Getting the examiner's file: the activity record, workpapers and FOIA requests

Why get the file

The report tells you what the examiner concluded; the file tells you how. The activity record can show when penalty approval was obtained relative to the first formal communication of the penalty, which matters under IRC 6751(b) (see supervisory approval). It shows statute actions, third-party contacts, managerial involvement and the reasons for delays. Workpapers show what records were reviewed and how adjustments were computed. Before a protest, an Appeals conference or a Tax Court petition, the file often shows which facts are in dispute and which are not.

What is in the file

IRM 4.10.9.2 describes the workpaper system: case file indexes, Form 4318 (the workpaper index listing issues and adjustments), Form 9984 (the activity record), administrative and issue lead sheets, and supporting workpapers that must document the facts, audit steps, tests, information obtained and conclusions. The activity record is the key document. IRM 4.10.9.5 says it should be prepared contemporaneously and chronicle all actions of the examiner, manager, clerical staff, taxpayer and representative. Entries should include:

1. Work done before, during and after taxpayer contact, research, and pre-planning for scope and depth.
2. Summaries of phone calls and contacts with the taxpayer, representative and third parties.
3. Causes of delays by the IRS (training, details) and by the taxpayer or representative.
4. Group manager involvement, including case reviews and penalty approvals.
5. Actions on the statute of limitations, collateral requests and referrals, transfers and closing dates.

Entries by anyone other than the examiner should be initialed, and the IRM says entries are to be factual and professional, “omitting personal opinions.” Examiners using Report Generation Software can keep the activity record as the RGS case history.

Asking the examiner directly

For an open exam, the simplest route is to ask. IRM 4.2.5.6 says taxpayers have a right under IRC 6103(e) to their own return information, including the administrative file and workpapers, unless release would seriously impair tax administration, and tells examiners to “provide the taxpayer and their POA a copy of the file and workpapers for open examinations directly when asked, to the extent their release does not adversely impact tax administration.” It adds: “Taxpayers and their authorized representatives do not need a FOIA request to obtain copies of the taxpayer's open examination case files.” Impairment decisions are generally made at the supervisory level and should not be so narrow as to block release of everything.

Put the request in writing to the examiner, cite IRM 4.2.5.6 and IRC 6103(e)(7), and ask specifically for the Form 9984 activity record, lead sheets, workpapers, third-party information and the penalty approval form. The examiner must confirm the requester's identity and authority, so make sure the Form 2848 covers the years. If the examiner has concerns, they contact Disclosure. Once a FOIA request is filed, Disclosure takes over.

What the IRS withholds

IRC 6103(e)(7) allows return information to be disclosed to a person entitled to the return “if the Secretary determines that such disclosure would not seriously impair Federal tax administration.” IRM 4.2.5.6 lists what examiners should not release:

A file with large redactions around a particular issue is itself information. Redactions for “direction of the exam” in a case with large unexplained deposits, for example, can signal fraud development; if you see that, read the civil fraud penalty and reconsider how the client is advised.

Making a FOIA request

FOIA, 5 U.S.C. 552, gives access to agency records without a reason. At the IRS, the Disclosure Office has sole authority to issue determinations (IRM 11.3.13.2). The IRS procedural rules at 26 CFR 601.702(c)(4) set what a request must do: be in writing and signed; say it is made under FOIA; go to the IRS office designated to receive it (now a single intake point, GLDS Support Services in Atlanta, described below); reasonably describe the records; establish the requester's identity and right to records restricted by IRC 6103 or the Privacy Act; give an address; say whether the requester wants to inspect or receive copies; agree to pay fees or set a limit or ask for a waiver; and state the requester's category. A representative requesting a client's file needs proof of authority, such as a Form 2848 covering the years.

Under 26 CFR 601.702(c)(9), the initial determination is due within 20 days, excluding weekends and legal holidays, after receipt of a complete request, unless the IRS invokes an extension, the requester agrees to one, or the request is expedited. If records cannot be located and evaluated in time, the IRS must say so, and the requester can treat that as a denial. A request that is deficient is not received until it is perfected, so get the elements right the first time.

A workable request letter for a client's exam file has a short list of parts: a heading identifying it as a Freedom of Information Act request under 5 U.S.C. 552 and 26 CFR 601.702; the taxpayer's name, TIN, tax type and periods; a description of the records (the complete examination administrative file, including the Form 9984 activity record, Form 4318, lead sheets, workpapers, information document requests, third-party information, penalty approval forms and statute consents); a statement of the requester's authority with the Form 2848 attached; a request for copies, in electronic form if available; an agreement to pay fees up to a stated amount; the requester category; and a signature with a mailing address. Keep proof of delivery, since the 20-day clock runs from receipt of a complete request.

Where and how to file

The IRS FOIA guidelines page on irs.gov says a request “must be sent to GLDS Support Services (GSS) using one of the three methods listed at the top of the page to be considered “received” by the IRS for purposes of FOIA processing.” They are the FOIA Public Access Portal (filing, status and messages online); fax to 877-891-6035 for taxpayer records; and mail to Internal Revenue Service, GLDS Support Services, Stop 93A, Post Office Box 621506, Atlanta, GA 30362. A request sent anywhere else is not received for FOIA purposes. The same page says of open cases: “If you're working with an employee on an open tax case, ask them for the records you need. It's free and usually faster.”

