Edward H. and Anne G. Harrell - Page 18

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               B.  Communications Between Respondent’s Counsel Stanley and            
          Appeals Officer Petrohovich2                                                
               We also agree with respondent that AO Martin did not abuse             
          her discretion in determining that the communications between AO            
          Petrohovich and RC Stanley did not violate petitioners’ rights.             
               RRA 1998 required that respondent develop a plan to prohibit           
          ex parte communications between officers of the Appeals Office              
          and other Internal Revenue Service employees that appear to                 
          compromise the independence of the Appeals Office.  Respondent              
          issued Rev. Proc. 2000-43, 2000-2 C.B. 404, to fulfill this                 
          statutory mandate.                                                          
               Petitioners are correct that Rev. Proc. 2000-43, places                
          limits on communications between the Appeals Office and certain             
          employees in the Office of Chief Counsel.  Under the guidance set           
          forth in Rev. Proc. 2000-43, an “ex parte communication” is a               
          communication taking place between the Appeals Office and another           
          Service function without the participation of the taxpayer or the           
          taxpayer’s representative.  Rev. Proc. 2000-43, sec. 3, Q&A-D11,            
          2000-2 C.B. 406, provides that                                              
               Appeals employees should not communicate ex parte                      
               regarding an issue in a case pending before them with                  

               2As stated above, AO Petrohovich conducted two separate                
          reviews of petitioners’ tax liabilities.  She conducted a sec.              
          6330 hearing with respect to certain of petitioners’ tax years              
          not here at issue.  She also conducted a review of the initial              
          denial of the Offer in Compromise.  Her review of the Offer in              
          Compromise was not conducted pursuant to sec. 6330.                         

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