Guidance on prohibition of ex parte communications.

• Author: Fitzgerald, Sarah B.
• Position: IRS guidance

In 1927, the IRS established the Office of Appeals. Its mission is to resolve tax controversies without litigation, to the extent possible, in a fair and impartial manner to both the taxpayer and the government. For cases that cannot be settled at the examination level, Appeals provides the final administrative forum for dispute resolution. Traditionally, there have been no limits on communications between IRS employees and Appeals officers. However, Section 1001(a)(4) of the Internal Revenue Service Restructuring and Reform Act of 1998 (IRS-RRA '98), requires the Service to establish an independent Office of Appeals. Under its reorganization plan, the IRS must ensure an independent Appeals function within the Service by prohibiting ex parte communications between Appeals officers and other IRS employees.

In response to the IRSRRA '98, the Service issued Notice 99-50, a proposed revenue procedure that addresses the prohibition on ex parte communications. The proposed guidance will be effective after it is published in final form; until that time, existing restrictions on communications for cases within Appeals will continue to apply.

Prohibited Ex Parte Communications

Notice 99-50 proposes guidance for addressing the prohibition on ex parte communications when such communications appear to compromise Appeals officers' independence. Ex parte communications are oral or written communications that take place when either the taxpayer or the taxpayer's representative is not present.

In general, communications between Appeals officers and other IRS employees are not permitted unless the taxpayer or his representative is given the opportunity to participate. "Opportunity to participate" means that the taxpayer will be given reasonable notice to attend meetings or participate in conference calls with the Appeals officer and the originating division (e.g., the Examination and Collection Divisions), when the taxpayer's case is discussed.

Permissible Ex Parte Communications

Notice 99-50 also enumerates the types of communications the Service deems permissible:

* Originating office (e.g., the Examination and Collection Divisions). An Appeals officer will be allowed to ask general or clarifying questions. In addition, he may also ask questions about whether certain information was requested or received, or about the anticipated return of the case to the originating function.

* Industry Specialization Program (ISP) Issues. Communications involving the...