IRS Notice 97-7: draft revenue procedure on obtaining private rulings on environmental remediation issues.On June 11, 1997, Tax Executives Institute submitted the following comments to the Internal Revenue Service on IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. Notice 97-7, which sets forth a draft revenue procedure on obtaining private rulings from the agency on the proper tax treatment of environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a expenditures. The comments were prepared under the aegis aegis (ē`jĭs), in Greek mythology, weapon of Zeus and Athena. It possessed the power to terrify and disperse the enemy or to protect friends. of the Institute's Federal Tax Committee, whose chair is David L. Klausman of Intel Corporation (company) Intel Corporation - A US microelectronics manufacturer. They produced the Intel 4004, Intel 8080, Intel 8086, Intel 80186, Intel 80286, Intel 80386, Intel 486 and Pentium microprocessor families as well as many other integrated circuits and personal computer networking . Margaret A. Satko of General Motors Corporations materially contributed to the preparation of TEI's submission.
The Internal Revenue Service published Notice 97-7 in the Internal Revenue Bulletin (1997-1 I.R.B. 8) on January 6, 1997. The Notice sets forth a draft of a proposed revenue procedure that will provide special procedures for obtaining private guidance on the proper tax treatment of environmental cleanup The process of removing solid, liquid, and hazardous wastes, except for unexploded ordnance, resulting from the joint operation of US forces to a condition that approaches the one existing prior to operation as determined by the environmental baseline survey, if one was conducted. costs under sections 162 and 263 of the Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. . In response to the IRS's invitation in Notice 97-7, Tax Executives Institute is pleased to submit the following comments on the draft revenue procedure.
Tax Executives Institute is the principal association of business tax executives in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . The Institute's more than 5,000 members represent 2,800 of the largest companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada. TEI 1. (communications) TEI - Terminal Endpoint Identifier.
2. (text, project) TEI - Text Encoding Initiative. represents a cross-section of the business community, and is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and the government alike. As a professional association, TEI is firmly committed to maintaining a tax system that works--one that is administrable and with which taxpayers can comply.
TEI members are responsible for managing the tax affairs of their companies and must contend daily with the provisions of the tax law relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc the operation of business enterprises. We believe that the diversity and training of our members enable us to bring an important, balanced, and practical perspective to environmental cleanup issues generally and to the issues raised specifically by Notice 97-7 relating to a proposed revenue procedure providing guidance to taxpayers seeking to obtain private guidance concerning the treatment of environmental remediation expenditures.
In Notice 97-7, the IRS proposes a new special revenue procedure permitting taxpayers to obtain private guidance on the tax treatment of environmental cleanup costs. The purpose of the procedure is "to facilitate the resolution of issues involving the capitalization or deduction of environmental cleanup costs for both prior and future years of a single environmental cleanup transaction."(1)
Consequently, the new procedure will depart from current ruling practice by permitting taxpayers generally to (i) obtain a private letter ruling after filing a return for the year of the transaction, (ii) obtain technical advice covering all years of a transaction rather than just the years under examination, and (iii) in connection with settlement of an examination, obtain a ruling addressing the future tax treatment of expenditures where part of the costs will be incurred under a continuing plan for environmental cleanup.
TEI commends the IRS for its effort to implement procedures facilitating the resolution of issues, especially the proper tax treatment of environmental cleanup costs. Under some circumstances, the proposed procedure will prove salutary sal·u·tar·y
Favorable to health; wholesome.
salutary Healthy, beneficial in resolving the deductibility of costs incurred in environmental cleanup transactions. Hence, the Institute supports the issuance of the procedure, but that support is tempered by our often expressed opinion that the resolution of capitalization issues generally, and environmental cleanup issues specifically, can and should be addressed more broadly and efficiently by the issuance of generally applicable guidance that can be relied upon by taxpayers and revenue agents alike.(2) Indeed, the number and extent of disputes over the deductibility of environmental remediation costs--and the rancor that is sometimes engendered during the disputes--have been exacerbated by the dearth of generally applicable formal guidance.
