The IRS has the right to contact third parties in an attempt to collect your taxes, penalties, and/or missing tax returns. A third party is someone other than yourself (besides your tax attorney or duly authorized representative) who may have information that would assist the IRS in their investigation. But it is important to know that there are certain restrictions on this right so that we don’t allow the IRS to take advantage.
The IRS must first give you notice that they are going to be contacting third parties. Notice typically comes in the form of a very simple letter (Letter 3164). There are three versions of this letter:
- 3164-A: for Trust Fund Recovery Penalty investigations
- 3164-B: for balance due investigations
- 3164-C: for delinquent return investigations
The IRS revenue officer must wait 10 days after mailing the letter before initiating any third party contact. In cases where the taxpayer was provided with a Publication 1 Your Rights as a Taxpayer, which is a majority of cases, the 3164 letter is usually not required because the third party contact language is included in Pub 1. There are also some blanket exceptions to the notice requirement, such as where there are pending criminal investigations, where a third party contact may jeopardize collection of the tax, and where the taxpayer authorizes third party contact.
Providing Third Party Lists
The IRS is required to provide the taxpayer with a list of all third party contacts periodically, and whenever requested by the taxpayer. Revenue officers must carefully maintain a list of all third party contacts, which should be updated after each contact in order to keep it current. As you can see, the language (“periodically”) is just vague enough to allow the IRS to only send the list a couple times a year unless the taxpayer requests to see it more frequently.