June 2000


The IRS recently released 15 new letters and notices to inform taxpayers that third parties might be contacted as part of the collection or examination process. The IRS indicated that steps to eliminate confusion about third-party notices now include the following:

* Targeting letters and notices to situations where the IRS may make third-party contacts rather than issuing blanket notices to a larger group of taxpayers;
* Specializing the notification by creating 13 letters and two notices tailored for taxpayers facing different situations; and
* Reinforcing the IRS policy to work first with taxpayers before contacting third parties.

Last year, the IRS began sending letters to all taxpayers being audited to notify them of the possibility of third-party contacts. After receiving criticism for the notices' "heavy-handed" language, the IRS toned it down.

The IRS addressed other questions, including the following:

* Isolating instances in which third-party contact was likely;
* Training employees on how to identify and handle third-party contacts; and
* Resolving questions about how to handle reporting requirements for third-party cases. *

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