Issuing Private Letter Rulings and Technical Advice Memoranda Is Not an Effective Means of Providing Guidance on Capitalization Issues
TEI does not believe that the tax law governing environmental cleanup expenditures can be effectively developed through the issuance of piecemeal piecemeal
patchy, e.g. necrosis of the liver in which groups of hepatocytes are separated by small groups of inflammatory cells and fine, fibrous septa following extension of the inflammatory process beyond the limiting plate. guidance in private letter rulings and technical advice memoranda. Private rulings involve the application of the law to the taxpayer's specific facts; hence, they are not designed to serve as general guidance. The rulings have no precedential prec·e·den·tial
1. Of, relating to, or constituting a precedent.
2. Having precedence.
Adj. 1. precedential effect and are not intended to be relied upon by anyone other than the taxpayer to whom the ruling is directed.(3)
The precedential effect of private rulings is limited for good reason. Many rulings, especially in their redacted form, are not detailed enough to provide useful precedent. In order to protect the confidentiality of the taxpayer, the discussion of the facts is FACTS I Federal Agencies' Centralized Trial-Balance System frequently abbreviated. In addition, the factual patterns posed in many rulings are not representative of common circumstances or transactions. Moreover, important factual alternatives may be omitted or the factual question may be narrowly framed. Similarly, alternative legal theories may not be addressed in the ruling and the legal analysis may be attenuated Attenuated
Alive but weakened; an attenuated microorganism can no longer produce disease.
Mentioned in: Tuberculin Skin Test
having undergone a process of attenuation. . Finally, private rulings are not subject to the same level of review by policy makers within the IRS and Treasury. For the foregoing reasons, private rulings are an ineffective method for communicating tax policy.(4)
The Need For General Guidance
In contrast with private rulings, the legal and policy analyses underlying regulations and revenue rulings are subject to a high level of scrutiny within the IRS (as well as the Treasury Department), which ensures that the articulated position is more likely to be sustained by the courts. Several benefits flow from this. First, taxpayers and agents generally give greater deference to published rulings, especially during the crucial phase of an examination where the facts are elicited e·lic·it
tr.v. e·lic·it·ed, e·lic·it·ing, e·lic·its
a. To bring or draw out (something latent); educe.
b. To arrive at (a truth, for example) by logic.
2. and legal authorities reviewed to determine whether a proposed adjustment is warranted. Second, published rulings are less likely to be challenged by taxpayers or subsequently revoked by the national office. As a result, the stability of the law is enhanced. Moreover, the first two benefits often combine felicitously fe·lic·i·tous
1. Admirably suited; apt: a felicitous comparison.
2. Exhibiting an agreeably appropriate manner or style: a felicitous writer.
3. to diminish the contentiousness of examinations. Finally, since published rulings apply to all taxpayers, many more issues can be resolved and cases settled at the Examination and Appeals levels without resorting to technical advice. Where national office procedures in respect of technical advice memoranda are invoked, the lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine.
["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978]. time for resolution of cases escalates, significantly increasing taxpayer administrative burdens and diminishing the rate of case resolution.
The fact-intensive nature of capitalization issues make them especially ripe for early and expeditious ex·pe·di·tious
Acting or done with speed and efficiency. See Synonyms at fast1.
ex resolution at the Examination level--assuming sufficient guidance is given to permit such resolution. For example, the IRS's recent revenue rulings on advertising, repairs, and training costs(5) have substantially diminished unnecessary capitalization controversies. Hence, the promise inherent in Notice 97-7 is that it will result in generally applicable guidance on environmental remediation issues rather than be limited to the cases where the procedure is invoked.
