Classified third-party contact names may be provided only in a secure setting

Plain-English summary

An exempt-organization examination involved a taxpayer’s classified contract with a government agency. Revenue agents interviewed government officials whose identities were themselves classified, and all discussion of the contract had to occur in a secure location. Chief Counsel concluded that section 7602(c) was satisfied if the IRS had given advance notice that it might contact third parties and could provide the officials’ names to the taxpayer upon request at the secure location. The IRS did not need to place the classified names on the ordinary third-party contact listing.

Ruling snapshot

• Question: How should the IRS satisfy third-party contact disclosure requirements when the contacted officials’ identities are classified?
• Outcome: Advice given.
• Key authorities: IRC § 7602(c).

Full text (IRS public release)

ID: CCA_2016042616112454
UILC: 7602.00-00

Number: 201621012
Release Date: 5/20/2016
From:
Sent: Tuesday, April 26, 2016 4:11:24 PM
To:
Cc:
Bcc:
Subject: third party contacts and classified information

P&A has now studied this issue and consulted with the attorney in TE/GE Counsel who provided
the advice to Exam. For the benefit of everyone on this email, here is the context:

    EO is examining an organization which had a contract to provide services to a
    government agency. The contract itself was classified information. Exam and
    TE/GE Counsel all had to get top secret security clearances to work on the
    case. The revenue agents interviewed certain government officials about the
    contract. The names of the individual government officials are part of the
    classified information. No one can even acknowledge the existence of the
    contract in a non-secure setting. The taxpayer, by virtue of its own clearance and
    its participation in the contract, knows who the individuals are. All meetings with
    the taxpayer in which classified information is discussed are held in a secure
    location.

P&A has concluded that section 7602(c) is satisfied in this situation so long as the IRS
gave advance notice that third-party contacts may be made, and the IRS can, if asked,
provide those names to the taxpayer at the secure location. It is not necessary for the
IRS to record the classified names on the third-party contact listing. Thus, P&A concurs
with the advice provided by TE/GE Counsel.

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