§7602 — Examination of books and witnesses
103 citing cases
Statute Text — 26 U.S.C. §7602
For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized—
To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.
The purposes for which the Secretary may take any action described in paragraph (1), (2), or (3) of subsection (a) include the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws.
An officer or employee of the Internal Revenue Service may not contact any person other than the taxpayer with respect to the determination or collection of the tax liability of such taxpayer unless such contact occurs during a period (not greater than 1 year) which is specified in a notice which—
informs the taxpayer that contacts with persons other than the taxpayer are intended to be made during such period, and
except as otherwise provided by the Secretary, is provided to the taxpayer not later than 45 days before the beginning of such period.
Nothing in the preceding sentence shall prevent the issuance of notices to the same taxpayer with respect to the same tax liability with periods specified therein that, in the aggregate, exceed 1 year. A notice shall not be issued under this paragraph unless there is an intent at the time such notice is issued to contact persons other than the taxpayer during the period specified in such notice. The preceding sentence shall not prevent the issuance of a notice if the requirement of such sentence is met on the basis of the assumption that the information sought to be obtained by such contact will not be obtained by other means before such contact.
The Secretary shall periodically provide to a taxpayer a record of persons contacted during such period by the Secretary with respect to the determination or collection of the tax liability of such taxpayer. Such record shall also be provided upon request of the taxpayer.
This subsection shall not apply—
to any contact which the taxpayer has authorized;
if the Secretary determines for good cause shown that such notice would jeopardize collection of any tax or such notice may involve reprisal against any person; or
with respect to any pending criminal investigation.
No summons may be issued under this title, and the Secretary may not begin any action under section 7604 to enforce any summons, with respect to any person if a Justice Department referral is in effect with respect to such person.
For purposes of this subsection—
A Justice Department referral is in effect with respect to any person if—
the Secretary has recommended to the Attorney General a grand jury investigation of, or the criminal prosecution of, such person for any offense connected with the administration or enforcement of the internal revenue laws, or
any request is made under section 6103(h)(3)(B) for the disclosure of any return or return information (within the meaning of section 6103(b)) relating to such person.
A Justice Department referral shall cease to be in effect with respect to a person when—
the Attorney General notifies the Secretary, in writing, that—
he will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws,
he will not authorize a grand jury investigation of such person with respect to such an offense, or
he will discontinue such a grand jury investigation,
a final disposition has been made of any criminal proceeding pertaining to the enforcement of the internal revenue laws which was instituted by the Attorney General against such person, or
the Attorney General notifies the Secretary, in writing, that he will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws relating to the request described in subparagraph (A)(ii).
For purposes of this subsection, each taxable period (or, if there is no taxable period, each taxable event) and each tax imposed by a separate chapter of this title shall be treated separately.
The Secretary shall not use financial status or economic reality examination techniques to determine the existence of unreported income of any taxpayer unless the Secretary has a reasonable indication that there is a likelihood of such unreported income.
The Secretary shall not, under the authority of section 6103(n), provide any books, papers, records, or other data obtained pursuant to this section to any person authorized under section 6103(n), except when such person requires such information for the sole purpose of providing expert evaluation and assistance to the Internal Revenue Service. No person other than an officer or employee of the Internal Revenue Service or the Office of Chief Counsel may, on behalf of the Secretary, question a witness under oath whose testimony was obtained pursuant to this section.
Treasury Regulations
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Treas. Reg. §301.7602-1Examination of books and witnesses
(a) In general. For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax (including any interest, additional amount, addition to the tax, or civil penalty) or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, collecting any such liability or inquiring into any offense connected with the administration or enforcement of the internal revenue laws, any authorized officer or employee of the Internal Revenue Service may examine any books, papers, records or other data which may be relevant or material to such inquiry; and take such testimony of the person concerned, under oath, as may be relevant to such inquiry.
(b) Summons—(1) In general. For the purposes described in § 301.7602-1(a), the Commissioner is authorized to summon the person liable for tax or required to perform the act, or any officer or employee of such person or any person having possession, custody, or care of books of accounts containing entries relating to the business of the person liable for tax or required to perform the act, or any other person deemed proper, to appear before one or more officers or employees of the Internal Revenue Service at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry. This summons power may be used in an investigation of either civil or criminal tax-related liability. The Commissioner may designate one or more officers or employees of the IRS as the individuals before whom a person summoned pursuant to section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 shall appear. Any such officer or employee is authorized to take testimony under oath of the person summoned and to receive and examine books, papers, records, or other data produced in compliance with the summons.
(2) Officer or employee of the IRS. For purposes of this paragraph (b), officer or employee of the IRS means all officers and employees of the United States, who are engaged in the administration and enforcement of the internal revenue laws or any other laws administered by the IRS, and who are appointed or employed by, or subject to the directions, instructions, or orders of the Secretary of the Treasury or the Secretary's delegate (Secretary). An officer or employee of the IRS, for purposes of this paragraph (b), shall include an officer or employee of the Office of Chief Counsel.
(3) Participation of a person described in section 6103(n)—(i) IRS contractor access to books and records obtained by the IRS administratively—(A) In general. The Secretary may not, under the authority of section 6103(n), provide any books, papers, records, or other data obtained pursuant to section 7602 to any person authorized under section 6103(n), except when such person requires such information for the sole purpose of providing expert evaluation and assistance to the IRS.
(B) Persons providing expert evaluation and assistance. For the purposes of paragraph (b)(3)(i)(A) of this section, persons providing expert evaluation and assistance may include, but are not limited to, the following:
(1) Persons with specialized expertise in certain substantive areas, including, but not limited to, economists, engineers, attorneys specializing in an area relevant to an issue in the examination (such as patent law, property law, environmental law, or foreign, state, or local law (including foreign, state, or local tax law)), industry experts, or other subject-matter experts;
(2) Persons providing support as ancillary service contractors including, but not limited to, court reporters, translators or interpreters, photocopy services, providers of data processing programs or equipment, litigation support services, or other similar contractors; and
(3) Whistleblower-related contractors described in § 301.6103(n)-2.
