11.3.40 Disclosures Involving Trust Fund Recovery Penalty Assessments

Manual Transmittal

August 11, 2017

Purpose

(1) This transmits revised 11.3.40, Disclosure of Official Information, Disclosures Involving Trust Fund Recovery Penalty Assessments.

Material Changes

(1) Editorial changes have been made throughout to update IRM/statute/organizational references and to make the text easier to follow.

(2) IRM 11.3.40.1 has been updated to clarify the overall disclosure provisions of the Trust Fund Recovery Penalty (TFRP) penalty.

(3) IRM 11.3.40.2 has been revised to add a new paragraph (4) that points out the most common type of TFRP situation is where employment taxes related to a corporate entity is in question.

(4) The title of subsection 11.3.40.3 has been changed from "General Considerations" to "General Disclosure Considerations" to ensure readers understand the subsection’s focus relates to understanding the multiple taxpayer aspects of TFRP investigations. The subsection has been revised to add clarity.

(5) The title of IRM 11.3.40.4 has been changed from Basic Disclosure Considerations, to Basic Disclosure Considerations and Disclosure in Response to a FOIA Request. This section was also revised by adding a note to (1) and deleting the current (9) and (10) and combining those subsections with others, and to add clarity.

(6) IRM 11.3.40.4.1 has been revised for clarity.

(7) IRM 11.3.40.5.1 has been renamed from "The Corporation Case File" to "The Business Case File" recognizing the files at question are employment or excise taxes that can be filed by other types of entities. Notes and Example added to (4) to provide additional information on access. Paragraphs (5) through (11) have been eliminated because they discuss the particular aspects of the release of corporate files that are not germane to this type of process.

(8) IRM 11.3.40.5.2 has been revised to eliminate paragraphs (8) through (13) and to consolidate that information into a revised format as well as to add additional information.

(9) IRM 11.3.40.5.2.1 has been revised to change the title and content to include references to the other types of tax returns that may be subject to TFRP investigations and to provide a listing of those other types of returns.

(10) IRM 11.3.40.5.2.2 has been revised to include references to Form 4181 Questionnaire Relating to Federal Trust Fund Matters of Employer and to expand the guidance to add clarity to what can be released from Form 4180 and Form 4181, should there be an actual assessment of the TFRP.

(11) IRM 11.3.40.5.2.3 has been revised to incorporate more detail about the release of information contained in Form 4183 considering the material interest in the name and amount of assessment for those who have been determined to be partially or totally liable.

(12) IRM 11.3.40.5.2.5 has been revised to incorporate a material interest determination for those who have been assessed the TFRP

(13) IRM 11.3.40.5.2.9 has been revised to add more clarity to the release of Letter 3586 Meeting Scheduled with Individual for TFRP Interview to incorporate the release of information in a material interest situation.

(14) IRM 11.3.40.5.2.10 has been revised to delete and incorporate the current (3) into the other two paragraphs and to add clarity.

(15) The heading of IRM 11.3.40.5.3 has been changed to Individual Master File Balance Due Collection File.

(16) IRM 11.3.40.5.5 has been deleted and not replaced.

(17) IRM 11.3.40.6 and IRM 11.3.40.6.2 have been deleted and IRM 11.3.40.6.1 has been renumbered as IRM 11.3.40.6.

(18) IRM 11.3.40.7 has been renamed to "Disclosures by Collection Employees" .

(19) IRM 11.3.40.7.2 has been revised by eliminating the current (4) and combining that information into the other remaining paragraphs.

(20) The heading for IRM 11.3.40.7.4 has been changed to "Other Disclosures" . Additional resources for Publication 594 and the irs.gov website were added to this section.

(21) The current IRM 11.3.40.8, Access Considerations, has been deleted and replaced with a new IRM 11.3.40.8 titled IRC §6103(e)(9), that updates the guidance specific to the release of tax information pursuant to IRC §6103(e)(9).

