§982 Admissibility of Documentation Maintained in Foreign Countries

Summary

If a taxpayer does not follow a formal request for documents kept outside the United States within 90 days after the request is mailed, a court can bar the taxpayer from using those foreign documents in a tax case if the Secretary asks. The taxpayer can avoid that ban by proving they had a good reason for not giving the documents. Saying a foreign law would punish disclosure is not a good reason. A formal request must come after normal requests fail and be sent by registered or certified mail to the taxpayer’s last known address. It must give a time and place to produce the papers, explain why earlier papers were not enough, describe the records wanted, and warn about the consequences of not producing them. The person getting the request can ask a court to cancel it within 90 days. The 90-day time limit pauses while that court case (and any appeals) is pending. The Secretary or the court can extend the 90-day period. "Foreign-based documentation" means papers outside the United States that matter to the tax issue, and "documentation" includes books and records. The running of limitation periods under sections 6501 and 6531 is also paused while the court challenge and appeals are pending.