What an ex parte communication is
Section 1001(a)(4) of RRA 98 directed the Commissioner to “ensure an independent appeals function within the Internal Revenue Service” including the prohibition of ex parte communications between appeals officers and other IRS employees “to the extent that such communications appear to compromise the independence of the appeals officers.” Rev. Proc. 2012-18 implements that directive and superseded Rev. Proc. 2000-43. The IRM defers to it: “To the extent that any instructions, directions or guidance in Part 8 of the IRM conflict with Rev. Proc. 2012-18, the guidance in the revenue procedure shall take precedence.” (IRM 8.1.10.1).
An ex parte communication is an oral or written communication between any Appeals employee and employees of other IRS functions “without the taxpayer/representative being given an opportunity to participate in the communication.” (Rev. Proc. 2012-18, sec. 2.01(1)). The rules are aimed at the “originating function”: Examination, Collection and the campus functions, the parts of the IRS whose determinations Appeals reviews, whether the case reached Appeals by protest, a CDP hearing request or a collection appeal.
Several things fall outside the definition: database and transcript inquiries; communications solely among Appeals employees; communications with other government agencies; communications with Counsel, Criminal Investigation, Competent Authority and the Taxpayer Advocate Service, which have their own rules; and any communication where the taxpayer was offered a chance to participate, even if the taxpayer declined.
“Opportunity to participate” means a reasonable chance to attend a meeting or join a call where the strengths and weaknesses of the case are discussed, or, for a written communication, a copy and a chance to respond. A taxpayer can waive participation for one communication or for the whole case, and can revoke a blanket waiver. The IRS will not wait indefinitely: “The IRS will not delay scheduling a meeting for a protracted period of time to accommodate the taxpayer/representative.” If no date can be agreed, Appeals sets one, and if the taxpayer does not attend, Appeals shares the substance and allows time to respond (sec. 2.01(3)).
Communications that are allowed
Ministerial, administrative or procedural communications are permitted at any stage without the taxpayer. Rev. Proc. 2012-18 sec. 2.03(2) lists examples, including:
- whether information was requested and received;
- locating a document referred to in the workpapers but missing from the file;
- clarifying illegible documents;
- case controls on IRS systems;
- tax calculations that are solely mathematical;
- closed cases involving the taxpayer, limited to what is in the public or administrative record;
- general information about related cases, such as how many similar cases are pending;
- the status of the case, limited to a narrow exchange with no discussion of the merits;
- referring a refund claim filed during the appeal back to the originating function;
- in CDP cases, verifying that legal and administrative requirements were met and verifying assets and liabilities for a collection alternative.
The revenue procedure warns that status communications “are not intended to provide the originating function or other IRS function a chance to discuss the strengths and weaknesses of the case”. Post-settlement conferences between Appeals and Examination on closed periods are allowed, but any discussion of open years for the same or a related taxpayer is subject to the rules (sec. 2.03(11)).
Appeals may also attend generic, non-case-specific briefings in multifunctional meetings and help develop settlement initiatives, as long as no specific taxpayer's case is discussed while Appeals is present (sec. 2.04).
Communications that are prohibited
Unless the taxpayer has an opportunity to participate, Appeals and the originating function may not discuss (Rev. Proc. 2012-18, sec. 2.03(3)):
| Prohibited topic | Example of a breach |
|---|---|
| The accuracy of facts the taxpayer presented and their importance | Examiner tells the Appeals Officer the taxpayer's mileage log was reconstructed |
| The merits or alternative readings of authorities in the protest or report | Examiner emails a memo rebutting the protest's case law without copying the representative |
| The examiner's view of the taxpayer's or representative's demeanor or credibility | Revenue agent calls the Appeals Officer to say the owner was evasive |
| The level of cooperation during the examination | Comment that the representative stalled the IDRs |
| The strengths and weaknesses of the case or positions | Phone call on how strong the government's position is |
| Advocacy for a result, or objection to a proposed resolution | Examiner asks Appeals not to concede the penalty |
Preconference meetings between Appeals and the examiner without offering the taxpayer a chance to attend are singled out: “These meetings should not be held unless the taxpayer/representative is given an opportunity to participate.” (sec. 2.03(5)). The same principle governs Counsel and Compliance attendance at the conference itself, which is at Appeals' discretion (IRM 8.6.1.5.4).