(22) New Exhibit 11.3.40-1 titled Access Provisions Applicable to Disclosure of TFRP Files, has been added to clarify the various laws which govern the disclosure of TFRP files. The prior Exhibit 11.3.40-1, Sample Letter for Response Under FOIA and IRC §6103(e)(9) has been renumbered as Exhibit 11.3.40-2, renamed to Sample Letter for Response under IRC §6103(e)(9),and updated to remove language that would respond to a FOIA request. References to these exhibits were made throughout the section, as applicable.

Effect on Other Documents

This material supersedes IRM 11.3.40, Disclosures Involving Trust Fund Recovery Penalty Assessments, dated 06-01-2010.

Audience

All Operating Divisions and Functions.

Effective Date

(08-11-2017)

Related Resources

The Disclosure and Privacy Virtual Library can be found at: https://portal.ds.irsnet.gov/sites/vl003/pages/default.aspx


Phyllis T. Grimes
Director, Governmental Liaison, Disclosure and Safeguards

Purpose

  1. This section provides guidance on disclosure aspects relating to the Trust Fund Recovery Penalty (TFRP). It is intended to provide Collection or other compliance employees with information about their responsibilities in releasing TFRP penalty information. It is also meant to enable Disclosure personnel to provide advice and assistance to Revenue Officers, Appeals Officers and others engaged in the assessment, collection and litigation of such penalties and for Disclosure personnel to process Freedom of Information Act (FOIA) and Internal Revenue Code (IRC) §6103 requests for access to TFRP records.

    Note:

    See IRM 11.3.2.4.13, Trust Fund Recovery Penalties and IRM 11.3.40.8 below for information on disclosures of TFRP information pursuant to IRC §6103(e)(9).

  2. The disclosure guidance provided in this section applies to the collection of taxes subject to IRC §6672. In the case of employment taxes, IRC §6672 is limited to the trust fund portion of the tax; that is, to the tax that the responsible person is required to collect or withhold from the wages of employees. In the case of excise taxes, IRC §6672(a) is applied according to the plain language of the statute: the penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. This guidance also applies to the personal liability imposed by IRC §4103 against persons willfully causing a business entity to fail to pay certain excise taxes (for example the air transportation excise taxes under IRC §4261 and IRC §4271).

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

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 provisions are administered by the Collection function of the 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.

  4. The most common TFRP assessments are against one or more persons who are or were associated with a corporation or LLC that failed to pay a covered tax such as an employment tax.

General Disclosure 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, whether taxes have been proposed or assessed, and the statutory provision under which the request is made. Requests for access to TFRP files may occur during the TFRP investigation but may also be after the assessment has taken place, and the assessment may be against one or more of the identified persons or there may be some that were considered but not assessed. That is a key component to know when reviewing access rights in a TFRP file.

  2. 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 openly or covertly have become adversaries seeking to avoid the penalty at each other’s expense. Such relationships are irrelevant for Disclosure purposes.

  3. Each person subject to the penalty is a separate 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.

  4. The close relationship between the persons who may be subject to 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 are not otherwise statutorily available.

  5. Disclosure and Collection personnel should recognize that TFRP files and related information may be available under FOIA, or pursuant to IRC §§6103(c), (e)(1), (e)(6), (e)(7) or (e)(9). Third party information cannot be disclosed under IRC §6103(h)(4) in response to a FOIA request. See Exhibit 11.3.40-1 for a brief description of each access provision.

    Note:

    See IRM 11.3.13.9.12, Trust Fund Recovery Penalties, for a discussion of how to respond to requests citing both the FOIA and IRC §6103(e)(9).

  6. Persons under investigation as potential responsible persons 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.

Basic Disclosure Considerations and Disclosure in Response to a FOIA Request

  1. Records produced or maintained in connection with the TFRP assessment are return information of the person or entity involved.

    Note:

    Records gathered or generated with respect to determining the liability of the entity are the return information of the entity, and not that of any person investigated as a potentially responsible person. Similarly, records gathered or generated with the respect to determining a person’s status as a responsible person are the return information of that person and not of the entity or of any other person.

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

  3. 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) when release would impair tax administration or identify a confidential informant.

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

    Note:

    Because a material interest in the name of others assessed a penalty and the amount assessed exists for all assessed a penalty (because they are all liable for payment of the penalty amount) there are going to be situations where that information will appear on Forms or in case history notes contained within TFRP files. Access can be greater for those assessed than for those who were considered but not assessed. The specifics of those situations are covered in this IRM.

