11.3.40  Disclosures Involving Trust Fund Recovery Penalty Assessments

11.3.40.1  (06-01-2010)
Purpose

  1. This section provides guidance on disclosure aspects relating to the trust fund recovery penalty. It is intended to enable Disclosure personnel to provide advice and assistance to Revenue Officers and Appeals Officers engaged in the assessment and collection of such penalties and to enable Disclosure personnel to process Freedom of Information Act (FOIA) and Internal Revenue Code (IRC) §6103 requests for access to trust fund recovery penalty (TFRP) records.

    Note:

    See IRM 11.3.2, Disclosure to Persons with a Material Interest, for information on disclosures of TFRP information pursuant to IRC §6103(e)(9).

  2. The disclosure guidance provided in this section applies to disclosures involving the personal liability for excise tax that is assessed against persons willfully causing a business entity to fail to pay certain excise taxes on fuels. The statutory authority for the tax is IRC §4103. Section 4103 provides that certain additional persons shall be jointly and severally liable with the taxpayer for the excise tax on fuels covered in IRC §§4041(a)(1), 4081, or 4091.

  3. The same care should be exercised in disclosures involving IRC §4103 excise tax assessment records as is exercised in disclosing IRC §6672 TFRP assessment records. Careful consideration of the complicated relationships involved in these assessments is necessary prior to disclosure of any information.

11.3.40.2  (06-01-2010)
Statutory Basis of Trust Fund Recovery Penalty Assessments (TFRP)

  1. IRC §6672 provides that any person required to collect, truthfully account for, and pay over any tax imposed by the Internal Revenue Code who willfully fails to do so or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall in addition to other penalties provided by law, be liable for a penalty equal to the total amount of the tax.

  2. The TFRP (formerly known as the 100% penalty) provisions are administered by Small Business Self Employed (SB/SE) division.

  3. Procedural instructions appear in IRM 5.7, Trust Fund Compliance. Additional information is provided in IRM 5.17.7, Liability of Third Parties for Unpaid Employment Taxes.

11.3.40.3  (01-01-2006)
General Considerations

  1. The most frequent use of the TFRP involves assessments against one or more persons who were associated with a corporation that failed to pay a covered tax such as an employment tax.

  2. Most requests for access to TFRP records occur when one of the persons subject to the penalty seeks information concerning the extent to which the penalty was considered, assessed against or collected from one or more other persons who may be subject to the penalty. Such requests for information generally occur while collection activity is being pursued and could involve tension between the persons subject to the penalty.

  3. Persons subject to the penalty may at one time have been closely associated in the business; they may be friends or relatives; they may at times have cooperated with each other and jointly proposed alternatives to the penalty; or, they may openly or covertly have become adversaries seeking to avoid the penalty at each other's expense. Such relationships are irrelevant for disclosure purposes, but increase the risk factor for unauthorized disclosure.

  4. Each person subject to the penalty is an individual taxpayer whose rights of access to records and whose right to privacy must be separately evaluated without regard to apparent personal relationships with another person subject to the penalty.

  5. The close relationship between the persons who may be subject to the penalty would generally mean that most of the information concerning any one of them is already known to one or more of the others. Such prior knowledge does not serve to authorize the disclosure of records which would not otherwise be available. The release of information protected by law is prohibited even though it may already be known to the requester. Disclosure personnel should recognize that TFRP files are available under FOIA and IRC §6103(c), (e)(6), (e)(7), and (e)(9) procedures.

    Note:

    See IRM 11.3.40.8 for a discussion of how to respond to requests citing both the FOIA and IRC §6103(e)(9).

  6. Persons under investigation may as a result of the investigatory process learn information such as the identity of other persons under investigation. Such circumstances do not authorize additional disclosures and do not create a right to receive confirmation of information learned or surmised.

11.3.40.4  (06-01-2010)
Basic Disclosure Considerations

  1. Records produced or maintained in connection with the TFRP assessment are return information.

  2. The threshold questions in determining the releasibility of any TFRP record are "whose tax information is being requested and by whom?" .

  3. Different persons may be subject to the penalty for different periods. This will result in variations in their right of access to records.