Under section 5.03 of the draft procedure, the national office of the IRS will coordinate review of proposed letter rulings with a representative of the environmental cleanup costs specialization team prior to issuing a ruling. TEI believes that the review of proposed letter rulings may promote uniformity and consistency in the rulings issued. More important, even though cleanup issues are factual, it should be possible for the specialization team to develop authoritative guidance on typical remediation fact patterns. Accordingly, we recommend that the specialization team use the experience gained from the procedure to propose standards for deductibility or capitalization of cleanup costs that can be incorporated in regulations or, at a minimum, announced in published rulings at the close of the two-year trial period of the revenue procedure. Such guidance would advance the overall goals of efficient tax administration.
The Procedure in Notice 97-7 Should Supplement, Not Undermine, Existing Guidance
The only published guidance specifically addressing environmental remediation expenditures, Rev. Rul. 94 38,(6) permits an ordinary and necessary deduction for the costs of removing environmentally hazardous Environmentally hazardous is a chemical hazard, where significant damage to the environment is caused by a chemical substance. It is defined in the Globally Harmonized System and in the European Union chemical regulations. PCBs pursuant to soil and groundwater cleanups. Specifically, the ongoing costs for treating the groundwater and the costs of removing and replacing contaminated contaminated,
v 1. made radioactive by the addition of small quantities of radioactive material.
2. made contaminated by adding infective or radiographic materials.
3. an infective surface or object. soil were determined to be deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). under section 162. The costs of constructing a special groundwater treatment facility in contrast were deemed to be capital expenditures under section 263A.
TEI sincerely hopes that the issuance of Notice 97-7 does not signal a stepping back from the challenge of providing general guidance similar to Rev. Rul. 94-38 on the proper treatment of various forms of environmental remediation costs. Such a retrenchment re·trench·ment
The cutting away of superfluous tissue. would be both mistaken and counterproductive coun·ter·pro·duc·tive
Tending to hinder rather than serve one's purpose: "Violation of the court order would be counterproductive" Philip H. Lee. to the averred purpose of the procedure to "facilitate the resolution of issues." As important, we are concerned that the publication of the procedure may cause revenue agents to question the vitality of Rev. Rul 94-38. Specifically, section 3.02 of the procedure includes soil and water contamination as among the environmental hazards 'Environmental hazard' is a generic term for any situation or state of events which poses a threat to the surrounding environment. This term incorporates topics like pollution and Natural Hazards such as storms and earthquakes. for which rulings may be sought without any qualification or reference to the 1994 ruling. Hence, the procedure may spawn To launch another program from the current program. The child program is spawned from the parent program.
(operating system) spawn - To create a child process in a multitasking operating system. E.g. confusion by undermining the only generally applicable guidance currently addressing contaminated soil and groundwater cleanups. Is Rev. Rul. 94-38 to be limited to the costs incurred in cleaning up a single form of hazardous material--PCBs--while the costs of cleaning up other hazardous materials in soil and groundwater contamination are subject to review by the national office? We hope not and recommend that, in order to remove any shadow cast upon Rev. Rul. 94-38, the IRS incorporate in the procedure a reference to that ruling as providing the generally applicable guidance on the proper treatment of soil and groundwater cleanups.
Rev. Rul. 94-38 was developed in response to submissions by numerous commentators--including TEI--following the IRS's public announcement of an intensive study of the proper tax treatment of environmental cleanup costs. When issued, the ruling was hailed as an important touchstone touchstone
Black, silica-containing stone used in assaying to determine the purity of gold and silver. The metal to be assayed is rubbed on the touchstone, and then a sample of metal of known purity is rubbed on the stone right next to it. because it provided bright-line rules A bright-line rule, or bright-line test, is a term generally used in law which describes a clearly defined rule or standard, composed of objective factors, which leaves little or no room for varying interpretation. in respect of the treatment of environmental remediation expenditures. TEI was among those that hoped that the ruling marked the first in a series on the treatment of environmental remediation expenditures.