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

  6. Responses denying records to FOIA requesters where they have no right to another’s tax information will cite 5 USC §552(b)(3) pursuant to IRC §6103(a). When the denied information is return information of the FOIA requester and release would impair the administration of tax determined by the owner of the records, responses will cite 5 USC §552(b)(3) in conjunction with IRC §6103(e)(7). Additionally, other FOIA exemptions may be cited whenever applicable. See IRM 11.3.13.9.12 .

  7. Responses denying records to Privacy Act requesters will state that IRS System of Records 26.013 Trust Fund Recovery Penalty is exempt from 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 (6) above. See IRM 11.3.13.9.12 , Trust Fund Recovery Penalty Penalties.

  8. Special care must be exercised when releasing transcripts contained in responsive files to ensure that disclosures are proper.

    Note:

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

Disclosure in Judicial and Administrative Tax Proceedings

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

  2. The judicial or administrative tax proceeding could be the TFRP investigation and assessment process itself conducted by Collection personnel or litigation involving the IRS which results from such assessment.

  3. Revenue Officers must ensure that all requirements of IRC §6103(h)(4) are met before disclosing any information. See IRM 11.3.22.17, Disclosure to Federal Officers and Employees for Tax Administration Purposes, Disclosure of Returns and Return Information in Judicial and Administrative Tax Proceedings.

  4. A Revenue Officer or others making disclosures 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 and disclosures are made only to the extent necessary and where the Revenue Officer or others determine the disclosure is authorized under the criteria of IRC §6103(h)(4).

Records Involved

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

The Business Case File

  1. Generally, TFRP cases begin with an attempt to collect employment or excise taxes from the business which was initially responsible for the filing and/or payment of such taxes. The business case file in connection with the examination or collection activity is the return or return information of the business.

  2. If a FOIA request for the TFRP investigation file is received along with a request for the complete business case file the portion pertaining to the business case file should be worked following regular FOIA processing guidelines including the application of IRC §6103(e) as appropriate. See IRM 11.3.13, Disclosure of Official Information, Freedom of Information Act (FOIA). Collection employees receiving a request for access should also apply IRC §6103(e) as appropriate, such as disclosure to an individual as authorized under IRC §6103(e)(1)(A). See IRM 11.3.2, Disclosure to Persons with a Material Interest, or Exhibit 11.3.40-1, for more information.

  3. FOIA access to TFRP documents contained in the business case file is limited to persons against whom the penalty has been proposed or assessed and limited to documents relevant to determining that person’s liability. Any information in the business case file pertaining to the determination that a TFRP should be assessed against a person is return information of only that person subject to the penalty. 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, Disclosure to Persons with a Material Interest.

  4. FOIA requesters seeking TFRP documents contained in the business case file who are not subject to investigation or who have been determined not to be subject to the penalty may not receive access to the business case file except as otherwise provided in IRC §6103(e). Also see IRM 11.3.2.

    Note:

    If the request comes from a Power of Attorney or an authorized third party designee, review the Form 2848 or Form 8821 to confirm the authority to access business information is proper.

    Example:

    If a person under investigation as a potential responsible party executes a POA for only the 1st quarter 2011 TFRP (Section 6672 Penalty/Civil Penalty), the attorney will be able to inspect/receive the person’s return and return information to the extent authorized under IRC §6103(e). The attorney will be able to inspect/receive business related documents found in the TFRP investigation file directly related to the 1st quarter 2011 TFRP if the person has been assessed.

    Note:

    If the authorization does not cover income taxes, Form 1040, you cannot release information in relation to income taxes.

Trust Fund Recovery Penalty Case File

  1. The contents of the TFRP files are generally not the return information of the business, although some supporting documents may consist of copies of records which originated in the business case file and were, in their original form and are, even after copying into a responsible person’s TFRP case file, return information of the business.

  2. TFRP case files consist of documents prepared or maintained to support and justify the penalty assessment and may contain return information of one, several, or all persons subject to, or potentially subject to, the penalty.