(C) Hiring of certain non-government attorneys. The IRS may not hire an attorney as a contractor to assist in an examination under section 7602 unless the attorney is hired by the IRS as a specialist in foreign, state, or local law (including foreign, state, or local tax law), or in non-tax substantive law that is relevant to an issue in the examination, such as patent law, property law, or environmental law, or is hired for knowledge, skills, or abilities other than providing legal services as an attorney.
(ii) IRS contractor participation in an IRS summons interview—(A) In general. No person other than an officer or employee of the IRS or its Office of Chief Counsel may, on behalf of the Secretary, question a witness under oath whose testimony was obtained pursuant to section 7602. Persons authorized by section 6103(n) and with whom the Secretary may provide books, papers, records, or other data obtained pursuant to section 7602 may also attend a summons interview and provide assistance to the IRS or Office of Chief Counsel employees in attendance, but may not question the summoned witness under oath or ask a summoned person's representative to clarify an objection or assertion of privilege.
(B) Court reporters, translators, and interpreters are not barred from asking questions. Court reporters who are hired as contractors by the IRS to make a record of an IRS summons interview are permitted to ask typical housekeeping questions of a summoned witness. Examples of such questions include, but are not limited to, asking whether the witness swears to tell the truth, asking the witness to spell a word or phrase, and asking whether the witness can speak up or speak rather than gesture an answer. Translators and interpreters who are hired as contractors by the IRS to assist in the interview of a summoned witness are permitted to translate any of the questions that are asked of the witness by an IRS or Office of Chief Counsel officer or employee and to ask questions which may be necessary to clarify the translation.
(c) Proscription on issuing of administrative summons when a Justice Department referral is in effect—(1) In general. The Commissioner may neither issue a summons under this title nor initiate a proceeding to enforce a previously issued summons by way of section 7604 with respect to any person whose tax liability is in issue, if a Justice Department referral is in effect with respect to that person for that liability.
(2) Justice Department referral in effect. A Justice Department referral is in effect with respect to any person when:
(i) The Secretary recommends, within the meaning of this paragraph, that the Attorney General either commence a grand jury investigation of or criminal prosecution of such person for any alleged offense connected with the administration or enforcement of the internal revenue laws, or
(ii) The Attorney General (or Deputy Attorney General or Assistant Attorney General) under section 6103(h)(3)(B) requests in writing that the Secretary disclose a return of, or return information relating to, such person. The request must set forth that the need for disclosure is for the purpose of a grand jury investigation of or potential or pending criminal prosecution of such person for any alleged offense connected with the administration or enforcement of the internal revenue laws.
The referral is effective at the time the document recommending criminal prosecution or grand jury investigation is signed by the Secretary or upon the Secretary's receipt of the section 6103(h)(3)(B) request.
(3) Cessation of Justice Department referral. A Justice Department referral ceases to be in effect with respect to a person:
(i) When the Secretary receives written notification from the Attorney General that the Justice Department:
(A) Will not prosecute that person for any offense connected with the administration or enforcement of the internal revenue laws that gave rise to the referral under paragraph (2)(i) of this section, or
(B) Will not authorize a grand jury investigation of that person with respect to such offense, or
(C) Will discontinue any grand jury investigation of that person with respect to such offense;
(ii) When a final disposition with respect to a criminal proceeding brought against that person has been made; or
(iii) When the Secretary receives written notification from the Attorney General, Deputy Attorney General, or an Assistant Attorney General, that the Justice Department will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws, based upon a previous request for disclosure under section 6103(h)(3)(B).
(4) Taxable years and taxes imposed by separate chapters of the Code treated separately—(i) In general. For purposes of this section, each taxable period (or, if there is no taxable period, each taxable event) and each tax imposed by a separate chapter of the Code is treated separately.
(ii) Examples. The following examples illustrate the application of this paragraph (c)(4):
(d) Applicability date. This section is applicable after September 3, 1982, except for paragraphs (b)(1) and (2) of this section, which are applicable on and after April 1, 2005, and paragraph (b)(3) of this section, which applies to examinations begun or administrative summonses served by the IRS on or after August 6, 2020. For rules under paragraphs (b)(1) and (2) of this section that are applicable to summonses issued on or after September 10, 2002 or under paragraph (b)(3) of this section that are applicable to summons interviews conducted on or after June 18, 2014 and before July 14, 2016, see 26 CFR 301.7602-1T (revised as of April 1, 2016). For rules under paragraph (b)(3) of this section that are applicable to administrative summonses served by the IRS before August 6, 2020, see 26 CFR 301.7602-1 (revised as of April 1, 2020).
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Treas. Reg. §301.7602-1(a)In general.
In general. For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax (including any interest, additional amount, addition to the tax, or civil penalty) or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, collecting any such liability or inquiring into any offense connected with the administration or enforcement of the internal revenue laws, any authorized officer or employee of the Internal Revenue Service may examine any books, papers, records or other data which may be relevant or material to such inquiry; and take such testimony of the person concerned, under oath, as may be relevant to such inquiry.
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Treas. Reg. §301.7602-1(b)Summons—(1) In general.
Summons—(1) In general. For the purposes described in § 301.7602-1(a), the Commissioner is authorized to summon the person liable for tax or required to perform the act, or any officer or employee of such person or any person having possession, custody, or care of books of accounts containing entries relating to the business of the person liable for tax or required to perform the act, or any other person deemed proper, to appear before one or more officers or employees of the Internal Revenue Service at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry. This summons power may be used in an investigation of either civil or criminal tax-related liability. The Commissioner may designate one or more officers or employees of the IRS as the individuals before whom a person summoned pursuant to section 6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 shall appear. Any such officer or employee is authorized to take testimony under oath of the person summoned and to receive and examine books, papers, records, or other data produced in compliance with the summons.
