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Does a preparer have the right to a FOIA request as it relates to a IRS 6694 examination hearing?

Fort Washington, MD |

If the IRS has scheduled a 6694 examination hearing and during the course of communication the examiner informs the preparer that they are in possession of documentation that supports imposing preparer penalties, is it wise for the preparer to submit an FOIA request for all documentation and information in the IRS possession that they say will be used to support proposed penalties prior to the hearing? Because it is a 6694 hearing and the information being requested is outside of the 9 exemptions, would the IRS be able to move forward with the examination prior to providing that information for the preparer to review?

Attorney Answers 4

Posted

Based upon the facts that you have set forth, it appears that the IRS examiner has proposed asserting tax return preparer penalties against you (or your client) and you have filed (or will soon file) a Protest of the proposed penalty determinations with the IRS Appeals Office. If that is the case, the Appeals hearing will probably not occur for another 6-12 months. Thus, you can submit a pro forma Protest to meet the 30-day time limit for filing protests and supplement it once you receive a response to your FOIA request.

It would be best to submit your FOIA request as soon as the examiner has made his/her determination because it is common for the IRS to seek 2-3 extensions of 30 days to respond to your FOIA request. [If the examiner has not made a determination, it is quite possible that the response that you receive to the FOIA request will be quite paltry, on the ground that it would interfere with an ongoing tax investigation or with tax administration]. Please be aware of the fact that the IRS is often quite stingy in what it produces in response to FOIA requests, so it is by no means assured that the information that you are requesting falls outside the scope of various exemptions. You may believe that to be the case but the IRS often broadly construes FOIA exemptions (contrary to the legislative intent of Congress in enacting FOIA). So, the bottom line is, get your FOIA request in early and allow enough time for the IRS to respond to your request so that the information will come in handy during your Appeals hearing. Good luck!

The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is licensed to practiced law ONLY in the State of California. Answers to questions from users in other jurisdictions or states are meant to provide only general information. Users should contact a local attorney in their jurisdiction or state to address their specific tax issue.

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2 comments

Asker

Posted

Thank you for your answer. It has been very insightful. Although I was asking about an FOIA request for the information to be used in a 6694 hearing prior to it being held.

Richard Gordon Stack

Richard Gordon Stack

Posted

I would add that you will probably have more difficulty in obtaining documents pursuant to a FOIA request submitted during the audit phase of your case because the IRS can quite plausibly withhold the documents on the ground that it would interfere with tax administration and/or a pending tax investigation.

Posted

Yes you have the right to an FOIA request as it relates to an IRS 6694 (preparer penalty) examination hearing. Mr. Stack has given you superb advice about it.

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Posted

My colleagues are on point. And knowing what the IRS has is important in any defense of the issues here so the FOIA request is a must!

Good luck.

Evan A. Nielsen is licensed to practice law in California and handles federal tax matters throughout the U.S. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.

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Posted

The previous posts have all provided you with good guidance. The only question I would ask is this - Has the preparer asked the examiner to share his or her workpapers? All they can do is say no, but that's not always the case, at least in my experience.

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