    1. TFRP files that involve more than one responsible person, or potential responsible person, are generally organized so that a primary or "key" file and a number of supplemental, or secondary files are created.

    2. All penalty determination documents are placed in the primary file while documents that pertain to a potential responsible person are placed in a specific supplemental file, pertaining solely to each potentially responsible person.

    3. If Disclosure personnel request a TFRP investigation file for all TFRP and/or related files and only receive a secondary or supplemental file, they will have to make another request to secure the primary file and ensure receipt of all documents.

      Note:

      See IRM 5.7.6.4, Case File Documentation, for a list of documents that may be found in a TFRP investigation file.

  3. Records and information gathered or generated in the course of determining whether a specific person is a responsible person subject to the TFRP is the return information of that person. Such information is available to that person in accordance with IRC §6103(e). Such information is generally not available to the business or to any other person.

  4. Information obtained from a person being investigated for possible TFRP liability, with respect to that person’s potential liability, is the return information of that person. This is true even if the information refers to other persons who may also be liable for the same TFRP. The original provider may obtain a copy of what he/she provided even if it contains third party references.

    Note:

    Care should be taken that any release consist only of what was said by or received from the original provider.

    Note:

    Redact notations made by IRS personnel on documents submitted to the original provider.

  5. Information obtained from a person with respect to the potential liability of another person for the TFRP penalty is the return information of the person whose liability is the reason the information was obtained or received. This is true even if the provider of the information is also potentially responsible for the same TFRP. Consideration should be given as to whether the release of the information to the person whose liability is being considered, could impair an investigation, identify an informant or otherwise be exempt from disclosure.

  6. Documents found in the TFRP file may require redacting, depending upon the status and identity of the requester, whether there has been an assessment or not, or if release may impair an investigation, identify an informant or otherwise be exempt from disclosure.

  7. Specific documents that may be found in the TFRP file can be found in IRM 5.7.6.4, Case File Documentation.

  8. If an IRS employee uses a pseudonym and that is present in the file, their real name should be deleted. Disclosure should consider FOIA exemption 5 USC §552(b)(6) and/or (b)(7)(C) when responding to a FOIA request where this is noted. See IRM 11.3.13.7, Review and Redacting.

Form 941, Employer's Quarterly Federal Tax Return and Other Types of Returns
  1. This could be the original return filed by the business or an IRS filed IRC §6020(b) assessment, a copy of Form 941, the Employer's Quarterly Federal Tax Return, or a computer printout of the tax module for the form.

  2. The Form 941 found in the collection case file can be disclosed under IRC §6103(h)(4) by Revenue Officers or others involved in TFRP investigation or litigation, or under IRC §6103(e) (as appropriate) to each person assessed 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.

    Note:

    If a Revenue Officer receives a request for the Form 941, and there is no such Form currently in the case file, they should refer the requester to the Form 4506, Request for Copy of Tax Return, procedure.

  3. This form is not available to a person not assessed the TFRP except if the requester otherwise can have access per IRC §6103(e) to the employment tax or other type of return.

    Caution:

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

    Note:

    This section may also apply to the following additional Forms if more than one person would be liable for payment of taxes:

    • Form 720, Quarterly Federal Excise Tax Return (see IRM 5.7.3.1.2, TFRP For Collected Excise Taxes)

    • Form CT-1, Employer’s Annual Railroad Retirement and Unemployment Return

    • Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees

    • Form 944, Employer’s Annual Federal Tax Return

    • Form 945, Annual Return of Withheld Federal Income Tax

    • Form 1042, Annual Withholding for U.S. Source Income of Foreign Persons

    • Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interest

    • Form 8804, Annual Return for Partnership Withholding Tax (IRC 1446)

Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Taxes and Form 4181 Questionnaire Relating to Federal Trust Fund Matters of Employer
  1. The Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Taxes, is used by Revenue Officers to obtain information pertinent to who might be responsible and willful for the non-payment of the trust fund taxes. Each person may receive his or her own Form 4180 because the information was gathered to determine that person’s potential liability under IRC §6672. This Form is the return information of the interviewee and must be withheld from all other requesters pursuant to IRC §6103(a). For FOIA requests, assert exemption (b)(3) in conjunction with IRC §6103(a) and exemption (b)(7)(C).

