Federal Register / Vol. 86, No. 170 / Tuesday, September 7, 2021 / Rules and Regulations 49923 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9952] 

RIN 1545–B012 

Certain Non-Government Persons Not 

Authorized To Participate in 

Examinations of Books and Witnesses 

as a Section 6103(n) Contractor 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations modifying regulations 

relating to IRS administrative 

proceedings to reflect limitations that 

are required by the enactment of the 

Taxpayer First Act of 2019. These final 

regulations implement new rules 

regarding the persons who may be 

provided books, papers, records, or 

other data obtained pursuant to section 

7602 of the Internal Revenue Code 

(Code) for the sole purpose of providing 

expert evaluation and assistance to the 

IRS, and adopt further limitations on the 

types of non-governmental attorneys to 

whom, under the authority of section 

6103(n) of the Code, any books, papers, 

records, or other data obtained pursuant 

to section 7602 may be provided. These 

final regulations also prohibit any IRS 

contractors from asking substantive 

questions of a summoned witness under 

oath or asking a summoned person’s 

representative to clarify an objection or 

assertion of privilege. The regulations 

affect persons who are examined by the 

IRS and any persons who are questioned 

by the IRS under oath pursuant to 

section 7602. 

DATES: 

Effective date: These regulations are 

effective on September 7, 2021. 

Applicability date: For date of 

applicability, see § 301.7602–1(d), 

which provides that the regulations 

promulgated by this Treasury decision 

are applicable to examinations begun or 

administrative summonses served by 

the IRS on or after August 6, 2020. 

FOR FURTHER INFORMATION CONTACT: 

William V. Spatz at (202) 317–5461 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

These final regulations amend 

Procedure and Administration 

Regulations (26 CFR part 301) under 

section 7602(a) of the Code relating to 

participation by persons described in 

section 6103(n) of the Code and 26 CFR 

301.6103(n)–1(a) of the Procedure and 

Administration Regulations in receiving 

and reviewing summoned books, 

papers, records, or other data and in 

interviewing a summoned witness 

under oath. These final regulations 

narrow the scope of the final regulations 

(TD 9778) published in the Federal 

Register (81 FR 45409) on July 14, 2016 

(Summons Interview Regulations) by 

providing that certain non-government 

attorneys whom the IRS could 

previously have hired are no longer 

authorized to participate in an 

examination and by interpreting the 

requirements of section 7602(f), which 

was added to the Code by the Taxpayer 

First Act of 2019. A notice of proposed 

rulemaking (REG–132434–17) proposing 

these changes was published in the 

Federal Register (85 FR 47931) on 

August 7, 2020 (proposed regulations). 

Summary of Comments 

No public hearing was requested or 

held regarding the proposed regulations. 

Two responsive comments were 

received, both of which concerned only 

one portion of the proposed 

regulations—proposed § 301.7602– 

1(b)(3)(C), titled ‘‘Hiring of certain nongovernment attorneys.’’ 

The first commenter recommended 

modifying the proposed rules to allow 

any outside contractors working for the 

IRS to examine, interview, and 

determine whether a taxpayer was a 

‘‘tax cheat.’’ The Department of the 

Treasury (Treasury Department) and the 

IRS decline to adopt this comment. 

While the IRS may hire a contractor to 

assist the IRS in these processes, 

examining a taxpayer and determining 

whether that taxpayer is in compliance 

with Federal tax laws are core IRS 

functions that the IRS has never allowed 

a contractor to perform. In addition, 

section 7602(f) now prohibits the IRS 

from allowing an IRS contractor to ask 

substantive questions of a witness 

whose testimony is being taken under 

oath pursuant to section 7602. 

