25.5.8  Use of Summons Special Applications

Manual Transmittal

June 28, 2011

Purpose

(1) This transmits a revision of Section 8, Use of Summons Special Applications, of IRM Handbook 25.5, Summons Handbook.

Background

The Summons Handbook provides guidelines for all IRS functions in one multifunctional handbook. This section provides information regarding the use of summons in special circumstances.

Material Changes

(1) This transmittal reissues existing procedures in the new IRM format and changes titles to reflect the crosswalk of titles in TEGE, LB&I and CI. This restructuring consists of the following changes:

  1. Updates the new organizational names and titles, including names and titles of approving officials throughout.

  2. IRM 25.5.8.2.1 Criminal Investigation and Summons Concerning Finances of a Political Organization was updated with current management titles.

  3. IRM 25.5.8.3 Summons for Information Pursuant to Tax Treaties was realigned with Records Outside the United States and is now renumbered 25.5.8.4..

  4. IRM Subsection 25.5.8.4 Restrictions on Church Tax Inquiries and Examinations has been moved and is now renumbered 25.5.8.3.

  5. IRM 25.5.8.3.2 Church Tax Inquiry now addresses the referral process for a church inquiry.

  6. IRM 25.5.8.3.3 Church Tax Examination added the time frames required between a tax inquiry letter and a church tax examination.

  7. IRM 25.5.8.3.4 IRC §7611 Definitions expands on definition of a church tax inquiry.

  8. IRM 25.5.8.3.5 Issuing Church Summons has expanded to explain that when the IRS has not complied with IRC §7611 procedures the courts will not suspend time frame to complete the examination.

  9. IRM 25.5.8.4 Summons for Information Pursuant to Tax Treaties now reflects coordination with the Competent Authority for requests from a foreign competent authority and has expanded to address collection cases.

  10. IRM 25.5.8.5 Records Outside the United States is updated to address requirement to contact Tax Attachés, Revenue Service Representative and headquarters Exchange of Information Groups.

  11. IRM 25.5.8.6 Information from Federal Officials and Employees addresses the situation when another federal agency requests a summons be served on them.

  12. IRM Exhibit 25.5.8-1 Church Tax Inquiry Letter has been moved to IRM Exhibit 4.76.7-2 and now includes Taxpayer Advocate information in the letter.

  13. IRM Exhibit 25.5.8-2 Administrative and Constitutional Provisions has been moved to IRM Exhibit 4.76.7-3 and renamed Statement of Administrative and Constitutional Rights.

  14. IRM Exhibit 25.5.8-3 Church Tax Examination Letter has been moved to IRM Exhibit 4.76.7-5, renamed Notice of Church Examination and now includes the Taxpayer Advocate information in the letter.

Effect on Other Documents

This material replaces text contained in IRM 25.5.8.

Audience

All Operating Divisions & Functions

Effective Date

(06-28-2011)

Scott D. Reisher
Director, Collection Policy
Small Business Self Employed

25.5.8.1  (04-30-1999)
Overview

  1. This section contains the following topics regarding the use of summons to obtain information:

    • Concerning the Finances of a Political Organization,

    • Pursuant to Tax Treaties,

    • Regarding Church Tax Inquiries and Examinations,

    • For Records Located Outside the United States,

    • From Federal Officials and Employees.

25.5.8.2  (04-30-1999)
Use of Summons to Obtain Information Concerning the Finances of a Political Organization

  1. The term political organization, includes a political party, a national, state, or local committee of a political party, and campaign committees or other organizations that accept contributions or make expenditures for influencing the selection, nomination, or election of any individual for elective public office. The term political organization does not include an organization to which the taxpayer is the only contributor.

  2. Information concerning the finances of a political organization includes testimony or documents that disclose the identity of contributors or recipients of expenditures.

  3. A summons may be used to obtain testimony or documents concerning the finances of a political organization if compliance with the summons would not require a general disclosure of the finances. Such a summons will be restricted to information relating to the tax liability of named taxpayers under examination or investigation. The summons must specifically identify the taxpayer’s transactions with the political organization and be limited to require only testimony or documents relating to those transactions or to other similar transactions. If the taxpayer’s transactions with the political organization are known to have occurred through the use of an intermediary person or organization, the summons may require testimony or documents relating to specifically identified transactions of the intermediary with the political organization.

  4. Except as provided in IRM 25.5.8.2.1 below, do not use a summons to obtain testimony or documents requiring a general disclosure of the finances of a political organization. This restriction applies if the information sought by a summons would generally disclose the finances of a political organization even though the testimony is to be obtained from, or the documents are owned or possessed by, a source that is not a political organization.

