Returning a case to Exam to fix penalty paperwork is not a prohibited ex parte communication

Plain-English summary

This short Chief Counsel advice, written as an email, addresses the ex parte rules that keep IRS Appeals independent from the examiners whose work it reviews. An Appeals Officer handling a deficiency appeal wanted to send the case back to the Exam function to fix penalty paperwork: to attach a missing form and to correct a workpaper so it cited the civil fraud penalty under section 6663 rather than the fraudulent-failure-to-file penalty under section 6651(f). The question was whether that contact with Exam would be a banned ex parte communication under Revenue Procedure 2012-18. Counsel advised that returning a case to Exam for ministerial, administrative, or procedural corrections like these is permitted under section 2.03(6) of Rev. Proc. 2012-18, so long as Appeals notifies the taxpayer or representative that the case is being returned for further development and shares the resulting supplemental report (here, the Exam manager's signed penalty approval). This helps Appeals staff tell routine, allowed case returns apart from improper behind-the-scenes contacts with the examining agents.

Ruling snapshot

• Question: Is an Appeals Officer's request that Exam correct penalty paperwork a prohibited ex parte communication under Rev. Proc. 2012-18?
• Outcome: advice given (permitted as a ministerial/procedural return, provided the taxpayer is notified and the supplemental report shared)
• Key authorities: Rev. Proc. 2012-18, § 2.03; IRC §§ 6651(f), 6663

Full text (IRS public release)

ID:        CCA_2018092715293062
UILC:      9999.94-02

Number: 201909010
Release Date: 3/1/2019
From:
Sent: Thursday, September 27, 2018 3:29:30 PM
To:
Cc:
Bcc:
Subject: --------------------------------


-----------,

You stated that the Appeals Officer assigned to a deficiency appeal wants to “ask
Exam to (1) attach the referenced LS501 to the Civil Penalty Form and (2) to fix
Workpaper 1.2 so that it has section 6663 checked and not section 6651(f).” You
asked whether the Appeals Officer’s contact with Exam would be a prohibited ex
parte communication and if there are any rules in Rev. Proc. 2012-18 applicable to
this situation.

Rev. Proc. 2012-18, section 2.03(6), makes clear that returning the case to Exam for
these purposes is not a prohibited ex parte communication as long as the request
and explanation does not go beyond the types of ministerial, administrative, or
procedural matters set forth in section 2.03(2). However, Rev. Proc. 2012-18,
section 2.03(6) requires Appeals to notify the taxpayer or the taxpayer’s
representative that the case is being returned in part for further development. The
supplemental report prepared by the originating function, which in this case would
be the properly signed approval by the Exam manager, must be shared with the
taxpayer or representative.

Based on this advice, I do not believe your other questions require answering. If
you disagree, please let me know and I will ask ----- and -------- to respond.

Let me know if you have any questions.

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