(2) Officer or employee of the IRS. For purposes of this paragraph (b), officer or employee of the IRS means all officers and employees of the United States, who are engaged in the administration and enforcement of the internal revenue laws or any other laws administered by the IRS, and who are appointed or employed by, or subject to the directions, instructions, or orders of the Secretary of the Treasury or the Secretary's delegate (Secretary). An officer or employee of the IRS, for purposes of this paragraph (b), shall include an officer or employee of the Office of Chief Counsel.
(3) Participation of a person described in section 6103(n)—(i) IRS contractor access to books and records obtained by the IRS administratively—(A) In general. The Secretary may not, under the authority of section 6103(n), provide any books, papers, records, or other data obtained pursuant to section 7602 to any person authorized under section 6103(n), except when such person requires such information for the sole purpose of providing expert evaluation and assistance to the IRS.
(B) Persons providing expert evaluation and assistance. For the purposes of paragraph (b)(3)(i)(A) of this section, persons providing expert evaluation and assistance may include, but are not limited to, the following:
(1) Persons with specialized expertise in certain substantive areas, including, but not limited to, economists, engineers, attorneys specializing in an area relevant to an issue in the examination (such as patent law, property law, environmental law, or foreign, state, or local law (including foreign, state, or local tax law)), industry experts, or other subject-matter experts;
(2) Persons providing support as ancillary service contractors including, but not limited to, court reporters, translators or interpreters, photocopy services, providers of data processing programs or equipment, litigation support services, or other similar contractors; and
(3) Whistleblower-related contractors described in § 301.6103(n)-2.
(C) Hiring of certain non-government attorneys. The IRS may not hire an attorney as a contractor to assist in an examination under section 7602 unless the attorney is hired by the IRS as a specialist in foreign, state, or local law (including foreign, state, or local tax law), or in non-tax substantive law that is relevant to an issue in the examination, such as patent law, property law, or environmental law, or is hired for knowledge, skills, or abilities other than providing legal services as an attorney.
(ii) IRS contractor participation in an IRS summons interview—(A) In general. No person other than an officer or employee of the IRS or its Office of Chief Counsel may, on behalf of the Secretary, question a witness under oath whose testimony was obtained pursuant to section 7602. Persons authorized by section 6103(n) and with whom the Secretary may provide books, papers, records, or other data obtained pursuant to section 7602 may also attend a summons interview and provide assistance to the IRS or Office of Chief Counsel employees in attendance, but may not question the summoned witness under oath or ask a summoned person's representative to clarify an objection or assertion of privilege.
(B) Court reporters, translators, and interpreters are not barred from asking questions. Court reporters who are hired as contractors by the IRS to make a record of an IRS summons interview are permitted to ask typical housekeeping questions of a summoned witness. Examples of such questions include, but are not limited to, asking whether the witness swears to tell the truth, asking the witness to spell a word or phrase, and asking whether the witness can speak up or speak rather than gesture an answer. Translators and interpreters who are hired as contractors by the IRS to assist in the interview of a summoned witness are permitted to translate any of the questions that are asked of the witness by an IRS or Office of Chief Counsel officer or employee and to ask questions which may be necessary to clarify the translation.
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Treas. Reg. §301.7602-1(c)Proscription on issuing of administrative summons when a Justice Department referral is in effect—(1) In general.
Proscription on issuing of administrative summons when a Justice Department referral is in effect—(1) In general. The Commissioner may neither issue a summons under this title nor initiate a proceeding to enforce a previously issued summons by way of section 7604 with respect to any person whose tax liability is in issue, if a Justice Department referral is in effect with respect to that person for that liability.
(2) Justice Department referral in effect. A Justice Department referral is in effect with respect to any person when:
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Treas. Reg. §301.7602-1(d)Applicability date.
Applicability date. This section is applicable after September 3, 1982, except for paragraphs (b)(1) and (2) of this section, which are applicable on and after April 1, 2005, and paragraph (b)(3) of this section, which applies to examinations begun or administrative summonses served by the IRS on or after August 6, 2020. For rules under paragraphs (b)(1) and (2) of this section that are applicable to summonses issued on or after September 10, 2002 or under paragraph (b)(3) of this section that are applicable to summons interviews conducted on or after June 18, 2014 and before July 14, 2016, see 26 CFR 301.7602-1T (revised as of April 1, 2016). For rules under paragraph (b)(3) of this section that are applicable to administrative summonses served by the IRS before August 6, 2020, see 26 CFR 301.7602-1 (revised as of April 1, 2020).
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Treas. Reg. §301.7602-1(i)§301.7602-1(i)
When the Secretary receives written notification from the Attorney General that the Justice Department:
(A) Will not prosecute that person for any offense connected with the administration or enforcement of the internal revenue laws that gave rise to the referral under paragraph (2)(i) of this section, or
(B) Will not authorize a grand jury investigation of that person with respect to such offense, or
(C) Will discontinue any grand jury investigation of that person with respect to such offense;
(ii) When a final disposition with respect to a criminal proceeding brought against that person has been made; or
(iii) When the Secretary receives written notification from the Attorney General, Deputy Attorney General, or an Assistant Attorney General, that the Justice Department will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws, based upon a previous request for disclosure under section 6103(h)(3)(B).
(4) Taxable years and taxes imposed by separate chapters of the Code treated separately—(i) In general. For purposes of this section, each taxable period (or, if there is no taxable period, each taxable event) and each tax imposed by a separate chapter of the Code is treated separately.
(ii) Examples. The following examples illustrate the application of this paragraph (c)(4):
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Treas. Reg. §301.7602-2Third party contacts
(a) In general. Subject to the exceptions in paragraph (f) of this section, no officer or employee of the Internal Revenue Service (IRS) may contact any person other than the taxpayer with respect to the determination or collection of such taxpayer's tax liability without giving the taxpayer reasonable notice in advance that such contacts may be made. A record of persons so contacted must be made and given to the taxpayer upon the taxpayer's request.
