The Internal Revenue Service is starting to give taxpayers access to the official document from IRS Appeals Officers about why a determination was made for or against them.
The move comes after years of requests from National Taxpayer Advocate Erin Collins, who heads the Taxpayer Advocate Service. She described the change in policy in a blog post Tuesday, but acknowledged that it falls short of her recommendation for the IRS Independent Office of Appeals to automatically provide taxpayers with a copy of the Appeals Case Memorandum, which explains how and why an Appeals Officer reached a final determination.
She noted that the Appeals office routinely shares the ACM with IRS Compliance personnel but historically hasn’t done so with the taxpayer in Examination Appeal cases.
“As the National Taxpayer Advocate, I have raised this issue in multiple Annual Reports to Congress and in this blog, emphasizing that withholding the ACM from taxpayers undermines both the independence and transparency of Appeals,” she wrote.
“Over the years I have heard from many taxpayers and practitioners that Appeals routinely refuses informal requests for ACMs, often citing an alleged policy against sharing them,” she added.
However, she pointed out this is a misstatement of existing IRS policy. For over a decade, Internal Revenue Manual 8.1.1.6.4(2) has made clear that taxpayers can informally ask for ACMs and these documents are not categorically exempt from disclosure.
In response to years of advocacy and mounting concern from Collins, the Appeals office recently issued internal guidance reminding employees that they should share ACMs with taxpayers upon an informal request.
“This clarification is a meaningful step toward transparency and a welcome development for taxpayer rights,” said Collins. “While it falls short of my recommendation that Appeals automatically share ACMs at the close of each case, the reaffirmation of this right sends a strong message: The Appeals process must be open and accountable to the taxpayers it serves.”
The memoranda may be heavily redacted, however, which could limit the usefulness of the information provided, and so far there’s no system to track issuance of the ACMs.
The information also should be available to taxpayer representatives such as tax professionals.
“This is an important course correction,” said Collins. “It puts Appeals employees on notice that blanket refusals to share ACMs are inconsistent with the IRM and inconsistent with taxpayer rights. It also sends a clear signal to taxpayers and their representatives that they have the right to ask for and receive this critical document.”
She would like to see the IRS go even further by limiting redactions to truly sensitive or privileged content, and automatically providing the ACM to taxpayers at the conclusion of every case.
“The recent guidance is a promising step in the right direction,” Collins added. “With further reforms, Appeals can continue to move toward a model of true independence and transparency that respects and upholds the rights of all taxpayers.”
