Comments Regarding Proposed Amendments to the Regulations
Governing Practice Before the Internal Revenue Service
(Title 31, Code of Federal Regulations, Subtitle A, Part 10)
April 23, 2001

Section 10.20  Information to be furnished.

To the Internal Revenue Service. The Section believes that by deleting the exception for information requests that are "of doubtful legality," the Proposed Amendments to section 10.20(a) impose an obligation on practitioners that goes beyond a taxpayer’s obligation to provide records or information under current law. Further, the Section believes that the requirement in section 10.20(a) that a practitioner must provide information regarding the identity of any person who may have possession or control of requested records or information should be deleted because that requirement can conflict with a taxpayer’s constitutional rights under certain circumstances.

Section 10.20(a) of the Proposed Amendments seems to impose an absolute obligation on practitioners to submit records and information to the Service unless there is a reasonable basis to assert a privilege. The idea that a practitioner in all circumstances is required to provide specific information to an investigating agent is contrary to settled law, as is the implication that, if the practitioner does not volunteer such information under a claim of privilege, he must assert that privilege before the agent.

Section 10.20(a) in its present form is adequate. Further, the Service should disclaim any effort to elevate disagreements over the appropriateness of responses to requests for information to sanctionable behavior. Taxpayers have the right under the Code to receive a formal summons and to test the enforceability of the summons in the federal courts. See IRC §§ 7604, 7612. Any practitioner who believes in good faith and on reasonable grounds that requested information need not be produced must have the right to object to the request for such information. The Service must recognize that right.

In addition, the Section believes that the portion of the Proposed Amendment to section 10.20(a) which states that the practitioner "must provide any information that either the practitioner or the practitioner’s client has regarding the identity of any person who may have possession or control of requested records or information," should be deleted. This portion of the Proposed Amendments fails to adequately recognize that information regarding the identity of the person who may have possession or control of requested records or information may be subject to claims of privilege. Thus, the provision may force a practitioner into a choice between allegedly misleading an agent by silence or providing a lead to potentially incriminatory information, in violation of the client’s rights and privileges.

To the Director of Practice. The Proposed Amendment to section 10.20(b) similarly deletes the provision in the current rule that permits a practitioner to not supply information or testimony to the Director of Practice if the practitioner believes in good faith and on reasonable grounds that the request is of doubtful legality. For the reasons set forth above, the Section believes that the current provision should not be changed.