The Office of the Chief Counsel Has Made Significant Progress in Making Its Advice Documents Available to the Public

October 2001

Reference No. 2002-10-001

Executive Summary

The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98) expanded the requirements for the IRS to make legal advice documents available to the public. The RRA 98 amended Internal Revenue Code (I.R.C.) § 6110 by expanding public access to tax advice written by the IRS headquarters Office of the Chief Counsel to IRS field employees. The IRS was required to release Chief Counsel Advice (CCA) documents as they are issued and to release historic CCA documents, issued between 1986 and 1998, on a staggered schedule over a 6-year period.

While CCA documents are not legal precedent, the Congress believed the public was entitled to know the rules being applied in its dealings with the IRS and the underlying rationale. Providing documents for public inspection was intended to increase the public’s confidence that the tax system operates fairly and in an even-handed manner with respect to all taxpayers.

The objective of this audit was to determine if management controls ensured compliance with RRA 98 Section 3509 and I.R.C. § 6110 requirements for making CCA documents available to the public.


Counsel has implemented the provisions of RRA 98 Section 3509 and I.R.C. § 6110 and has routinely made CCA documents available to the public. Counsel released, as they were issued, approximately 500 CCA documents for public inspection during Fiscal Year (FY) 2000. Counsel also used a document review team to collect, process, and release historic CCA documents. While not released by the date specified in the law, almost 2,300 CCA documents from 1994 through 1998 were released to the public during FY 2000 and the first quarter of FY 2001.

Counsel is on track to timely release the remaining historical CCA documents. Based on our analysis, Counsel’s procedures also were effective in ensuring that almost 95 percent of the CCA documents prepared in FY 2000 were released for public inspection. However, the processes for providing public access to CCA documents could be improved by enhancing controls to help ensure that all are identified for timely release and providing a convenient way to research and retrieve historical CCA documents.

Counsel Is On Track to Timely Release the Remaining Historical Chief Counsel Advice Documents

Counsel informed us and we confirmed that only 29 percent of the 1994 through 1998 CCA documents were released timely by January 2000. Counsel had released approximately 74 percent through April 2000, approximately 96 percent through September 2000, and the final few documents were released in January 2001.

Many factors delayed Counsel efforts to release these documents. Counsel indicated there were difficulties in the start-up process for this unique effort, staffing constraints that persisted during the year, and changes to the redaction method after the effort had begun. As anticipated, these factors did not affect the release of 1992 and 1993 CCA documents, which Counsel indicated were timely released in July 2001.

Counsel Can Enhance Its Procedures to Ensure That All Chief Counsel Advice Documents are Identified for Timely Release to the Public

Counsel released almost 95 percent (472 of an estimated 500) of the CCA documents issued in FY 2000. Counsel also released 85 percent (402 of 472) of these documents within the time periods defined by law.

We estimate that 28 CCA documents issued in FY 2000 were not released. We identified 10 CCA documents issued that were not released and estimate that there are potentially an additional 18 CCA documents that were not released. These instances were identified by reviewing closed cases that had specific codes in the case management system that indicated CCA documents may have been issued but not released.

Delays in releasing documents usually occurred when the Counsel office that authored the document did not timely forward it for disclosure processing. In 30 untimely released documents we sampled, it took an average of 91 days after documents were signed before they were received by the disclosure processing function. The law requires the IRS to notify taxpayers within 60 days that their documents will be released for public inspection or if the document does not relate to a specific taxpayer the IRS should release the document within 60 days.

Counsel attorneys who prepared the documents were responsible for initiating the release process after the documents were signed. While Counsel managers reviewed and signed CCA documents, they were not required to specifically determine whether documents had been identified for release.

Although CCA documents cannot be cited as precedent, they contain Counsel’s views on significant tax issues at the time the advice was written. When Counsel does not provide documents, or provide documents timely, they miss an opportunity to assist practitioners and taxpayers involved in similar tax situations.

The Public Should Be Provided a Convenient Way to Research and Retrieve Historical Chief Counsel Advice Documents

To retroactively release CCA documents issued during 1994 through 1998, Counsel placed paper copies of the documents in the IRS headquarters public reading room. These paper documents were placed in the reading room in no searchable order and without an index. By releasing the CCA documents in this manner at only one IRS location, persons living outside of the Washington, DC area had no convenient way to research and retrieve any specific documents that related to a particular revenue provision or taxation subject.

Although Counsel met the requirement to release these documents, providing a way to research and retrieve these documents would have supported the IRS’ strategic goal of providing top-quality service to taxpayers. According to a Counsel management official, several factors led to the decision to not convert the documents to electronic format or create an index. Since prior years’ documents were not always retained in electronic format, the costs associated with making them electronically accessible would have been high. In addition, Counsel considered the documents to be of only historic value and was concerned that the release might confuse the public’s understanding of the actual current views held by Counsel.

We believe the public does have a current interest in these documents and that Counsel is not exempted from applying the indexing requirements contained in the regulations. Interest in the content of the historical CCA documents is indicated by the tax community’s use of the documents. At least one tax publisher, to whom the IRS provided a complete set of copies of the paper documents, has made them electronically available to its subscribers and provides a full text search capability. Counsel informed us that taxpayers and their representatives have referenced these historical CCA documents in their dealings with the IRS. In contrast, the absence of an IRS supplied way to research and retrieve specific documents restricts access by persons who are not subscribers to a particular tax publisher.

Summary of Recommendations

The Office of the Chief Counsel should revise its procedures to require Counsel managers to ensure that CCA documents have been identified for public release when they approve the document for issuance. It should also initiate a periodic review focusing on specific case closures. Additionally, Counsel should develop and implement a convenient way for the public to research and retrieve historical CCA documents.

Management’s Response: The Office of the Chief Counsel agreed with the recommendations to enhance its procedures to ensure that all CCA documents are identified for timely release. Counsel made several modifications to its procedures and distributed to all Counsel managers and attorneys a document that clarifies the CCA procedures. Counsel also intends to initiate reviews, on a periodic basis, which will focus on specific case closures.

At this time, Counsel does not agree with the recommendation to develop and implement a convenient method for the public to research and retrieve historic CCA documents. Counsel will make that determination after it reviews the results of the IRS study concerning the delivery of the agency’s public reading room services.

Office of Audit Comment: We believe that if the IRS study recommends not maintaining historic documents electronically, Counsel should pursue options of contracting with tax publishers to allow the public access to these documents.

Management’s comments are included in the body of the report where appropriate, and the complete text of their response is included as Appendix V.