Each third-party contact notice must list the tax period, or a summons for that period may not be enforceable

Plain-English summary

This is an email of Chief Counsel Advice answering a revenue agent's question about third-party contact notices and summons enforcement. Before the IRS contacts someone other than the taxpayer (a bank, employer, or other person) about that taxpayer's liability, IRC section 7602(c) requires it to first give the taxpayer advance notice, and that notice must specify the period during which such contacts will be made. The agent asked whether a notice that lists one tax year is good enough to support a summons covering a different year. The attorney advises no: the statute's "flush language" (the text after the numbered subparagraphs) lets the IRS send repeated notices for the same periods, but it also implicitly requires every third-party contact notice to state the tax period it covers, so a notice for one year does not cover another. A taxpayer can have different representatives and different likely third-party contacts for different years. The practical takeaway: the agent should issue a new Letter 3164 that lists both periods (or at least the 2019 year) before pursuing summons enforcement, because otherwise the Powell requirements for enforcing a summons likely would not be met and a court likely would not enforce it.

Ruling snapshot

• Question: Must a third-party contact notice under IRC 7602(c) state the specific tax period, so that a notice for one year cannot support a summons for a different year?
• Outcome: advice given (Chief Counsel email advice)
• Key authorities: IRC § 7602(c); Letter 3164 (third-party contact notice); United States v. Powell (summons-enforcement requirements)

Full text (IRS public release)

 ID:       CCA_2022020308003204                 [Third Party Communication:

 UILC:     7602.00-00                           Date of Communication: Month DD, YYYY]

Number: 202230008
Release Date: 7/29/2022
From: -------------------
Sent: Thursday, February 3, 2022 8:00:32 AM
To: --------------
Cc: ----------------------
Bcc:
Subject: RE: Third Party Contact Question


The RA should issue a new letter 3164 listing both periods, but certainly one listing the
2019 year, if the RA wishes to pursue summons enforcement.

Per IRC section 7602(c):

(c) Notice of contact of third parties.
(1) General notice . An officer or employee of the Internal Revenue Service may not
contact any person other than the taxpayer with respect to the determination or
collection of the tax liability of such taxpayer unless such contact occurs during a period
(not greater than 1 year) which is specified in a notice which—
        (A) informs the taxpayer that contacts with persons other than the taxpayer are
intended to be made during such period, and
        (B) except as otherwise provided by the Secretary, is provided to the taxpayer
not later than 45 days before the beginning of such period.

         Nothing in the preceding sentence shall prevent the issuance of notices to the
         same taxpayer with respect to the same tax liability with periods specified
         therein that, in the aggregate, exceed 1 year. A notice shall not be issued under
         this paragraph unless there is an intent at the time such notice is issued to
         contact persons other than the taxpayer during the period specified in such
         notice. The preceding sentence shall not prevent the issuance of a notice if the
         requirement of such sentence is met on the basis of the assumption that the
         information sought to be obtained by such contact will not be obtained by other
         means before such contact.

Because of the flush language in IRC section 7602(c), the notices of 3rd party contact
must contain the tax periods, I do not think the Powell requirements would be deemed
met and do not think a Court would enforce the summons. The flush language is meant
to clarify that the IRS can send out successive notices for the same tax periods, but it
also implicitly requires the tax period in all of the 3 rd party contact notices. This makes
sense---taxpayers could have different representatives and different potential 3 rd party
contacts for different tax periods—therefore notice for one tax period does not cover
notice for another period.
                                                   2


Take care,

Nancy C. Carver
Pronouns: she, her, hers
IRS, Office of Chief Counsel |
Special Counsel | SBSE Counsel HQ | CC:SB |
Denver, Colorado | (Mountain Time) |
[Mention was removed] | Office (720) 956-4011 |

Program Areas: Estate and Gift, Whistleblower, Excise, etc.