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IRS's letters to physician's patients were not unlawful disclosure.

Barrett, a plastic surgeon, was under civil investigation by the IRS. Two confidential informants-- both disgruntled ex-employees-- told the IRS Barrett kept cash patient fees off the books. The IRS referred the case to the Criminal Investigations Division (CID).

The special agent conducting the investigation at CID issued administrative summonses to the hospitals where Barrett had admitting privileges and got the names of Barrett's patients. The agent sent these patients 386 form letters asking whether they had paid Barrett in cash. The letters contained Barrett's name and address and the fact CID was investigating him.

Barrett sued the IRS under IRC section 7431, which gives taxpayers the fight to sue the United States for a U.S. employee's knowing or negligent disclosure of "tax return information" (a violation of IRC section 6103). Section 6103 generally provides tax returns and "tax return information" are to be kept confidential and outlines exceptions to the rule. One exception, in section 6103(k)(6), allows IRS employees to disclose return information for investigative purposes, but only to the extent the disclosure is necessary to obtain information not otherwise reasonably available. Barrett's name, address and the fact he was being investigated were all items of return information under the statute.

Barrett argued the information should have been obtained by other means, namely by examining bank statements and detailed cross-referencing between bank statements and other taxpayer documents.

Result: For the IRS. The disclosures were lawful under section 6103(k)(6). The disclosures were necessary to obtain information not otherwise reasonably available. * Barrett (DC S. Tex., 1993).
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Title Annotation:Barrett
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1993
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