CCA 200045003: Advice on a proposed summons and foreign document request

Plain-English summary

Chief Counsel reviewed a proposed summons for a tax examination and found no barrier to enforcing it. Counsel suggested adding monthly account statements to the bank records requested. An attached International Division memorandum reviewed a proposed formal document request for records held outside the United States. It explained that section 982 applies after ordinary requests fail and can bar a taxpayer from using covered foreign documents in a civil case if the taxpayer does not comply within 90 days. The division advised attaching the earlier information request and narrowing or revising several items so the formal request covered foreign-based documentation.

Ruling snapshot

• Question: Are the proposed summons and formal request for foreign-based records suitable for issuance?
• Outcome: Advice approving the summons review and recommending changes to the formal document request.
• Key authorities: IRC § 982.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224

June 21, 2000

CC:EL:GL:Br3
Number: 200045003
TL-N-2105-00
Release Date: 11/9/2000
UILC:75.10.00-00
9999.98-00

MEMORANDUM FOR PAUL KRUG, SPECIAL LITIGATION ASSISTANT (CT), (NORTHERN CALIFORNIA DISTRICT) CC:WR:NCA:SF

FROM: Chief, Branch 3 (General Litigation)

SUBJECT: Review of Proposed Summons to

LEGEND: None required.

Pursuant to your request, we have reviewed the summons that the Service
proposes to issue to
. We perceive no barrier to enforcing the
proposed summons. You may wish to include the monthly statements of account within the description of summoned bank documents for the eight accounts listed in the first set of summoned documents, assuming the examiner has not already obtained them.

As you noted in your incoming memorandum, we coordinated our review with the International Division. That division’s advisory memorandum and the Information Document Request to which it refers are attached. We were pleased to assist you with this matter, and if you have questions or comments, please contact me at 622- 3630 or Elizabeth Rawlins at 622-9867.

Attachments:
Memorandum from International District Counsel
Proposed Information Document Request
 DEPARTMENT OF THE TREASURY
I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224

CC:INTL:IDC:WBLowrance
TL-N-2105-00

UILC:982.02-00

MEMORANDUM FOR LAWRENCE H. SCHATTNER
CC:GL:Br3 CHIEF, BRANCH 3
Attn: Elizabeth Rawlins

FROM: Ricardo A. Cadenas
Chief, International District Counsel CC:INTL:IDC

SUBJECT: –TL N 2105-00

LEGEND: None required.

On April 28, 2000, you sent us a proposed summons with related information. The proposed summons requests books, records and information (foreign and domestic) from of . The International Examiner proposes to issue a Formal Document Request (FDR) with the summons. You asked that we review the Formal Document Request.

I.R.C. § 982(c) provides, in part, that the term formal document request means any request, made after normal request procedures have failed to produce the requested documentation, for the production of foreign-based documentation. An FDR is issued only after normal Information Document Requests (IDR) procedures have failed in getting the requested information.

I.R.C. § 982 provides that if a taxpayer fails to comply with a FDR within 90 days after the mailing of the request, then the taxpayer shall be prohibited from introducing into evidence in a civil proceeding any foreign based documentation covered by the request.

Documents and information requested in the FDR must be foreign based documentation. The term foreign based documentation means any documentation held outside the United States which may be relevant or material to the tax 2

treatment of the examined item. The FDR must be mailed to the taxpayer’s last known address by registered or certified mail. The FDR must include the following:

1. Time and place for production.
2. A statement of the reason previously submitted documents are insufficient.
3. A description of the documents requested.
4. Consequences of noncompliance.

We have reviewed the proposed FDR letter and attachment. We suggest the following:

That the International Examiner attach a copy of the IDR, to which did not provide information, to the letter.

That “Foreign Document Request” be printed on the attached Form 4564 describing the documentation requested.

Item II on Form 4564 does not refer to foreign based documentation and the request may be best suited for the summons.

Item III should be “Copies of all personal financial statements of that refer to foreign assets, foreign property, foreign income or foreign liabilities.”

Item IV on Form 4564 does not refer to foreign based documentation and the request may be best suited for the summons.

Item VI should be “All escrow instructions, escrow statements, disbursement statements and any documents referring to and/or any of relatives which are outside the United States and relate to the acquisition and/or disposition of any assets in the United States, Hong Kong, Canada or any other country. Such assets may be, but are not limited to, real properties and corporate interests.

If you have any questions, please call me at 202-874-1321 or Trial Attorney Bill Lowrance at 202-874-1893.

Ricardo A. Cadenas
Chief, International District Counsel