25.5.8.2.1  (06-28-2011)
Criminal Investigation and Summons Concerning Finances of a Political Organization

  1. If conformity with IRM 25.5.8.2(3) or an exception to the provisions of IRM 25.5.8.2 (4) is desired, a memorandum request with a copy of the proposed summons will be submitted by the Special Agent in Charge, Criminal Investigation (CI), to the Director of Field Operations, CI, for prior written approval. If time is of the essence, a telephonic request can be made to the Director of Field Operations, CI, followed immediately by a memorandum.

  2. If there is a question as to the legal sufficiency of the proposed summons, and time permits, refer the summons to the appropriate Area Counsel office for a preliminary legal review, prior to referral of the request to Headquarters for approval.

25.5.8.2.2  (04-30-1999)
TE/GE:EO

  1. A summons may be issued to obtain testimony or documents concerning a political organization (whether from the organization itself or a recordkeeper, such as a bank), if needed, to determine the exempt status or tax liability of an organization under examination.

  2. The TE/GE Area Manager must authorize the summons before it is issued. The signature must be on the original and all copies of the summons.

    1. Prepare a detailed memo to the Area Manager, explaining the need for the summons.

    2. Retain a copy of such memo in the examination administrative file.

    3. Refer any questions about the legal sufficiency of the proposed summons to Area Counsel for a preliminary legal review before forwarding it to the Director, TE/GE, for approval.

  3. In situations requiring expeditious handling, the Area Manager may give oral authorization to the Director, TE/GE, to issue a summons to a political organization. A statement signed by the Director, TE/GE, on the original and all copies of the summons, must specify that he or she had prior authorization by the Area Manager, and include the date authorized. Such authorization should be confirmed by the Area Manager in writing as soon as possible after the summons is issued.

25.5.8.3  (04-30-1999)
Restrictions on Church Tax Inquiries and Examinations

  1. IRC §7611 imposes restrictions on inquiries or examinations concerning a church. Before the IRS can civilly use any information for an adverse action against a church (e.g., final notice of revocation or denial of exempt status, issuance of a notice of deficiency, or the assessment of any underpayment of tax), the restrictions of IRC §7611 must first be met.

25.5.8.3.1  (04-30-1999)
Situations in which IRC §7611 Procedures Do Not Apply

  1. IRC §7611(i) states that these restrictions do not apply to:

    1. any criminal investigation;

    2. any inquiry or examination relating to the tax liability of any person other than a church;

    3. any assessment under section 6851 (relating to termination assessments of income tax), IRC §6852 (relating to termination assessments in case of flagrant political expenditures of IRC §501(c)(3) organizations), or section 6861 (relating to jeopardy assessment of income taxes, etc.);

    4. any willful attempt to defeat or evade any tax imposed by this title; or

    5. any knowing failure to file a return of tax imposed by the title.

  2. The restrictions of IRC §7611 do not apply to examinations relating to the tax liability of any person other than a church. For example, examinations regarding:

    1. the tax status or liability of a contributor to the church;

    2. use of church funds to a particular individual or organization that might result in the denial of a charitable contribution, (for example, a tuition payment that is claimed as a contribution)

    3. assignment of income, services, or contributions to a church;

    4. a vow of poverty with transfer of assets to a church;

    5. social security tax, self-employment tax, or income tax withheld from wages of individuals other than the church.

  3. The restrictions of IRC §7611 do not apply to third-party records. For example:

    1. It does not apply to records relating to the church held by a third-party (to be acquired by a summons to which IRC §7609 applies) such as cancelled checks in the possession of a bank. The summons procedures of IRC §7609 must be followed before third-party records are examined.

    2. It does not apply to requests made to a church for information needed to locate third-party records. Such information includes the church’s chartered name, the state and year in which it was incorporated, and the location of bank accounts.

    Note:

    Consult with Area Counsel whenever questionable situations are encountered.

  4. The restrictions of IRC §7611 do not apply to routine requests. Routine requests are requests for information the IRS needs to administer the Internal Revenue Code apart from requests for information needed to determine an organization’s exempt status or to assess tax. Routine requests include requests for information concerning:

    1. the filing or failure to file any tax or information return by the church;

    2. compliance with income tax or FICA withholding responsibilities;

    3. supplemental information needed to complete the mechanical processing of any incomplete or incorrect return filed;

    4. information needed to process letter ruling requests or applications for exemption or foundation classification;

    5. information necessary to process and periodically update registrations for tax-free transactions (excise tax), elections for exemptions from windfall profits tax, or employment tax exemption requests by a church;

    6. information identifying a church that will be used by the Service to update its Cumulative List of Tax Exempt Organizations (Pub. 78) and other computer files; and

    7. confirmation that a specific business is or is not owned or operated by a church.