(b) Third-party contact defined. Contacts subject to section 7602(c) and this regulation shall be called “third-party contacts.” A third-party contact is a communication which—
(1) Is initiated by an IRS employee;
(2) Is made to a person other than the taxpayer;
(3) Is made with respect to the determination or collection of the tax liability of such taxpayer;
(4) Discloses the identity of the taxpayer being investigated; and
(5) Discloses the association of the IRS employee with the IRS.
(c) Elements of third-party contact explained—(1) Initiation by an IRS employee—(i) Explanation—(A) Initiation. An IRS employee initiates a communication whenever it is the employee who first tries to communicate with a person other than the taxpayer. Returning unsolicited telephone calls or speaking with persons other than the taxpayer as part of an attempt to speak to the taxpayer are not initiations of third-party contacts.
(B) IRS employee. For purposes of this section, an IRS employee includes all officers and employees of the IRS, the Chief Counsel of the IRS and the National Taxpayer Advocate, as well as a person described in section 6103(n), an officer or employee of such person, or a person who is subject to disclosure restrictions pursuant to a written agreement in connection with the solicitation of an agreement described in section 6103(n) and its implementing regulations. No inference about the employment or contractual relationship of such other persons with the IRS may be drawn from this regulation for any purpose other than the requirements of section 7602(c).
(ii) Examples. The following examples illustrate this paragraph (c)(1):
(2) Person other than the taxpayer—(i) Explanation. The phrases “person other than the taxpayer” and “third party” are used interchangeably in this section, and do not include—
(A) An officer or employee of the IRS, as defined in paragraph (c)(1)(i)(B) of this section, acting within the scope of his or her employment;
(B) Any computer database or website regardless of where located and by whom maintained, including databases or web sites maintained on the Internet or in county courthouses, libraries, or any other real or virtual site; or
(C) A current employee, officer, or fiduciary of a taxpayer when acting within the scope of his or her employment or relationship with the taxpayer. Such employee, officer, or fiduciary shall be conclusively presumed to be acting within the scope of his or her employment or relationship during business hours on business premises.
(ii) Examples: The following examples illustrate this paragraph (c)(2):
(3) With respect to the determination or collection of the tax liability of such taxpayer—(i) Explanation—(A) With respect to. A contact is “with respect to” the determination or collection of the tax liability of such taxpayer when made for the purpose of either determining or collecting a particular tax liability and when directly connected to that purpose. While a contact made for the purpose of determining a particular taxpayer's tax liability may also affect the tax liability of one or more other taxpayers, such contact is not for that reason alone a contact “with respect to” the determination or collection of those other taxpayers' tax liabilities. Contacts to determine the tax status of a pension plan under chapter 1, subchapter D (Deferred Compensation) of the Internal Revenue Code, are not “with respect to” the determination of plan participants” tax liabilities. Contacts to determine the tax status of a bond issue under chapter 1, subchapter B, Part IV (Tax Exemption Requirements for State and Local Bonds) of the Internal Revenue Code, are not “with respect to” the determination of the bondholders' tax liabilities. Contacts to determine the tax status of an organization under chapter 1, subchapter F (Exempt Organizations) of the Internal Revenue Code, are not “with respect to” the determination of the contributors' liabilities, nor are any similar determinations “with respect to” any persons with similar relationships to the taxpayer whose tax liability is being determined or collected.
(B) Determination or collection. A contact is with respect to the “determination or collection” of the tax liability of such taxpayer when made during the administrative determination or collection process. For purposes of this paragraph (c) only, the administrative determination or collection process may include any administrative action to ascertain the correctness of a return, make a return when none has been filed, or determine or collect the tax liability of any person as a transferee or fiduciary under chapter 71 of title 26.
(C) Tax liability. A tax liability means the liability for any tax imposed by title 26 of the United States Code (including any interest, additional amount, addition to the tax, or penalty) and does not include the liability for any tax imposed by any other jurisdiction nor any liability imposed by other Federal statutes.
(D) Such taxpayer. A contact is with respect to the determination or collection of the tax liability of “such taxpayer” when made while determining or collecting the tax liability of a particular, identified taxpayer. Contacts made during an investigation of a particular, identified taxpayer are third-party contacts only as to the particular, identified taxpayer under investigation and not as to any other taxpayer whose tax liabilities might be affected by such contacts.
(ii) Examples. The following examples illustrate the operation of this paragraph (c)(3):
(4) Discloses the identity of the taxpayer being investigated—(i) Explanation. An IRS employee discloses the taxpayer's identity whenever the employee knows or should know that the person being contacted can readily ascertain the taxpayer's identity from the information given by the employee.
(ii) Examples. The following examples illustrate this paragraph (c)(4):
(5) Discloses the association of the IRS employee with the IRS. An IRS employee discloses his association with the IRS whenever the employee knows or should know that the person being contacted can readily ascertain the association from the information given by the employee.
(d) Pre-contact notice—(1) In general. An officer or employee of the IRS may not make third-party contacts without providing reasonable notice in advance to the taxpayer that contacts may be made. The pre-contact notice may be given either orally or in writing. If written notice is given, it may be given in any manner that the IRS employee responsible for giving the notice reasonably believes will be received by the taxpayer in advance of the third-party contact. Written notice is deemed reasonable if it is—
(i) Mailed to the taxpayer's last known address;
(ii) Given in person;
(iii) Left at the taxpayer's dwelling or usual place of business; or
(iv) Actually received by the taxpayer.
(2) Pre-contact notice not required. Pre-contact notice under this section need not be provided to a taxpayer for third-party contacts of which advance notice has otherwise been provided to the taxpayer pursuant to another statute, regulation or administrative procedure. For example, Collection Due Process notices sent to taxpayers pursuant to section 6330 and its regulations constitute reasonable advance notice that contacts with third parties may be made in order to effectuate a levy.
