What the letter means
The IRS page: “We plan to contact third parties about your tax liability, such as a neighbor, a bank, an employer, or employees.” The page says the IRS generally shares only limited information such as the taxpayer's name, that “The timeframe is on your letter, but not more than one year,” and that “You can request a list of our contacts at any time.”
The letter exists because IRC 7602(c)(1) bars an IRS employee from contacting “any person other than the taxpayer with respect to the determination or collection of the tax liability of such taxpayer” unless the contact falls within a period of not more than one year specified in a notice that is provided “not later than 45 days before the beginning of such period.” The statute adds that “A notice shall not be issued under this paragraph unless there is an intent at the time such notice is issued to contact persons other than the taxpayer during the period specified in such notice.” Since the 2019 amendment of IRC 7602(c)(1) by Pub. L. 116-25 took effect, IRM 25.27.1.3.1 confirms that “Effective August 15, 2019, Publication 1 no longer satisfies the advance notice requirement of IRC Section 7602(c)(1).”
IRM 25.27.1.2 defines a third-party contact from Treas. Reg. 301.7602-2: a communication initiated by an IRS employee, with a person other than the taxpayer, about the determination or collection of the taxpayer's liability, that discloses the taxpayer's identity and the employee's IRS affiliation. The IRM gives examples of what counts, including “A levy or summons issued to anyone other than the taxpayer such as a bank, credit card processor or employer,” and what does not, including database searches, contacts with government offices for public records, unsolicited information from a third party, and “Contacts with individuals who have a valid power of attorney for the taxpayer.”
Why the client got it
IRM 25.27.1.3.1: “The Letter 3164, Third Party Notice, is issued by Collection and Exam employees to notify taxpayers of potential TPCs. There are over twenty versions of the Letter 3164, available to meet specific functional requirements.” The suffix tells you the function: versions exist for revenue officers, revenue agents, ACS, the Automated Substitute for Return program, bankruptcy (3164-B) and others. The IRM also says, “Letter 3164 should only be issued when the employee intends to contact a third party,” so the letter is a signal that the employee expects to need information from someone else: an employer for wage verification, a bank for account information, a customer for income, a county for property records that concern the taxpayer's business with that office.
One version arrives automatically. IRM 5.19.22.3.1 says the business return delinquency notice package “will contain Letter 3164, Third Party Contact, Notice 609, Privacy Act Notice, and a return envelope.” A CP259 recipient therefore gets a Letter 3164 whether or not anyone intends to call a third party that week; the systemic notice preserves the IRS's ability to contact payers later if the return is never filed.
IRM 25.27.1.3 states the IRS's own preference: “It is the IRS’s practice to obtain information relating to a liability or collectibility determination directly from the taxpayer whenever possible,” and that employees should first try the taxpayer or representative or obtain authorization on Form 12180. The letter often follows an unanswered information document request or an unreturned financial statement.
The 45-day wait, the one-year window and the exceptions
| Rule | What the IRM says | Source |
|---|---|---|
| Waiting period | “Employees may not contact a third party until the 46th day following the date of the notice.” | IRM 25.27.1.3.1 |
| Window | Letter must specify the period, not to exceed one year, and the tax periods at issue | IRM 25.27.1.3; 7602(c)(1) |
| Refresher | A new Letter 3164 at least 46 days before the current window ends avoids a gap; otherwise another 45-day wait | IRM 25.27.1.3.1 |
| Joint liability | “each spouse must receive a separate Letter 3164” | IRM 25.27.1.3.1 |
| Representative | “Provide a copy of the letter to the power of attorney (POA).” | IRM 25.27.1.3.1 |
| List requests | Any time, oral or written; one per taxpayer; not within 90 days of a prior request | IRM 25.27.1.5 |
IRC 7602(c)(3) and IRM 25.27.1.3.2 list the exceptions: a contact the taxpayer authorized; a determination “for good cause shown that such notice would jeopardize collection of any tax or such notice may involve reprisal against any person”; and a pending criminal investigation. Treas. Reg. 301.7602-2(f) adds contacts with government entities, confidential informants and non-administrative contacts in litigation. Reprisal is decided contact by contact: IRM 25.27.1.3.3 says “Make a determination on a contact-by-contact basis with no blanket determinations,” and a third party's stated fear of reprisal “will be taken at face value,” which removes that contact from the list the taxpayer can obtain.
The letter itself has no deadline and no appeal right. Its practical effect on the case is timing: nothing can be asked of a third party during the 45 days, so a representative who wants to supply the information directly has that window to do it.