    Note:

    Repeated (two or more) failures by the church to respond to routine requests may support the commencement of a church tax inquiry. In any case, if a summons is required to secure this information after the failure of the church to respond, the provisions of IRC §7611 must be observed.

  5. The restrictions of IRC §7611 must be observed if an organization claims to be a church. When you have reason to believe an organization’s claim to be a church is frivolous, secure Area Counsel’s opinion before a determination is made that IRC §7611 is not applicable.

  6. IRC §7611 applies to schools operated as part of a church or convention or association of churches. However, IRC §7611 does not apply to a separately organized or incorporated church-supported school, or other organization incorporated separately from the church.

25.5.8.3.1.1  (04-30-1999)
Collection / TE/GE: EO Requirements Prior to Service of Church Summons

  1. Follow the provisions of IRC §7611 prior to the service of a summons on a church when the purpose of the summons is to:

    1. determine a church’s requirement to file a tax return;

    2. secure information required to prepare a delinquent tax return.

    Note:

    A summons served on a third party to obtain information necessary to determine whether a church is subject to filing requirements is not subject to IRC §7611.

25.5.8.3.2  (06-28-2011)
Church Tax Inquiry

  1. Before a church tax inquiry can begin, certain reasonable belief and notice requirements defined in IRC §7611 must be satisfied. There must be a "reasonable belief" on the part of the Designated Official that the church:

    1. may not be tax exempt (by reason of its status as a church) under IRC §501(a), or

    2. may be carrying on an unrelated trade or business (within the meaning of IRC §513), or

    3. otherwise engaged in activities subject to taxation under the Internal Revenue Code.

  2. If Exempt Organization personnel, as well as other operating divisions, secure information that indicates a church tax inquiry under IRC §7611 may be warranted, they should forward that information per IRM 4.76.7.4.2 on Form 5666, EO Information Report, to the Manager, EO Classification in Dallas for consideration by the EO Referral Committee.

  3. The Designated Official must sign the church inquiry letter and it must be sent by certified mail, return receipt requested. An examiner will prepare the church tax inquiry notice for the Designated Official using the appropriate language as illustrated in Exhibit 4.76.7-2 and attach the Statement of Administrative and Constitutional Rights in Exhibit 4.76.7-3. Steps for processing the Church Tax Inquiry Notice are explained in IRM 4.76.7.4.5.

    Note:

    Before requesting the Designated Official's approval, the examiner must request concurrence from Counsel that an inquiry is warranted.

  4. The examiner will prepare a memorandum to Counsel setting forth the following:

    1. reasons for the inquiry;

    2. information upon which the decision to initiate the inquiry is based;

    3. specific provisions of the IRC section and regulations considered;

    4. an explanation of how the examiner obtained the information relied on for the proposed inquiry.;

    Note:

    The request should be accompanied by the case file, containing all of the information the examiner considered in making the decision to request approval to initiate the church tax inquiry, including the administrative file, if available. If the examiner believes the information is too voluminous to be included, the examiner should include a summary and offer Counsel the opportunity to inspect the information, if necessary.

  5. If the church provides sufficient information for the examiner to determine no further action is required, the examiner will prepare a letter advising the organization of this conclusion, specifying the time period covered, the class of tax reviewed and the issue for which the no change is made.

    1. The examiner should use the language contained in Exhibit 4.76.7-6, No Change Notification Letter to Organization Recognized Exempt - No Examination, for an organization previously recognized as exempt by the IRS.

    2. The examiner should use the language contained in Exhibit 4.76.7-7, No Change Notification Letter to Organization Not Recognized Exempt - No Examination, for an organization not previously recognized as exempt by the IRS.

  6. If the final determination will result in the assessment of additional tax (other than by voluntary filing), refer to IRM 25.5.8.3.3(8).

  7. If a church fails to respond to the inquiry notice, follow the procedures in IRM 25.5.8.3.3 before serving a summons on a church.

  8. The IRS has 90 calendar days from the date of the mailing of a notice of inquiry to decide whether to initiate a church tax examination and issue a Notice of Examination.

25.5.8.3.3  (06-28-2011)
Church Tax Examination

  1. Conduct a church tax examination of the church records only to the extent necessary to determine:

    1. the liability for any tax;

    2. the amount of tax;

    3. whether an organization claiming to be a church is a church for any period.

  2. A church tax examination can only begin if certain notice of examination and opportunity for conference requirements, set forth in IRC §7611, are first satisfied.