The second commenter noted that the 

non-exclusive nature of the proposed 

regulations left open the possibility that 

the IRS could hire as a contractor in an 

IRS examination a certified public 

accountant (CPA), enrolled agent, or 

another non-attorney to provide the IRS 

with assistance in the application of 

Federal tax laws. This commenter 

asserted that the proposed regulations 

should be revised so as to prohibit the 

IRS from hiring as a contractor in an 

examination any person, whether or not 

an attorney, for that person’s expertise 

with the Federal tax laws. The Treasury 

Department and the IRS decline to 

adopt this comment. The limitation on 

hiring attorneys as contactors in 

examinations for their expertise in 

applying the Federal tax laws is a 

measure that goes beyond what is 

required by section 7602(f). This hiring 

limitation was introduced as a matter of 

sound tax administration to address 

concerns expressed by a range of 

professional and business associations 

over the IRS’s prior use of attorneys as 

contractors. While the previous 

commenters addressing the Summons 

Interview Regulations and Notice 2017– 

38, 2017–30 I.R.B. 147, noted the 

potential hazards that could arise from 

the IRS hiring attorney contractors for 

their expertise with Federal tax laws, 

the hiring of a CPA or other accountant 

by the IRS as a contractor has not been 

established as a widely held concern. 

Accordingly, the Treasury Department 

and the IRS have determined (1) that 

hiring outside CPAs and accountants as 

contractors in an examination does not 

pose the same potential risk to tax 

administration that prior commenters 

had identified for the IRS hiring of 

outside attorneys, who are trained at 

developing facts and taking testimony, 

and (2) that the IRS is justified in 

contracting for the resources and 

expertise of CPAs and accountants from 

outside of the IRS in certain large or 

complex cases. 

Explanation of the Final Regulations 

The preamble to proposed regulations 

explained the various provisions of the 

proposed regulations in detail. Because 

these final regulations adopt the 

proposed regulations without any 

modifications, any persons interested in 

understanding the provisions of these 

final regulations should consult the 

preamble discussion of these provisions 

in the proposed regulations. 

Special Analyses 

These regulations are not subject to 

review under section 6(b) of Executive 

Order 12866 pursuant to the 

Memorandum of Agreement (April 11, 

2018) between the Treasury Department 

and the Office of Management and 

Budget regarding review of tax 

regulations. Therefore, a regulatory 

impact assessment is not required. 

Pursuant to the Regulatory Flexibility 

Act (5 U.S.C. chapter 6), it is hereby 

certified that these regulations do not 

impose a significant economic impact 

on a substantial number of small 

entities. The final regulations mainly 

affect the IRS and do not impose 

requirements on small entities. Thus, no 

economic impact will result from these 

regulations on any small entity. 

Accordingly, the Secretary of the 

Treasury’s delegate certifies that the rule 


lotter on DSK11XQN23PROD with RULES1
49924 Federal Register / Vol. 86, No. 170 / Tuesday, September 7, 2021 / Rules and Regulations 

will not have a significant economic 

impact on a substantial number of small 

entities. 

Pursuant to section 7805(f) of the 

Code, the notice of proposed rulemaking 

preceding these final regulations was 

submitted to the Chief Counsel for the 

Office of Advocacy of the Small 

Business Administration for comments 

on its impact on small business. No 

comments were received from the Chief 

Counsel for the Office of Advocacy of 

the Small Business Administration. 

Drafting Information 

The principal author of these final 

regulations is William V. Spatz of the 

Office of Associate Chief Counsel 

(Procedure and Administration). 

However, other personnel from the 

Treasury Department and the IRS 

participated in their development. 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR part 301 is 

amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

Paragraph 1. The general authority 

citation for part 301 continues to read in 

part as follows: 

Authority: 26 U.S.C. 7805 * * * 

Par. 2. Section 301.7602–1 is 

amended: 

■ 1. In paragraph (b)(2), by adding 

‘‘(Secretary)’’ at the end of the first 

sentence. 

■ 2. By revising paragraphs (b)(3) and 

(d). 

The revisions read as follows: 

§ 301.7602–1 Examination of books and 

witnesses. 

* * * * * 

(b) * * * 

(3) Participation of a person described 

in section 6103(n)—(i) IRS contractor 

access to books and records obtained by 

the IRS administratively—(A) In 

general. The Secretary may not, under 

the authority of section 6103(n), provide 

any books, papers, records, or other data 

obtained pursuant to section 7602 to 

any person authorized under section 

6103(n), except when such person 

requires such information for the sole 

purpose of providing expert evaluation 

and assistance to the IRS. 

