Can the IRS contact your friends, neighbors, and employer? This is the government, of course they can. But the tax law does require them to give you reasonable notice. So when should you worry about this taking place, and what does ‘reasonable’ mean?
The Ninth Circuit of the Court of Appeals recently ruled that it cannot be a generalized statement referring to third parties in the whole. Instead it must be a written notice that they plan to contact a specifically named party. The Court’s reasoning was that these contacts could be very detrimental to the taxpayer. First, the contact alone was an exception to the rule that your tax information was completely confidential. Secondly there was a possible or even probable negative impact on the taxpayer’s reputation that the IRS was making inquiries.
This is great news for people in California and Arizona who are in the Ninth Circuit’s area. But, what about us in Florida? It also looks like good news for us. The IRS is adopting changes that will give everybody reasonable notice. While the IRS policy book (aka Internal Revenue Manual) still reflects their old policy of only providing a general notice in Publication 1 – Your Rights as a Taxpayer, which they mail out in all audits. There was a new memorandum issued last July with an effective date of 8/15/19. It requires IRS employees to provide written notice of who they intend to contact at least 45 days in advance.
This is a much-needed change. It allows you the option to provide the necessary documents so that the IRS does not need to contact your friends, customers, or employer.
If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email email@example.com.