  2. Form 4181, Questionnaire Relating to Federal Trust Fund Tax Matters Of Employer, is used to obtain information from any person pertaining to who in the business was responsible for filing and payment of trust fund taxes. The Revenue Officer uses the information in identifying potentially responsible persons. The Form 4181 can be provided in an unredacted form to the person who provided it. It can also be provided to any person identified on the form after redacting information pertaining to other persons. These redactions should be made pursuant to FOIA exemption (b)(3) with IRC §6103(a), and FOIA exemption (b)(7)(C). Revenue Officers should assert IRC §6103(a) to withhold this material.

Form 4183, Recommendation Re Trust Fund Recovery Penalty Assessment (Rev. 2-93)
  1. Form 4183, Recommendation re: Trust Fund Recover Penalty Assessment, is used to capture the Revenue Officer’s determination about who is responsible and willful for the non-payment of trust fund taxes based on the facts and circumstances of the investigation. The specific information about other persons available to a requester depends on the Revenue Officer and Collection Group Manager determination of the TFRP liability of each person. When determining what can be released, Disclosure and Collection employees should follow the instructions below.

  2. For requesters deemed not responsible, the requester can receive information that pertains to that person only. Only the portion of the Form 4183 pertaining to the non-responsible requester may be disclosed to that requester. This includes the name of the business and the Service employee signatures and dates on page 1 of Form 4183. All other information on Form 4183 is return information of taxpayer(s) other than the requester, and must be withheld in full. Collection employees will cite IRC §6103(a) to withhold this information. For FOIA requests, cite FOIA exemption (b)(3) in conjunction with IRC §6103(a) and FOIA exemption (b)(7)C).

  3. For requesters deemed responsible in part, the requester can receive information that pertains to that requester and limited information about others also deemed responsible. The partially responsible requester may be provided the information authorized for disclosure pursuant to IRC §6103(e)(9). See IRM 11.3.40.8 for details on this provision. The requester may also be provided the name of the business and the Service employee signatures and dates on page 1 of Form 4183; this is return information of the requester. All other information on Form 4183 is return information of taxpayer(s) other than the requester, and must be withheld in full. This includes the block on the lower left of page 1 labeled “non-assertion approved” (regardless of whether it is checked). This is an indication that no penalties were asserted against one or more persons and is not available to persons who are determined to be liable, or partly liable, for the TFRP. Collection employees will cite IRC §6103(a) to withhold this information. For FOIA requests, cite FOIA exemption (b)(3) in conjunction with IRC §6103(a) and FOIA exemption (b)(7)(C).

    Note:

    IRC §6103(e)(9) requires a written request. If Collection receives a verbal request, information about other assessed responsible persons cannot be disclosed until a written request is received.

    Note:

    If the same TFRP has been assessed against more than one responsible person, IRC §6103(e)(9) authorizes disclosure of specific limited information about each assessed responsible person to other assessed responsible persons. See IRM 11.3.40.8 for information about disclosures pursuant to IRC §6103(e)(9).

    Note:

    No provision of IRC §6103, including §6103(e)(9), authorizes disclosure to a partially responsible person of the trust fund outstanding balance. This information must be redacted from page 1 of Form 4183.

    Note:

    Collection employees handling open TFRP cases may be authorized to disclose certain third party return information to a requester pursuant to IRC §6103(h)(4). See IRM 11.3.22.17, Disclosure of Returns and Return Information in Judicial and Administrative Tax Proceedings, for more information.

  4. For requesters deemed responsible for payment of the entire trust fund penalty, the requester can receive information that pertains to that requester only and limited information about others also deemed responsible in full or in part. The responsible requester may be provided the information authorized for disclosure pursuant to IRC §6103(e)(9). See IRM 11.3.40.8 for details on this provision. The requester may also be provided the name of the business and the Service employee signatures and dates on page 1 of Form 4183; this is return information of the requester. All other information on Form 4183 is return information of taxpayer(s) other than the requester, and must be withheld in full. This includes the block on the lower left of page 1 labeled “non-assertion approved” (regardless of whether it is checked). This is an indication that no penalties were asserted against one or more persons and is not available to persons who are determined to be liable, or partly liable, for the TFRP. Collection employees will cite IRC §6103(a) to withhold this information. For FOIA requests, cite FOIA exemption (b)(3) in conjunction with IRC §6103(a) and FOIA exemption (b)(7)C).

