Rp 2003-36

ending [insert date short taxable year
ended]. Under the Alternative Carryback
Term and Condition, any net operating loss
arising in this short taxable year must be
carried back to each of the 2 taxable years
preceding the short taxable year (and any
remaining net operating loss must be carried over in accordance with the provisions of section 172 of the Code) and any
capital loss arising in this short taxable year
must be carried back or carried over in accordance with section 1212.”
(iii) Special elections for consolidated
groups. A consolidated group that wishes
to make one of the elections under section 5.04 of this revenue procedure (acquiring group) must attach one of the
following statements to the election to apply the Modified Carryback Term and Condition or the Alternative Carryback Term
and Condition:
“SPECIAL ELECTION TO WAIVE
PRE-ACQUISITION EXTENDED CARRYBACK PERIOD. This is an election under section 5.04 of Rev. Proc. 2003–34 to
waive the pre[insert the first day of the first
taxable year for which the acquired member (or members) was a member of the taxpayer’s consolidated group (acquiring
group)] extended carryback period for the
consolidated NOLs attributable to [insert
name and employer identification number of acquired member (or members)] for
the [short period].”; or
“SPECIAL ELECTION TO WAIVE
ENTIRE PRE-ACQUISITION CARRYBACK PERIOD. This is an election under section 5.04 of Rev. Proc. 2003–34 to
waive the pre[insert the first day of the first
taxable year for which the acquired member (or members) was a member of the taxpayer’s consolidated group (acquiring
group)] carryback period for the consolidated NOLs attributable to [insert name and
employer identification number of acquired
member (or members)] for the [short period].”
(b) Where to file. A taxpayer electing to
apply either the Modified Carryback Term
and Condition or the Alternative Carryback Term and Condition must file the appropriate statement(s) with the Director,
Internal Revenue Service Center, Attention:
ENTITY CONTROL, where the taxpayer
files its federal income tax return. No copies of any statements are required to be sent
to the National Office.

May 5, 2003

(c) Statements not claims for refunds.
The statements described in section
6.01(3)(a) do not constitute claims for refund or applications for tentative refunds.
A taxpayer electing to apply either the
Modified Carryback Term and Condition or
the Alternative Carryback Term and Condition by filing a statement in compliance
with the procedures of this section 6.01
must additionally file a claim for refund or
application for tentative refund within the
periods prescribed by statute to carry back
any short period NOL or CL. The taxpayer
must attach a copy of the statement filed
under these procedures to any claim for refund or application for tentative refund filed
as a result of the making of an election under this revenue procedure.
.02 Election Constitutes Taxpayer’s
Agreement. An election made in accordance with this section constitutes an agreement between the taxpayer and the Service
to modify the terms and conditions for the
Commissioner’s approval of the taxpayer’s change in annual accounting period. An
election to apply either the Modified Carryback Term and Condition or the Alternative Carryback Term and Condition does
not revoke a valid election described in
§ 172(b)(3), Reg. § 1.1502–21(b)(3)(ii)(B)
or Reg. § 1.1502–21T.
SECTION 7. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2002–37 and Rev. Proc.
2002–39 are modified.
SECTION 8. EFFECTIVE DATES AND
TRANSITION RULE
.01 Applications Filed Under Rev. Proc.
2002–37. For a taxpayer within the scope
of Rev. Proc. 2002–37:
(1) In general. This revenue procedure
is effective for all changes in annual accounting periods for which the first effective year (as defined in section 5.07 of Rev.
Proc. 2002–37) ends on or after April 8,
2003; and
(2) Transition rule. If the first effective year (as defined in section 5.07 of Rev.
Proc. 2002–37) ends before April 8, 2003,
and the time for filing Form 1128 with respect to that first effective year expires on
or after April 8, 2003, (whether or not a
Form 1128 was filed before that date with
the Service Center), a taxpayer may elect
to use one of the optional carryback terms

859

and conditions of section 5 of this revenue procedure by following the procedures of section 6 of this revenue procedure.
.02 Applications Filed Under Rev. Proc.
2002–39. For a taxpayer within the scope
of Rev. Proc. 2002–39:
(1) In general. This revenue procedure
is effective for applications filed on or after April 8, 2003; and
(2) Transition rule. If a taxpayer filed an
application to change the taxpayer’s annual accounting period before April 8, 2003,
and the application is pending with the national office on April 8, 2003, the taxpayer may request that the application be
processed in accordance with this revenue
procedure. However, the national office will
process applications filed before April 8,
2003, in accordance with prior authority unless, prior to the later of June 9, 2003, or
the issuance of the letter ruling granting or
denying consent to the adoption, change, or
retention, the taxpayer notifies the national
office that the taxpayer desires that the taxpayer’s application be processed in accordance with this revenue procedure.
.03 Taxpayers With Prior Accounting Period Changes. For a taxpayer described in
section 3.02 of this revenue procedure, this
revenue procedure is effective for changes
in the taxpayer’s annual accounting period if the short period necessary to effect the change began on or after February
1, 2000.
DRAFTING INFORMATION
The principal authors of this revenue
procedure are Roy A. Hirschhorn and
Michael Schmit of the Office of Associate Chief Counsel (Income Tax and
Accounting). For further information regarding this revenue procedure, contact
Mr. Hirschhorn or Mr. Schmit at (202) 622–
4960 (not a toll-free call).

