CCA 1311027: CCA concludes that disclosure of third-party return information is not authorized

Plain-English summary

Chief Counsel advice addressed whether third-party return information could be disclosed in an IRS examination under IRC § 6103(h)(4)(B) or (C). The advice explained that disclosure may be allowed when the treatment of an item directly resolves an issue in a tax proceeding or when return information directly relates to a transactional relationship that affects the issue. On the facts presented, disclosure that a third-party taxpayer claimed or was allowed a credit would not resolve whether the retail company properly claimed the credit. The advice therefore concluded that disclosure was not authorized.

Ruling snapshot

• Question: What did the IRS determine under the cited Code provisions?
• Outcome: advice.
• Key authorities: IRC § 6103

Full text (IRS public release)

-

ID: CCA_2012101509251324 Number: 201311027
Release Date: 3/15/2013
Office: ----------
UILC: 6103.02-08, 6103.08-04

From: ---------------
Sent: Monday, October 15, 2012 9:25:15 AM
To: ----------------------
Cc:
Subject: RE: Disclosure section 6103(h)(4)(B) or (C)

As we discussed on Friday, section 6103(h)(4)(B) and (C) provide for the disclosure of third-
party return information in a judicial or administrative proceeding pertaining to tax. Generally,
courts hold that an IRS examination is an administrative proceeding pertaining to tax. Under
section 6103(h)(4)(B), disclosure of third-party return information may be made in the
proceeding if the treatment of an item reflected on such return is directly the resolution of an
issue in the proceeding. Under section 6103(h)(4)(C), disclosure of third-party return
information may be made in the proceeding if such return or return information directly relates to
a transactional relationship between a person who is a party to the proceeding and the taxpayer
which directly affects the resolution of an issue in the proceeding.

My review of the information you provide below finds that disclosure is not authorized. The
regulation you cite does not provide for the taxpayer to claim the credit. Disclosure that the
third-party taxpayer claimed the credit or that the IRS audit team allowed the third-party
taxpayer to claim the credit would not directly resolve the issue in the proceeding of whether the
retail company appropriately claimed the credit. The burden is on the retail company to
establish its right to the credit.