Three details perfect the request on arrival. Identity: for IRC 6103 records, a handwritten signature (stamped or digital signatures are not accepted) plus a copy of a signed government photo ID, or a notarized or sworn statement of identity, with the Form 2848 for a representative. Description: name the record (“2019 examination administrative file”), because “Do not request something like “All records under my name and social security number” or “All IRS emails concerning xxxx”. These requests may be rejected as too broad and/or not specific enough to allow a proper search.” Fees: state a ceiling and send no payment; the schedule is $.20 a page and $50 an hour of search after two free hours, nothing is charged at $25 or less, and the IRS notifies the requester before exceeding the ceiling or $250.

Timing

The 20-day clock can be extended for unusual circumstances (records in a field office, a voluminous request, consultation with another unit), but under 26 CFR 601.702(c)(11)(i)(B) extensions “shall not cumulatively total more than ten days (exclusive of Saturday, Sunday and legal public holidays)”; beyond that the IRS must offer a chance to narrow the request or agree a new time frame. Status questions go to the FOIA Public Liaison line at 312-292-2929, whose contact details IRM 11.3.13.5.1 requires on every response letter. File when the protest is being planned, not when the conference is scheduled.

FOIA is most useful for closed files, files in another function, Appeals files, and situations where the direct request was refused or ignored. It is slower than a direct request for an open exam file.

FOIA exemptions you will see

IRM 11.3.13.4.2.4 gives a useful example for exam files: information the examiner gathered about the taxpayer's own business relationships (a landlord's name, payments to suppliers) is the taxpayer's return information and cannot be withheld as third-party information, though notes about the third parties' own tax matters are withheld. And under exemption (b)(5), the deliberative process privilege does not apply to records created 25 years or more before the request.

Appeals and court

A requester may administratively appeal a denial in full or part, an adverse fee decision, a no-records response, or a denied expedite request (IRM 11.3.13.5.3, citing 26 CFR 601.702(c)(10)). The IRS Independent Office of Appeals handles FOIA appeals. Every adverse response must give the right to appeal within a period of no less than 90 days, and contact information for the FOIA Public Liaison and the Office of Government Information Services (OGIS) for dispute resolution. An appeal of a denied expedite request must be made within 10 calendar days. The appeal decision is due within 20 business days. If the IRS misses its deadlines, the requester is treated as having exhausted administrative remedies and can sue in district court, where the IRS bears the burden of justifying withholding and fees can be awarded to a requester who substantially prevails (26 CFR 601.702(c)(12) and (13)). Appeals does not process appeals from constructive denials for lack of a timely response; the remedy is court.

The Appeals case file under IRC 7803(e)(7)

In Appeals, smaller taxpayers have a statutory route. IRC 7803(e)(7)(A), added by the Taxpayer First Act, requires that when a conference has been scheduled at the request of a specified taxpayer, the Chief of Appeals ensure the taxpayer “is provided access to the nonprivileged portions of the case file on record regarding the disputed issues (other than documents provided by the taxpayer to the Internal Revenue Service) not later than 10 days before the date of such conference.” A specified taxpayer is an individual with adjusted gross income of $400,000 or less for the year in dispute, or any other taxpayer with gross receipts of $5 million or less (aggregated under IRC 448(c)(2)). Under 7803(e)(7)(B) the taxpayer can elect to receive the file by the conference date instead.

Under IRM 8.6.1.2.1 the Appeals officer decides specified-taxpayer status before scheduling, and “Whenever it is unclear whether the taxpayer meets the definition of a “specified taxpayer,” treat the taxpayer as a “specified taxpayer” and offer case file access.” The offer comes in the initial contact letter or call; the taxpayer or representative “may request access to the case file under the TFA at any point up until the initial conference”, and Appeals reschedules if needed so the file arrives 10 calendar days before it. The file goes by fax (150 pages or fewer), flash drive, PDF through secure messaging, or paper, with transmittal Letter 6271. On content, IRM 8.6.1.2.1.2 says “The file must include all workpapers relevant to the disputed issues”, including digital case histories the Appeals officer accessed; privileged material and the taxpayer's own submissions are excluded. Ask for the file in the first call with Appeals and confirm receipt in writing. A request made after the conference has started, or by a taxpayer over the thresholds, is handled as an ordinary disclosure request rather than under the statute, and FOIA remains available for both.

Other records worth requesting

1. Third-party contact list. Request Letter 3173 under IRM 25.27.1.5: one taxpayer per request, contacts before the request date, no more often than every 90 days. See third-party contacts.
2. Interview recordings. A copy of an IRS audio recording is provided on media the taxpayer supplies, without a fee (IRM 4.10.3.4.7.4).
3. Transcripts. Account transcripts show assessment, exam and statute codes; see reading an account transcript.
4. Certified mail records. In a notice of deficiency dispute, the PS Form 3877 mailing list (IRM 4.8.9.12.3).

Questions practitioners ask