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Third-Party Notices.

In a major policy shift, the IRS announced (IR-99-28) a more selective process to send out third-party notices. The change, effective March 29, 1999, was made to reflect the Service's long-standing policy of contacting outside parties about a person's tax case only as a last resort.

For the vast majority of IRS field examinations, a third-party notice will now be sent only if the agency cannot collect the needed information from the taxpayer. Thus, the IRS will stop sending third-party letters on a blanket basis to taxpayers facing examination questions. The new standard requires using the letters only on an "as needed" basis.

For tax collection issues, letters will continue being sent out on a general basis; the IRS is currently rewriting this letter (Number 3164) after tax practitioners raised concerns about its wording. The Service is working with tax practitioners to create a new version of the letter that clearly spells out the agency's procedure of working cooperatively with individual taxpayers before contacting outside parties. The revised letter also will highlight new taxpayer rights provisions, which include the IlKS's responsibility to notify individuals as to which outside parties the agency has contacted.

The AICPA has provided the IRS with comments and a draft of the proposed new letter.
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Author:Laffie, Lesli S.
Publication:The Tax Adviser
Date:May 1, 1999
Words:209
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