IRS using secure email for some audits

Register now

WASHINGTON -- Tax-exempt bond officials at the Internal Revenue Service are conducting a pilot project testing the use of an IRS Secure Messaging platform for municipal securities audit examinations.

Officials don’t know yet how much quicker the audit process will be. The pilot program began in May, but was not officially announced by the IRS until last week.

Telly Meier, field operations manager for the IRS Indian Tribal Governments/Tax Exempt Bond section, talked about the new email portal at the Bond Attorneys Workshop in September.

Participation is voluntary for the bond issuer that is under examination, but the IRS says feedback from the issuers and their representatives that have tried secure messaging has been very positive.

“This, to me, is actually a good thing because it means they are trying to figure out ways to streamline the process,” said Vicky Tsilas, a partner at Ballard Spahr who recently headed Branch 5 in the IRS Chief Counsel’s Office.

Tsilas predicted that using the IRS secure messaging platform “will mean that document exchange for exams will proceed with more efficiency and therefore result in audits being conducted in a faster manner.”

Perry E. Israel, a board member of the National Association of Bond Lawyers and a sole practitioner in Sacramento, Calif., said he’s already used the IRS secure email system for a couple of audits.

“The way it works is, when you get your first audit letter with something saying they have this program going and if you want to participate, you have to send back to them something saying we’re willing to participate and they set you up with a secure portal for as long as that audit lasts,” Israel said.

The temporary portal is unique to that particular audit and a new portal is established for a second audit even if it involves the same client.

“I’m personally very happy that we finally have this because until now it’s been kind of crazy,” Israel said. “The IRS was using a fax system, but now most people now don’t even have fax machines.”

The IRS began using the secure email system earlier for corporate audit exams, according to Todd Cooper, a partner in the public finance group at Locke Lord who chairs the American Bar Association’s taxation section's tax-exempt financing committee.

“So, my assumption is that they will wait to see how well the program works, gather data, and only then talk about whether it will enhance the speed of an exam,” Cooper said in an email.

Meier is scheduled to participate on a panel at the ABA tax-exempt financing committee meeting in New Orleans on Jan. 18, 2019 that will include secure messaging as one of the topics to be discussed, Cooper said.

For reprint and licensing requests for this article, click here.
Tax audits Bonds Enforcement actions NABL IRS Washington DC