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4.1.10.5
(02-05-2008)
Third- Party Notification in PACs
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Under IRC § 7602(c), the Service
may have to provide a taxpayer with notice if it intends to initiate a contact
with a third party in order to collect or determine the taxpayer's tax liability.
Under IRC § 6671, preparer and promoter penalties
are treated as "taxes"
for all purposes of the Code. Thus,
the same concerns that would exist in a normal examination for purposes of
third-party contact disclosure exist when examining a preparer and/or promoter.
Examiners should become familiar with the extensive third-party contact procedures
provided in IRM 4.10.1.6.12,
Third Party Contacts
— Background, and IRM 5.1.17, Third-Party Contacts. Furthermore.
examiners should become familiar with the procedures for third-party contacts
in preparer and promoter cases found in IRM 20.1.6.1.11
, Third Party Contacts—IRC Section 7602(c),
and IRM 4.32.2.7.3.2,
Third-Party Contacts.
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The examination of a preparer’s client/taxpayer under a PAC is
considered a third-party contact with respect to the preparer. Therefore,
Letter 3164-N, Third Party
Contact To Preparers, must be issued to the preparer after the PAC
is approved and before any of the related client/taxpayers are first contacted
for examination. Generally, the RPC will mail the letter to the preparer and
wait 10 days before mailing the cases to the group.
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The RPC will retain a copy of the third-party notification letter in
the PAC Administrative File and place a copy of the letter in each client’s
Examination case file.
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The Case Memorandum placed in each case file should include the following
statement: "The examiner must document contacts with return
preparer clients and other third parties and must follow the procedures in
IRM 4.10.1.6.12.3.1,Recording Third Party Contacts, for
completing Form 12175, Third Party Contact Report Form.
Note that the exceptions to taxpayer notification under
IRC § 7602(c)(3) apply in equal force in return preparer examinations,
so that the Service may not have to report specific third-party contacts,
for example when a threat of reprisal exists. See IRM 4.10.1.6.12.4, Exceptions to Taxpayer Notification Requirements."
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The exceptions to taxpayer notification under
IRC section 7602(c)(3) apply in preparer investigations. The exceptions
are:
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Taxpayer authorizes third-party contact;
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Notice would jeopardize collection of any tax;
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Notice may involve reprisal against any person; and
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A criminal investigation of the taxpayer is pending.
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PAC requested in conjunction with an ongoing criminal investigation.
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Per IRM 4.10.6.12.4.4, Criminal Investigation Cases,
third-party notification requirements do not apply to
any tax period under investigation by Criminal Investigation. Therefore, Letter
3164N, Third Party Contact To Preparers will
NOT be issued.
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The pending criminal investigation exception under IRC §7602(c)(3)(C)
applies to third party contacts made by examiners while working pursuant to
a CID request and assisting in establishing harm to the government for an
ongoing criminal investigation.
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Per IRM 20.1.6.12(6), Third Party Contacts - Criminal Investigations,
examiners may conduct examinations of program action taxpayers regarding
civil issues at the same time that special agents are independently conducting
a criminal investigation of the related preparer. However, just as the pending
criminal investigation exception applies to third party contacts made by special
agents, it also applies to examiners assisting CID by performing examinations
of program action taxpayers.
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