Opinion ID: 785820
Heading Depth: 1
Heading Rank: 3

Heading: Violation of the Restriction on Ex Parte Communications

Text: 20 As an initial matter, we may dispense with the IRS argument that the ex parte communications were permissible and not in violation of the Restructuring Act and Rev. Proc.2000-43. Congress passed the Restructuring Act to ensure that taxpayers would have adequate protections when the agency exercised its powers in an improper fashion. National Commission on Restructuring the Internal Revenue Service, Report of the National Commission on Restructuring the Internal Revenue Service, A Vision for a New IRS, at 8 (June 25, 1997). One method Congress chose to provide these protections was to direct the Commissioner of Internal Revenue to enhance the independence of the IRS Appeals Office by restricting certain types of ex parte communication between the Appeals Office and other areas of the IRS. Congress mandated, among other things, that: 21 The Commissioner of the Internal Revenue shall develop and implement a plan to reorganize the Internal Revenue Service. The plan shall ... (4) ensure an independent appeals function within the Internal Revenue Service, including the prohibition in the plan of ex parte communications between appeals officers and other Internal Revenue Service employees to the extent that such communications appear to compromise the independence of the appeals officers. 22 Restructuring Act § 1001(a). 23 In Revenue Procedure 2000-43, promulgated under the Restructuring Act, the IRS set forth its own position regarding which communications appear to compromise the independence of the appeals officer. The IRS distinguished between ministerial, administrative, and procedural matters, on the one hand, and substantive matters, on the other. Id. § 3. As to the former, the IRS does not consider ex parte communications to be prohibited under the Restructuring Act. The IRS provided examples of communications considered to be permissible: questions regarding whether certain information was requested and received; questions regarding whether a document referred to in the work papers but not found in the file is available; questions to clarify illegible documents; questions about case controls on the IRS's management information systems; and questions regarding tax calculations that are purely mathematical in nature. Id. § 3, at Q & A 5. As clearly demonstrated through this list, the IRS itself set forth a limited view of communications that would be considered ministerial and that could occur on an ex parte basis between the Appeals Office and other Divisions. 24 At least some of the communications in the present case did not involve merely ministerial, administrative, and procedural matters, but rather, involved the substance of Ms. Robert's appeal. Accordingly, under the Restructuring Act and the IRS's own procedures, at least some of the communications in the present case should not have taken place on an ex parte basis. Mr. Mannion should not have expressed his opinions regarding the sufficiency of Mr. Gruenfeld's appraisal to Messrs. Latt and Mezines on an ex parte basis. In addition, he should not have shared with the Examination Division the written critique and additional information that Ms. Robert's attorneys provided without including Ms. Robert's attorneys in the communications. Finally, he should not have recommended to Mr. Mezines that the Examination Division hire an outside appraiser to value the Siegel-Robert stock. At a minimum, these communications appeared to compromise Mr. Mannion's independence. 25 The ex parte communications are made more troubling by the fact that the IRS delayed disclosure of at least some of these communications until this matter reached the stage of litigation. Further, even on appeal to this court, the IRS did not willingly concede the improper nature of its ex parte communications. If anything, this denial by the IRS suggests an institutional failure to embrace the ex parte restrictions and militates against our enforcement of the summonses. 26 Nevertheless, as explained below, we will enforce the summonses in this case because Congress did not specifically legislate a limitation on the IRS summons power as a remedy for violation of the ex parte restrictions; the IRS did proscribe an administrative remedy to address violations of the ex parte restrictions; the Supreme Court has cautioned that we should be slow to erect barriers to enforcement of IRS summonses; and, we discern no improper purpose or bad faith behind issuance of the IRS summonses nor nexus between the improper communications and any improper purpose for the investigation.