When the IRS is investigating a taxpayer for mistakes on a tax return or a lack of a return, the agency has the power to gather evidence. This includes books, papers, records, and other documents that might be relevant for the investigation.

Taxpayers can choose to hand over documents to the IRS. If taxpayers decline to do so, the IRS does have the authority to compel the production of documents. The Internal Revenue Code has requirements that allow the agency to pursue documents and other evidence related to unpaid taxes or other issues.

In some cases, the IRS can pursue third parties to obtain the information or other evidence. Obtaining documents from third parties, however, follows a different procedure and depends on the type of evidence.

For emails, the IRS will obtain a search warrant when seeking emails stored by an ISP. The IRS doesn't pursue obtaining emails in civil administrative hearings.

For other documents, the IRS will generally not contact third parties unless the agency first gives the taxpayer reasonable notice. Third parties include banks, employers, and anyone else who might have information that would be relevant to adjusting or collecting taxes owed.

Taxpayer Bills of Rights

If taxpayers do hand over information to the IRS, the IRS has a responsibility to protect those documents and not disclose the information to others. The IRS's Bill of Rights for taxpayers includes the right to confidentiality. This right establishes that any information disclosed to the IRS will remain confidential unless the taxpayer approves the disclosure or the law requires it.

In addition, the IRS extends attorney-client privilege to federally authorized tax practitioners. This means that communications between a taxpayer and their tax advisor are protected for noncriminal matters, and the IRS cannot access them. One exception is that the privilege doesn't extend to any conversations involving tax shelters.

If you have questions about IRS investigations and what information the IRS can request, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.