Par. 2. Section 301.7602-2 is amended by revising paragraphs (a), (d), and (g) to read as follows:
(a) Advance notice of third-party contacts —(1) In general. Subject to the exceptions in paragraph (f) of this section, no officer or employee of the Internal Revenue Service (IRS) may contact any person other than the taxpayer with respect to the determination or collection of such taxpayer's tax liability unless the requirements of section 7602(c) of the Internal Revenue Code (Code) and paragraph (d) of this section have been satisfied.
(2) Record of contacts. A record of persons so contacted must be made and given to the taxpayer upon the taxpayer's request in accordance with paragraph (e) of this section.
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(d) Notice of third-party contacts —(1) In general. An officer or employee of the IRS may not make third-party contacts with respect to the determination or collection of the liability of a taxpayer unless such contact occurs during a period (not greater than one year) that is specified in a written notice (third-party contact notice) that—
(i) The IRS provides to the taxpayer in accordance with paragraph (d)(2) of this section;
(ii) Informs the taxpayer that third-party contacts are intended to be made during such period; and
(iii) Except as set forth in paragraph (d)(5) of this section, is provided to the taxpayer no later than 45 days before the beginning of such period (45-day advance notice period).
(2) Provision of third-party contact notice. A third-party contact notice must be—
(i) Mailed to the taxpayer's last known address;
(ii) Given in person to the taxpayer;
(iii) Left at the taxpayer's dwelling or usual place of business; or
(iv) Actually received by the taxpayer.
(3) Successive notices. Nothing in paragraph (d)(1) of this section prevents the IRS from issuing successive notices to the same taxpayer with respect to the same tax liability for periods (each not greater than one year) that, in the aggregate, exceed one year.
(4) Intent to contact. A third-party contact notice will not be issued under paragraph (d) of this section unless there is an intent at the time such notice is issued to contact persons other than the taxpayer during the period specified in such notice. Nothing in the preceding sentence will prevent the issuance of a third-party contact notice if the requirement of such sentence is met on the basis of the assumption that the information sought to be obtained by such contact will not be obtained by other means before such contact.
(5) Exceptions to 45-day advance notice period. The 45-day advance notice period of section 7602(c)(1)(B) of the Code and paragraph (d)(1) of this section is reduced in the case of third-party contacts described in paragraphs (d)(5)(i) through (v) of this section.
(i) Fuel compliance program. The 45-day advance notice period is reduced to zero days, and the IRS may make a third-party contact at any time after the third-party contact notice has been given to the taxpayer, if—
(A) The IRS officer or employee intends to make a third-party contact in connection with its investigation of potential liability for penalties under section 6715, 6715A, or 6720A of the Code; or
(B) The IRS officer or employee intends to make a third-party contact in connection with its exercise of authority under section 4083(d) of the Code.
(ii) Nonjudicial sale redemption investigations. The 45-day advance notice period is reduced to 10 days if the IRS officer or employee intends to make a third-party contact in connection with an investigation into a potential nonjudicial sale redemption.
(iii) Examination cases involving certain issues in which statutory period for assessment expiring within one year or less. The 45-day advance notice period is reduced to 10 days in cases under examination in which there is one year or less remaining before the expiration of the period for assessment under section 6501(a) of the Code determined with regard to extensions (statutory assessment period) for any period included in the examination as of the date the IRS intends to make a third-party contact if:
(A) The case involves an issue with respect to which the IRS would have the burden of proof in any court proceeding; and
(B) The IRS has requested that the taxpayer provide the IRS with an unrestricted, signed Form 872, Consent to Extend the Time to Assess Tax, to extend the statutory assessment period by a period necessary to complete the examination and other administrative actions, and the taxpayer has not provided the requested signed Form 872 within the time requested.
(iv) Trust fund recovery penalty investigations in which statutory period for assessment expiring within one year or less. The 45-day advance notice period is reduced to 10 days in investigations into potential liability for penalties under section 6672 of the Code if there is one year or less remaining before the expiration of the statutory assessment period for any period included in the investigation as of the date the IRS intends to make a third-party contact.
(v) Statutory period for collection expiring within one year or less. The 45-day advance notice period is reduced to 10 days if there is one year or less remaining in the time period (or, in cases involving multiple time periods, in any time period in the case) under section 6502 of the Code within which the IRS may collect an assessed tax by levy or by a proceeding in court (statutory collection period) as of the date the IRS intends to make a third-party contact and either—
(A) The IRS intends to prepare and deliver to the Department of Justice (DOJ) a suit referral requesting that DOJ file suit to reduce assessments to judgment or to foreclose Federal tax liens before the expiration of the statutory collection period; or
(B) The revenue officer is unable to contact the taxpayer (as defined in paragraph (d)(5)(vi) of this section), or the taxpayer refuses to pay (as defined in paragraph (d)(5)(vii) of this section), and the revenue officer concludes that the advance notice period should be reduced in order to maximize the amount of unpaid tax that can be collected by levy within the time remaining before the statutory collection period expires.
(vi) Unable to contact the taxpayer. The revenue officer is unable to contact the taxpayer for purposes of paragraph (d)(5)(v)(B) of this section if the taxpayer fails to respond to the revenue officer's reasonable attempts to contact the taxpayer directly within the time requested by the revenue officer.
(vii) Taxpayer refuses to pay. The category of taxpayers who are considered to have refused to pay for purposes of paragraph (d)(5)(v)(B) of this section includes taxpayers described in this paragraph (d)(5)(vii). This paragraph (d)(5)(vii) is not an exhaustive list of taxpayers considered to have refused to pay, and taxpayers who engage in conduct not specifically described in this paragraph (d)(5)(vii) may be considered to have refused to pay.
(A) Taxpayers who have the ability to pay their currently due and owing taxes including required tax deposits and estimated tax payments and to pay their delinquent taxes through an alternative collection method but will not do so.
(B) Taxpayers who cannot pay currently due taxes or pay their delinquent taxes, but who have assets in excess of amounts exempt from levy that will yield net proceeds and are unwilling or unable to borrow against or liquidate these assets.
(C) Taxpayers who are accruing employment tax liabilities without making required tax deposits.
(D) Taxpayers who use frivolous tax arguments and continue to resist the requirements to file returns and pay their tax liability.
(E) Taxpayers who will not cooperate with the IRS (for example, taxpayers that evade contact or will not provide financial information).
(F) Taxpayers who will not comply with the results of the IRS's financial analysis or will not enter into an installment agreement or offer in compromise.
(G) Taxpayers who are wage earners who have not paid their tax liability and will not adjust their withholdings to prevent future delinquencies.
(H) Taxpayers who are self-employed, have not paid their tax liability, and will not make estimated tax payments to prevent future delinquencies.
(I) Taxpayers who do not meet their commitments (without a valid reason) as required by an installment agreement, offer in compromise, or extension of time to pay.
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(g) Applicability dates —(1) In general. Except as provided for in paragraph (g)(2) of this section, this section is applicable on December 18, 2002.
(2) Exceptions. Paragraphs (a)(1) and (d) of this section apply to third-party contacts made on or after 30 days after [DATE OF PUBLICATION OF FINAL RULE].