(e) Post-contact reports—(1) Requested reports. A taxpayer may request a record of persons contacted in any manner that the Commissioner reasonably permits. The Commissioner may set reasonable limits on how frequently taxpayer requests need be honored. The requested report may be mailed either to the taxpayer's last known address or such other address as the taxpayer specifies in the request.
(2) Contents of record—(i) In general. The record of persons contacted should contain information, if known to the IRS employee making the contact, which reasonably identifies the person contacted. Providing the name of the person contacted fully satisfies the requirements of this section, but this section does not require IRS employees to solicit identifying information from a person solely for the purpose of the post-contact report. The record need not contain any other information, such as the nature of the inquiry or the content of the third party's response. The record need not report multiple contacts made with the same person during a reporting period.
(ii) Special rule for employees. For contacts with the employees, officers, or fiduciaries of any entity who are acting within the scope of their employment or relationship, it is sufficient to record the entity as the person contacted. A fiduciary, officer or employee shall be conclusively presumed to be acting within the scope of his employment or relationship during business hours on business premises. For purposes of this paragraph (e)(2)(ii), the term entity means any business (whether operated as a sole proprietorship, disregarded entity under § 301.7701-2 of the regulations, or otherwise), trust, estate, partnership, association, company, corporation, or similar organization.
(3) Post-contact record not required. A post-contact record under this section need not be made, or provided to a taxpayer, for third-party contacts of which the taxpayer has already been given a similar record pursuant to another statute, regulation, or administrative procedure.
(4) Examples. The following examples illustrate this paragraph (e):
(f) Exceptions—(1) Authorized by taxpayer—(i) Explanation. Section 7602(c) does not apply to contacts authorized by the taxpayer. A contact is “authorized” within the meaning of this section if—
(A) The contact is with the taxpayer's authorized representative, that is, a person who is authorized to speak or act on behalf of the taxpayer, such as a person holding a power of attorney, a corporate officer, a personal representative, an executor or executrix, or an attorney representing the taxpayer; or
(B) The taxpayer or the taxpayer's authorized representative requests or approves the contact.
(ii) No prevention or delay of contact. This section does not entitle any person to prevent or delay an IRS employee from contacting any individual or entity.
(2) Jeopardy—(i) Explanation. Section 7602(c) does not apply when the IRS employee making a contact has good cause to believe that providing the taxpayer with either a general pre-contact notice or a record of the specific person contacted may jeopardize the collection of any tax. For purposes of this section only, good cause includes a reasonable belief that providing the notice or record will lead to—
(A) Attempts by any person to conceal, remove, destroy, or alter records or assets that may be relevant to any tax examination or collection activity;
(B) Attempts by any person to prevent other persons, through intimidation, bribery, or collusion, from communicating any information that may be relevant to any tax examination or collection activity; or
(C) Attempts by any person to flee, or otherwise avoid testifying or producing records that may be relevant to any tax examination or collection activity.
(ii) Record of contact. If the circumstances described in this paragraph (f)(2) exist, the IRS employee must still make a record of the person contacted, but the taxpayer need not be provided the record until it is no longer reasonable to believe that providing the record would cause the jeopardy described.
(3) Reprisal—(i) In general. Section 7602(c) does not apply when the IRS employee making a contact has good cause to believe that providing the taxpayer with either a general pre-contact notice or a specific record of the person being contacted may cause any person to harm any other person in any way, whether the harm is physical, economic, emotional or otherwise. A statement by the person contacted that harm may occur against any person is sufficient to constitute good cause for the IRS employee to believe that reprisal may occur. The IRS employee is not required to further question the contacted person about reprisal or otherwise make further inquiries regarding the statement.
(ii) Examples. The following examples illustrate this paragraph (f)(3):
(4) Pending criminal investigations—(i) IRS criminal investigations. Section 7602(c) does not apply to contacts made during an investigation, or inquiry to determine whether to open an investigation, when the investigation or inquiry is—
(A) Made against a particular, identified taxpayer for the primary purpose of evaluating the potential for criminal prosecution of that taxpayer; and
(B) Made by an IRS employee whose primary duties include either identifying or investigating criminal violations of the law.
(ii) Other criminal investigations. Section 7602(c) does not apply to contacts which, if reported to the taxpayer, could interfere with a known pending criminal investigation being conducted by law enforcement personnel of any local, state, Federal, foreign or other governmental entity.
(5) Governmental entities. Section 7602(c) does not apply to any contact with any office of any local, state, Federal or foreign governmental entity except for contacts concerning the taxpayer's business with the government office contacted, such as the taxpayer's contracts with or employment by the office. The term office includes any agent or contractor of the office acting in such capacity.
(6) Confidential informants. Section 7602(c) does not apply when the employee making the contact has good cause to believe that providing either the pre-contact notice or the record of the person contacted would identify a confidential informant whose identity would be protected under section 6103(h)(4).
(7) Nonadministrative contacts—(i) Explanation. Section 7602(c) does not apply to contacts made in the course of a pending court proceeding.
(ii) Examples. The following examples illustrate this paragraph (f)(7):
(g) Effective Date. This section is applicable on December 18, 2002.
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Treas. Reg. §301.7602-2(a)In general.
In general. Subject to the exceptions in paragraph (f) of this section, no officer or employee of the Internal Revenue Service (IRS) may contact any person other than the taxpayer with respect to the determination or collection of such taxpayer's tax liability without giving the taxpayer reasonable notice in advance that such contacts may be made. A record of persons so contacted must be made and given to the taxpayer upon the taxpayer's request.
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Treas. Reg. §301.7602-2(b)Third-party contact defined.
Third-party contact defined. Contacts subject to section 7602(c) and this regulation shall be called “third-party contacts.” A third-party contact is a communication which—
(1) Is initiated by an IRS employee;
(2) Is made to a person other than the taxpayer;
(3) Is made with respect to the determination or collection of the tax liability of such taxpayer;
(4) Discloses the identity of the taxpayer being investigated; and
(5) Discloses the association of the IRS employee with the IRS.