  4. A TFRP record may be the return information of the corporation or of one or more of the subjects of the penalty investigation. Some records may be exclusively the return information of only one of the foregoing taxpayers, whereas some records may be the return information of several or all of the foregoing taxpayers. A similar distinction may be made for various items of information within a single record.

    Example:

    The liability data on Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, may contain tax periods not available to an officer not considered responsible for all periods reflected on the form.

  5. Having determined that a record is the return information of a taxpayer, that record will be available to any person who has established a material interest, as provided by IRC §6103(e), unless it is to be withheld pursuant to IRC §6103(e)(7).

  6. Persons who have not established a material interest as stated above, will not be permitted access pursuant to a IRC §6103(e) request, a FOIA request, or a Privacy Act request.

  7. Responses denying records to IRC §6103(e) requesters will cite IRC §6103(a) and/or IRC §6103(e)(7) as appropriate.

  8. Responses denying records to FOIA requesters will cite exemption 5 United States Code (USC) §552(b)(3) pursuant to IRC §6103(a) and/or IRC §6103(e)(7) as appropriate. Additionally, other FOIA exemptions may be cited whenever applicable. See IRM 11.3.40.5.2.2.

  9. Responses denying records to Privacy Act requesters will state that IRS System of Records 26.013, Trust Fund Recovery Penalty/ One Hundred Percent Penalty Cases, is exempt from the access provisions of the Privacy Act pursuant to 5 USC §552a(k)(2). If, however, the requester is the taxpayer or has a material interest, the documents may be provided in accordance with FOIA or IRC §6103 provisions unless IRC §6103(a) or (e)(7) apply as described in (7) and (8) above. See IRM 11.3.13.9.14, Trust Fund Recovery Penalties.

  10. Special care must be exercised when releasing computer transcripts to ensure that disclosures are proper.

    Note:

    See especially the note in IRM 11.3.2.4.13(5) regarding TXMODs and display of TINs.

11.3.40.4.1  (01-01-2006)
Disclosure in Judicial and Administrative Tax Proceedings

  1. An alternative approach to access to TFRP records is provided by IRC §6103(h)(4) when the tax proceeding is still "open."

  2. The "requisite" judicial or administrative tax proceeding could be the TFRP assessment process itself or litigation involving the Internal Revenue Service (IRS) which results from such assessment.

  3. Great care must be exercised to ensure that all requirements of IRC §6103(h)(4) are met before disclosing any information in excess of that which would have been otherwise available. See IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes.

  4. A requester seeking disclosure in a judicial or administrative tax proceeding should demonstrate the applicability of IRC §6103(h)(4) to the request. However, it is important to remember that IRC §6103(h)(4) is NOT an access provision. Instead, that section allows IRS to make certain disclosures in a tax administration proceeding subject to certain requirements and where the IRS believes the disclosure is warranted to advance the governments' interest.

11.3.40.5  (01-01-2006)
Records Involved

  1. There are various records contained in a TFRP case. The following sections discuss the types of information/documents that may be involved, as well as access to and releasibility of the information/documents.

11.3.40.5.1  (01-01-2006)
The Corporation Case File

  1. Generally, TFRP cases begin with an attempt to collect employment or excise taxes from the corporation which was initially responsible for the payment of such taxes.

  2. The contents of the case file formed in connection with this collection activity is clearly the return or return information of the corporation.

  3. The return or return information of a corporation is available to:

    1. a corporate officer authorized in accordance with State law to legally bind the corporation;

    2. any person designated by resolution of its board of directors or any other similar governing body;

    3. any officer or employee of the corporation upon written request signed by any principal officer and attested to by the secretary or other officer; or

    4. a bona fide shareholder of record owning one percent or more of the outstanding stock of the corporation.

    Note:

    See IRC §6103(e)(1)(D) and IRM 11.3.2.

  4. Frequently, a person against whom a TFRP is proposed will be able to meet one of the foregoing qualifications (alone or in concert with others) and consequently may have access to the corporation case file.

  5. If the officer seeking access to the corporate case file as a person subject to the TFRP is the same officer with whom the revenue officer dealt as the de facto head of the corporation while pursuing the investigation, there would be a strong presumption that such access would be appropriate.

