The general rule of disclosure states that no return or return information can be disclosed by employees of the United States. Information provided to or gathered by Internal Revenue Service employees is to be considered confidential and may not be disclosed except under limited circumstances. Congress recognized that it might be necessary for tax information to be disclosed in order to effectively administer the tax laws of the United States. Therefore, they have carefully crafted exceptions to the general rule. A knowledge of disclosure laws and procedures will assist you in understanding what those limitations are and help you to be able to balance the need to protect taxpayer confidentiality while being able to make disclosures of tax information to complete your assigned duties. IRM 11.3, Disclosure of Official Information, provides detailed instructions relating to disclosure procedures.

Each examination group will maintain a copy of IRM 11.3, Disclosure of Official Information or provide members access electronically to IRM 11.3.

The purpose of this section is to provide you with a brief explanation of the more commonly encountered disclosure issues which may arise in the course of the examination process. More detailed disclosure procedures as set forth in IRM 11.3, Disclosure of Official Information, will be referenced in each section. Additional information relating to disclosure issues can be found at http://www.hq.irs.gov/disclosure/. You should also contact your local Disclosure Officer or staff if you have any questions about disclosure issues or concerns

IRS employees, in connection with their official duties, may disclose return information to a third party to the extent that such disclosure is necessary in obtaining information which is not otherwise reasonably available. IRC § 6103(k)(6) and its implementing regulation, 26 CFR 6103(k)(6)-1, allow you to make certain investigative disclosures to third parties to obtain information, but only when specific conditions are met.

Investigative disclosure rules apply among other things, to IRS employees who are performing official duties relating to examinations or audits.

Only return information, not the return itself, may be disclosed. Return information includes:

You should disclose only the minimum amount of information necessary to get the facts or assistance you need for your investigation. Investigative disclosures must be initiated solely to obtain information. This useful investigative tool may be a disclosure in person, by mail, or by the act of using taxpayer information as search terms to access data from the Internet or electronic databases. It allows disclosures to such third parties only when necessary to secure data employees cannot obtain otherwise, or to make initial contact in acquiring the services of a qualified expert (e.g. handwriting analysis or appraisals).

An investigative disclosure does not provide for an exchange of information.

Whenever practical, information should be obtained directly from taxpayers or their authorized representatives. In certain situations, it’s obvious that the information you need cannot be obtained from the taxpayer in an accurate, useful, or timely manner. Some examples are when:

Additional information can be found at IRM 11.3, Section 21, Investigative Disclosures.

Investigative disclosures may be subject to the third party contact rules as required by IRC § 7602(c). You should follow your functional guidance/procedures as necessary.

Occasions arise when it is necessary to secure the services of qualified experts to assist during an examination or other enforcement activities. Often such experts will be called as witnesses to testify in tax cases.

Authority to disclose return information to obtain such services is contained in Treas. Reg. 301.6103(n)-1, Treas. Reg. 301.6103(k)(6)-1(b)(5), and 5 USC 552a(b) in the case of individual records.

Whenever possible, the services of experts for investigative purposes should be engaged under IRC section 6103(n) and its implementing regulation, rather than to IRC section 6103(k)(6) and its implementing regulation. Safeguard and Privacy Act provisions apply to the former whereas statutory confidentially protection provisions of the IRC do not apply to the latter.

See IRM 11.3.21.4 for more information on Contract Disclosures for Investigative Purpose.

IRC § 6103(c) and its implementing regulation, 26 CFR 301.6103(c)-1T, allow IRS employees to make disclosures of federal tax returns or return information to persons or organizations designated by the taxpayer. These sections of the Code and regulations generally provide that authorizations be in writing.

A Form 2848 is used by certain individuals and, if valid, will not only allow disclosure of tax information, but will also permit the individual to act on behalf of the taxpayer as his or her Power of Attorney. If the individual is not able to represent the taxpayer for any reason, including the fact they have been disbarred from practice, that individual may still be authorized by the taxpayer to receive return and/or return information.

A valid Form 8821, Tax Information Authorization, will allow disclosures of tax information to the person or persons designated by the taxpayer. This does not give the designee the same authority as a Power of Attorney.

Your disclosure authority is limited to only those tax years listed on the authorization Form 2848 or 8821. Should you need to expand the scope of the authorization by including additional tax years or types of returns, you must contact the taxpayer and secure a new authorization form prior to making any further disclosures.

You can obtain an oral authorization from the taxpayer that would allow you to discuss tax matters for any periods not covered by the authorization form. You can also use an oral authorization to contact a representative the taxpayer refers you to for handling the audit. Oral authorizations are only allowed when the taxpayer needs assistance to resolve a Federal tax matter. The taxpayer does not have to be present at a face-to-face meeting with IRS or remain on the telephone after giving verbal consent. The designee does not have to be present at the meeting or on the telephone when the taxpayer gives consent.

Details of the oral consent should be recorded on a history sheet. Remember, you must take reasonable steps to confirm the identity of the taxpayer and the designee before disclosing any return information to a third party. The disclosure of return information must be limited to the information covered in the verbal consent and in these instances disclosure can only be made to third parties helping taxpayers resolve a Federal tax matter. You should follow your functional guidelines when dealing with oral consents.

