Proposed Regulations Narrow Ability of Private Attorneys to Participate on Behalf of IRS in Exams

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A few years ago we discussed litigation involving Microsoft (see, eg., Keith’s Enforcing the Summons Against Microsoft), which implicated Treasury regulations that allowed private lawyers to participate in exams. While the litigation did not strike down that practice, it was heavily criticized, and Treasury now proposes to scale back the practice significantly.

Last week Treasury has proposed to “significantly narrow the scope of the current regulations by excluding non-government attorneys from receiving summoned books, papers, records, or other data or from participating in the interview of a witness summoned by the IRS to provide testimony under oath, with a limited exception.”

The exception relates to lawyers who have expertise in issues other than federal tax law, such as state, local or other countries’ tax laws, or in other substantive areas, like patent law. The exception does not extent to nonsubstantive specialized knowledge (like litigation skills).

Treasury regulations still permit other outside specialists like economists to “receive and review summoned information and fully participate in the summons interview, including questioning witnesses.” The proposed regs also allow for lawyers who are not acting as lawyers but who are performing services associated with outside permitted specialists to participate.

The proposed regs attempt to restrike the balance between the need for outside assistance to help administer the tax laws with the “perceived risk that the IRS may not be able to maintain full control over the actions of a non-government attorney hired by the IRS when such an attorney, with the limited exception described below, questions witnesses.”

Perhaps the rebalancing of these interests will inspire a fresh look at the private debt collection issue, an area that likewise has raised questions about risks associated with non-government employees performing essential IRS functions.

4/3 Update: Title Changed to clarify we are talking about IRS limitations!

Avatar photo About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.


  1. Steve Kassel, EA says

    I have heard from several sources that the Private Debt Collection program is a complete disaster and is bringing in virtually nothing.

    Of course, had Congress asked those of us that regularly handle collection matters, we would have explained with absolutely certainly that the program had zero chance of success. If Congress really cared about bringing in additional money and curbing bad taxpayer behavior, they would increase IRS’s budget substantially.

  2. Norman Diamond says

    From careful reading of the posting, it can be inferred that this means Proposed Regulations Narrow Ability of Private Attorneys to Participate ON THE IRS’S SIDE in Exams. This is a big relief after seeing how it looked at first.

    There are already too many restrictions on private attorneys on the taxpayer’s side. Low Income Tax Clinics exist in jurisdictions where 93% of US citizens reside, but even in those cases they don’t help if the IRS failed to issue staturorily mandated notices, where the first litigiable issue is either collection or refund.

    Sometimes the IRS doesn’t even inform a taxpayer when the IRS conducts an exam. The IRS’s purpose would be defeated if they had to allow a private lawyer to be present, even hypothesizing that the taxpayer could afford one and somehow knew they needed one.

  3. mm… Are they trying to give more power to those who specialize in IRS representation, i.e. Enrolled Agents or CPAs ? Why would they want to restrict private attorneys?

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