Disclosure and Summons Provisions of 1976 Tax Reform Act--Privacy Gains With Unknown Law Enforcement Effects

GGD-78-110: Published: Mar 12, 1979. Publicly Released: Mar 12, 1979.

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The Internal Revenue Service (IRS) and the Department of Justice warned that several provisions of tax reform legislation could delay criminal tax investigations and could tend to benefit tax violators.

Taxpayers have benefited from the increased confidentiality provided by the disclosure provisions of the law. Investigative delays have occurred, but they may be attributable to the multitiered legal review process and the fact that IRS employees were not fully conversant with summons procedures. A number of summonses were found to be erroneous, defective, or unnecessary and possibly deprived the taxpayer of the chance to stay compliance and raise substantive defenses to summons enforcement. The Congress may want to monitor use of the stay of compliance procedure under existing privacy law and consider whether the adoption of similar provisions for IRS summonses would be appropriate.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Commissioner of the IRS should provide additional training to all employees responsible for issuing summonses, and require the Director of the IRS Audit Division to monitor the effectiveness of this training. He should revise the summons reporting system to provide field personnel with specific guidance on accounting for summonses, stays, and interventions; collect information to determine the extent to which those whose illegal activities extend beyond the tax laws tend to exercise their rights to stay summonses and intervene in enforcement actions; and accumulate statistics on investigative delays caused by the summons provisions.

    Agency Affected:

 

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