CCA 200911030: The new disclosure rule did not change TEFRA proceeding disclosures

Plain-English summary

Chief Counsel advised that the amendment adding section 6103(e)(10) should not affect disclosures in TEFRA partnership proceedings under section 6103(h)(4)(A). That provision allows taxpayer information to be disclosed to parties in a federal judicial or administrative proceeding, and all direct and indirect partners are parties to a TEFRA audit and resulting litigation. The IRS could therefore continue issuing Form 886-Z under the proceeding exception. The advice nevertheless recommended protecting partner information that was not directly relevant to the proceeding.

Ruling snapshot

• Question: Did the new section 6103(e)(10) rule change disclosures made during TEFRA partnership audits and litigation?
• Outcome: Advice given: no, the IRS could continue issuing Form 886-Z under section 6103(h)(4)(A).
• Key authorities: IRC §§ 6103(e)(10) and 6103(h)(4)(A); Abelein v. U.S., 323 F.3d 1210 (9th Cir. 2003).

Full text (IRS public release)

ID: CCA_2009020615524437 Number: 200911030
Release Date: 3/13/2009
Office: --------------
UILC: 6103.09-03, 6103.05-03

From: -------------------
Sent: Friday, February 06, 2009 3:52:45 PM
To: ----------------------------
Cc: ---------------------------------------------------- Subject: RE: New I.R.C. § 6103(e)(10)

The amendment to section 6103(e) should not affect any disclosures in TEFRA proceedings under section 6103(h)(4)(A). Section 6103(h)(4)(A) provides that taxpayer information may be disclosed to all parties in a federal judicial or administrative proceeding. All direct and indirect partners in a TEFRA partnership are parties to the administrative proceeding (i.e., the audit) and the subsequent litigation. The 9th Circuit so held in Abelein v. U.S., 323 F.3d 1210, 91 A.F.T.R.2d 2003-1476, 2003-1 USTC P 50,331. So while we will have to be more careful for disclosures outside of TEFRA under the amendment to section 6103(e), the new legislation should not affect our disclosures made as part of a TEFRA audit and litigation.

Thus, we may continue to issue the Form 886-Z under section 6103(h)(4)(A) since this provides an exception to 6103(e). That said, we should nevertheless respect partner privacy to the extent their personal information is not directly relevant to the TEFRA proceeding. ----------------------------------------------------------------------------------------------------
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