US Supreme Court to Rule on the Extent of the IRS’ Summons Power

Time and time again, Courts have found the Internal Revenue Services’ authority broad and that it was Congress’ intent to ‘encourage’ effective tax investigations. Part of these powers include the power of the IRS to issue Summons to parties or third parties to examine documents and take testimony as part of its tax compliance and investigatory functions. Failure to comply with Summons results in the IRS going to Court for an enforcement hearing. On its procedural face, it appears that the taxpayer gets his day in Court to explain why the Summons is improper (i.e., improper motive, fishing expedition, etc). However, in reality, Judges routinely rubber stamp enforcement summonses without a hearing.

Now the Court will decide what legal standards taxpayers must meet to get a court hearing if they think the IRS has issued a summons for an improper purpose.

We are particularly interested in determining whether the Court will make any determinations from a taxpayer’s rights standpoint. Further, in an era of john doe summons and vast IRS investigations, additional interpretations of IRS authority and due process rights will impact many individuals and businesses worldwide.

We will keep you posted. In the meantime, contact Moskowitz, LLP with any questions.