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Part 34. Litigation in District Court, Bankruptcy Court, Court of Federal Claims, and State Court

Chapter 9. Disclosure, Testimony, and Production of Documents

Section 1. Disclosure, Testimony, And Production Of Documents

34.9.1  Disclosure, Testimony, And Production Of Documents

34.9.1.1  (08-11-2004)
Testimony Authorizations

  1. These procedures provide instructions for responding to requests and demands for testimony and production of internal revenue records or information in judicial or administrative proceedings or in response to Congressional requests.

  2. Authority. Treas. Reg. § 301.9000-1 requires Service employees to obtain appropriate authorization before they may produce internal revenue records or information in judicial or administrative proceedings in response to a demand (subpoena, notice of deposition, court order, etc.) defined below at CCDM 34.9.1.2 or in response to a request or demand by another authority, such as Congress.

    1. An exception to this rule occurs when the testimony or production of internal revenue records or information is accomplished in accordance with an existing Service procedure. Treas. Reg. § 301.9000-1(c). For example, this section does not restrict the inspection of returns under section 6103 or approved applications for tax exemption under section 6104.

    2. This rule does not restrict the disclosure of internal revenue records or information that is requested by U.S. Attorneys or attorneys of the Department of Justice for use in cases arising under the internal revenue laws or related statutes and which are referred by the Department of the Treasury to the Department of Justice for prosecution or defense.

    3. Delegation Order No. 156 sets forth the Service officials who are delegated authority to authorize testimony or disclosure of internal revenue records or information in response to requests or demands for such information.

    4. The authority to respond to Congressional requests or demands for testimony has not been delegated and is reserved to the Commissioner and Deputy Commissioner.

    5. The scope of the authorization will be restricted by applicable statutes (e.g., sections 6103, 6104, 6110, 4424; the Privacy Act).

34.9.1.2  (08-11-2004)
Definitions

  1. "Internal revenue records or information" means "any records (including copies thereof) or information, made or obtained by, furnished to, or coming to the knowledge of, any officer or employee of the Service while acting in his/her official capacity, or because of his/her official status with respect to the administration of the internal revenue laws or any other laws administered by or concerning the Service." Treas. Reg. § 301.9000-1(b)(1). The regulation covers all records or information, including, but not limited to, tax records, personnel records, leave and pay records, management records and reports, and statistical records. This term also includes Office of Personnel Management records, Equal Employment Opportunity Commission records, Office of Government Ethics records, and Department of Labor records that are in the custody of the Service.

  2. "Internal revenue officer and employee" means "all officers and employees of the United States, engaged in the administration and enforcement of the internal revenue laws, or any other laws administered by the Service, appointed or employed by, or subject to the directions, instructions or orders of, the Secretary of the Treasury or delegate." Treas. Reg. § 301.9000-1(b)(2). This term includes employees of the Office of Chief Counsel. Former employees, however, are not subject to Treas. Reg. § 301.9000-1. See CCDM 34.9.1.3(5).

  3. "Request" is not defined in Treas. Reg. § 301.9000-1. The term request as used in Delegation Order No. 156 means a request by any court, administrative agency, or other authority, or by any person for the disclosure of Service records or information.

  4. "Demand" means "any subpoena, notice of deposition either upon oral examination or written interrogatory, or other order, of any court, administrative agency, or other authority." Treas. Reg. § 301.9000-1(b)(3).

34.9.1.3  (08-11-2004)
Requests and Demands for Testimony, Responses to Interrogatories, and Production of Documents

  1. Requests for Answers, Records, or Testimony in Actions Pertaining to Tax Administration. No authorization is needed when testimony or production of documents is requested by respondent’s counsel in a Tax Court case or by U.S. Attorneys or Department of Justice attorneys for use in cases that arise under the internal revenue laws or related statutes and that have been referred by the Service to the Department of Justice for prosecution or defense. Treas. Reg. § 301.9000-1(c); IRM 11.3.35.6(3).

