In IRS Chief Counsel Advice 201146017, an IRS agent asked to obtain a taxpayer’s original electronic data files (or backups of those data files) to obtain the unaltered “metadata,” even if the taxpayer offered to provide paper printouts of those data files. In addition, the IRS agent asked to obtain the taxpayer’s original electronic data files from the taxpayer’s accountant.
The IRS Chief Counsel advised that the agent can summon a taxpayer’s original electronic data files containing unaltered metadata, as long as the information in the metadata “may be relevant” (under § 7602(a)(2) of the tax code) to a proper purpose for the IRS examination. This has a broad scope, include “ascertaining the correctness of the return.” The IRS Chief Counsel advises that the fact that the taxpayer offers print copies that omit the metadata does not restrict the IRS’s authority to summon the original, unaltered metadata.
The IRS Chief Counsel also advised that the agent can summon a third–party witness, including the taxpayer’s accountant, to produce original electronic data files and unaltered metadata.
This is an important ruling, because metdata in electronic documents can contain a history of document revisions, formulas in spreadsheets that aren’t printed, hidden text or cells that aren’t printed, comments and notes that aren’t printed, a record of who edited and reviewed the document, a record of dates and times when the document was modified, and much more. Microsoft has articles about importance of metadata in Word documents and Excel spreadsheets. Another good source of information about metadata is Metadatarisk.org.
This Chief Counsel Advice follows the recent Chief Counsel Advice 201141017 where an IRS agent requested copies of a taxpayer’s e–mail contents from the taxpayer’s Internet Service Provider (ISP) without a warrant. That specific request was withdrawn because it violated § 2703(a) of the Stored Communications Act, but the IRS agent was authorized to request “non–content information” about the taxpayer’s e–mails without a warrant, including how long the taxpayer has used the e–mail service and even the credit card number or bank account number used to pay for the e–mail service, if applicable!
This is an interesting recent pattern of IRS agents seeking electronic data in the tax return examination process.
