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IRS SUMMONS

A notice to a taxpayer requiring him to provide information in an IRS tax investigation, either civil or criminal.

26 U.S.C. S 7602 ("Examination of books and witnesses") provides in pertinent part:

(a) Authority to summon, etc. -- For the purpose of ascertaining the correctness of any return. . . , determining the liability of any person for any internal revenue tax. . . , or collecting any such liability, the Secretary is authorized --

(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry; (2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and (3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.

Congress has granted the IRS "expansive information-gathering authority." United States v. Arthur Young & Co., 465 U.S. 805, 816 (1984). The IRS is obligated to "inquire after and concerning all persons. . . who may be liable to pay any internal revenue tax. . . ." 26 U.S.C. S 7601.

Section 7602 provides three separate means of such inquiry. Section 7602(a)(1) provides for an informal, noncompulsory means of inquiry. If an informal inquiry proves inadequate, Sections 7602(a)(2) and 7602(a)(3) provide mechanisms for the formal compulsion of the production of documents and testimony. As the only published opinion to have considered this question explained, "[t]he mere fact that the IRS has the power under S 7602(2) to obtain information by issuing summonses does not require it to do so." United States v. Barksdale, 499 F. Supp. 624, 628 (M.D. Fla. 1980).

There is a statutory right to quash certain IRS summonses, see 26 U.S.C. S 7609, but there is no statutory right to "quash" IRS circular letters. Circular letters are not summonses or the "functional equivalent" of summonses. This is not, of course, to say that so long as a communication from the IRS is labelled "circular letter," the statutory restraints on summonses do not apply. A letter mailed out purportedly under the authority of Section 7602(a)(1), but appearing to make response mandatory, or to threaten IRS action against the recipient if response is not made, would amount in practical effect to a summons under Section 7602(a)(2).

To obtain enforcement of a summons, the IRS must first establish its "good faith" by showing that the summons: (1) is issued for a legitimate purpose; (2) seeks information relevant to that purpose; (3) seeks information that is not already within the IRS' possession; and (4) satisfies all administrative steps required by the United States Code. United States v. Powell, 379 U.S. 48, 57-58 (1964). The government's burden is "a slight one" and typically is satisfied by the introduction of the sworn declaration of the revenue agent who issued the summons that the Powell requirements have been met. United States v. Dynavac, Inc., 6 F.3d 1407, 1414 (9th Cir. 1993); United States v. Gilleran, 992 F.2d 232, 233 (9th Cir. 1993). Once a prima facie case is made a "heavy" burden is placed on the taxpayer to show an "abuse of process" or "the lack of institutional good faith." Dynavac, 6 F.3d at 1414.

Issuance of third-party summonses is governed by 26 U.S.C. S 7609. That statute provides that when a summons is served on a "third-party recordkeeper" and that summons identifies a person about whom information is requested, "notice of the summons shall be given to any person so identified." Id. S 7609(a)(1). The statute indicates that "[s]uch notice shall be accompanied by a copy of the summons which has been served and shall contain an explanation of the right under subsection (b)(2) to bring a proceeding to quash the summons." Id.

Notice of the summonses: S 7609(a)(2), which provides that notice is sufficient if: [S]uch notice is served in the manner provided in section 7603 (relating to service of summons) upon the person entitled to notice, or is mailed by certified or registered mail to the last known address of such person, or, in the absence of a last known address, is left with the person summoned. 26 U.S.C. S 7603 in turn provides that a "summons . . . shall be served by the Secretary, by an attested copy delivered in hand to the person to whom it is directed, or left at his last and usual place of abode."

A taxpayer is not entitled to an evidentiary hearing at which he could examine witnesses and inquire into the IRS' good faith unless he or she presents some "minimal amount of evidence" to support a contention of a lack of good faith. United States v. Stuckey, 646 F.2d 1369, 1372 (9th Cir. 1981), cert. denied, 455 U.S. 942 (1982). The Tenth Circuit has observed that to be entitled to a hearing, the taxpayer must "factually oppose the Government's allegations by affidavit." United States v. Balanced Financial Management, Inc., 769 F.2d 1440, 1444 (10th Cir. 1985). The showing must be more than "[l]egal conclusions[,] mere memoranda of law . . . or allegations." Id.

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