Moreover, regardless of whether one agrees where the lines are drawn in Rev. Rul. 94-38, it provides substantive guidance on a common type of environmental cleanup cost. Similar rulings should be developed by the IRS to address other situations, including those involving the remediation of leaking underground storage tanks An Underground Storage Tank (UST), in United States environmental law, is a tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground. , asbestos removal, and lead-paint removal.
Specific Comments on Revenue Procedure
In addition to the foregoing remarks on the process for providing guidance to taxpayers on capitalization issues generally and environmental remediation specifically, we offer the following comments on the draft procedure.
Terminology; Definition of "Single" or "Entire" Environmental Cleanup "Transaction" and "Completed Transaction"
1. Scope of Rulings Should be Expanded Beyond a "Single" Transaction
As a hybrid of the wholly prospective transaction-based private ruling approach of Rev. Proc. 97-1 and the wholly closed, completed, and reported transaction-based technical advice approach of Rev. Proc. 97-2, the draft procedure utilizes terminology that is adapted from both progenitors
The Progenitors were a race of fictional beings in the Star Trek Universe created by Gene Roddenberry. Consequently, the procedure employs the term "transaction" as though environmental cleanup "transactions" have a standard usage and meaning. They do not. More important, environmental remediation projects are not as discrete as the procedure assumes because they often do not have definitive start and stop times or circumscribed circumscribed /cir·cum·scribed/ (serk´um-skribd) bounded or limited; confined to a limited space.
Bounded by a line; limited or confined. geographic boundaries. Hence, the amorphous Unorganized or vague. A lack of structure. For example, the amorphous state of a spot on a rewritable optical disc means that the laser beam will not be reflected from it, which is in contrast to a crystalline state which will reflect light. See crystalline. nature of cleanup activities with respect to which a taxpayer may seek rulings issued pursuant to the procedure _ i.e., a "single" environmental cleanup transaction -- may inhibit the number of requests filed.
By way of explanation, section 1 of the draft procedure states that "the purpose of the ruling is to facilitate the resolution of issues [related to] a single environmental cleanup transaction." Building on this statement, section 3.01 states that the ruling procedure applies to "continuing transactions (e.g., occurring over prior and future taxable years Taxable year
The 12-month period an individual uses to report income for income tax purposes. For most individuals, their tax year is the calendar year. )." In order for the new procedure to be useful, of course, it must be flexible enough to address alternative "plans" of remediation. Section 3.04 permits this, however, without defining what an alternative "plan" or "continuing plan" of environmental cleanup or remediation is, perhaps on the assumption that a "plan" for federal or state EPA EPA eicosapentaenoic acid.
n.pr See acid, eicosapentaenoic.
n. requirements is a "plan" for purposes of the procedure. Finally, section 3.05 restricts taxpayers from obtaining rulings for "excluded situations." Specifically, a taxpayer may not request a ruling where (i) the "entire" environmental cleanup transaction is "completed" and the time for filing the returns has passed, (ii) the "entire" environmental cleanup transaction is a proposed transaction in respect of which the taxpayer may request a ruling under Rev. Proc. 97-1, or (iii) the "identical" environmental cleanup "issue" is in the taxpayer's return for an earlier period and that "issue" is pending in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.
When a person begins a civil lawsuit, the person enters into a process called litigation. .(7)
Just as environmental damage is amorphous and occasionally latent, the contours Contours may mean:
1. an excess of blood.
2. by extension, a red florid complexion.pletho´ric
1. of activities and expenditures in connection with a particular site, a hazardous waste Hazardous waste
Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. , or a multitude of cleanup initiatives. A taxpayer should not be required to seek a separate ruling on each and every activity within a remediation project or plan. On the other hand, the IRS should be able to know with some certainty what it is being asked to rule on. As a result, TEI recommends that the procedure be revised to permit taxpayers to define, within the ruling request or at the presubmission conference pursuant to Announcement 97-22,(8) the scope of the cleanup activities for which a ruling is sought.