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Treas. Reg. §301.7602-2(c)Elements of third-party contact explained—(1) Initiation by an IRS employee—(i) Explanation—(A) Initiation.
Elements of third-party contact explained—(1) Initiation by an IRS employee—(i) Explanation—(A) Initiation. An IRS employee initiates a communication whenever it is the employee who first tries to communicate with a person other than the taxpayer. Returning unsolicited telephone calls or speaking with persons other than the taxpayer as part of an attempt to speak to the taxpayer are not initiations of third-party contacts.
(B) IRS employee. For purposes of this section, an IRS employee includes all officers and employees of the IRS, the Chief Counsel of the IRS and the National Taxpayer Advocate, as well as a person described in section 6103(n), an officer or employee of such person, or a person who is subject to disclosure restrictions pursuant to a written agreement in connection with the solicitation of an agreement described in section 6103(n) and its implementing regulations. No inference about the employment or contractual relationship of such other persons with the IRS may be drawn from this regulation for any purpose other than the requirements of section 7602(c).
(ii) Examples. The following examples illustrate this paragraph (c)(1):
(2) Person other than the taxpayer—(i) Explanation. The phrases “person other than the taxpayer” and “third party” are used interchangeably in this section, and do not include—
(A) An officer or employee of the IRS, as defined in paragraph (c)(1)(i)(B) of this section, acting within the scope of his or her employment;
(B) Any computer database or website regardless of where located and by whom maintained, including databases or web sites maintained on the Internet or in county courthouses, libraries, or any other real or virtual site; or
(C) A current employee, officer, or fiduciary of a taxpayer when acting within the scope of his or her employment or relationship with the taxpayer. Such employee, officer, or fiduciary shall be conclusively presumed to be acting within the scope of his or her employment or relationship during business hours on business premises.
(ii) Examples: The following examples illustrate this paragraph (c)(2):
(3) With respect to the determination or collection of the tax liability of such taxpayer—(i) Explanation—(A) With respect to. A contact is “with respect to” the determination or collection of the tax liability of such taxpayer when made for the purpose of either determining or collecting a particular tax liability and when directly connected to that purpose. While a contact made for the purpose of determining a particular taxpayer's tax liability may also affect the tax liability of one or more other taxpayers, such contact is not for that reason alone a contact “with respect to” the determination or collection of those other taxpayers' tax liabilities. Contacts to determine the tax status of a pension plan under chapter 1, subchapter D (Deferred Compensation) of the Internal Revenue Code, are not “with respect to” the determination of plan participants” tax liabilities. Contacts to determine the tax status of a bond issue under chapter 1, subchapter B, Part IV (Tax Exemption Requirements for State and Local Bonds) of the Internal Revenue Code, are not “with respect to” the determination of the bondholders' tax liabilities. Contacts to determine the tax status of an organization under chapter 1, subchapter F (Exempt Organizations) of the Internal Revenue Code, are not “with respect to” the determination of the contributors' liabilities, nor are any similar determinations “with respect to” any persons with similar relationships to the taxpayer whose tax liability is being determined or collected.
(B) Determination or collection. A contact is with respect to the “determination or collection” of the tax liability of such taxpayer when made during the administrative determination or collection process. For purposes of this paragraph (c) only, the administrative determination or collection process may include any administrative action to ascertain the correctness of a return, make a return when none has been filed, or determine or collect the tax liability of any person as a transferee or fiduciary under chapter 71 of title 26.
(C) Tax liability. A tax liability means the liability for any tax imposed by title 26 of the United States Code (including any interest, additional amount, addition to the tax, or penalty) and does not include the liability for any tax imposed by any other jurisdiction nor any liability imposed by other Federal statutes.
(D) Such taxpayer. A contact is with respect to the determination or collection of the tax liability of “such taxpayer” when made while determining or collecting the tax liability of a particular, identified taxpayer. Contacts made during an investigation of a particular, identified taxpayer are third-party contacts only as to the particular, identified taxpayer under investigation and not as to any other taxpayer whose tax liabilities might be affected by such contacts.
(ii) Examples. The following examples illustrate the operation of this paragraph (c)(3):
(4) Discloses the identity of the taxpayer being investigated—(i) Explanation. An IRS employee discloses the taxpayer's identity whenever the employee knows or should know that the person being contacted can readily ascertain the taxpayer's identity from the information given by the employee.
(ii) Examples. The following examples illustrate this paragraph (c)(4):
(5) Discloses the association of the IRS employee with the IRS. An IRS employee discloses his association with the IRS whenever the employee knows or should know that the person being contacted can readily ascertain the association from the information given by the employee.
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Treas. Reg. §301.7602-2(d)Pre-contact notice—(1) In general.
Pre-contact notice—(1) In general. An officer or employee of the IRS may not make third-party contacts without providing reasonable notice in advance to the taxpayer that contacts may be made. The pre-contact notice may be given either orally or in writing. If written notice is given, it may be given in any manner that the IRS employee responsible for giving the notice reasonably believes will be received by the taxpayer in advance of the third-party contact. Written notice is deemed reasonable if it is—
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Treas. Reg. §301.7602-2(e)Post-contact reports—(1) Requested reports.
Post-contact reports—(1) Requested reports. A taxpayer may request a record of persons contacted in any manner that the Commissioner reasonably permits. The Commissioner may set reasonable limits on how frequently taxpayer requests need be honored. The requested report may be mailed either to the taxpayer's last known address or such other address as the taxpayer specifies in the request.
(2) Contents of record—(i) In general. The record of persons contacted should contain information, if known to the IRS employee making the contact, which reasonably identifies the person contacted. Providing the name of the person contacted fully satisfies the requirements of this section, but this section does not require IRS employees to solicit identifying information from a person solely for the purpose of the post-contact report. The record need not contain any other information, such as the nature of the inquiry or the content of the third party's response. The record need not report multiple contacts made with the same person during a reporting period.