The administrative file, transmittal and rebuttal
The administrative file sent to Appeals is not an ex parte communication. But the transmittal memo or similar cover document “should not include statements or comments intended to influence Appeals' decision-making process”. A neutral list of unagreed issues is fine. If the transmittal, or a document inserted into the file in preparing it for Appeals, contains prohibited comments, the originating function must share that document with the taxpayer when the file goes to Appeals. A rebuttal to the protest must be shared with the taxpayer when it is sent. Examiners must not place notes or memos in the file, including gratuitous case history entries, to influence Appeals (sec. 2.03(4)).
For a representative, two practical steps follow. Ask the examiner for a copy of any rebuttal and transmittal comments when the case is sent. And if the client is a specified taxpayer, request the case file under IRC 7803(e)(7) before the conference and read the activity record and transmittal for advocacy (Appeals conference).
New information, docketed cases, CAP and mediation
New information. When the taxpayer gives Appeals significant new information, the originating function should generally get a chance to review and comment. The taxpayer must be told when material is sent back and must receive the results of the review (sec. 2.03(7)). Premature referrals work the same way: Appeals tells the taxpayer the case was returned, and the supplemental report must be shared (sec. 2.03(6)).
Docketed cases. “The ex parte communication rules do not apply to communications between Appeals and Counsel in connection with cases docketed in the United States Tax Court.” Communications between Appeals and the examiner in a docketed case within Appeals' settlement jurisdiction are still covered (sec. 2.06(2)); see Tax Court petitions. Rev. Proc. 2016-22 adds that Counsel and Appeals must still interact in a way that preserves Appeals' independence. In pre-docket cases, Appeals may obtain legal advice from Counsel; IRC 7803(e)(6)(B) asks Counsel, to the extent practicable, to use staff not involved in the case or its litigation.
Collection Appeals Program. In CAP cases, “Communications between Appeals and other IRS employees are strictly limited to ministerial, administrative, or procedural matters, and the merits of the case cannot be discussed.” (IRM 8.24.1.3.8). If Collection decides to continue enforcement during a CAP because collection is at risk, it may tell Appeals what will happen but not why (IRM 8.24.1.3).
CDP remands. When the Tax Court remands a CDP case, Counsel's memo to Appeals explaining the remand must not discuss the taxpayer's credibility or facts, and a copy goes to the taxpayer (sec. 2.03(10)(c)).
Fast Track and mediation. In programs where an Appeals employee mediates while the case is still in Examination, such as Fast Track Settlement, “The prohibition against ex parte communications between Appeals employees and other IRS employees does not apply because Appeals employees are not acting in their traditional Appeals' settlement role.” Private caucuses are normal there (sec. 2.05(1)). In post-Appeals mediation, the agreement to mediate prohibits ex parte contacts with the mediator (Rev. Proc. 2014-63); see mediation.
Compliance dissents. Discussions between Compliance and Appeals about a disagreement with a settlement wait until the Appeals case is closed, and must stay generic if the same issue is open for the taxpayer or a related taxpayer (IRM 8.6.4.2.10; IRM 8.24.1.3.10.1).
Spotting and curing a breach
Breaches usually surface in the case file: an email in the activity record, a transmittal with commentary, or a remark by the Appeals Officer that reflects something the examiner said. Rev. Proc. 2012-18 sec. 2.10 sets the remedy process:
- Raise it with the Appeals Officer and the Appeals Team Manager in writing, identifying the communication.
