Changes to tax law will impact use of third-parties

On Behalf of | Sep 10, 2019 | Tax Audits

The Internal Revenue Service (IRS) will have to change the notification process used to inform taxpayers that it intends to reach out to a third-party. The contact may be used to ask questions to help the IRS determine the taxpayer’s tax obligations. Tax law generally requires the IRS to refrain from reaching out to third parties about a taxpayer’s tax obligations. If the agency needs to contact a third-party, the law requires the IRS first to provide the taxpayer with sufficient notification.

What is “sufficient notification” for third-party contact?

In the past, the agency could send an IRS Publication to meet this requirement. The new law has more strict requirements. Instead, the agency must now follow these guidelines:

  • Statement. The mailing must have a statement from the IRS explaining that the agency intends to contact third parties.
  • Date. The correspondence should also explain when the agency plans on contacting the third-party. This time frame cannot be greater than one year.
  • Limits. The changes also require the agency to provide the taxpayer 45 days’ notice before reaching out to the third-party.

The changes are the result of the Taxpayer First Act. These changes went into effect on August 15, 2019.

Will the IRS be able to implement these changes?

Reuters reports the agency has provided agents with multiple sample letters. Agents can edit these samples to conform to the TFA requirements as needed for each taxpayer.

Taxpayers that find themselves receiving these notifications are wise to take the matter seriously. An attorney experienced in tax law issues can review the correspondence and provide guidance to ensure better your interests are protected. The lawyers with Goldburd McCone can help taxpayers navigate these and other tax matters.