CCA 201125023: TEFRA proceedings permit certain disclosures of partner information
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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2011, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.
Plain-English summary
Chief Counsel Advice addressed whether the IRS could disclose partner information to other partners during a TEFRA partnership audit or related litigation. The advice concluded that IRC § 6103(e)(10), enacted by the Mortgage Forgiveness Debt Relief Act of 2007, did not change the disclosure exception in IRC § 6103(h)(4)(A). Because direct and indirect partners are parties to the administrative proceeding and later litigation, the IRS could continue issuing Form 886-Z in that setting. The advice cited Abelein v. U.S. as support for that conclusion.
Ruling snapshot
- Question: Can the IRS disclose partner information to other partners during a TEFRA audit or related litigation?
- Outcome: Advice given.
- Key authorities: IRC § 6103(e)(10); IRC § 6103(h)(4)(A); Abelein v. U.S., 323 F.3d 1210.
Full text (IRS public release)
ID: CCA_2011051909444237 Number: 201125023
Release Date: 6/24/2011
Office: ---------
UILC: 6103.05-03
From: --------------------
Sent: Thursday, May 19, 2011 9:44:53 AM
To: -------------------
Cc: --------------------------------------
Subject: RE: IRC 6103(e)(10) Clarification pertaining to Partnerships ---------------------------
Section 8 of the Mortgage Forgiveness Debt Relief Act of 2007 enacted new section 6103(e)(10) limiting the disclosure of partner information to other partners in the same partnership. It did not change section 6103(h)(4)(A) which is an exception to the general disclosure limitations and allows such information to be disclosed to other partners in the same partnership as part of a TEFRA audit or litigation.
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). ---------------------------------------------------------------------------------------------------------------
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