- Appeals notifies the taxpayer of the breach and asks for the taxpayer's input on the remedy. “Most breaches of the ex parte communication rules may be cured by timely notifying the taxpayer/representative of the situation, sharing the communication or information in question, and affording the taxpayer/representative an opportunity to respond.”
- If more is warranted, Appeals may reassign the case to a different Appeals or Settlement Officer with no prior involvement.
- “The deciding official for the determination of the appropriate remedy for a breach of the ex parte communication rules will be a second-level manager.” The choice of remedy is in Appeals' sole discretion.
Two limits matter. The rules “do not create substantive rights affecting the taxpayer’s tax liability” or the IRS's ability to assess or collect (sec. 2.10(1); IRM 8.1.10.1.2), so a breach does not void a deficiency. In CDP cases, the Tax Court may remand to Appeals for a new or supplemental hearing to fix a breach (sec. 2.10(2)). Appeals tracks breaches generically: “Appeals monitors ex parte communication breaches through the Ex Parte Report System.” (IRM 8.1.10.1.4).
How the Tax Court polices the rules. The remand remedy in sec. 2.10(2) codifies what the Tax Court had already done in CDP cases under the predecessor, Rev. Proc. 2000-43. In Drake v. Commissioner, 125 T.C. 201 (2005), an IRS insolvency advisor faxed the settlement officer a memorandum questioning the credibility and motives of the taxpayer's bankruptcy counsel, and the settlement officer neither told the taxpayer nor offered a chance to participate. The court held the memorandum “was not ministerial, administrative, or procedural in nature”, that the hearing officer had abused his discretion, and remanded “for a new section 6330 hearing with an independent Appeals officer who has received no communication relating to the credibility of petitioner or petitioner's representative.” In Industrial Investors v. Commissioner, T.C. Memo. 2007-93, the revenue officer's cover letter transmitting the administrative file gave his opinion of the taxpayer and argued for a result; the court rejected the IRS's harmless error argument, holding that “Actual influence isn't required, only a reasonable possibility that the prohibited communication may have compromised the Appeals officer's impartiality”, and again ordered a new hearing before a different Appeals officer who had not seen the letter. Moore v. Commissioner, T.C. Memo. 2006-171, adds two points that matter when Appeals offers a cure: the court held that nothing in RRA 98 or the revenue procedure “allows respondent's Appeals officer to avoid the rule against prohibited ex parte communications by later informing the taxpayer about the communications”, and that independent grounds for the determination do not moot the breach; the court also noted that a taxpayer raising only frivolous arguments may get no relief at all. All three were CDP cases reviewed for abuse of discretion, which is why the remedy was a remand; in a deficiency case the Tax Court decides the liability itself, and these decisions do not translate into dismissal of the notice. For the representative, they support asking for reassignment rather than accepting disclosure alone where the communication went to credibility, and they are the reason Industrial Investors found the breach at all: the taxpayer read the Appeals officer's case activity record, which is now available to a specified taxpayer under IRC 7803(e)(7).
Questions practitioners ask
Can the examiner attend the Appeals conference?
Yes, at Appeals' discretion (IRM 8.6.1.5.4). Because the taxpayer is present, the discussion is not ex parte.
Can the Appeals Officer call the examiner to ask where a document is?
Yes. Locating a document referred to in the workpapers is a ministerial communication (Rev. Proc. 2012-18, sec. 2.03(2)).
Do the rules apply to Counsel in a Tax Court case?
Not between Appeals and Counsel in a docketed case (sec. 2.06(2)). They still apply between Appeals and the examiner in a docketed case within Appeals' settlement jurisdiction.
Does a breach mean the deficiency is thrown out?
No. The rules do not create substantive rights affecting the tax liability. The usual cure is disclosure and a chance to respond; reassignment to a new Appeals Officer is available at Appeals' discretion.
Is the Taxpayer Advocate Service covered?
No. TAS is not an originating function, and IRM 8.1.10.2 says communications between Appeals and TAS are permissible.