  6. A responsible person for TFRP purposes may or may not be an officer authorized by the corporation in accordance with applicable state law to legally bind the corporation. Consequently, additional factors must be considered prior to releasing records, such as the actual practices within the corporation. See IRM 11.3.2.

    Note:

    Allowing access to the file by a requester who is resisting assessment of the penalty on grounds of not being a corporate officer or a responsible person cannot be justified. Disclosure personnel should be aware, however, that the requester may qualify for access to the file on another material interest basis. See IRM 11.3.2.

  7. When access is sought by a person subject to the TFRP and the corporation continues in existence, consideration should be given to whether there has been a change in management. The person seeking access may no longer have any valid authority based on title. However, he/she may meet another material interest requirement as outlined in IRM 11.3.2.

  8. If the corporation has been dissolved, any person authorized by applicable state law to act for the corporation or any person found to have a material interest which will be affected by information contained therein, may be allowed access to the corporation case file. A person subject to the TFRP would have such a material interest to the extent that the information is relevant to the proposed penalty.

  9. Any information in the corporate case file pertaining to the determination that a TFRP should be assessed is also the return information of the person subject to such penalty.

  10. Access to the corporation case file pursuant to (8) and (9) above is limited to persons against whom the penalty has been proposed or assessed. No access is to be permitted to persons who are not being considered for the penalty or who have been determined not to be subject to the penalty (except as otherwise provided for in IRC §6103).

  11. See IRM 11.3.40.8.1 for a discussion of how to handle a FOIA request that also constitutes a valid IRC §6103(e)(9) request.

11.3.40.5.2  (01-01-2006)
Trust Fund Recovery Penalty Case File

  1. The TFRP case file consists of documents prepared or maintained to support and implement the penalty assessment.

  2. The contents of this file are not the return information of the corporation, although some supporting documents may consist of copies of records which originated in the corporation case file and were, in their original form, return information of the corporation.

    1. TFRP files that involve more than one responsible person are generally organized so that a primary or key file and a number of secondary files are created. All penalty determination documents are placed in the "primary" file while documents that pertain to a potentially responsible person are placed in a specific file pertaining just to that person.

    2. Disclosure personnel need to keep this organizational procedure in mind when asked by an officer for all records pertaining to his/her own penalty. It may be necessary to retrieve information from the "primary file" in order to make a complete response.

  3. The contents of the TFRP case file generally constitute the return information of one, several, or all the persons subject to the penalty.

  4. Information which relates to the general operation of the business, or differentiates between the duties and responsibilities of the various officers and employees, or which pertains to the imposition of the penalty is generally the return information of all persons subject to the penalty.

  5. The right to access the information described in (4) above ceases when a determination has been made not to assert the penalty against the requester except as the information may pertain specifically to the requester.

  6. Information which relates to the personal affairs or unrelated business activities of an individual, correspondence from the IRS to the individual, and records which pertain only to the imposition of the penalty against a particular individual are the return information of that individual. They continue to be available to that individual, although a determination may have been made not to assert the penalty. Such information is generally not available to other individuals.

  7. Copies of responses to IRS originated correspondence and information submitted by an individual in writing, may be provided to that individual, regardless of whether the content pertains to the writer, is general, or pertains to another person.

  8. Written accounts prepared by IRS personnel of information provided by an individual orally may be released if the information pertains to that individual as in (6) above or should be available to the requester as general information as in (4) above.

  9. Information about another individual gathered in connection with determining that individual's liability becomes the return information of that individual. The original provider may obtain a copy of what he/she provided.

    Caution:

    Care should be taken that any release consists only of what was said by the provider. Notations made on the document by IRS personnel would not be available to the provider.

  10. Before disclosure, documents found in the TFRP case file may require editing. The extent of the editing may differ depending upon the status and identity of the requester. Information may also be withheld because release may impede an investigation, identify an informant, or otherwise be exempt from disclosure.

  11. Items which call for general information (e.g., Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Taxes) may sometimes include personal information. Accordingly, care should be exercised in performing the editing so that information is released properly. See IRM 11.3.40.5.2.2.

  12. When an employee uses a pseudonym, their real name should be deleted. Disclosure personnel should consider FOIA exemptions (b)(3) with IRC §6103(e)(7), (b)(6), (b)(7)(A) and (b)(7)(C) when responding to FOIA requests. See IRM 11.3.13.7, Review and Editing.

