concurring: Respondent has taken the position that section 7521 does not apply to the hearings afforded under sections 6320 and 6330, on grounds that such hearings are not “interviews” within the meaning of section 7521. The majority rightly concludes, relying in large part on the ordinary meaning of the term “interview”, that taxpayers are entitled to make audio recordings of section 6320 and 6330 hearings. I write separately to highlight several additional reasons why the majority is correct.
First, it is significant that the express language of section 7521 grants a right which turns on the subject matter of the interview and not on either (1) the particular function within the Internal Revenue Service (Service) of the officer or employee conducting the interview or (2) the voluntary or involuntary nature of the interview. The statute requires the Service to permit taping whenever an interview is held relating to the determination or collection of tax.
Second, neither legislative history nor administrative pronouncements directs a different result. Legislative history with respect to section 7521 expressly covered the “initial in-person audit interviews” and “initial in-person collection interviews”. H. Conf. Rept. 100-1104, at 212-214 (1988), 1988-3 C.B. 473, 702-704. The Service subsequently took the following administrative position in defining “taxpayer interview”:
For purposes of section 7520 of the Code [later redesignated section 7521], the term “taxpayer interview” means a meeting between an officer or employee of the Examination function, the Employee Plans and Exempt Organization function, or the Collection function of the Service, and a taxpayer or authorized representative, as defined in section 7520(b)(2), when the determination or the collection of any tax is at issue.
LEGAL EFFECT: This document serves as an “administrative pronouncement” as that term is described in section 1.6661-3(b)(2) of Income Tax Regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.
[Notice 89-51,1989-1 C.B. 691 (Notice 89-51).]
Because the Office of Appeals is typically treated by the Service as an independent function, separate and distinct from the Examination, Employee Plans and Exempt Organization, and Collection functions, respondent maintains that a hearing with an Appeals officer is not an in-person interview within the ambit of section 7521. I do not agree with this contention. As to hearings under sections 6320 and 6330, Appeals, although separate, is in my view an integral component of the overall Examination, Employee Plans and Exempt Organization, and Collection functions.
Notice 89-51, supra, is not controlling here since, by its own terms, its legal effect is similar to that of revenue rulings and revenue procedures. This Court and the Court of Appeals for the Ninth Circuit, to which appeal in the instant case would normally lie, have indicated that revenue rulings “do not rise to the dignity of those ‘rules and regulations’ which under the authority of sec. 7805(a) are prescribed by respondent ‘with the approval of the Secretary.’ Sec. 301.7805-1(a), Proced. & Admin. Regs.” Estate of Lang v. Commissioner, 64 T.C. 404, 406-407 & n.4 (1975), affd. in part on this issue and revd. in part on other grounds 613 F.2d 770 (9th Cir. 1980); see also United States v. Mead Corp., 533 U.S. 218, 228 (2001).
Moreover, notwithstanding Notice 89-51, supra, the Service until May 2002 preempted litigation as to its construction of section 7521 by providing taxpayers with the right to record Appeals conferences or hearings and, in the process, explicitly recognized the integral role played by Appeals in the Examination, Employee Plans and Exempt Organization, and Collection functions. See 5 Administration, Internal Revenue Manual (CCH), sec. 8626.1, at 25,784 (e.g., 10-23-91 revision), which provided:
General Guidelines
(1) The audio recording of an Appeals conference is generally permitted, if the taxpayer, or the taxpayer’s authorized representative requests it, and supplies the recording equipment. In such cases, the appeals officer will also make an audio recording of the conference with IRS equipment.
(2) IRC 7521 (formerly IRC 7520) provides that taxpayers may make audio recordings of interviews with the IRS that determine' liability or collectibility. Although Appeals conferences differ in nature from taxpayer interviews in the auditing or collecting functions, Appeals still decides liability or collectibility on cases in which those issues have been referred to us. Procedures for making audio recordings are described in Notice 89-51, 1989-1 C.B., and Appeals employees will follow the provisions of Notice 89-51 when allowing recordings in cases within Appeals jurisdiction.