    Note:

    IRC §6103(e)(9) requires a written request. If Collection receives a verbal request, information about other assessed responsible persons cannot be disclosed until a written request is received.

    Note:

    If the same TFRP has been assessed against more than one responsible person, IRC §6103(e)(9) authorizes disclosure of specific limited information about each assessed responsible person to other assessed responsible persons. See IRM 11.3.40.8 for information about disclosures pursuant to IRC §6103(e)(9).

    Note:

    Do not redact the trust fund outstanding balance. This information is the return information of the fully responsible person and can be disclosed to this requester.

    Note:

    Collection employees handling open TFRP cases may be authorized to disclose certain third party return information to a requester pursuant to IRC §6103(h)(4). See IRM 11.3.22.17, Disclosure of Returns and Return Information in Judicial and Administrative Tax Proceedings, for more information.

Form 2209, Courtesy Investigation
  1. What can be released from Form 2209, Courtesy Investigation, will depend upon the 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).

Form 2749, Request for Trust Fund Recovery Penalty Assessment(s)
  1. Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), is the return information of the responsible person to whom it pertains. Form 2749 is prepared by the Revenue Officer proposing the TFRP, reviewed in Advisory and processed for assessment in Compliance Services, Collection Operations.

  2. Form 2749 is the return information of the responsible person named on the form. This form may be disclosed to that person, after deleting any information the disclosure of which would impair tax administration. Collection should assert IRC §6103(e)(7) to withhold such information. For FOIA requests, assert FOIA exemption (b)(3) in conjunction with IRC §6103(e)(7) and FOIA exemption (b)(7)(A). This form is not disclosable to any person other than the person whose proposed TFRP assessment is reflected on it.

  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 5 USC §552(b)(3) in conjunction with IRC §6103(a) should be cited, as appropriate, whenever necessary to withhold the form from a third party requester.

Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, and Form 2751, Proposed Assessment of Trust Fund Recovery Penalty
  1. Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, and Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, 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 person.

  3. In FOIA responses, if the requester is someone other than the taxpayer or the holder of a valid power of attorney or a designee of the taxpayer, exemption (b)(3) in conjunction with IRC §6103(a) should be cited.

Form 2644, Recommendation for Jeopardy/Termination Assessment, and Form 2859, Request for Quick or Prompt Assessment
  1. Form 2644, Recommendation for Jeopardy/Termination Assessment, and Form 2859, Request for Quick or Prompt Assessment, are the return information of the person 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 who has no right to access the information, since the fact they exist is itself return information which cannot be disclosed and the denial should not intimate or confirm their existence. That will only be an issue if the specific form itself is requested, not if it is being withheld as part of the third party return information material responsive to a request for the TFRP file.

    Note:

    Consider whether disclosure of Form 2644 would impair the collection of the TFRP. If so, the form should be withheld in full from the taxpayer whose return information it is pursuant to IRC §6103(e)(7). For FOIA requests, assert FOIA exemption (b)(3) in conjunction with IRC §6103(e)(7) and exemption (b)(7)(A).

  3. In FOIA responses, the entire document should be withheld citing exemption 5 USC §552(b)(3) in conjunction with IRC §6103(a).

Form 433-B, Collection Information Statement for Businesses
  1. A copy of Form 433-B, Collection Information Statement for Businesses, from the business file may be contained in the penalty file. This form is the return information of the business, and may be provided to the business without redaction.

  2. Collection employees with an open TFRP case may disclose this form to a potential responsible person in accordance with IRC §6103(h)(4). See IRM 11.3.22.17, Disclosure of Returns and Return Information in Judicial and Administrative Tax Proceedings, for additional information. Personal information of persons other than the requester should be redacted.