Industry Issue Resolution
Program
Rev. Proc. 2003–36
SECTION 1. PURPOSE
This revenue procedure describes procedures for business taxpayers, industry associations, and other interested parties to
submit issues for consideration under the
Internal Revenue Service’s Industry Issue
Resolution (IIR) Program. The objective of

2003–18 I.R.B.

the IIR Program is to identify frequently
disputed or burdensome tax issues that are
common to a significant number of business taxpayers that may be resolved through
published or other administrative guidance. Resolving issues through prefiling
guidance rather than postfiling examination is a goal of the Internal Revenue Service and the Office of Chief Counsel. The
Large and Mid-Size Business Division and
the Small Business and Self Employed Division of the Service share operational responsibility for the IIR Program.
SECTION 2. BACKGROUND
In Notice 2000–65, 2000–2 C.B. 599, the
Service announced the Industry Issue Resolution Pilot Program. The objective of the
pilot program was to establish a procedure to address frequently disputed tax issues that are common to a significant
number of large or mid-size business taxpayers through prefiling guidance rather
than postfiling examination. After evaluating the success of the pilot program, the
Service announced in Notice 2002–20,
2002–1 C.B. 796, that the IIR Program
would be made permanent. In addition, Notice 2002–20 expanded the IIR Program to
address issues common to small businesses,
as well as large and mid-size businesses,
and to address opportunities to reduce burden for all business taxpayers.
SECTION 3. SCOPE
.01 Issues appropriate for the program.
The issues most appropriate for consideration under the IIR Program generally will
have two or more of the following
characteristics:
(1) The proper tax treatment of a common factual situation is uncertain.
(2) The uncertainty results in frequent,
and often repetitive, examinations of the
same issue.
(3) The uncertainty results in taxpayer
burden.
(4) The issue is significant and impacts a large number of taxpayers, either
within an industry or across industry lines.
(5) The issue requires extensive factual development, and an understanding of
industry practices and views concerning the
issue would assist the Service in determining the proper tax treatment.

2003–18 I.R.B.

.02 Issues not appropriate for the program.
The following issues are not appropriate for consideration under the IIR Program:
(1) Issues that are unique to one or a
small number of taxpayers.
(2) Issues that are primarily under the
jurisdiction of Operating Divisions of the
Service other than the LMSB and SB/SE
Divisions.
(3) Issues that involve transactions that
lack a bona fide business purpose, or transactions with a significant purpose of improperly reducing or avoiding federal taxes.
(4) Issues that involve transfer pricing
or international tax treaties.
SECTION 4. RECOMMENDATION
AND SELECTION PROCESS
.01 Recommendation process.
The LMSB and SB/SE Divisions will review and evaluate the issues submitted under the IIR Program and, if appropriate,
may recommend that an issue be included
on the Treasury Department’s and the Service’s Guidance Priority List for the upcoming year or on periodic updates to the
Guidance Priority List. The Guidance Priority List sets forth the published guidance that the Service expects to issue during
the plan year. Inclusion of an IIR item on
the Guidance Priority List does not, however, guarantee that the Service will issue
published guidance on the item.
Interested parties may submit issues at
any time during the year. The LMSB and
SB/SE Divisions will review and evaluate the issues submitted under the IIR Program at least semi-annually, generally after
March 31 and August 31 of each year. Additionally, the LMSB and SB/SE Divisions will review issues submitted by May
15, 2003, to determine whether to recommend those issues for inclusion on the
2003–2004 Guidance Priority List.
.02 Selection process.
A recommendation under this revenue
procedure does not guarantee that the issue will be selected for inclusion on the
Guidance Priority List or included on a periodic update of the Guidance Priority List.
In deciding whether to include issues recommended by the LMSB Division or
SB/SE Division under this revenue procedure for inclusion on the Guidance Priority List, the Office of Chief Counsel and the
Treasury Department will consider, among