  13. Specific documents are usually found in the TFRP case file, and should generally be disclosed as indicated in IRM Exhibit 11.3.40.5.2.1-10.

11.3.40.5.2.1  (01-01-2006)
Form 941, Employer's Quarterly Federal Tax Return

  1. This could be the actual or an IRS copy of the Employer's Quarterly Federal Tax Return, or a computer printout of the tax module for the form.

  2. This is disclosable under IRC §6103(h)(4) or (e) (as appropriate) to each person subject to the penalty for that period. Redactions to the form or computer module printout are unnecessary once the (h)(4) or (e) determination has been made.

  3. This form ceases to be available when a determination is made not to impose the penalty against the requester except as otherwise provided in IRC §6103(e).

    Caution:

    Care must be taken to release only returns that match the periods for which the requester is subject to the penalty.

11.3.40.5.2.2  (01-01-2006)
Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Taxes

  1. Each person may receive his or her own Form 4180.

  2. Persons entitled to return or return information under IRC §6103(e), or persons against whom the TFRP is being considered, may receive another individual's Form 4180 after all personal information is deleted.

  3. The personal information contained in Section 1 blocks 1, 2, 3, 4, and 5 of Form 4180 (Revision 9-2004) should be withheld from persons other than the person to whom the Form 4180 pertains. Disclosure personnel should consider FOIA exemptions (b)(3) with IRC §6103(e)(7), (b)(7)(A), and (b)(7)(C) when withholding personal information about third parties.

    Caution:

    Care must be taken to review the entire Form 4180. Personal information may be contained in sections other than Section 1.

  4. The content of what was said may be available to all persons with material interest in the penalty determination, but the personal information of the provider is not to be made generally available. In addition, consideration should be given to redacting personal information provided during an interview about individuals other than the requester.

  5. Disclosure personnel will generally presume that information contained on an interview document is derived from the interview rather than IRS records. Therefore, the person being interviewed generally has access to all information contained on his/her own Form 4180. If there is reason to question whether the information came from IRS records, contact should be made with the revenue officer to confirm the source.

  6. The source of the information would be of concern primarily in determining proper exemptions to cite in FOIA responses. When responding to requests other than FOIA requests where exemptions need not be cited, the source of the information may not be a concern when deleting data.

  7. In FOIA responses, the exemption cited when deleting personal information from Form 4180 will depend on the source of the personal information.

    1. If the source is information given orally by the provider during an interview solely to discuss the penalty issues, exemption (b)(6) and/or (b)(7)(C) should be considered.

    2. If the IRS employee uses IRS records as a source to add the personal information to the documentation (i.e., IDRS to obtain the SSN or address), exemption (b)(3) in conjunction with IRC §6103(a) would be cited.

  8. Care must also be taken to ensure that none of the data contained on Form 4180 would, if disclosed, impair tax administration or impede an investigation.

  9. The authority to determine whether the release of information may impair tax administration is delegated to the supervisor level. See Delegation Order 11-2.

  10. In FOIA responses, the exemption cited for deletions related to impairment of tax administration is (b)(3) in conjunction with IRC §6103(e)(7). FOIA exemption (b)(7)(A) should also be considered.

11.3.40.5.2.3  (01-01-2006)
Form 4183, Recommendation Re Trust Fund Recovery Penalty Assessment (Rev. 2-93)

  1. Page 1 and Page 2 are available to any requester listed thereon after deletion of all information pertaining to other persons. The entire block of information regarding the recommendation to assert the penalty against any responsible person other than the requester, including sections a, b, and c, should be deleted in full.

  2. Whenever non-assertion is approved, delete:

    • the Employer Identification Number;

    • assessed balance and

    • Trust Fund entries.

  3. The assessed balance and trust fund entries are also to be deleted whenever the requester is a person who is only being assessed a portion of the liability.

    1. Delete the box for non-assertion approved which appears in the bottom left portion of the form regardless of whether or not the box is checked.

    2. In FOIA responses, exemption (b)(3) in conjunction with IRC §6103(a) would be cited for all of these deletions.

  4. Page 3 is available only to persons recommended for assessment of the penalty, and only to the extent it pertains to the requester.

