Interim Revised Notice of Intent to Contact Third-Parties Procedures Issued by IRS

The Self-Employed/Small Business (SBSE) Division of the IRS has a memorandum outlining revised procedures for third party contact in SBSE-04-0719-0034.[1]  The revised procedures reflect changes made to IRC §7602(c)(1) by the Taxpayer First Act of 2019.

IRC §7602(c)(1), both before and after amendment, required the IRS to provide notice to the taxpayer prior to contacting third parties.  The IRS had taken the position, noted in the Internal Revenue Manual at IRM 25.27, Third Party Contacts, that providing the taxpayer with Publication 1, Your Rights as a Taxpayer, was sufficient notice under the prior law.

The IRS’s position had come into question before the passage of the revisions found in the Taxpayer First Act.  In the case of J.B.; P.B. v. United States of America, No. 16-15999, CA9, the provision of Publication 1 at the beginning of the examination was found to be inadequate under the prior law §7602(c)(1) for contact well after the beginning of the dispute with the IRS.[2]

Congress decided to provide more detailed and specific requirements for IRS notice of intent to contact third parties, and these new rules were found in the Act signed into law July 1, 2019.  The new law takes effect on August 15, 2019.

In preparation for this effective date, the SBSE memorandum reminds IRS employees that, effective August 15, 2019, Publication 1 will no longer satisfy the notice requirements in the law. [3]  The memo summarizes the new provisions in the law as follows:

The Code now requires that IRS:

  • issue advance notice of third-party contacts,

  • intend, at the time such notice is issued, to contact third parties (the notice must state this intent),

  • specify in the notice the time period, not to exceed one year, within which IRS intends to make the third-party contact(s), and

  • send the notice at least 45 days before contact with a third party.[4]

A notice meeting the revised requirements must be issued in any case involving third-party contact after August 15, 2019 and IRS employees may not contact any third-party until the 46th day following the issuance of the notice.[5]

The memorandum provides the following details on the revised notices:

The notice must also include the tax period(s) at issue. Employees may reissue notices yearly, if necessary. The current notices (e.g., Letter 3164 series and Letter 3404C) will be updated to add reference to the applicable tax period(s) and effective contact period. Until the appropriate use letter is updated, a manual edit must be made to include the tax period (heading of letter) and contact period (paragraph 3 of the body) in the letter (L3164 examples attached).[6]

The example letters from the Letter 3164 series show the edits highlighted on the page.

Example revised Letter 3164-A (from IRS memorandum)

Example revised Letter 3164-A (from IRS memorandum)

Example revised Letter 3164-X (from IRS memorandum)

Example revised Letter 3164-X (from IRS memorandum)

Within a year the IRS plans to update the Internal Revenue Manual to incorporate the new procedures.[7]  The memorandum will govern IRS employees on this issue until the IRM is updated.[8]

[1] SBSE-04-0719-0034,, August 5, 2019 (public release date), retrieved August 6, 2019

[2] Ed Zollars, “IRS Failed to Give Adequate Notice for Contacting a Third Party in Exam When Only Publication 1 Was Provided,” Current Federal Tax Developments website, February 28, 2019,, retrieved August 6, 2019

[3] SBSE-04-0719-0034,, August 5, 2019 (public release date), retrieved August 6, 2019, p. 2

[4] Ibid

[5] Ibid

[6] Ibid

[7] Ibid, p. 2

[8] Ibid, p. 1