  2. Requests by a Non-Government Party for Answers to Written Interrogatories or Written Production of Documents in Actions Pertaining to Tax Administration. The procedures set forth in Treas. Reg. § 301.9000-1 do not apply to the answering of written interrogatories served in connection with Tax Court cases or cases referred by or on behalf of the Service to the Department of Justice or Office of the U.S. Attorney for defense, prosecution or other affirmative action. IRM 11.3.35.3(8). Additionally, such procedures do not apply to petitioner’s notices to produce documents in the Tax Court or document production requests in cases referred by or on behalf of the Service to the Department of Justice or Office of the U.S. Attorney for defense, prosecution or affirmative action, unless such production is called for together with the testimony of an employee. IRM 11.3.35.3(9).

  3. Demands by a Non-Government Party for Testimony or Production of Documents in Actions Pertaining to Tax Administration. Subpoenas requiring a Service officer or employee to provide testimony or produce documents directly, rather than through government counsel, in a tax administration case require authorization. IRM 11.3.35.6(4).

  4. Requests or Demands by any Party (including other Government agencies) in a Case Not Involving Tax Administration. Authorization is required when testimony or production of documents is sought in any case not involving tax administration. IRM 11.3.35.7(3). The prohibitions of section 6103 generally bar the disclosure of tax records in non-tax litigation to which the Service or the United States is not a party.

    1. Any Area or Associate Chief Counsel employee who receives or is notified of a court order or court issued subpoena requesting the disclosure of tax records in non-tax litigation to which the Service or United States is not a party should contact the Office of Assistant Chief Counsel (Disclosure & Privacy Law) for assistance.

    2. The Area or Associate Chief Counsel employee receiving the request should contact the attorney for the party responsible for the subpoena, explain that section 6103 prohibits the disclosure of the information, and ask that the subpoena be withdrawn.

    3. The Area or Associate Chief Counsel employee should memorialize the conversation, including the specific reason for refusal, e.g., that section 6103 prohibits the disclosure, and copy the local U.S. Attorney on the letter.

    4. If the party attempts to enforce the subpoena, the Area or Associate Chief Counsel employee should request the local U.S. Attorney to defend the Service against the party’s motion to compel.

  5. Demands for Testimony of Former Employees. A former employee is not subject to Treas. Reg. § 301.9000-1 and therefore does not require the Commissioner’s approval to testify.

    1. To the extent a former employee is requested or demanded to give testimony or produce returns or return information, the employee is governed by the provisions of section 6103, and the limitations imposed by section 6103(a) apply to information of which the individual had knowledge because of his/her employment with the Service. The former employee is subject to the penalty provisions of sections 7213 and 7213A for unauthorized disclosures or inspections of returns or return information.

    2. While authorization pursuant to Treas. Reg. § 301.9000-1 is not required for former employees, the Counsel attorney assigned to the matter may prepare an advisory letter to the former employee reminding him/her of the procedures to follow and cautioning him/her on what may and may not be disclosed in testimony.

  6. Demands by Opposing Counsel for Grand Jury Information. Disclosure of information or records obtained by an employee while under the direction of the U.S. Attorney’s Office in a grand jury investigation is not subject to Treasury Reg. § 301.9000-1, because the performance of such duties are not performed subject to the direction, instructions or orders of the Secretary of the Treasury or his delegate. Treas. Reg. § 301.9000-1(b)(2).

    1. Employees receiving subpoenas from opposing counsel regarding grand jury information obtained by an employee while under the direction of the U.S. Attorney’s Office in a grand jury investigation should request guidance from the Department of Justice (usually the Assistant U.S. Attorney assigned to the grand jury investigation) to obtain any direction necessary pursuant to Fed. Crim. Proc. Rule 6(e), which limits disclosure of matters occurring before a grand jury.

    2. Testimony sought by opposing counsel regarding information obtained during the administrative stage of an investigation that is later referred to a grand jury requires authorization pursuant to Treas. Reg. § 301.9000-1, because the employee in that early stage of the investigation is performing duties subject to the direction, instructions or orders of the Secretary of the Treasury or his delegate. Treas. Reg. § 301.9000-1(b)(2). The Counsel attorney handling the subpoena or request should contact the Area Counsel (Criminal Tax) for coordination or assistance.

    3. Testimony sought by opposing counsel with regard to returns or return information, obtained by a grand jury pursuant to section 6103(h)(2), requires authorization pursuant to Treas. Reg. § 301.9000-1. Returns and return information retain their status as such even when turned over to a grand jury.