[Emphasis added.]
In fact, Appeals officers from time to time have performed limited audit functions when necessary to expediently resolve tax cases. Further, in recent years, both Congress and the Service have increasingly utilized Appeals officers and settlement officers during the examination and collection phases of a tax case. See, e.g., secs. 6320, 6330, 7123; see also Rev. Proc. 2003-41, 2003-25 I.R.B. 1047 (fast-track mediation procedures); Rev. Proc. 2003-40, 2003-25 I.R.B. 1044 (fast-track settlement procedures); Announcement 2003-36, 2003-25 I.R.B. 1093 (tax-exempt bond mediation program); Rev. Proc. 2002-67, 2002-43 I.R.B. 733 (tax shelter settlement initiative); Rev. Proc. 2002-52, 2002-31 I.R.B. 242 (simultaneous Appeals consideration and competent authority assistance procedure); I.R.S. News Release IR-2000-42 (June 27, 2000) (Mutually Accelerated Appeals Process for coordinated examinations of large corporate taxpayers); Rev. Proc. 99-28, 1999-2 C.B. 109 (procedures for early referral of “unresolved issues from the Examination or Collection Division to the Office of Appeals”). Given this involvement of Appeals in the Examination, Employee Plans and Exempt Organizations, and Collection functions, section 7521 cannot logically be interpreted as properly excluding the Appeals Office simply because it is the Appeals Office.1
When Congress enacted sections 6320 and 6330 in 1998, section 7521(a), permitting taxpayers to record any in-person interviews relating to the determination or collection of any tax, was already 10 years old. Admittedly, Congress could have enacted sections 6320 and 6330 with the assumption that the rights granted in section 7521, as those rights apply to section 6320 and 6330 Appeals hearings, would be governed by Notice 89-51, supra. However, it seems to me more likely that Congress, if it considered this issue, would have assumed that the right to record in-person interviews, as applied to section 6320 and 6330 Appeals hearings, would be administered by the Service in the same manner as the Service had for the 10 years since its enactment administered section 7521. In any event, because taxpayers had the right to tape Appeals proceedings at the time sections 6320 and 6330 were enacted, nothing can be presumed from Congress’s silence regarding the right to record these hearings.
Third, several considerations of fairness or practicality support the taxpayer’s right to record hearings under section 6320 or 6330. In particular, it is noteworthy that both section 7521 and sections 6320 and 6330 were enacted to add to the taxpayer’s procedural rights. The usefulness of a transcript for purposes of review of sections 6320 and 6330 proceedings also cannot be ignored. Lastly, the concerns apparently generating the Service’s retraction of recording rights in the Appeals context can perhaps be handled effectively in ways less drastic than a complete curtailment.
Gerber, Laro, Foley, Marvel, and Goeke, JJ., agree with this concurring opinion.While the Service Litigation Guideline Memorandum GL-17 (GL-17) is more explicit in stating that it is the Service’s position “that section 7521 does not apply to an administrative appeals conference”, it is a litigating position not controlling on this Court. The authority cited in GL-17 for excluding Appeals conferences from sec. 7521 is Notice 89-51, 1989-1 C.B. 691. As noted above, I find that authority unpersuasive.
GL-17 also makes a distinction between those third-party interviews where a witness is compelled to testify by legal process, such as a summons or subpoena, vis-a-vis those situations where the witness testifies voluntarily. The memorandum notes that pursuant to the Administrative Procedures Act (APA), 5 U.S.C. secs. 551-559, 701-706 (2000), if the testimony of the witness was compelled by legal process, recording should be allowed since that witness would under APA sec. 555(c) be entitled, at his or her cost, to a copy of the official transcript of his or her testimony.
The compelled versus voluntary distinction, however, is irrelevant to taxpayer interviews which are governed by sec. 7521. The result under that section should not be affected by whether or not the taxpayer interview was compelled by legal process or was voluntary. Sec. 7521, unlike APA sec. 555(c), does not differentiate between voluntary and compelled taxpayer interviews.