J. Jean Moore - Page 11

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          consider a nominee theory and to look at petitioner’s “money                
          stream” were substantive in nature and clearly constituted                  
          prohibited ex parte communications that were per se prejudicial             
          to petitioner.                                                              
               Respondent argues that grounds independent of the ex parte             
          communications would support the Appeals Office’s adverse                   
          determination (namely, petitioner’s conviction for tax evasion              
          and noncompliance by petitioner’s eldercare business with certain           
          Federal employment tax laws).  These alleged grounds do not                 
          overcome or render moot the prohibited ex parte communication               
          rules, as respondent appears to argue.                                      
               Respondent also argues that because petitioner eventually              
          learned from the Appeals officer the content of the ex parte                
          communications, petitioner was not kept in the dark with regard             
          thereto and was not harmed.  Nothing, however, in either RRA 1998           
          or Rev. Proc. 2000-43, supra, allows respondent’s Appeals officer           
          to avoid the rule against prohibited ex parte communications by             
          later informing the taxpayer about the communications.                      
               Respondent characterizes the ex parte communications as                
          “routine factual investigation.”  We disagree.  Although the ex             
          parte communications may have been in good faith and intended to            
          assist in the development of relevant facts, they were ex parte             
          and substantive, and they were covered by the prohibition                   
          discussed above.                                                            

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