The IRS gathers quite a bit of information about taxpayers. This includes those who have unpaid tax debts and those who the IRS suspects may owe additional taxes. The IRS has the ability to contact third parties in gathering this information. There are rules that must be followed in doing so.
When do the Rules Apply
The rules apply to third party contacts. A third party contact includes a communication:
1. Initiated by an IRS employee.
2. Made to someone other than the taxpayer.
3. Made with respect to the determination or liability for tax.
4. That discloses the taxpayer’s identity.
5. That discloses the association with the IRS.
Returning unsolicited telephone calls or speaking with persons other than the taxpayer when attempting to speak to the taxpayer are not initiations of third-party contacts. Communications with another IRS officer or employee; any computer database or website; or the taxpayer’s current employee, officer, or fiduciary are also excluded.
Required Advance Notice
IRS employees must provide a pre-contact notice before contacting third parties. This notice lets the taxpayer know that third party contacts may be made. The notice may be given orally or in writing and has to be reasonable.
Most IRS employees satisfy this requirement by providing taxpayers with Publication 1 and documenting that the publication was provided.
There are a number of exceptions to the notice requirement. These exceptions are set out in Treas. Reg. § 301.7602-2.
Consequences of Not Providing Notice
Unfortunately, there is no administrative remedy available to taxpayers in the event the IRS makes third party contacts without providing the required advance notice. There may be other remedies available, however.
It may be possible to exclude any evidence that was gathered in violation of IRS policy from court proceedings. May may also be possible to have the evidence excluded from consideration during the IRS appeals process. Last, it may provide evidence sufficient to justify court intervention.
We help taxpayers with IRS audits and collections matters. If the IRS has made third party contacts in your case or you think that they will, we want to hear from you. Give us a call today to see how we can help.