As important, rather than limit the scope of the draft procedure to a "single" environmental "transaction" (or project or plan), we believe that the IRS should permit taxpayers to obtain a "global" ruling in respect of the different expenditures affecting a single type of hazard. For example, a taxpayer may be required to clean up multiple sites that share a common environmental hazard, such as abatement A reduction, a decrease, or a diminution. The suspension or cessation, in whole or in part, of a continuing charge, such as rent.
With respect to estates, an abatement is a proportional diminution or reduction of the monetary legacies, a disposition of property by will, when of fire-retardant asbestos in multiple floors of the same building or in similar buildings at different locations.(9) Without a means to address a single type of repeated cleanup procedure at different locations (i.e., a single issue), taxpayers may view the procedure as too costly, time-consuming, and too narrow to undertake.(10)
Similarly, as with the soil and groundwater cleanup in Rev. Rul. 94-38, multiple cleanup procedures may be required in respect of a single site. Where multiple cleanup activities are undertaken at a single site for a particular hazard, the ruling should be broad enough to incorporate all of the activities to be conducted. Likewise, where multiple hazards -- say, lead and other toxic chemical Any chemical which, through its chemical action on life processes, can cause death, temporary incapacitation, or permanent harm to humans or animals. This includes all such chemicals, regardless of their origin or of their method of production, and regardless of whether they are produced waste contaminants -- are discharged at a single manufacturing site that also includes a leaking underground storage tank -- say, fuel to power the equipment or heat the manufacturing facility -- the scope of the procedure should be broad enough to permit a ruling on all hazard types and activities at a single location.
In order to clarify the procedure in the manner suggested, we recommend that section 1 be revised to define the purpose of the procedure as "permitting rulings for environmental cleanup costs incurred for a particular type of hazard (e.g., leaking underground storage tanks), a particular site or source of environmental contamination (e.g., the leaking underground storage tanks in State `X'), or a combination of types of hazards, sites or sources of contamination, or methods of remediation spanning one or more taxable years, pursuant to a plan of remediation defined by the taxpayer."
2. Excluded Situations
Section 3.05(2) provides that where "the entire environmental cleanup transaction is a proposed transaction, and the taxpayer may request a letter ruling under Rev. Proc. 97-1," the new revenue procedure does not apply. Similarly, section 4.01 of the proposed procedure directs taxpayers who are not under examination or before the appeals office to use the private letter ruling procedure set forth in Rev. Proc. 97-1. Under section 4.02, taxpayers under examination or before an appeals office must, except to the extent modified by the special procedure, comply with the instructions for obtaining technical advice contained in Rev. Proc. 97-2. In addition, under subsection subsection
any of the smaller parts into which a section may be divided
Noun 1. subsection - a section of a section; a part of a part; i.e. 3.05(1) a taxpayer may not request a ruling where the "entire" environmental cleanup transaction is "completed" and the time for filing the returns has passed. Finally, where the "identical" environmental cleanup issue is in the taxpayer's return for an earlier period and the "identical" issue is pending in litigation with the taxpayer (or certain related taxpayers), the taxpayer may not avail itself of the procedure.
TEI appreciates that the IRS intends that taxpayers that will incur costs related to wholly future environmental cleanup activities should obtain rulings pursuant to the procedures set forth in Rev. Proc. 97-1. Similarly, we appreciate that, where the cleanup activities are entirely "completed" and returns filed reporting the costs of such activities, taxpayers should generally employ procedures similar to the technical advice process of Rev. Proc. 97-2. Nonetheless, the use of the adjectives "entire" and "identical" in section 3.05 to preclude taxpayers from invoking the new procedure in excluded situations is problematic and will severely limit the utility of the procedure.