    1. If the remarks section includes recommendations regarding other potentially responsible persons, editing is required.

    2. In FOIA responses, exemption (b)(3) in conjunction with IRC §6103(a) is appropriate to assert in this instance.

  5. Page 4 is available to persons recommended for assessment of the full amount of the penalty.

    1. Persons recommended for the assessment of lesser amounts or identified as "responsible in part" should be provided with only so much of page 4 as pertains to their proposed assessment.

    2. In FOIA responses, the cite for edited portions would be (b)(3) in conjunction with IRC §6103(a).

11.3.40.5.2.4  (01-01-2006)
Form 2209, Courtesy Investigation

  1. The releasability of Forms 2209 will depend upon their specific content.

    1. In some circumstances the name of the assigned Revenue Officer or the address of the Post of Duty to which sent may pinpoint the locality in which a taxpayer or an informant currently resides.

    2. It may, therefore, be necessary to delete such information. In FOIA responses, exemptions which may be cited are (b)(3) in conjunction with IRC §6103(a) or (e)(7) and/or (b)(7)(A), (C) and/or (D).

11.3.40.5.2.5  (01-01-2006)
Form 2749, Request for Trust Fund Recovery Penalty Assessment(s)

  1. Form 2749 is the return information of the responsible person to whom it pertains. It is not available to other persons. It is completed by Compliance Services, Collection Operations.

  2. Prior to release, the name, address and SSN of other taxpayers should be deleted from the Related Assessments portion.

    Note:

    See IRM 11.3.2.4, Persons Who May Have Access to Returns and Return Information Pursuant to IRC §6103(e), and IRM 11.3.40.8.1 for information regarding IRC §6103(e)(9).

  3. The box "No Related Assessments" should be deleted entirely regardless of whether the box for related assessments was checked.

  4. When processing FOIA requests for Form 2749, exemption (b)(3) in conjunction with IRC §6103(a) should be cited.

11.3.40.5.2.6  (01-01-2006)
Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, and Form 2751, Proposed Assessment of Trust Fund Recovery Penalty

  1. Forms 2750 and 2751 constitute a contractual agreement between the taxpayer and the IRS.

  2. They are the return information of the taxpayer who signs them and may be released only to that individual.

  3. In FOIA responses, if the requester is someone other than the taxpayer (or other designee under IRC §6103(c) or IRC §6103(e)(6)), exemption (b)(3) in conjunction with IRC §6103(a) should be cited.

11.3.40.5.2.7  (01-01-2006)
Form 2644, Recommendation for Jeopardy/Termination Assessment, and Form 2859, Request for Quick or Prompt Assessment

  1. Forms 2644 are the return information of the individual to whom they pertain and are not available to any other person.

  2. Care must be exercised in the manner in which access to these forms is denied to a third party, since the fact they exist is itself return information which cannot be disclosed and the denial should not intimate or confirm their existence.

  3. In FOIA responses, the entire document should be withheld citing exemption (b)(3) in conjunction with IRC §6103(a).

11.3.40.5.2.8  (01-01-2006)
Form 433-B, Collection Information Statement for Businesses

  1. A copy of Form 433-B, from the corporate file may be contained in the penalty file.

  2. Personal information pertaining to individuals listed on pages 1-3 should be deleted prior to disclosure.

  3. In FOIA responses, exemptions (b)(3), in conjunction with IRC §6103(a), or (b)(6) should be cited. Disclosure personnel should exercise caution to differentiate between the application of (b)(3) or (b)(6).

    Note:

    See IRM 11.3.13.7 for a further discussion.

11.3.40.5.2.9  (01-01-2006)
Routine Form Letters

  1. Letter 1153, 30-Day Notification Letter, and Letter 1155, Transmittal Letter, Trust Fund Recovery Penalty, are generally sent to all persons subject to the penalty and are return information of the individual to whom addressed and not available to other parties.

  2. In FOIA responses, exemption (b)(3) in conjunction with IRC §6103(a) should be cited.

  3. Letter 3586, Meeting Scheduled with Individual for TFRP Interview, may be available to each of the potentially responsible persons if it is contained in the corporate file or another file that is responsive to the FOIA request. The address of the recipient should be deleted when provided to other individuals.

