The Texas Society of CPAs is voicing concerns about revenue agents at the Internal Revenue Service requiring taxpayers to attend in-person interviews, even when they have an authorized tax professional like a CPA representing them with a signed and power of attorney authorization.
The TXCPA's Federal Tax Policy Committee sent a
"Over the past two years, our members have noted a steady increase in Revenue Agents routinely demanding taxpayer interviews in civil (non-criminal) examinations and tax compliance matters," wrote James Smith, chair of the Federal Tax Policy Committee, in a letter to IRS CEO Frank Bisignano and Thomas Curtin Jr., acting director of the IRS Office of Professional Responsibility. "This practice is contrary to the taxpayer rights and protections enacted by Congress under Internal Revenue Code Section 7521(c). These observations are not isolated."
He noted that the Treasury Inspector General for Tax Administration issued a
"A represented taxpayer's right to be absent from an IRS interview is not a matter of IRS grace," said Smith.
He also noted Section 7521(c) of the Internal Revenue Code provides that right in mandatory terms: "An officer or employee of the Internal Revenue Service may not require a taxpayer to accompany the representative in the absence of an administrative summons issued to the taxpayer under Subchapter A of Chapter 78."
Smith added that Congress enacted the protection as part of the Omnibus Taxpayer Bill of Rights in 1988. "A taxpayer who has properly designated a representative by executing a Power of Attorney on Form 2848 is entitled to have that representative handle the examination without the taxpayer's personal attendance," he added. "IRC Section 7521(b)(2) provides a related protection — the right of consultation — requiring any IRS employee to immediately suspend an interview upon the taxpayer's expressed desire to consult a representative. These laws were enacted for a reason."
He pointed out that in 1987 and 1988, Sen. David Pryor of Arkansas, who was then chairman of the Subcommittee on Oversight of the IRS of the Senate Finance Committee, led the legislative effort that documented instances in which IRS agents bypassed authorized representatives and used the leverage of the examination process to extract responses directly from taxpayers.
Among other recommendations, Smith asked for the IRS to issue clear written guidance reaffirming that IRC Section 7521(c) prohibits IRS employees from requiring a represented taxpayer to attend an interview absent a formal administrative summons, regardless of the subject matter of the inquiry, the agent's assessment of the representative's responses, or any claim that the taxpayer possesses "first-hand knowledge" of the books and records. The guidance should expressly confirm that "first-hand knowledge" is not a recognized exception under the law. He also asked the IRS to direct the Office of Chief Counsel to issue a published legal memorandum confirming the scope of IRC Section 7521(c), the absence of any "first-hand knowledge" exception, and the proper application of the regulations to examination cases. "A published, citable Chief Counsel authority would let practitioners resolve an improper demand in the field without escalation," he wrote.
"We recognize the IRS's vital role in administering the tax laws, and we do not suggest that civil examinations should be impeded or that the Service forgo appropriate investigative tools," Smith added. "The proposals outlined above are grounded in the plain text of IRC Section 7521(c), its legislative history, the limited text of Treas. Reg. Sections 601.506 and 601.507, and the IRS's own internal summons-issuance standards. We ask only that examinations proceed within the boundaries Congress established."
