5.17.6  Summonses

5.17.6.1  (10-15-2010)
General

  1. The purpose of this section is to acquaint revenue officers with the basic legal concepts governing the use and enforcement of administrative summonses. For more detailed guidance, refer to the Summons Handbook at IRM 25.5.

  2. In general, the Service should issue summonses only when the taxpayer (or other witness) will not produce the desired records or other information voluntarily. When a taxpayer or third person is willing to testify and produce documents voluntarily, a summons may not be required. In such cases, revenue officers may only need to produce their credentials. Before issuing any summons, the Service should consider:

    1. The possibility that judicial enforcement will be required, and

    2. The adverse effect on future voluntary compliance if enforcement is abandoned.

    Note:

    The Service should only issue a summons when it is prepared to seek judicial enforcement if the summoned party fails to fully comply.

  3. The summons should not require the witness to do anything other than appear on a given date to give testimony or produce existing books, papers and records or both. A summons cannot require a witness to prepare or create documents, including tax returns, that do not currently exist. However, a taxpayer may be required by a summons to appear and give testimony that would allow a revenue officer to obtain answers to all the questions or blanks on a Collection Information Statement for that taxpayer.

    Note:

    Pursuant to IRC § 6331(g), the Service may not levy on a person’s property on the day that person (or that person’s officer or employee) is required to appear in response to a summons issued by the Service for the purpose of collecting any tax.

5.17.6.2  (12-11-2007)
Legal Authority

  1. IRC § 7602 provides the Service with summons authority. See IRM 5.17.6.2.1, below. Additionally, case law provides standards that the Service must meet to have its summons enforced. See IRM 5.17.6.2.2, below.

5.17.6.2.1  (10-15-2010)
Statutory Authority

  1. IRC § 7601 authorizes the Service to inquire about any person who may be liable to pay any internal revenue tax without a summons.

  2. IRC § 7602 authorizes the Service to summon a witness to testify and to produce books, papers, records, or other data that may be relevant or material to an investigation. United States v. Powell, 379 U.S. 48 (1964).

  3. IRC § 7602 and the corresponding regulations, Treas. Reg. § 301.7602-1, also identify the purposes for which the Service may issue summonses. The purposes are:

    • to ascertain the correctness of a return;

    • to prepare a return where none has been made;

    • to determine the liability of a person for internal revenue tax;

    • to determine the liability at law or in equity of a transferee or fiduciary of a person in respect of any internal revenue tax;

    • to collect any internal revenue tax liability; or

    • to inquire into any offense (civil or criminal) connected with the administration or enforcement of the internal revenue laws.

    Note:

    The Service’s right to examine records provided by IRC § 7602 includes the right to photocopy such records.

  4. The following persons may be summoned under the authority of IRC § 7602(a)(2):

    • the person liable for the tax or required to perform the act (prepare a return);

    • any officer or employee of such person who has information that may be relevant to the investigation;

    • any person having possession, custody, or care of books, papers, records, or other data that may be relevant to the investigation; and

    • any other person the Secretary deems proper.

  5. IRC § 7602(d)(1) prohibits a summons from being issued or enforced with respect to any person if a Justice Department referral is in effect with respect to such person. A "referral" is in effect, as defined by IRC § 7602(d)(2), when either:

    • The Service has recommended to the Justice Department a grand jury investigation of, or the criminal prosecution of, such person for any offense connected with the administration or enforcement of internal revenue laws; or

    • The Justice Department requests, pursuant to IRC § 6103(h)(3)(B), the disclosure of return or return information relating to such person, as when the Justice Department requests the Service’s criminal investigators to join an ongoing federal grand jury investigation of the person for non-tax crimes, such as narcotic trafficking or racketeering, to investigate potential tax charges.

    Note:

    The limitation of IRC 7602(d)(1) applies only when the Service has referred to the Justice Department the taxpayer whose liabilities are at issue. The Service is not barred from summoning a third-party witness when the Service has referred the third-party witness to the Justice Department. Khan v. United States, 548 F.3d 549 (7th Cir. 2008); Treas. Reg. § 301.7602-1(c)(1).

  6. Other IRC sections concerning the proper use and enforcement of a summons are:

    • Section 7603 — Service of Summons

    • Section 7604 — Enforcement of Summons

    • Section 7605 — Time and Place of Examination

    • Section 7609 — Special Procedures for Third-Party Summonses

    • Section 7610 — Fees and Costs for Witnesses

    • Section 7611 — Restrictions on Church Tax Inquiries and Examinations

    • Section 7612 — Special Procedures For Summonses For Computer Software

    • Section 7402 — Jurisdiction of District Courts

    • Section 7210 — Failure to Obey Summons

5.17.6.2.2  (12-11-2007)
Case Law

  1. In United States v. Powell, 379 U.S. 48, 57-58 (1964), the Supreme Court set forth the standards that the Service must meet to have its summons enforced. The Service must show that:

    • The investigation will be conducted pursuant to a legitimate purpose;

    • The inquiry may be relevant to the purpose;

    • The information sought is not already within the Service's possession; and

    • All administrative steps required by the Code have been followed.