11.3.40.5.2.10  (01-01-2006)
Case History Notes

  1. History notes from TFRP files are often very difficult to review and sanitize, especially when multiple persons are being considered for assertion of the penalty. Often, the revenue officer maintains only one set of history notes that begins when attempts are made to collect taxes from the entity and follows through to development and assertion of the TFRP against the persons determined to be liable.

  2. In general, history notes concerning efforts to collect the underlying taxes subject to the TFRP are available to all potentially responsible persons. However, care must be taken to ensure the type of tax and tax periods referenced in the history match those being considered for the TFRP, and that personal information about third parties is deleted.

  3. When reviewing the history notes relating to the identification of potentially responsible persons, the same considerations must be made as those mentioned elsewhere in IRM 11.3.40.5.2. The notes should be reviewed and consideration given to redacting the following items about any individual other than the requester:

    1. Personal information (phone numbers, addresses, etc.),

    2. Any reference to the decision to hold (or not to hold) a person responsible for the TFRP,

    3. Interview notes taken during an interview with a potentially responsible person referencing his/her liability for the penalty and/or ability to pay.

    Note:

    History notes documenting efforts to schedule an interview to prepare a Form 4180, may be released, since the form itself is available to all potentially responsible persons. However, where the requester is not the interviewee, any documentation regarding the determination to hold the person interviewed liable for the TFRP should be deleted citing exemptions (b)(3) in conjunction with IRC §6103(a) and (b)(7)(C).

11.3.40.5.3  (01-01-2006)
Taxpayer Delinquent Account (TDA) Files

  1. A separate Taxpayer Delinquent Account (TDA) file is issued for each person against whom the TFRP has been assessed.

  2. The TDA File is the return information of the taxpayer against whom the penalty is assessed and is not available to any other person.

  3. Prior to releasing the TDA File to the taxpayer to whom it pertains, the file must also be reviewed in order to delete information which would interfere with tax administration or the law enforcement process and/or would identify an informant.

  4. The TDA File may also include tax or personal information concerning other persons. Such information should be deleted before the file is released.

  5. In FOIA responses, exemptions (b)(3) in conjunction with IRC §6103(a) and/or (e)(7), (b)(6) and/or (b)(7)(A), (C), (D) and/or (F) should be considered when reviewing the TDA file. See IRM 11.3.13.7.

11.3.40.5.4  (01-01-2006)
Case Control Files

  1. The originating SB/SE function (see IRM 5) has responsibility for controlling related TFRP cases. Information contained in the case control files may have various disclosure characteristics depending upon the circumstances involved.

  2. Information concerning a claim for relief or the filing of a bond pursuant to IRC §6672(b) is return information of the taxpayer involved and should not be released to other persons.

  3. Initiation of a refund suit may make available to any member of the public any documents which have become public in the course of a judicial tax proceeding, including the fact that such suit has been filed. See IRM 11.3.40.6.1.

11.3.40.5.5  (01-01-2006)
Collection Activity

  1. Except as provided in IRC §6103(e)(9), collection activity taken against a taxpayer, extension of a collection statute date, reporting of an account as currently not collectible and similar information constitutes the return information of the subject taxpayer and is not available to other persons. See IRM 11.3.2.

  2. The unpaid balance of a TFRP assessment for any given tax period may be disclosed to others who have been assessed for the same tax period. Amounts collected which are to be applied elsewhere should not be disclosed to any person whose liability is not affected by such application.

  3. When disclosing an amount in accordance with (2) above, the specific source, manner of collection or other details of the payment or credit should not be disclosed.

    Example:

    The amounts paid by one person upon which the penalty has been assessed cannot be disclosed to any other person who may also be liable, but see IRM 11.3.40.8.1 regarding IRC §6103(e)(9). The balance due is available as described in (2) above.

  4. In FOIA responses, if the requester is someone other than the taxpayer, exemption (b)(3) in conjunction with IRC §6103(a) should be cited.

11.3.40.6  (01-01-2006)
Factors Limiting Editing

  1. In some circumstances, it may not be necessary to edit TFRP records as outlined in IRM 11.3.40.5.

11.3.40.6.1  (01-01-2006)
Litigation

  1. Disclosure personnel should recognize that litigation of some type may have caused certain identity information to be made public. This factor may affect the redaction of records.