(B) Persons providing expert 

evaluation and assistance. For the 

purposes of paragraph (b)(3)(i)(A) of this 

section, persons providing expert 

evaluation and assistance may include, 

but are not limited to, the following: 

(1) Persons with specialized expertise 

in certain substantive areas, including, 

but not limited to, economists, 

engineers, attorneys specializing in an 

area relevant to an issue in the 

examination (such as patent law, 

property law, environmental law, or 

foreign, state, or local law (including 

foreign, state, or local tax law)), industry 

experts, or other subject-matter experts; 

(2) Persons providing support as 

ancillary service contractors including, 

but not limited to, court reporters, 

translators or interpreters, photocopy 

services, providers of data processing 

programs or equipment, litigation 

support services, or other similar 

contractors; and 

(3) Whistleblower-related contractors 

described in § 301.6103(n)–2. 

(C) Hiring of certain non-government 

attorneys. The IRS may not hire an 

attorney as a contractor to assist in an 

examination under section 7602 unless 

the attorney is hired by the IRS as a 

specialist in foreign, state, or local law 

(including foreign, state, or local tax 

law), or in non-tax substantive law that 

is relevant to an issue in the 

examination, such as patent law, 

property law, or environmental law, or 

is hired for knowledge, skills, or 

abilities other than providing legal 

services as an attorney. 

(ii) IRS contractor participation in an 

IRS summons interview—(A) In general. 

No person other than an officer or 

employee of the IRS or its Office of 

Chief Counsel may, on behalf of the 

Secretary, question a witness under oath 

whose testimony was obtained pursuant 

to section 7602. Persons authorized by 

section 6103(n) and with whom the 

Secretary may provide books, papers, 

records, or other data obtained pursuant 

to section 7602 may also attend a 

summons interview and provide 

assistance to the IRS or Office of Chief 

Counsel employees in attendance, but 

may not question the summoned 

witness under oath or ask a summoned 

person’s representative to clarify an 

objection or assertion of privilege. 

(B) Court reporters, translators, and 

interpreters are not barred from asking 

questions. Court reporters who are hired 

as contractors by the IRS to make a 

record of an IRS summons interview are 

permitted to ask typical housekeeping 

questions of a summoned witness. 

Examples of such questions include, but 

are not limited to, asking whether the 

witness swears to tell the truth, asking 

the witness to spell a word or phrase, 

and asking whether the witness can 

speak up or speak rather than gesture an 

answer. Translators and interpreters 

who are hired as contractors by the IRS 

to assist in the interview of a summoned 

witness are permitted to translate any of 

the questions that are asked of the 

witness by an IRS or Office of Chief 

Counsel officer or employee and to ask 

questions which may be necessary to 

clarify the translation. 

* * * * * 

(d) Applicability date. This section is 

applicable after September 3, 1982, 

except for paragraphs (b)(1) and (2) of 

this section, which are applicable on 

and after April 1, 2005, and paragraph 

(b)(3) of this section, which applies to 

examinations begun or administrative 

summonses served by the IRS on or after 

August 6, 2020. For rules under 

paragraphs (b)(1) and (2) of this section 

that are applicable to summonses issued 

on or after September 10, 2002 or under 

paragraph (b)(3) of this section that are 

applicable to summons interviews 

conducted on or after June 18, 2014 and 

before July 14, 2016, see 26 CFR 

301.7602–1T (revised as of April 1, 

2016). For rules under paragraph (b)(3) 

of this section that are applicable to 

administrative summonses served by 

the IRS before August 6, 2020, see 26 

CFR 301.7602–1 (revised as of April 1, 

2020). 

Douglas W. O’Donnell, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: August 20, 2021. 

Mark J. Mazur, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2021–19225 Filed 9–2–21; 4:15 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2021–0585] 

Safety Zones; Fireworks Displays, Air 

Shows and Swim Events in the Captain 

of the Port Long Island Sound Zone 

AGENCY: Coast Guard, Department of 

Homeland Security (DHS). 

ACTION: Notification of enforcement of 

regulation. 

SUMMARY: The Coast Guard will enforce 

safety zones for marine events in the 

Long Island Sound Captain of the Port 

Zone on the dates and times provided 

in the tables below. This action is 


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