860

other things, recommendations from other
sources, and whether the requested guidance promotes sound tax administration.
An LMSB or SB/SE representative will
notify the submitter when a decision has
been made whether to include an issue on
the Guidance Priority List or on a periodic update. A public announcement on the
issues reviewed under the IIR Program and
selected for the Guidance Priority List or
a periodic update will be issued at least annually. The announcement will include the
name of the officials to contact for information regarding the selected issues.
SECTION 5. GUIDANCE FOR
SELECTED ISSUES
Guidance on selected issues may be in
the form of published guidance, such as a
regulation, revenue ruling, revenue procedure, or notice, prepared by the appropriate Office of the Associate Chief Counsel.
In some situations, the guidance may require taxpayers to file a request for a change
in method of accounting before changing
the manner in which they treat the issue.
Published guidance issued under the IIR
Program is available on the Digital Daily
at www.irs.gov. Selected issues also may be
addressed in administrative guidance, such
as an Internal Revenue Manual provision.
SECTION 6. ADDITIONAL
INFORMATION ABOUT THE IIR
PROGRAM
.01 IIR team.
If an issue submitted under the IIR Program is selected as a published guidance
project, the Service will establish a team
(the IIR team) to provide assistance in analyzing the issue. IIR team members will include appropriate personnel from the LMSB
and SB/SE Divisions, Appeals, the Office
of Chief Counsel, and the Treasury Department.
.02 Requests for information or meeting.
An IIR team may request that the submitter or other business taxpayers voluntarily meet with the Service, provide
information, or provide an opportunity for
the Service to review books and records to
assist in the development of the issue. These
activities are not for the purpose of examination or inspection within the meaning of
section 7605(b).
.03 Disclosure of information.

May 5, 2003

The Service encourages interested parties to submit information that will assist
the Service and the Treasury Department in
reaching an appropriate resolution of the issue. Submissions and any additional information provided may be subject to
disclosure under the Freedom of Information Act. All submissions made under the
IIR Program will be made available for
public inspection and copying in their entirety. Therefore, submissions should not include confidential or taxpayer specific
information.
SECTION 7. SUBMITTING ISSUES
UNDER THE PROGRAM
.01 No required format.
An issue submitted for consideration under the IIR Program is not required to be
submitted in a particular format. The submission should, however, include an issue statement, a description of why the issue
is appropriate for the IIR Program, an explanation of the need for guidance, the estimated number of taxpayers affected by the
issue, and the name and telephone number of a person to contact if additional information is needed. The submission may
also include a recommendation as to how
the issue may be resolved.
.02 Where to submit issues.
Interested parties should submit issues
by e-mail to IIR@irs.gov. Alternatively, submissions may be mailed or faxed to:
Internal Revenue Service
Office of Prefiling and Technical
Services
Large and Mid-Size Business Division
LM:PFT
Mint Building 3rd Floor M3–420
1111 Constitution Avenue, NW
Washington, DC 20224
Fax: 202–283–8406

May 5, 2003

SECTION 8. EFFECT ON OTHER
DOCUMENTS
This revenue procedure supersedes Notice 2002–20.
SECTION 9. EFFECTIVE DATE

Books or records relating to a collection of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return information are confidential, as required by
26 U.S.C. 6103.

This revenue procedure is effective April
17, 2003.
SECTION 10. PAPERWORK
REDUCTION ACT
The collections of information contained
in this revenue procedure have been reviewed and approved by the Office of Management and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C. 3507)
under control number 1545–1837.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless
the collection of information displays a valid
OMB control number.
The collections of information in this
revenue procedure are in Sections 6 and 7.
This information is required to submit a request for the Service to consider an issue
under the IIR Program. This information
will be used to enable the Service to determine whether the issue is suitable for determination under the IIR Program. The
collections of information are voluntary to
obtain a benefit. The likely respondents are
business or other for profit institutions.
The estimated total annual reporting burden is 2,000 hours.
The estimated annual burden per respondent varies from 4 hours to 200 hours,
depending on individual circumstances, with
an estimated average of 40 hours. The estimated number of respondents is 50.
The estimated annual frequency of responses is on occasion.

861

SECTION 11. CONTACT
INFORMATION
The principal author of this revenue procedure is Donna Welch of the Office of Associate Chief Counsel (Procedure and
Administration), Administrative Provisions and Judicial Practice Division.
Ms. Welch may be contacted at (202) 622–
4910 (not a toll-free number). For information regarding the IIR Program, please
contact Susan Blake, Senior Program Analyst, of the LMSB Prefiling and Technical Services Office at (202) 283–8414 (not
a toll-free number) between the hours of
9:00 AM – 5:00 PM, Eastern Time, Monday through Friday.

2003–18 I.R.B.