  2. In light of the inconsistent posture adopted by the courts, disclosure personnel will maintain a general policy to redact such information. In the event of a FOIA request, consider the public information facts along with other applicable FOIA considerations.

    Note:

    See IRM 11.3.11.13, Information Which Has Become Public Record, for further discussions.

11.3.40.6.2  (01-01-2006)
Combined Individual and Corporate Request

  1. The need to edit records can be simplified if the requester seeking access to records concerning his or her own return information also requests and establishes a right to access the corporate records.

  2. A combined individual and corporate request does not, however, increase the right of access to another taxpayer's return information or to personal information of a third party contained in the corporate records.

11.3.40.7  (01-01-2006)
Operational Disclosures

  1. While conducting a TFRP investigation, issues involving investigative disclosures, joint appearances, informal requests, and/or oral disclosures may arise.

11.3.40.7.1  (01-01-2006)
Investigative Disclosure

  1. Investigative disclosures are made at the initiative of the IRS in the process of obtaining information, collecting tax or performing law enforcement activities. They cannot be made in response to a taxpayer's request to obtain information. Investigative disclosures are not authorized for the purpose of obtaining greater cooperation from the taxpayer and cannot be offered as a trade-off for other information.

    Note:

    Investigative disclosures are discussed in detail in IRM 11.3.21.

  2. Each person subject to the TFRP may be a valid source of information concerning other persons subject to the penalty. Consequently, such person may easily infer the identity of other persons involved. Such inference does not authorize further disclosure of information and should not be confirmed.

  3. Whenever this section requires the editing of identity or personal information, such editing should be performed, even if the requester has inferred or claims to know the information being deleted.

11.3.40.7.2  (01-01-2006)
Joint Appearances

  1. The process of asserting the TFRP may include conferences with persons subject to the penalty. Several or all of the persons subject to the penalty may appear at such conferences together as a matter of choice or convenience. Appearing jointly creates an atmosphere where IRS personnel must be sensitive to the privacy considerations of each participant. Participants in a joint meeting should be advised up front that there is a possibility that their private information will be overheard by the other participants. If they understand that fact and consent to an open discussion, the case file should be adequately documented to indicate their understanding and consent.

    Note:

    See IRM 11.3.3, Disclosure to Designees and Practitioners, for procedures related to verbal authorization to disclose pursuant to IRC §6103(c).

  2. Any record maintained of such joint conference would constitute the return information of all the persons subject to the penalty who were present.

  3. The appearance of a person at such a conference does not, however, authorize any further disclosures about the other persons present after the conference is concluded.

  4. Whenever this section requires the editing of identity or personal information, such editing should be performed, even though the persons involved may have appeared together during a conference or otherwise given the appearance of acting jointly during the course of the investigation.

11.3.40.7.3  (01-01-2006)
Informal Requests

  1. Revenue Officers and Appeals Officers may release information pertaining to an open TFRP matter assigned to them in response to a request (other than a FOIA request) from a taxpayer provided the release is in accordance with this section.

  2. If information is withheld on the basis of impairment to tax administration, the authority to withhold such information pursuant to IRC §6103(e)(7) rests with the supervisor. Unless the requester desires appeal rights, there is no need to require a formal FOIA request in order to obtain access to a file the requester is authorized to access under IRC §6103(a) or (e).

  3. Disclosure personnel will provide any necessary advice to accomplish the quickest and least expensive resolution of any request.

  4. Telephonic contact with the requester is strongly encouraged in order to clarify the extent and intent of the request, explain the type of information which may be released and reduce the effort and expense necessary to resolve the request.

  5. Requests that formally cite FOIA must be processed by the Disclosure office. In situations where the requester agrees, the Revenue Officer or Appeals Officer may respond if the formal FOIA request is withdrawn.

11.3.40.7.4  (01-01-2006)
Oral Disclosures

  1. Some frequently asked questions may be simply answered without necessitating a written request or a written response.

  2. IRM 5.7, Trust Fund Compliance, is available to the public and may be provided to a taxpayer seeking information regarding the administration of the penalty. Blank copies of forms mentioned in IRM 5.7, Trust Fund Compliance, may also be provided.

