Taxpayers Cannot Record IRS Telephone Interviews

In Calafati v. Commissioner the tax court has now ruled that taxpayers may not record IRS collection due process hearings (AKA Section 6330 hearings) if the hearing is conducted via telephone. A number of taxpayers opt to record conversations that they have with the IRS; however, there are still many unanswered questions surrounding if and when taxpayers can record IRS conversations.

The collection due process hearing is a hearing with the IRS Appeals Office granted by Section 6330. This hearing gives taxpayers the opportunity to halt IRS collection activities until an IRS employee with the IRS appeals office hears the taxpayers concerns, which satisfies the Constitutional mandate that citizens have the right to be heard prior to the government taking their property. Congress, in IRC Section 7521, has specifically granted taxpayers the right to record certain “in person” IRS interviews.

In analyzing these two statutes, the 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 tax court relied on the ordinary definition of “in person” from the Merriam Webster’s Dictionary to hold that taxpayers were not entitled to record telephonic collection due process hearings.

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, Section 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, because the IRS appeals offices in those localities are too busy to handle the hearings. 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 Colorado 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 (and that doesn’t begin to address those taxpayers who are not physically able to travel to far away destinations due to medical conditions, etc.).

So you might be thinking, “what is the big deal” or “why doesn’t the IRS just let taxpayers record whatever they want?” The answer is that many IRS employees are very unprofessional; IRS employees often make rude, threatening, and even crude remarks; IRS employees often misstate the law, make contradictory statements, then create administrative “notes” that do not reflect the true substance of the conversation; and in other cases IRS employees say one thing and do something entirely different and/or they do not follow up with what they said they would do. If you were the IRS, would you want any of that recorded?