  3. A FOIA requester other than the business can only have access to this form if the requester provides an applicable disclosure consent or Power of Attorney with the request. If the requester does not provide a disclosure authorization (Form 8821, Tax Information Authorization or Form 2848, Power of Attorney and Declaration of Representative),withhold this form in full and assert exemption (b)(3) in conjunction with IRC §6103(a). If the requester provides a disclosure authorization, then personal privacy information of individuals named in section 2 should be withheld and FOIA exemptions (b)(6) and/or (b)(7)(C) should be asserted, as applicable.

    Note:

    See IRM 11.3.13.7, Reviewing and Redacting, for a further discussion.

Routine Form Letters
  1. Letter 1153, 30-Day Notification Letter,Letter 1155, Transmittal Letter, Trust Fund Recovery Penalty, and Letter 3164(A)Third Party Contact Letter, are generally sent to all responsible or potentially responsible persons subject to the penalty.

  2. Requesters can receive copies of letters addressed to them. Letters sent to other parties are not available without proper authorization from the person to whom they pertain, using Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, or equivalent.

  3. FOIA responses should cite exemption 5 USC §552(b)(3) in conjunction with IRC §6103(a).

  4. Letter 3586, Meeting Scheduled with Individual for TFRP Interview. This is a letter sent to schedule a meeting to a person with information relevant to the penalty determination. This usually will precede the completion of Form 4180. This letter is not available to any third party FOIA requester unless the requester provides a disclosure authorization using Form 8821, Form 2848, or equivalent. Withhold the letter in full asserting FOIA exemption (b)(3) in conjunction with IRC §6103(a).

    Note:

    IRC §6103(e)(9) does not authorize disclosure of any information from this letter.

    Note:

    Collection personnel working an open case may be authorized to disclose information from this letter pursuant to IRC §6103(h)(4). See IRM 11.3.22.17, Disclosure of Returns and Return Information in Judicial and Administrative Tax Proceedings, for more information.

Case History Notes
  1. History notes from TFRP files are often difficult to review and sanitize, especially when multiple persons are considered for assertion of the TFRP. The Revenue Officer maintains:

    • The business case history is the return information of the business. ICS history notes containing TFRP collection matters must be carefully reviewed to ensure that return information of each person identified as a potential responsible person and/or assessed as a responsible person is disclosed only as authorized.

    • Automated Trust Fund Recovery (ATFR) history/notes which are used to document systematic actions and calculations that pertain to trust fund taxes.

  2. For ICS and ATFR history/notes, care must be taken to ensure the type of tax and tax periods referenced in the history match those being sought by the requester, and that personal information about third parties is redacted. That will include:

    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 disclosed only to the person the Revenue Officer seeks to interview. Like the form itself, this information is the return information of the interviewee, and should be withheld from all other requesters pursuant to IRC §6103(a). For FOIA requests, assert exemption (b)(3) in conjunction with IRC §6103(a) and exemption (b)(7)(C).

    Note:

    History notes documenting efforts to solicit a Form 4181 may be released to any person named on the Form, after redacting all personal information of every other person named on the form. This information is the return information of those other persons and should be withheld pursuant to IRC §6103(a). For FOIA, assert exemption (b)(3) in conjunction with IRC §6103(a) and exemption (b)(7)(C). Also consider whether any information should be withheld because disclosure would impair tax administration. If so, assert IRC §6103(e)(7). For FOIA, assert exemption (b)(3) in conjunction with IRC §6103(e)(7) and exemption (b)(7)(A).

Individual Master File Balance Due Collection File

  1. A separate Balance Due file (Master File Transaction 55 Transaction Code 240 with Action Code 618) Taxpayer Delinquent Account (TDA) file is issued for each person against whom the TFRP has been assessed.

  2. Prior to releasing the Individual Master File (IMF) Balance Due 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. See IRM 11.3.13Disclosure of Official Information, Freedom of Information Act, for general disclosure information.

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

  4. 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, Disclosure of Official Information, Freedom of Information Act.

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.

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.

Disclosures by Collection Employees

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

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.

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. Appearing jointly creates an atmosphere where Collection employees must be sensitive to the privacy considerations of each participant. Those participating 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 agree to proceed, the case file should be adequately documented that they have given verbal consent and that they have indicated their agreement to that fact.

