Appraisal disclosure may satisfy the Section 6103 item test

Plain-English summary

An IRS employee asked whether an appraisal could be disclosed in a tax proceeding. Chief Counsel treated the appraisal as a third party's return information because the IRS had received it in connection with that other taxpayer's possible tax liability. The fact that the taxpayer in the proceeding might already possess the appraisal did not itself authorize disclosure. Counsel advised that disclosure was likely permissible under Section 6103(h)(4)(B) if the appraisal's treatment of stock value directly related to resolving an item at issue in the proceeding.

Ruling snapshot

• Question: Could an appraisal containing third-party return information be disclosed in a tax proceeding?
• Outcome: Advice given: likely yes, if the appraisal directly related to an item at issue.
• Key authorities: IRC § 6103(h)(4)(B).

Full text (IRS public release)

ID: CCA_2018040510092212
UILC: 6103.08-04

Number: 201818013
Release Date: 5/4/2018
From:
Sent: Thursday, April 05, 2018 10:09:22 AM
To:
Cc:
Bcc:
Subject: RE: Request for assistance regarding I.R.C. section 6103

Thank you for your question. The appraisal you wish to disclose is third party return
information in this context, as it was received by the Secretary with respect to possible
liability under the Code of a taxpayer who is not a party to this proceeding. While the
taxpayer may already have a copy of the return information in question, we cannot
disclose third party return information unless an exception in § 6103 applies.

Based on the facts you provide, consider the “item” test exception in IRC §
6103(h)(4)(B). The item test permits disclosure of third party return information to
parties in a judicial or administrative tax proceeding if the item to be shared directly
relates to the resolution of an item at issue in the proceeding. In other words, if the
treatment of stock value in the appraisal directly relates to resolving an issue in the
taxpayer’s case, disclosure is likely permissible.

We hope this is helpful, but please let us know if you have any further questions.