  7. Requests for Information or Testimony Received from a Foreign Government. Foreign government requests for testimony or production of records from an IRS or Chief Counsel employee must be approved by the Office of the United States Competent Authority (Director, International (LMSB)) and the Office of the Associate Chief Counsel (International). See IRM 11.3.35.5(1)b.

34.9.1.4  (08-11-2004)
Preparation and Approval of Testimony and Production Authorizations

  1. Authorizations Per Delegation Order No. 156. Delegation Order No. 156 identifies Service and Chief Counsel officials who may prepare and authorize disclosures of returns and return information that are confidential pursuant to section 6103, but which may nonetheless be disclosed pursuant to exceptions as provided by the Code. See IRM 1.2.2.77.

    1. Delegation Order No. 156 contains tables that identify Service and Chief Counsel officials who may authorize (or deny) testimony and production of documents when requested or demanded by any subpoena, notice of oral deposition, written interrogatory, or other order of a court, administrative agency, or other authority, pursuant to Treas. Reg. § 301.9000-1. These tables also identify the Service and Chief Counsel employees who are to prepare testimony authorization documents. See IRM Exhibit 1.2.2-2. See also IRM 11.3.35.7(2).

    2. In Tax Court cases or cases referred by or on behalf of the Service to the Department of Justice or Office of the U.S. Attorney for defense, prosecution or other affirmative action, the delegation of authority to permit testimony or production of documents generally lies with the Counsel office having jurisdiction over the matter. For example, IRM Exhibit 1.2.2-2, Table 1 of Delegation Order No. 156 provides that in a Tax Court case where the petitioner demands the testimony of a Service employee, the assigned Counsel attorney prepares the authorization for the signature of the Area Counsel.

  2. Scope of the Testimony Authorization. The determination of whether employees should be allowed to testify and what records or information, if any, may be disclosed must take into account applicable statutes, privileges, and constitutional requirements.

    1. Whether the burden on agency resources outweighs the possible benefit to the Government should be considered in determining whether to authorize testimony. Generally, Service resources should not be expended in private litigation. Requests for Service expert testimony in private litigation will generally be denied. The local Disclosure Officer should offer alternate sources or methods for obtaining the requested records or information, to the extent practicable (e.g., Privacy Act requests, Forms 4506, 6103(c) or (e) disclosures).

  3. Format of the Testimony Authorization. In drafting testimony authorizations, it is important to consider the two purposes that such authorizations serve: to identify the scope and limitations of Service records or information to be produced and to provide a basis upon which to decline to produce records or information that are outside the scope of the authorization.

    Note:

    A sample testimony authorization may be found at Exhibit 35.11.1-34.

  4. Response to Demands for Testimony or Documents Outside the Scope of the Testimony Authorization or Prior to Issuance of an Authorization. A Service employee faced with a court order to testify or produce records or information prior to receiving authorization should respectfully decline to testify. To the extent necessary, Disclosure or Counsel personnel or Government counsel (usually an Assistant U.S. Attorney) should accompany the employee to explain the situation.

    1. If an employee is faced with a court order to testify or produce records or information that is not authorized to be disclosed, Treas. Reg. § 301.9000-1(d)(2)(ii) states "In the event the court, administrative agency, or other authority rules adversely with respect to the refusal to disclose the records or information pursuant to the instructions of the Commissioner … the officer or employee upon whom the demand has been served shall, pursuant to this section, respectfully decline to disclose the internal revenue records or information sought." See IRM 11.3.35.12(2).

    2. A court cannot hold an employee in contempt of court for refusing to testify. The Supreme Court, in United States ex rel. Touhy v. Ragen , 340 U.S. 462 (1951), held that an employee cannot be held in contempt of court for following instructions of the employee’s superior regarding disclosure of agency records.

    3. The authorizing official should consider coordinating with the Department of Justice or U.S. Attorney’s Office to either file a motion to quash or a motion for a protective order. In making such motions, the defenses of sovereign immunity and/or the Supremacy Clause of the United States Constitution should be raised.

34.9.1.5  (08-11-2004)
Technical Assistance

  1. All requests for assistance concerning this section should be directed to the Office of the Associate Chief Counsel (Procedure & Administration).


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