  3. This section is available to the public and may be provided to a taxpayer seeking information on what records may be released to persons subject to the penalty.

  4. Prior to assessment, a person subject to the penalty may be advised whether or not other persons are also being considered unless to do so would identify those persons due to the size of the company. Other persons being considered for the penalty should not be specifically identified. A requester may be advised of the types of persons generally considered for the penalty, as discussed in IRM 5.7. Generally, the requester should not, however, be provided any specific information concerning any other persons against whom the penalty is being considered.

    Note:

    See IRM 11.3.2.4.13, Trust Fund Recovery Penalties, and IRM 11.3.40.8.1 regarding IRC §6103(e)(9) and the eligibility to receive information about others who are assessed the TFRP.

  5. A taxpayer may always be advised of the current payoff figure for that taxpayer's own liability, reflecting payments and credits as discussed in IRM 11.3.40.5.5.

  6. A taxpayer may be advised of any related judicial tax proceeding and any information which becomes public as a result of such proceeding. See IRC §6103(h)(4) and IRM 11.3.40.6.1.

11.3.40.8  (01-01-2006)
Access Considerations

  1. At any point in the TFRP process, employees may receive a request for access to the files. Each request must be considered based on the current status of the case and the statute provision under which the request is made.

11.3.40.8.1  (01-01-2006)
Access under FOIA and IRC §6103(e)(9)

  1. Disclosure personnel should consider both the FOIA and IRC 6103(e)(9) provisions to determine releasability of information regarding one responsible person to another responsible person. Prior to the enactment of IRC §6103(e)(9), the IRS did not disclose to any one responsible person specific information regarding other persons considered for the penalty. Currently IRC §6103(e)(9) permits disclosure, upon written request, of the names of other responsible persons, whether the IRS has attempted to collect from these other persons, the nature of the collection activities, and the amount collected.

    Note:

    IRC §6103(e)(9) is not applicable until the point that actual assessment has taken place. Disclosure personnel should not make premature disclosure of the information based on IRC 6103(e)(9) because a proposed assessment may not actually be assessed for a variety of compliance reasons.

    Note:

    See IRM 11.3.2.4.13 for a complete discussion of IRC §6103(e)(9).

  2. A FOIA request which does not include a statement that access is requested for information whose disclosure is covered by IRC §6103(e)(9), should be handled under the previous rules governing protection of each officer's privacy as outlined in this section.

  3. When both FOIA and IRC §6103(e)(9) or its equivalent (e.g., section 6103(e) and/or information on other persons that are liable for the penalty) are cited in the request, the FOIA request letter meets the written requirement to request information under IRC §6103(e)(9). The case file will be redacted and provided under the appropriate FOIA considerations, and the data available under IRC §6103(e)(9) will be provided at the same time but in a separate portion of the request. The FOIA response letter may provide the additional information available under IRC §6103(e)(9), but it is important that the language in the letter explain that the additional items of information contained in the letter are being provided pursuant to IRC §6103(e)(9) and not the FOIA.

    Note:

    A sample letter for response under FOIA and IRC §6103(e)(9) is provided in IRM Exhibit 11.3.40-1.

Exhibit 11.3.40-1 
Sample Letter for Response under FOIA and IRC §6103(e)(9)

Mr. Al Palm
Palm and Reedy Enrolled Agents
123 Main Street
Santa Ana, CA 92617


Dear Mr. Palm:

This letter is in response to your Freedom of information Act (FOIA) request dated December 5, 2008, and received in our office December 10, 2008, regarding the Trust Fund Recovery Penalty File for "The Business" for 2004. Enclosed are seven pages of the administrative file. One page has been sanitized per FOIA exemption (b)(3) in conjunction with Internal Revenue Code (IRC) §6103(a) as it contains other taxpayer information.

The following is provided pursuant to IRC §6103(e)(9). The other person who has been assessed the IRC §6672 penalty for the X quarter of X was "Taxpayer Name " . The amount that has been collected is $X. The current collection status is


                                                  Sincerely,



                                                  C. Marshall
                                                  Disclosure Manager

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