CCA 201005042: An exam may disclose only third-party return information directly related to the issue

Plain-English summary

This internal IRS Chief Counsel advice addresses disclosure of an ex-wife's return information during an examination of an ex-husband's return. It says IRC § 6103(h)(4)(C) permits disclosure of third-party returns and return information when the information directly relates to a transaction between a party to the proceeding and the third-party taxpayer, and the transaction directly affects resolution of an issue in the proceeding. The advice cautions that only information meeting the statutory standard may be disclosed. It gives the same instruction for individual items taken from the third-party return.

Ruling snapshot

• Question: When may an examination disclose a third party's return information to resolve an issue involving the taxpayer under examination?
• Outcome: Advice given.
• Key authorities: IRC § 6103(h)(4)(C).

Full text (IRS public release)

ID: CCA_2010011119485732 Number: 201005042
Release Date: 2/5/2010
Office: --------------
UILC: 6103.08-04

From: --------------------
Sent: Monday, January 11, 2010 7:49:26 PM
To: ----------------------
Cc: ---------------------------
Subject: RE: query about disclosure of ex wife's tax return

You are directly on track. During an exam, which is an administrative tax proceeding, the transactional relationship provision of 6103(h)(4)(C) allows for the disclosure of third party returns and return information if it directly relates to a transactional relationship like you have here (payment from one to the other), between person who is a party to the proceeding (ex-husband) and a taxpayer (ex-wife) which directly affects the resolution of an issue in the proceeding (whether ex-husband is entitled to the deduction taken). Take care to ensure that only that information that meets the statutory standard is disclosed. Similarly, if you are disclosing items from the return, ensure that only those items on the third party's return that are directly related to resolving an issue in the exam be disclosed.

Let me know if you have any more questions.

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