The determination whether all the remediation activities related to an "entire" transaction are "completed" or whether an "identical" cleanup "issue" exists (because of similar remediation activities) is heavily dependent on the facts and circumstances. For example, assume that multiple hazards, toluene toluene (tōl`yēn') or methylbenzene (mĕth'əlbĕn`zēn), C7H8 (a paint-removing agent) and lead paint, have been discharged at the same site. Assume the taxpayer is aware of one hazard, removes it without benefit of a ruling, and subsequently discovers that the site contains the second hazard requiring additional cleanup work. Under these facts, is the taxpayer precluded from seeking a ruling in respect of the first hazard (because the entire hazard is removed), the second, or both? Alternatively, assume that the first attempt to remove or remediate re·me·di·a·tion
The act or process of correcting a fault or deficiency: remediation of a learning disability.
re·me a single hazard is unsuccessful and, as a result of continued monitoring, the hazard is rediscovered. Is the taxpayer precluded from seeking a ruling in respect of either the first or second attempts at remediating the site or hazard?
Likewise, determining when remediation activities are "completed" is extremely difficult since many, if not most, cleanups require continued monitoring (as in Rev. Rul. 94-38) to ascertain whether the cleanup is successful. Hence, the completion of a particular environmental remediation is also dependent on the facts and circumstances. Moreover, the issue whether the environmental cleanup is "completed" may not be relevant. Instead, the issue is whether there is an issue in any open taxable year that is attributable to cleanup costs involved in the project or plan of remediation that has been submitted to the IRS for a ruling. TEI's recommended approach of permitting the taxpayer, with the agreement of the national office, to define the scope of the site, hazard, and cleanup procedures involved in the ruling request will prove more workable.
Concededly, where an "identical" issue is being litigated in a previous tax year with the same taxpayer, the IRS may not wish to issue a ruling that potentially undermines its litigation strategy. Nonetheless, the last excluded transaction of subsection 3.05(3) (no ruling where the identical issue is in the taxpayer's return and the issue is in litigation) seemingly precludes the use of the procedure where it is most warranted: when an issue has resulted in substantial controversy. Moreover, TEI questions how identical a transaction must be to qualify as an excluded situation under subsection 3.05(3). For example, if the taxpayer remediated asbestos in certain machinery and equipment in an earlier year and that issue is now in litigation, will the taxpayer be precluded from seeking a ruling in respect of asbestos used as a fire retardant fire retardant Public health A chemical used to resist combustion, which may contain polybrominated biphenyls and antimony oxide in the taxpayer's corporate headquarters? In such a case, we believe that either the activities performed in the remediation attempt or the differing use of the asset may compel Compel - COMpute ParallEL a different answer. The draft procedure is unclear.
As a result of (i) the facts and circumstances nature of the inquiry and (ii) the substantial interpretative in·ter·pre·ta·tive
Variant of interpretive.
in·terpre·ta difficulties inherent in determining whether a cleanup project is "entire," "identical," or "completed," we recommend that the IRS delete subsection 3.05(3) and consider any environmental cleanup project eligible for the private ruling procedure.
Change In Accounting Method
Under section 9 of the procedure, a taxpayer receiving a ruling may be required to seek the Commissioner's consent for a change in accounting method. In such cases, the national office will inform the taxpayer of the procedures for obtaining consent. TEI recommends that taxpayers be able to obtain the change in method by supplemental submission to the ruling request under the new revenue procedure rather than by separate submission.
Temporary Nature of the Procedure
Section 13 states that the special ruling procedure will be available on a trial basis for a two-year period, beginning on the date the procedure is finalized See finalization. . We believe that the IRS's caution in establishing the procedure on a temporary basis is warranted. The very nature of environmental remediation expenditures may diminish a taxpayer's desire to invoke To activate a program, routine, function or process. the procedure inasmuch as in·as·much as
1. Because of the fact that; since.
2. To the extent that; insofar as.
1. since; because
2. expenditures for assessment or remediation of environmental hazards are unlikely to produce future income or to result in the construction of a tangible asset Tangible Asset
An asset that has a physical form such as machinery, buildings and land.
