Sometimes it is nice to have a record of what transpired. This is true even if the recording is never used. Just the fact that the recording is being made, and everyone is aware that it is being made, can change the tone and substance of the meeting. The law allows taxpayers to record meetings that are held in person, but what about meetings that are held over the phone? The court recently addressed this in Calafati v. Commissioner, 127 T.C. 219 (2006).
The Facts in Califanti’s Case
The Calafati case involved a collection due process hearing with the IRS Office of Appeals. The taxpayer had filed a Form 12153, Request for a Collection Due Process Hearing, in response to the IRS sending him a Notice of Intent to Levy.
The taxpayer was afforded a telephone converence with Appeals. He was not told that Appeals would not let him record the telephone conference. When he called in for the conference, the taxpayer told the appeals officer that he intended to record the conference. The appeals officer told the taxpayer that this was not permitted. The conference was then noted as nothing having been discussed given that Appeals would not allow the conference to be recorded.
Recording IRS Appeals Conferences
The question for the court was whether the taxpayer had a right to record the Appeals conference. It is not all that common, but some taxpayers opt to record conversations that they have with the IRS. It is not entirely clear when taxpayers can and cannot record IRS conversations.
In this case, the court ruled that taxpayers may not record IRS collection due process hearings (AKA Section 6330 hearings) if the hearing is conducted via telephone. It is worth pausing to consider the purpose of the collection due process hearing and the appeals conference.
Why Recording Conferences Should Be Allowed
The collection due process hearing is a hearing with the IRS Appeals Office granted by Section 6330. This hearing gives taxpayers the opportunity to stop IRS collection activities until an IRS employee hears the taxpayers concerns. This satisfies the Constitutional mandate that citizens have the right to be heard prior to the government taking their property.
In addition to the Constitution, Congress has noted that taxpayers can record some IRS communications. Specifically, Sec. 7521 authorizes taxpayers to record certain “in person” IRS interviews.
In analyzing these two statutes, i.e., Sec. 6330 and 7521, the U.S. Tax Court has previously held that taxpayers were entitled to record IRS collection due process hearings if they were conducted “in person.” In this case, Calafati’s tax attorney was trying to extend this prior ruling to cover IRS collection due process hearings that were held via the telephone.
Since the statute did not provide for Calafati’s position, the U.S. Tax Court relied on the ordinary definition of “in person” from the Merriam Webster’s Dictionary.
The non-tax attorney might assume that this opinion provides a clear answer and that this will be the end of this line of inquiry. Fortunately (or unfortunately, depending on your persuasion) this will probably not be the case. The Calafati case leaves open a number of questions.
For example, Sec. 7521 only applies to “audio recordings.” What exactly is an “audio recording?” Does an “audio recording” include the taxpayer having a third party listen in on and transcribe the conversation? Does an “audio recording” include a “video recording” made by a taxpayer that includes an audio component? For example, can a taxpayer put the IRS employee on speakerphone and record his or herself talking into the phone? Both of these examples should be admissible in court if certain requirements were met, as it appears that the law does not prohibit them.
Calafati also does not address whether physical presence of both parties is necessary for the hearing is “in person.” Instead, the court in Calafati uses the definition “in one’s bodily presence.” Can “bodily presence” be satisfied by the taxpayer going to their local IRS service center and having an IRS employee present while the taxpayer calls the IRS appeals office? What if taxpayers use new technologies, such as real time video conferencing?
Calafati also doesn’t address the realities of our current IRS tax collection system. Today the IRS does not allow timely collection due process hearings in some localities. This may be due to the IRS appeals offices in those localities being too busy to handle the hearings or, more likely, not having the budget to travel. In these cases the hearing is assigned to any number of IRS appeals offices located across the nation.
For example, many of my collection due process hearings for my Texas clients have been assigned to the Fresno, California and Austin, Texas appeals offices. Does this mean that taxpayers have to pay to travel out to these far away locations in order to exercise their right to make an “audio recording” of their collection due process hearing?
Did Congress intend to limit a taxpayers right to record these types of interviews only if the taxpayer could afford and/or have the time to travel to these far away destinations? This doesn’t even begin to address those situations where taxpayers are not physically able to travel to far away destinations due to medical conditions, etc.