An IRS appraiser's proposed disclosures to complete a property investigation are permissible investigative disclosures under section 6103(k)(6)

Plain-English summary

Section 6103 makes tax return information confidential, but it has exceptions. Chief Counsel was asked whether an IRS appraiser could share certain information with outside parties while investigating a property's value to determine a possible tax liability. Counsel first confirmed the information counts as protected "return information" under section 6103(b)(2)(A), even though some of it may also be publicly available. It then explained that the appraiser's proposed disclosures are allowed under section 6103(k)(6), which lets the IRS disclose return information when necessary to carry out official duties, such as verifying a liability or getting help from people with special knowledge or technical skills. Because the appraiser needs to discuss the property's highest and best use with knowledgeable parties to complete the investigation, the disclosures fit those categories. Counsel cautioned that the appraiser should disclose only the minimum return information necessary. This is internal advice confirming the disclosures are authorized, not a formal ruling.

Ruling snapshot

• Question: May an IRS appraiser disclose return information to outside parties to complete a property valuation investigation, consistent with section 6103?
• Outcome: Advice given (the disclosures are permissible under section 6103(k)(6), limited to the minimum necessary).
• Key authorities: IRC § 6103(b)(2)(A), (k)(6); Treas. Reg. § 301.6103(k)(6)-1(a)(1).

Full text (IRS public release)

 ID:       CCA_2022020309300350                         Third Party Communication: None

 UILC:     6103.00-00, 6103.11-06                       Date of Communication: Not Applicable

Number: 202208014
Release Date: 2/25/2022
From: -----------------
Sent: Thursday, February 3, 2022 9:30:03 AM
To: -------------------
Cc: ---------------------
Bcc:
Subject: RE: Draft Letter for Counsel Approval


Good Morning Anita,

The information we discussed is information received by, collected by, or furnished to the IRS with
respect to a return or with respect to the determination of the possible existence of a tax liability. It is
thus return information despite the fact that it also may be publicly available. See I.R.C. section
6103(b)(2)(A) (defining "return information").

However, the disclosures proposed by the IRS appraiser are permissible tax administration investigative
disclosures. Under I.R.C. section 6103(k)(6), the IRS may disclose return information to the extent that
disclosure is necessary to obtain information relating to official duties. Treas. Reg. § 301.6103(k)(6)-
1(a)(1) provides examples of such situations, including, but not limited to:
     • "Establishing or verifying the correctness or completeness of any return or return information,";
     • "Establishing or verifying the liability (or possible liability) of any person … for any tax, penalty,
         interest, fine …"; and
     • "Obtaining the services of persons having special knowledge or technical skills (such as, but not
         limited to, knowledge of particular facts and circumstances relevant to a correct determination
         of a liability)..."

The proposed disclosures here would be made so that the IRS appraiser can complete his investigation
into property to ascertain a possible tax liability. The disclosures are necessary to evaluate the highest
and best use of property and the IRS appraiser can disclose information to discuss issues with entities
having special knowledge that would assist the IRS. The IRS appraiser should only disclose the minimum
amount of return information possible to obtain the information he needs. Accordingly, the disclosures
we discussed would fall into one – if not all – of the aforementioned categories and are therefore
authorized under section 6103.

Please let me know if you'd like to discuss.

Thanks,

Scott L. Panitz (he/him)
Law Clerk, CC:PA:07
IRS Office of Chief Counsel, P&A
[email protected]
202.317.5351 (office)
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