there is a reasonable likelihood that, however well intentioned, the numbers presented by the IRS might not be correct. And the reason for this is because almost every section 6166 computation has a wrinkle that distinguishes it from all other 6166 computations. The rules and nuances for posting numbers and dates in section 6166 computations are so numerous and subtle that, unless one runs these computations every day, it is not possible to attain (or retain) the proficiency to run them correctly. This is why the Cincinnati Campus Transfer Tax Technicians (or Paralegals) are as a group the best in the IRS at running section 6166 computations.
NOTE: In August 2010 IRS field Estate Tax Attorneys started using a new computer program (the IMS program with the Notebook application) for their estate tax computations. Anecdotal evidence indicates that the first version of the new program was not able to perform interrelated state death tax deduction computations. Subsequent revisions have apparently corrected this problem, but the program capabilities for running interrelations between interest deductions and complex charitable or marital deductions are not yet known. There is also anecdotal evidence that another revision will enable interrelated section 6166 computations, although it remains to be seen whether such revision will be capable of running truly complex 6166 computations; it is the nature of new programs that there be many revisions. Meanwhile, Cincinnati Campus will continue using the Inter-Est program. It is to be hoped that the field examination computations will match those run at Cincinnati Campus.
In reviewing actual Notebook section 6166 computations in cases for his clients, the author has not seen any evidence to date (2015) that the Notebook program is sufficiently robust. It cannot run interrelated state 6166 computations that are part of the Federal 6166 computation. In addition, the Federal interest factors are displayed with only 6 digits to the right of the decimal point, while Revenue Procedure 95-17 requires that there be 9 digits. This could be the result of having confused the Form 706 instructions that the 6166(a)(2) deferred tax ratio be carried out to 6 decimal places - which is the only application where 6 digits is specified - with the general 9-digit interest factors used throughout 6166 computations and for all interest computations at Cincinnati Campus.
The Notebook application must now be used at Cincinnati Campus. However, the technicians use the Inter-Est program to check the accuracy of the Notebook computations and make appropriate adjustments.
Note that some of the most experienced Transfer Tax Technicians or Paralegals at Cincinnati Campus have retired, while many of those still working there have been reassigned to other duties because of the reduced number of estate tax return filings since 2009. At last count (2015), there were some 14 Transfer Tax Technicians left.
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