What a representative can do
- Identify the function from the letter version and the signature block, and match it to the open matter: an exam IDR that is overdue, a collection financial statement that was never returned, an unfiled business return behind a CP259.
- Offer the information directly. IRM 25.27.1.3 says employees should first try to get it from the taxpayer or representative. Providing bank statements, employer letters or customer records yourself keeps the IRS from calling those parties and keeps the client's relationships out of the case.
- Consider a Form 12180 authorization for specific contacts you prefer the IRS make with your knowledge (for example, a payroll company or a prior CPA). IRM 25.27.1.3.5 says the form lists each contact, blanket authorizations are not accepted, both spouses sign on a joint liability, and a representative signing on the taxpayer's behalf must have “Authorize disclosure to third parties” checked on line 5a of Form 2848. Authorized contacts are not recorded or listed, and the IRM says the employee must tell the taxpayer that.
- Understand what refusing does not do: “The taxpayer may not prevent an IRS employee from contacting a third party by refusing to provide authorization.” Without authorization the IRS simply waits out the 45 days and records the contacts.
- Request the contact list when it matters: before an Appeals conference, when preparing a CDP hearing, or when a customer or lender reports an IRS call. IRM 25.27.1.5 says the request may be oral or written, must include name, address, TIN and tax periods, must be for one taxpayer only (“Joint requests, regardless of filing status, are not valid”), covers contacts already made, and may not be made within 90 days of a prior request. The IRS answers with Letter 3173.
- If a third party was contacted inside the 45 days or with no Letter 3164 on file, document it. The remedy is not suppression of the information in most cases, but the violation is relevant to a Taxpayer Advocate complaint, to Appeals and to any summons enforcement dispute; see third-party contacts in exams.
Letter 3164 is not a summons. A third party is free to decline an informal IRS request; only a summons compels production, and a third-party summons under IRC 7609 has its own notice and quash procedures. IRM 25.27.1.4 notes that giving the taxpayer a copy of a third-party summons satisfies the 7602(c) recording and reporting requirements for that contact. See IRS summonses.
What the IRS does next
After day 45 the employee may make the contacts described. IRM 25.27.1.3.4 gives the reprisal script employees use with a third party, telling the person that by law their name goes on a list that may be sent to the taxpayer and asking whether they fear reprisal. Each reportable contact is recorded on Form 12175 (one per third party per day) and sent to the function's third-party contact coordinator; some collection systems record contacts automatically. IRM 25.27.1.4 adds that recording is not required for contacts the taxpayer has already been told about under another rule, such as a CDP notice or a summons.
On request, the coordinator prepares Letter 3173 listing all contacts since January 18, 1999 or since the last list, other than those excluded for reprisal or another statutory reason (IRM 25.27.1.5). IRC 7602(c)(2) also requires the IRS to provide the record periodically on its own. If the employee needs more time, a refresher Letter 3164 extends the window; if the work ends, nothing further issues.
Related notices
- CP259: the business delinquency notice that always encloses a Letter 3164.
- Letter 2205 and Letter 566: exam contact letters that may be followed by a Letter 3164.
- LT16: ACS contact in collection cases where third-party contacts are common.
- Letter 3172: lien filing notice; recording a lien with a county office is a government-entity contact, not a third-party contact (IRM 25.27.1.3.8).
Questions practitioners ask
Does the client need to respond?
No. The IRS page says only that the taxpayer may want to respond to outstanding requests for information. The letter is notice, not a request.
Can we stop the IRS from contacting the client's customers?
Not by refusing. IRM 25.27.1.3.5 says the taxpayer cannot prevent a contact by withholding authorization. Supplying the information directly during the 45-day wait is the practical way to make the contacts unnecessary.
What does the IRS tell the third party?
The IRS page says generally only limited information such as the taxpayer's name, because the disclosure rules limit what can be shared. The IRM script also tells the third party that their name will go on a list the taxpayer can obtain unless they fear reprisal.
How do we get the list of contacts?
Ask the employee on the letter, orally or in writing, with the client's name, address, TIN and tax periods. IRM 25.27.1.5 allows a request at any time but not within 90 days of a prior one, and the list comes as Letter 3173.
Is a bank levy a third-party contact?
IRM 25.27.1.2 lists a levy or summons issued to a bank or employer as a third-party contact, so a collection employee must have a Letter 3164 in place before levying. IRM 25.27.1.4 says contacts the taxpayer already received notice of, such as through a CDP notice, need not be separately recorded.