(ii) Special rule for employees. For contacts with the employees, officers, or fiduciaries of any entity who are acting within the scope of their employment or relationship, it is sufficient to record the entity as the person contacted. A fiduciary, officer or employee shall be conclusively presumed to be acting within the scope of his employment or relationship during business hours on business premises. For purposes of this paragraph (e)(2)(ii), the term entity means any business (whether operated as a sole proprietorship, disregarded entity under § 301.7701-2 of the regulations, or otherwise), trust, estate, partnership, association, company, corporation, or similar organization.
(3) Post-contact record not required. A post-contact record under this section need not be made, or provided to a taxpayer, for third-party contacts of which the taxpayer has already been given a similar record pursuant to another statute, regulation, or administrative procedure.
(4) Examples. The following examples illustrate this paragraph (e):
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Treas. Reg. §301.7602-2(f)Exceptions—(1) Authorized by taxpayer—(i) Explanation.
Exceptions—(1) Authorized by taxpayer—(i) Explanation. Section 7602(c) does not apply to contacts authorized by the taxpayer. A contact is “authorized” within the meaning of this section if—
(A) The contact is with the taxpayer's authorized representative, that is, a person who is authorized to speak or act on behalf of the taxpayer, such as a person holding a power of attorney, a corporate officer, a personal representative, an executor or executrix, or an attorney representing the taxpayer; or
(B) The taxpayer or the taxpayer's authorized representative requests or approves the contact.
(ii) No prevention or delay of contact. This section does not entitle any person to prevent or delay an IRS employee from contacting any individual or entity.
(2) Jeopardy—(i) Explanation. Section 7602(c) does not apply when the IRS employee making a contact has good cause to believe that providing the taxpayer with either a general pre-contact notice or a record of the specific person contacted may jeopardize the collection of any tax. For purposes of this section only, good cause includes a reasonable belief that providing the notice or record will lead to—
(A) Attempts by any person to conceal, remove, destroy, or alter records or assets that may be relevant to any tax examination or collection activity;
(B) Attempts by any person to prevent other persons, through intimidation, bribery, or collusion, from communicating any information that may be relevant to any tax examination or collection activity; or
(C) Attempts by any person to flee, or otherwise avoid testifying or producing records that may be relevant to any tax examination or collection activity.
(ii) Record of contact. If the circumstances described in this paragraph (f)(2) exist, the IRS employee must still make a record of the person contacted, but the taxpayer need not be provided the record until it is no longer reasonable to believe that providing the record would cause the jeopardy described.
(3) Reprisal—(i) In general. Section 7602(c) does not apply when the IRS employee making a contact has good cause to believe that providing the taxpayer with either a general pre-contact notice or a specific record of the person being contacted may cause any person to harm any other person in any way, whether the harm is physical, economic, emotional or otherwise. A statement by the person contacted that harm may occur against any person is sufficient to constitute good cause for the IRS employee to believe that reprisal may occur. The IRS employee is not required to further question the contacted person about reprisal or otherwise make further inquiries regarding the statement.
(ii) Examples. The following examples illustrate this paragraph (f)(3):
(4) Pending criminal investigations—(i) IRS criminal investigations. Section 7602(c) does not apply to contacts made during an investigation, or inquiry to determine whether to open an investigation, when the investigation or inquiry is—
(A) Made against a particular, identified taxpayer for the primary purpose of evaluating the potential for criminal prosecution of that taxpayer; and
(B) Made by an IRS employee whose primary duties include either identifying or investigating criminal violations of the law.
(ii) Other criminal investigations. Section 7602(c) does not apply to contacts which, if reported to the taxpayer, could interfere with a known pending criminal investigation being conducted by law enforcement personnel of any local, state, Federal, foreign or other governmental entity.
(5) Governmental entities. Section 7602(c) does not apply to any contact with any office of any local, state, Federal or foreign governmental entity except for contacts concerning the taxpayer's business with the government office contacted, such as the taxpayer's contracts with or employment by the office. The term office includes any agent or contractor of the office acting in such capacity.
(6) Confidential informants. Section 7602(c) does not apply when the employee making the contact has good cause to believe that providing either the pre-contact notice or the record of the person contacted would identify a confidential informant whose identity would be protected under section 6103(h)(4).
(7) Nonadministrative contacts—(i) Explanation. Section 7602(c) does not apply to contacts made in the course of a pending court proceeding.
(ii) Examples. The following examples illustrate this paragraph (f)(7):
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Treas. Reg. §301.7602-2(g)Effective Date.
Effective Date. This section is applicable on December 18, 2002.
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Treas. Reg. §301.7602-2(i)§301.7602-2(i)
Mailed to the taxpayer's last known address;
(ii) Given in person;
(iii) Left at the taxpayer's dwelling or usual place of business; or
(iv) Actually received by the taxpayer.
(2) Pre-contact notice not required. Pre-contact notice under this section need not be provided to a taxpayer for third-party contacts of which advance notice has otherwise been provided to the taxpayer pursuant to another statute, regulation or administrative procedure. For example, Collection Due Process notices sent to taxpayers pursuant to section 6330 and its regulations constitute reasonable advance notice that contacts with third parties may be made in order to effectuate a levy.
103 Citing Cases
We are satisfied that section 7602 provides the IRS with sufficient authority to carry out the necessary investigative activities needed to enforce section 6038.
With respect to interest accrued during the examination, Form 886-A points out that section 7602 authorizes the IRS to examine documents for purposes of ascertaining the correctness of any return or determining the liability of any person for any internal revenue tax.2 The delay caused by petitioners’ failure to provide such documents, RA O’Neil explains, “is not attributable to the [IRS].” As for the litigation phase of the case,
The IRS is authorized to examine those returns, § 7602, and to determine that additional tax may be owed, § 6212.
Finally, section 7602 gives the Commissioner broad discretion to examine a range ofmaterials to "ascertain[] the correctness ofany return".