    Note:

    See IRM 11.3.3.2.1, Requirements for Oral Authorization, 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. The verbal disclosure consent expires at the conclusion of the joint conference. If the participants want the disclosure authority to extend beyond the conference, they must provide a written disclosure authorization (Form 8821, Form 2848, or equivalent).

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 is authorized to access under IRC §6103(e)(1) and (e)(7) for the requester’s own return information, or pursuant to a written request for the specific information about other assessed responsible persons pursuant to IRC §6103(e)(9).

  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.

Other Disclosures

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

  2. Pub 594, The IRS Collection Process, provides a general description about employment tax, trust fund taxes and the trust fund recovery penalty.

  3. More information can be found in Notice 784, Could you be Personally Liable for Certain Unpaid Federal Taxes? or on www.IRS.gov at the following website: http://www.irs.gov/Businesses/Small-Businesses-&-Self -Employed/Employment-Taxes-and-the-Trust-Fund-Recovery -Penalty-TFRP.

  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, below, 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.

  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, Litigation.

IRC §6103(e)(9)

  1. Disclosures made pursuant to IRC §6103(e)(9) shall be made in written form upon receipt of a proper written request from a person who has been assessed the penalty or their duly authorized attorney-in-fact. The disclosure will be limited to the specific tax period associated with the requester’s TFRP and must include:

    1. Names of the other persons assessed the same penalty,

    2. Amount collected from each person assessed the penalty,

    3. Current collection status (e.g., notice, TDA, installment agreement, suspended), and

    4. If suspended, the reason (e.g., unable to locate, hardship)

    Note:

    Collection 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:

    IRC §6103(e)(9) does not authorize disclosure of the amount assessed with respect to each responsible person.

  2. If the Disclosure office receives a FOIA request for the TFRP file and for access to information under IRC §6103(e)(9), they must work the FOIA portion and forward the (e)(9) portion to Collection for a response. If the Collection office receives a FOIA request for the TFRP file and for access to information under IRC §6103(e)(9), collection must work the (e)(9) portion and forward the FOIA request to Disclosure for a response.

  3. When Collection forwards the FOIA portion of the request to Disclosure, they should also indicate if/when they are going to respond to the (e)(9) portion and if applicable, provide a copy of the response letter provided to the taxpayer.

  4. Compliance personnel are responsible for processing these requests, and will not refer an IRC §6103(e)(9) TFRP disclosure to Disclosure. See IRM 5.1.22.4.1, IRC §6103(e)(9) Disclosure Procedures, and IRM 5.1.22.4.2, Guidelines for TFRP Disclosure, for processing instructions.

    Note:

    See IRM 11.3.2.4.13, Trust Fund Recovery Penalties, for a complete discussion of IRC §6103(e)(9).

Access Provisions Applicable to Disclosure of TFRP Files

Code section Disclosure guidance Additional resource
5 USC §552 Freedom of Information Act, FOIA Provides for public access to records and information maintained by Federal agencies. IRM 11.3.13, Freedom of Information Act (FOIA)
IRC §6103(c) Disclosure of returns and return information to designee of taxpayer. IRM 11.3.3, Disclosure to Designees and Practitioners
IRC §6103(e)(1) Disclosure to persons having a material interest, in general. IRM 11.3.2, Disclosure to Persons with a Material Interest
IRC §6103(e)(6) Disclosure to persons having a material interest, attorney-in-fact. IRM 11.3.2, Disclosure to Persons with a Material Interest
IRC §6103(e)(9) Disclosure to persons having a material interest, Disclosure of certain information where more than 1 person subject to penalty under section 6672. IRM 11.3.2, Disclosure to Persons with a Material Interest
IRC §6103(h)(4) Disclosure for purposes of tax administration, disclosure in judicial and administrative tax proceedings. IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes

Sample Letter for Response under IRC §6103(e)(9)

Mr. Al Palm
Palm and Elm Enrolled Agents
123 Main Street
Washington, D.C.


Dear Mr. Palm:

This letter is in response to your request dated December 5, 2014, and received in our office December 10, 2014, regarding the Trust Fund Recovery Penalty File for "The Business" for 2011.

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 X.


Sincerely,



John Smith
Revenue Officer