The Internal Revenue Code governs the domestic portion of federal statutory law in the United States. Under section 7602, the code sets out the rules on examining Books and witnesses. This specific provision allows for any authorized individual to examine any books, papers, records, or other data; to summon a taxpayer required to appear to produce any books, ad records, give testimony under oath, and finally, take testimony under oath.

The general provision under part C of section 7602, which is Notice to contact third parties, is that for general notices, an officer of the Internal Revenue Service may not contact a person other than a taxpayer in respect of determination or collection of tax liability of such taxpayer without issuing prior notice. Additionally, this must be for a period not greater than one year. The notice must specify that the contact with a person other than the taxpayer is made within such a period and that the notice is presented within 45 days.

The provision in scrutiny does not allow or give the taxpayer a right to prevent contact with third parties. In essence, it will enable the taxpayer to request for the record, which is kept periodically.

In the instant scenario, the correct position is that there is a violation of section 7602 (c) as long as the summoning / contacting of third parties was done without proper notice to the taxpayer. The statute intimates a proviso that such notice shall not be issued unless there is a need and intention at the time to contact a person other than the taxpayer during that period. This read, together with 7602 (c) (1) (A), clearly shows that there is a violation.

It is important to note that the provisions do not prevent notices to the same taxpayer regarding the similar tax liability with periods specified that cumulatively exceed one year.

The exception on this subsection is that it does not apply to any contact which the taxpayer has authorized, it does not apply if the Secretary determines a good cause shown that notice would jeopardize collection of any or which may involve reprisal against any person, and finally, it does not apply to any pending criminal investigation.

In the instant scenario and owing to the above, section 7602 indeed applies to IRS Counsel in tax court.

In conclusion, the IRS’s lack of notice to the taxpayer of contacting third parties is an abuse of the right for the taxpayer to interview a third party and will be deemed to be used frivolously if the notices are not issued. Lastly, on the statutory time limitation, this provision applies only to contacts made after January 18, 1999.


Note that Section 7602(c) does not apply to third-party contacts made during litigation if the contact relates to a matter being litigated.

Suppose the contact is made in connection with the determination or collection of a taxpayer’s liability and not concerning a matter pending in litigation. In that case, the statutory requirements to issue a notice must be followed by Counsel employees unless another exception applies.

Contacts made with persons other than the taxpayer to avoid litigation or before a case is filed are considered section 7602(c) contacts to whom the statute to issue a notice applies.

For example, Contacts made with other Service employees who are acting within the scope of their employment or with Department of Justice attorneys in the course of litigation do not constitute section 7602(c) contacts.

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