Section 7602 authorizes the Commissioner to examine books, papers, records, and other data potentially relevant or material to the determination ofa taxpayer's Federal income tax liability. Where an individual fails to maintain adequate books and records, the Commissioner may reconstruct the taxpayer's income using any method which, in his opinion,
Nothing in section 7602 requires the Commissioner to issue a summons.
Section 7602 authorizes the Commissionerto examine books, papers, records, and other data potentially relevant or material to the determination ofa taxpayer's Federal income tax liability. Where an individual fails to maintain adequate books and records, the Commissionermay reconstructthe taxpayer's income using any method which, in his opinion, cl
Section 7602 of the Internal Revenue Code authorizes the IRS to examine “any books, papers, records, or other data” which “may be relevant” to an inquiry into “the correctness of any [tax] return.” 26 U.S.C. §7602(a)(1). [Mattatall’s] assertion that an affidavit is sufficient is unfounded. - 6 - exemptions were correct as reported.8 Mr. Mattatall
Respondent’s revenue agent obtained information regarding the construction business by issuing summonses under section 7602 for - 10 - SCC’s bank records and for settlement statements from title companies for the houses that had been sold by SCC.
In the case of a summons under authority of paragraph (2) of section 7602, or under the corresponding authority of section 6420(e)(2), 6421(g)(2), or 6427(j)(2), the date fixed for appearance before the Secretary shall not be less than 10 days from the date of the summons.
Section 7602 of the Internal Revenue Code authorizes the IRS to examine "any books, papers, records, or other data" which "may be relevant" to an (continued...) - 4 - respondent's revenue agent to discuss the examination. At the meeting, petitioner produced an "Affidavit of Facts of Robert Kolbeck" summarily declaring, among other things, that his
In the case of a summons under authority of paragraph (2) of section 7602, or under the corresponding authority of section 6420(e)(2), 6421(g)(2), or 6427(j)(2), the date fixed for appearance before the Secretary shall not be less than 10 days from the date of the summons.
s of the section 7491(a)(1) requirement that they introduce relevant credible evidence as a precondition of our placing the burden of proof on respondent. 9 Respondent obtained critical evidence against petitioners pursuant to a summons issued under sec. 7602, which was enforced in a Federal District Court under sec. 7604. Petitioners do not question, in this proceeding, whether the District Court properly ordered them to produce records in the prior summons enforcement proceeding, and they do n
At the meeting, respondent's examiner displayed her badge to establish her authority to conduct the examination and cited section 7602 to establish the statutory authority for the examination.
only applies to EVERY PERSON LIABLE FOR ANY TAX * * * * * * * * * * As to the authority to examine us, our research has shown that the only IR Code section that comes close to authorizing “some type of agent” to examine books and records is, IR Code section 7602. Yet this IR Code section has NEVER been published in the Federal Register under Title 26, only under Title 27. This tells us that unless you are a Title 27 Agent (BATF), you do not have investigative authority. * * * * * * * As to you t
Title 26 Section 7602 is the I.R.S.'s authority to examine books and records regarding "internal reve- nue tax"--not income tax.
Title 26 Section 7602 is the I.R.S.'s authority to examine books and records regarding "internal reve- nue tax"--not income tax.
Title 26 Section 7602 is the I.R.S.'s authority to examine books and records regarding "internal reve- nue tax"--not income tax.
Title 26 Section 7602 is the I.R.S.’s authority to examine books and records regarding “internal reve- nue tax”--not income tax.
Title 26 Section 7602 is the I.R.S.'s authority to examine books and records regarding "internal reve- nue tax"--not income tax.
Title 26 Section 7602 is the I.R.S.’s authority to examine books and records regarding “internal reve- nue tax”--not income tax.
Title 26 Section 7602 is the I.R.S.'s authority to examine books and records regarding "internal reve- nue tax"--not income tax.
Title 26 Section 7602 is the I.R.S.'s authority to examine books and records regarding "internal reve- nue tax"--not income tax.
At the meeting, respondent’s examiner displayed her badge to establish her authority to conduct the examination and cited section 7602 to establish the statutory authority for the examination.
Title 26 Section 7602 is the I.R.S.’s authority to examine books and records regarding “internal reve- nue tax”--not income tax.
Section 7602 (captioned “Examination of Books and Witnesses”) appears in subchapter A (captioned “Examination and Inspection”) of chapter 78. Section 7602(a) contains a very broad grant of authority to the IRS to examine books and records, issue summonses, and take testimony under oath for the purpose, inter alia, of determining or collecting the F
The Court of Appeals for the Second Circuit held that even if Canada failed to satisfy its reciprocal obligation under the convention, the United States was permitted to use the summons authority of section 7602 to obtain the information requested by Canadian tax officials.
Petitioners incurred the expenses to comply with 7 section 7602, which allows the IRS to examine taxpayers’ books and records to ascertain whether a return is correct.
Petitioners incurred the expenses to comply with 7 section 7602, which allows the IRS to examine taxpayers’ books and records to ascertain whether a return is correct.
Petitioners incurred the expenses to comply with 7 section 7602, which allows the IRS to examine taxpayers’ books and records to ascertain whether a return is correct.
Petitioners incurred the expenses to comply with 7 section 7602, which allows the IRS to examine taxpayers’ books and records to ascertain whether a return is correct.
Petitioners incurred the expenses to comply with 7 section 7602, which allows the IRS to examine taxpayers’ books and records to ascertain whether a return is correct.
Petitioners incurred the expenses to comply with section 7602, which allows the IRS to examine taxpayers’ books and records to ascertain whether a return is correct.
The Court of Appeals for the Second Circuit held that even if Canada failed to satisfy its reciprocal obligation under the convention, the United States was permitted to use the summons authority of section 7602 to obtain the information requested by Canadian tax officials.
At that time, Fried and Dubow did not use the administrative summons procedure under section 7602 because they believed it took too long to enforce.