Oral consents do not take the place of a power of attorney authorizing a third party to represent the taxpayer before the IRS. If you are dealing with a Power of Attorney with the taxpayer giving you verbal consent to conduct or expand your examination, you will still need to secure a Form 2848 that includes these additional years or types of returns to allow the Power of Attorney to practice before the IRS. Additional information about verbal consents can be found at frequently asked questions (http://www.hq.irs.gov/disclosure/faq’s.htm#Verbal Consents) in the Disclosure website. Other information about disclosures to Designees and Practitioners can be found at IRM 11.3, Section 3.

If you receive a subpoena or are asked to testify, there are certain requirements that must be met prior to you being authorized to testify or produce IRS records. You cannot agree to testify or produce records without coordinating with Counsel or with Disclosure.

If the IRS is a party in the matter, that is, you are asked to testify for the government in a tax case, contact your local Counsel office immediately and follow its directions.

If the IRS is not a party to the matter, but the subpoena requests IRS records or testimony, contact your local Disclosure office immediately and follow its directions. Common situations that would apply here would be if you are subpoenaed to testify or produce IRS records in a divorce proceeding.

Most subpoenas have a short response time, so time is of the essence. The Counsel or Disclosure office will ask you for the information contained in the subpoena, as well as your involvement in the matter. If the Counsel or Disclosure office needs to be involved, they will ask you to carry or fax a copy of the subpoena to them.

Counsel or Disclosure will contact the individual who issued the subpoena to explain IRS procedure and the disclosure provisions of IRC § 6103 or the Privacy Act. They will also determine if the IRS can substitute certified documents in lieu of an appearance by an IRS employee. If an appearance is required, either Counsel or Disclosure as appropriate will coordinate the necessary testimony authorizations. Without this authorization, employees may not testify or even discuss the case with the requesting party.

If you must testify in court or give a deposition, an attorney from Counsel or the Office of the United States Attorney may accompany you. When you testify or present documents, keep the disclosure restrictions in mind. Limit your testimony to the issue at hand and stay within the bounds of the testimony authorization. For additional advice on testimony tactics, reference the Disclosure web site at http://www.hq.irs.gov/disclosure/testimony.htm. For additional references, see IRM 11.3.35 and Treas. Reg. 301.9000-1, 26 CFR 301.9000-1. If you have additional questions, contact your local Disclosure office.

During the course of an examination, you may have a taxpayer or representative ask for a copy of your files or workpapers. The legal basis for giving taxpayers copies of their own tax records is contained in Internal Revenue Code section 6103(e). This section says the Service shall give taxpayers access to their returns upon written request. It also says the Service may provide copies of return information unless the Secretary determines release would seriously impair tax administration.

If you are approached to provide copies of your administrative file, you should be sure the person requesting access has a legal right to the information. After you are satisfied they can have copies, you should review the information prior to release to determine that release of the information would not seriously impair tax administration. IRC § 6103(e)(7) allows the IRS to withhold return information (your administrative file and workpapers) if that release would impair tax administration.

Items to be considered to make an impairment determination would be:

A taxpayer will have a right to information used in determining his or her tax liability, so impairment determinations should not be so narrowly construed to prevent the release of all information. Impairment determinations are generally made at the supervisory level. If you have any concerns about whether something in the file should be released, you can contact your local Disclosure office for assistance.

Occasionally, the Service is required to summons documents as well as contact third parties to obtain needed information. Any summoned document and/or third party contact information is return information. Such information can be withheld if the Service determines that such release would:

Occasionally, IRS employees tell requesters that they have to make a request under the Freedom of Information Act (FOIA) in order to obtain records. This is not necessarily true. Even though the FOIA offers certain advantages to requesters, mainly in the form of mandatory response timeframes and appeal rights for denial of access, it is not the only way taxpayers may inspect or obtain copies of their tax information. If it is necessary for a FOIA request to be made, it must be processed by Disclosure and there are certain requirements that must be met. These requirements along with other information can be found at: http://www.irs.gov/foia/index.html.

Additional information concerning who may be authorized to receive return information, including copy of files or workpapers, may be found in IRM 11.3.2, Disclosures to Persons with a Material Interest.

The Internal Revenue Service provides tax information to the States for their use in administering State tax laws. IRC § 6103(d) provides the requirements for States to receive tax information. Although it is not common for examination employees to be involved in the actual exchanges of information under these provisions, there are a few items you should be aware of:

Additional information about Federal/State exchanges can be found in IRM 11.3, Section 32, Disclosures to States for Tax Administration Purposes or you can contact your Disclosure staff for any questions.

IRS employees are required to report suspected willful unauthorized inspections/disclosures of returns and return information to the Treasury Inspector General for Tax Administration (TIGTA). Field employees should report these matters to the local TIGTA Special Agent. A willful act is one where there is a voluntary intentional violation of a known legal duty.

IRS employees must report unauthorized disclosures where no willfulness is involved directly to their immediate supervisors who, in turn are expected to bring them to the attention of their Disclosure Officer. Form 10848 is used for this purpose.