This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. (or an improvement or betterment bet·ter·ment
1. An improvement over what has been the case: financial betterment.
2. Law An improvement beyond normal upkeep and repair that adds to the value of real property. in the parlance Parlance - A concurrent language.
["Parallel Processing Structures: Languages, Schedules, and Performance Results", P.F. Reynolds, PhD Thesis, UT Austin 1979]. of section 263, or the production of assets used in the trade or business as in section 263A). Moreover, taxpayers will likely resist strained arguments requiring capitalization of environmental cleanup costs. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , since remediation costs, standing alone, rarely meet one of the recognized tests for capitalization of repairs (an increase in the value or life of an asset), taxpayers may be reluctant to consider the procedure except as a last administrative recourse to resolve a contentious examination. Should taxpayers be unwilling to utilize the procedure, the IRS should discontinue dis·con·tin·ue
v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues
1. To stop doing or providing (something); end or abandon: it.
TEI is pleased to have the opportunity to present its views on Notice 97-7. These comments were prepared under the aegis of TEI's Federal Tax Committee whose chair is David L. Klausman. If you have any questions concerning these comments, please call either Mr. Klausman of Intel Corporation at (408) 765-6592, or Jeffery P. Rasmussen of the Institute's professional tax staff at (202) 638-5601.
(1) 1997-1 I.R.B. 8.
(2) See the Institute's comments on the tax treatment of environmental remediation expenses, dated June 15, 1993; comments with respect to expenditures to adopt just-in-time manufacturing just-in-time manufacturing (JIT)
Production-control system, developed by Toyota Motor Corp. and imported to the West, that has revolutionized manufacturing methods in some industries. , dated September 21, 1995; comments in response to Notice 96-7, dated March 20, 1996; comments submitted for the November 19, 1996, TEI-IRS liaison meeting; and our follow-up comments to Notice 96-7, dated April 1, 1997.
(3) Section 6 of the draft procedure recognizes this limitation and, in accord with section 6110(j)(3), parallels Rev. Proc. 97-1 and Rev. Proc. 97-2 in limiting its holdings to the specific transactions and taxpayer involved.
(4) Despite the limited precedential effect of private rulings, revenue agents and taxpayers frequently cite the "reasoning" employed in the ruling in support of the outcome either seeks. Should the draft procedure supplant sup·plant
tr.v. sup·plant·ed, sup·plant·ing, sup·plants
1. To usurp the place of, especially through intrigue or underhanded tactics.
2. public guidance, tax administration will suffer as the national office steps into more and more cases to resolve disputes.
(5) Revenue Rulings 92-80, 94-12, and 96-62, respectively.
(6) 1994-1 C.B. 35
(7) The change in terminology from environmental cleanup "transactions" to environmental cleanup "issues" within the same section underscores the need for consistency and clarification of the terminology. If the difference in terminology within section 3.05 of Notice 97-7 is unintended it should be eliminated; if it is purposeful pur·pose·ful
1. Having a purpose; intentional: a purposeful musician.
2. Having or manifesting purpose; determined: entered the room with a purposeful look. , it should be explained. We recommend that the section be modified for consistency or the difference be explained.
(8) 1997-12 I.R.B. 1.
(9) The definition of "continuing transactions" may permit a ruling on repeated cleanup procedures at a single site. For example, the removal of asbestos insulation from different floors of a single building that requires several years to complete may be viewed as a continuing transaction." Should the IRS agree with this view, we recommend that a clarifying example be added.
(10) Section 3.05(3) precludes a taxpayer from obtaining a ruling where the "identical" issue is being litigated in other taxable years of the taxpayer or certain related taxpayers. While the meaning of "identical" issue is unclear, it presumably pre·sum·a·ble
That can be presumed or taken for granted; reasonable as a supposition: presumable causes of the disaster. includes repeated cleanup activities for a particular hazard at different sites.