  2. Powell also held that a summons cannot be issued for an "improper purpose." This includes using a summons:

    • To harass the taxpayer;

    • To pressure the taxpayer into settling a collateral dispute; or

    • For any other purpose adversely reflecting on the "good faith" of the investigation.

5.17.6.3  (12-11-2007)
Relevance and Materiality

  1. IRC § 7602 authorizes the Service to issue a summons to any person to produce for examination books, papers, records or other data, and to require such person to give such testimony, under oath, as may be relevant or material to the determination or collection of any internal revenue tax.

  2. The question of what "may be relevant or material" depends on the facts and circumstances of each case. In general, courts reject the use of a summons as a "fishing expedition" and have held that there must be a "realistic expectation" rather than an "idle hope" that something may be discovered to satisfy the relevance and materiality requirements of IRC § 7602, particularly where third-party documents are sought. United States v. Arthur Young & Co., 465 U.S. 805, 814, n.11 (1984), citing United States v. Harrington, 388 F.2d 520, 524 (2d Cir. 1968).

  3. Courts recognize that not all documents summoned will prove relevant or material, emphasizing the test is whether the summoned documents "might throw light upon subjects under legitimate inquiry." Arthur Young, 465 U.S. at 813–814.

  4. When documents or information are sought from the taxpayer, all records of financial transactions, all books and records showing the receipt or expenditure of money by the taxpayer, all financial transactions of the taxpayer with other persons and the names of such other persons to verify such transactions satisfy the relevance test of IRC § 7602.

  5. Where documents or information are requested from third persons, all records or information of the taxpayer’s financial transactions with such third persons or other persons satisfy the relevance test of IRC § 7602.

5.17.6.4  (12-11-2007)
Summons Authority of Collection Personnel

  1. Delegation Order No. 4 (as revised) provides detailed instructions concerning the levels of authority delegated to various Service officials to approve and perform activities concerning summonses. See IRM 1.2.52.7. Revenue officers should refer directly to the most current revision of Delegation Order No. 4 whenever an issue arises about their authority to take any of these actions:

    • authorize, issue and serve summonses;

    • set the time and place for examination;

    • administer oaths to witnesses;

    • take testimony under oath;

    • take and certify papers; and

    • receive and examine summoned materials.

5.17.6.5  (10-15-2010)
Proper Description of Documents

  1. IRC § 7603 provides that books and records sought must be described with reasonable certainty or particularity, including the periods for which the records are sought. In general, the meaning of the phrase "reasonable certainty" is a factual matter that will depend on all the circumstances involved.

  2. A demand for documents required to be produced for examination cannot be so general and vague that it would be unreasonable to expect the summoned party to comply. The rule established by the courts is that the Service employee or officer issuing the summons need not describe in minute detail every document and paper to be produced, but must describe them with "such reasonable certainty" that the person summoned will have sufficient information to enable him to produce such documents. Adamowicz v. United States, 531 F.3d 151, 157-8 (2d Cir. 2008); United States v. Medlin, 986 F.2d 463, 467 (11th Cir. 1993).

  3. In United States v. Calhoun County Hospital, Inc., 35 AFTR2d 75-1097 (N.D. Miss. 1974), the typed-in body of the summons did not specify for what years the records were sought. The court rejected the taxpayer's argument that the summons was facially invalid by looking at the "four corners" of the summons, thereby incorporating into the body of the summons the years listed in the caption. Accord United States v. Duke, 379 F. Supp. 545 (N.D. Ill. 1974).

  4. If it is not known what records are in the summoned party's possession, a summons can be served identifying only the taxpayer, the tax period under investigation, and the type of tax involved.

    • Upon appearance, the witness can be asked whether or not certain records exist.

    • Then a second summons can be issued describing the particular records with reasonable certainty.

    • Such a "preliminary" summons is specifically exempt from the notice provisions of IRC § 7609, but the exemption applies only to inquiries about whether or not records of the taxpayer's business transactions or affairs have been made or kept. IRC § 7609(c)(2)(B) .

5.17.6.5.1  (10-15-2010)
Proper Service - IRC § 7603

  1. IRC § 7603 provides that service of the summons will be made by delivery in hand of an attested copy to the person to whom it is directed or by leaving it at his last and usual place of abode. Third-party recordkeepers may also be served by certified or registered mail.

  2. The Summons Handbook at IRM 25.5.3.2 outlines the procedures for serving summonses. This section states that a summons should be handed to the person to whom it is directed, or left at his or her last and usual place of abode by leaving it with a person who is of suitable age and discretion with instructions that the summons be given to the summoned individual, or by affixing the summons to the front door of the last and usual place of abode by a means that will not mar the finish. Revenue officers should also establish that the place where a summons is left is, in fact, the home, residence, or place of abode of the party summoned rather than the business address.