  3. If the church does not respond to the inquiry notice or voluntarily file the required information within 15 calendar days, prepare a church tax examination notice for the Designated Official's signature (see Exhibit 4.76.7–5).

  4. The notice of examination must not be mailed sooner than 15 calendar days after the date the notice of church tax inquiry was mailed and must be mailed at least 15 days before the date the examination begins. The notice must also be given to Area Counsel. Send the church tax examination letter after the notice of inquiry is issued, and by certified mail, return receipt, and include the following:

    1. a copy of the church tax inquiry notice and attachments previously sent to the taxpayer;

    2. a description of the church records and activities to be examined;

    3. copies of all documents collected or prepared by the IRS for use in the examination. Disclosure of this information is required by the Freedom of Information Act, as supplemented by IRC §6103;

    4. an offer to participate in a conference between the church and an IRS official to discuss and attempt to resolve issues relating to the examination.

    Note:

    The church may request a meeting anytime prior to the examination. If the church requests a conference, schedule it within a reasonable period of time. Only one conference is needed to comply with IRC §7611. Churches may not use the conference requirement to delay an examination beyond the time necessary to prepare for and hold a conference.

  5. Area Counsel has 15 days from the issuance of the examination notice to file an advisory objection. See IRM 4.76.7.5.1(3)e and Exhibit 4.76.7-8.

  6. If, as a result of an advisory objection, a determination is made to conclude the church examination with no further action, the examiner will send a no change advisory letter, as applicable, that neither denies nor recognizes exempt status or that continues to recognize exempt status under IRC §501(c)(3).

  7. In response to the examination notice, the church may provide sufficient information to permit a final determination. Conclude the inquiry and notify the church in writing. This letter, signed by the Designated Official, will specify the:

    1. time period covered;

    2. specific periods reviewed;

    3. description of issues considered in the examination; and

    4. determination concerning the church’s liability for each period reviewed.

  8. If the final determination will result in the assessment of additional tax (other than by voluntary filing), refer the proposed assessment to Area Counsel for approval. Area Counsel must furnish written approval that the IRS has substantially complied with the provisions of IRC §7611. Attach this memorandum to the return prepared under IRC §6020(b) submitted for assessment.

  9. Complete church examination procedures within two years after the date the notice of examination is mailed to the church. The running of this two–year period is suspended for any period during which:

    1. there is a pending judicial proceeding brought by the church against the IRS with respect to the church tax inquiry or examination;

    2. there is a pending judicial proceeding brought by the IRS against the church to compel compliance;

    3. the IRS is unable to take actions with respect to the examination because of an order issued in a suit under IRC §7609;

    4. the church fails to comply with any reasonable request for church records, or other information (for periods in excess of 20 days, but not more than six months).

    Note:

    The examiner should prepare a summons and forward to Counsel for review as soon as circumstances indicate the church will not voluntarily provide the information requested.

  10. If the Service has not substantially complied with the church examination procedures, a summons enforcement proceeding brought by the Service to gain access to church records may be stayed by the Court until the Service complies with IRC § 7611 procedures.

    Note:

    The two-year period for completing a church examination will not be suspended during stays of summons proceedings resulting from violations of IRC §7611 procedures.

25.5.8.3.4  (06-28-2011)
IRC § 7611 Definitions

  1. The term "church" includes:

    1. any organization claiming to be a church;

    2. any convention or association of churches.

  2. A church tax inquiry is any inquiry to a church (other than an examination) to serve as a determining basis for whether a church is:

    1. tax exempt under IRC §501(a) by reason of its status as a church; or

    2. carrying on an unrelated trade or business (within the meaning of IRC §513); or

    3. engaged in activities which may be subject to taxation.

    Note:

    A church tax inquiry may lead to a church tax examination.

  3. A church tax examination is any examination of church records or the religious activities of any church to determine if a church is:

    1. tax exempt under IRC §501(a) by reason of its status as a church; or

    2. carrying on an unrelated trade or business (within the meaning of IRC §513); or

    3. engaged in activities which may be subject to taxation.

    Note:

    A church tax examination may not take place until a church tax inquiry has been completed.

  4. Church records include:

    1. all regularly kept church corporate and financial records;

    2. corporate minute books, contributor and membership lists, and church books of account;

    3. private correspondence between a church and its members that is in the possession of the church.

25.5.8.3.5  (06-28-2011)
Issuing Church Summonses

  1. Comply with the requirements of IRC §7611 before issuing a summons to a church to secure:

    1. information requested during the examination which the church refuses to provide;

    2. information about a church’s federal filing requirement;

    3. delinquent returns.

