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 10.72  Evidence.

The proposed amendments to section 10.72 modifies the rule of admissible evidence seemingly to give the Administrative Law Judge discretion to receive evidence that is not relevant. ("However, the Administrative Law Judge ‘may’ exclude evidence that is irrelevant."). Using "may exclude" instead of "shall exclude" is inconsistent with section 10.70(b)(5). It is not clear why irrelevant evidence should be received in a sanctions proceeding. Further, section 10.72 permits hearsay to be received as evidence.

The "shall" standard of the currently effective Circular 230 should be adhered to. There is little sense in permitting irrelevant evidence into the record. Admission of irrelevant evidence is prejudicial to a respondent because in these circumstances the Administrative Law Judge has not ruled on evidence he or she believes needs to be rebutted by the respondent. Thus, the accused has no way of knowing what evidence the Administrative Law Judge thinks is relevant to the charges against the respondent, complicating the presentation of the defense and, at best, wasting time and resources.

The admission of hearsay to prove a violation of the rules of conduct also seems to lack a sound basis and is particularly unsound when the proceeding has at stake the livelihood of the respondent. The hearsay rules are designed to limit the admission of untrustworthy evidence and should be adopted in some form that assures a respondent a fair hearing and entitlement to confront accusers and cross-examine witnesses. For example, an affidavit is hearsay. The rules as drafted could preclude a respondent from cross-examining a witness who testified by way of an affidavit. Admitting hearsay could deprive the respondent of due process.