Third-party contact reports should be provided only on request

Plain-English summary

Chief Counsel advised that the IRS should give a taxpayer reports of third parties contacted during an examination only when the taxpayer requests them. The email rejected periodic issuance of those reports. It relied on the preamble to Treasury Regulation section 301.7602-2(e)(1), which states that periodic reports may harm third parties. Taxpayers still receive advance notice before third-party contacts and may specifically ask the IRS for a list of persons contacted.

Ruling snapshot

• Question: Should the IRS issue third-party contact reports periodically or only when a taxpayer requests them?
• Outcome: advice given
• Key authorities: IRC § 7602; Treas. Reg. § 301.7602-2(e)(1)

Full text (IRS public release)

ID:         CCA_2023121011592548                                [Third Party Communication:

UILC:       7602.00-00                                          Date of Communication: Month DD, YYYY]

Number: 202352020
Release Date: 12/29/2023
From: -------------------
Sent: Wednesday, November 15, 2023 1:35:47 PM
To: ------------------------
Cc: ---------------------------------------------------------------------------------------------
Bcc:
Subject: RE: Third Party Contact Report Guidelines - TAS non-concur


Hey -----------,

We maintain our position that third-party contact reports should be issued to the
taxpayer only upon request and not periodically. The preamble to Procedure and
Administration Regulation § 301.7602-2(e)(1) states: “[T]he IRS determined that the
issuance of periodic reports may result in harm to third parties and, accordingly, has
determined that periodic reports should not be issued. Taxpayers will continue to
receive pre-contact notice and may specifically request from the IRS reports of persons
contacted.”

Thanks,

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