  2. If the purpose of the summons is to secure information to aid in the collection of liabilities already assessed, IRC §7611 is not applicable, and a summons may be served.

  3. Modify the preprinted description of purpose on the summons form to reflect the specific purpose of the summons.

  4. Prepare a church summons in accordance with procedures in IRM 25.5.2, Preparation of Summons. Area Counsel must review the proposed summons before issuance.

  5. If a church does not comply with a summons, refer to Area Counsel for enforcement. After reviewing the summons enforcement request and preparing the suit letter, Area Counsel will refer the matter to the National Office for review pursuant to CCDM 34.6.3.3.2.

  6. If the Service has not substantially complied with the church examination procedures, a summons enforcement proceeding brought by the IRS to gain access to church records may be stayed by the Court until the IRS complies with IRC §7611 procedures.

    Note:

    The two-year period for completing a church examination will not be suspended during stays of summons proceedings resulting from violations of IRC §7611 procedures.

25.5.8.3.5.1  (04-30-1999)
Criminal Investigation

  1. In church-related investigations, Criminal Investigation will follow the same procedures for summonses and other inquiries as in other criminal cases, since IRC §7611(i) states restrictions on church tax inquiries and examinations do not apply to any criminal investigation.

25.5.8.4  (06-28-2011)
Summons for Information Pursuant to Tax Treaties

  1. A summons may be issued to obtain information from individuals and entities within the United States, relating to the foreign tax liability of a foreign citizen, in response to a formal request made by the foreign competent authority under income tax treaties, estate and gift tax treaties, or tax information exchange agreements. The Deputy Commissioner, Large Business and International (LB&I), acts as the U.S. Competent Authority in administering the operating provisions of tax treaties as well as tax coordination agreements with the U.S. territories.

  2. Incoming (received from foreign countries) requests are received by the designated Competent Authority, Tax Attachés, or Revenue Service Representatives. If it is determined that a request is proper under a treaty or tax information exchange agreement, assignment will be coordinated through the Program Manager, Competent Authority, to Collection, Examination, Appeals or Criminal Investigation when necessary. Initially, an attempt should be made to obtain the information without a summons. However, do not attempt to obtain documents by informal means from financial institutions within the Tenth Circuit or in areas governed by Tenth Circuit precedents. Refer to IRM 25.5.1.4.1 for more information on this limitation. If the witness refuses to voluntarily supply the information, a summons will be prepared in coordination with Area Counsel. If the summoned information is not provided or if a petition to quash the summons is filed, request Area Counsel to initiate enforcement action.

  3. At times cases being worked by the Competent Authority office are also assigned to a revenue officer (RO). It is possible that the RO could pursue collection actions in these cases that would be counter-productive to the IRS' interest or unfair to the taxpayer and could violate the postponement guidelines in Rev. Proc 2006-23. Refer to IRM 5.21.7.2.1 for collection procedures for working Competent Authority cases.

25.5.8.5  (06-28-2011)
Records Outside the United States

  1. Before issuing a summons for records located outside the United States, the employee should exhaust all available opportunities to secure information from within the United States.

  2. The IRS may be able to summon a domestic branch or office of an offshore financial institution for the production of any records that would be available to the taxpayer at the same branch or office. Consult with Area Counsel and International Counsel and refer to IRM 25.5.6.7.1 and 25.5.6.7.2 for information concerning foreign banks or foreign branches of domestic banks.

  3. Requests for foreign-based information are handled by IRS Tax Attachés (TAs), a Revenue Service Representative (RSR), and headquarters Exchange of Information (EOI) groups. IRS employees needing foreign-based information are encouraged to make direct contact with the appropriate TA, RSR, or EOI Analyst to determine what might be available from a specific country via the treaty/TIEA exchange process. Compliance Employees cannot issue a summons directly to any individual or entity located outside the United States.

25.5.8.6  (06-28-2011)
Information From Federal Officials and Employees

  1. In general, no summons will be issued to federal agencies, their officials and employees for information related to their official responsibilities. Such information may ordinarily be obtained through liaison with the agency.

  2. In rare instances, such as when a high-ranking executive from another federal agency requests a summons, it may be appropriate to serve a summons on the other agency. Any proposal to do so much first be coordinated with and approved by the Office of Chief Counsel, Procedure and Administration, Branches 6 or 7.

    Note:

    Any summons served on another federal agency cannot be enforced in a district court. If the summoned federal agency refuses to provide the summoned information, the dispute will ultimately be resolved by the Office of Legal Counsel at the Department of Justice.


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