  3. In United States v. Bichara, 826 F.2d 1037 (11th Cir. 1987), the Eleventh Circuit held that section 7603 allows service by merely leaving the summons at the last and usual place of abode. The Circuit decision reversed the district court, which had denied enforcement on the grounds that merely leaving the summons was insufficient, and that due process required the summons be left with some person of suitable age or discretion. See also, United States v. Gilleran, 992 F.2d 232 (9th Cir. 1993) (the appellate court reversed the district court that had required the Service to mail the summons in addition to leaving the summons at the last and usual place of abode).

  4. A summons should be issued only to one summoned party, i.e., only one party's name should appear on the "To" line of a summons. For a summons to a corporation or to an officer of a corporation, see IRM 5.17.6.5.1(6)-(7), below.

  5. A summons can be personally served on a person at his business address, but if the person being summoned is not present, the summons may not be left at that address. See United States v. Myslajek, 568 F.2d 55 (8th Cir. 1977), cert. denied, 438 U.S. 905 (1978) (summons left with taxpayer's adult son at taxpayer's place of business held defective for purposes of service, although the summons was ordered enforced because the defect in service was not timely raised). The Code authorizes leaving the summons only at the last and usual abode of the person. The fact that an improperly served summons is actually received by the summoned party will not cure the defective service.

  6. A summons served on a corporation without identifying a specific person may be served on any officer or employee of the corporation authorized to receive process by either state law or the corporate by-laws. For example, the summons may describe the witness as "X Corporation." It should be noted that a corporation does not have a "place of abode" within the meaning of section 7603(a); therefore, a summons may not be served by fixing it to the door of the corporate building. The summons should be served only on a person authorized to receive process; it cannot be simply left at the corporate offices. For example, a summons cannot be left with the corporate officer’s secretary. The summons should also not be left at a last and usual place of abode of the person (or persons) authorized to receive process. Therefore, the summons must be served in person to an authorized person, unless the witness is summoned in the capacity of a third-party recordkeeper described in IRC § 7603(b).

  7. A summons that seeks records or testimony from a specific corporate officer should be issued to that officer by name. For example, the "In the matter of" line should read "Corporation X" and the "To" line should read "Person Y." By addressing the summons to "Person Y," the summons may be either served personally upon Person Y or left at the last and usual abode of Person Y.

  8. The Certificate of Service is found on the second page of the original Form 2039. Once executed, the certificate is evidence of the facts stated at the summons enforcement hearing. IRC § 7603.

  9. In accordance with IRC § 7603(a), the copy of the summons given to the summoned person must contain a signed certification or affirmation that it is a true and correct copy of the original. On the current pre-printed summons forms, the attestation clause reads as follows: "I hereby certify that I have examined and compared this copy of the summons with the original and that it is a true and correct copy of the original."

  10. Improperly served summonses cannot be cured. But as noted above, the taxpayer may waive defective service of a summons by failing to object to the defective service in a timely fashion. United States v. Myslajek, 568 F.2d 55 (8th Cir., 1977) (although summonses were served on taxpayer's adult son at accountant's business office, taxpayer waived strict compliance with requirement that summons be served on the person to whom it is directed or left at his last and usual place of abode where accountant received actual notice of the summonses on date they were served but did not object to defective service until almost three months later); United States v. Payne, 648 F.2d 361 (5th Cir. 1981) (taxpayer waived strict compliance with statute governing service of IRS summons where taxpayer appeared at time and place set forth in summons but failed to object to improper service at such time).

5.17.6.5.2  (10-15-2010)
Time and Place of Appearance - IRC § 7605

  1. In the case of all first-party summonses (those served on the taxpayer or upon any officer or employee of an entity taxpayer or of a taxpayer with a sole proprietorship) subject to IRC § 7605, the following notice and waiting periods requirements apply:

    1. The time and place for appearance and examination must be reasonable. IRC § 7605(a).

    2. Date for appearance shall not:
      • be on a Saturday, Sunday, or legal holiday; and
      • be less than 10 full days from service with the date of service excluded from the 10-day waiting period. It is legally sufficient to require the summoned person to appear on the 10th day. However, it may be preferable to set the date of appearance on a later date, such as the 11th day, to avoid any question regarding timeliness.

      Note:

      For a discussion of notice and waiting period requirements in the case of all third-party summonses that are not exempt from the notice requirements of IRC § 7609, see IRM 5.17.6.6.2, below.

  2. As added by the Taxpayer Bill of Rights, unless jeopardy is found, no levy can be made on the property of a summoned person on the date the person is required to appear in response to the summons. IRC § 6331(g).

  3. Any agreement with a summoned party that alters the party's circumstances of appearance may result in a waiver of the Service's summons rights. In United States v. Malnik, 489 F.2d 682 (5th Cir. 1974), the summoned taxpayer entered into an agreement with the Service not to appear based in part on his claim of constitutional privileges. Even though the privileges were infirm, the court held that the Service waived its right to have the taxpayer appear.

5.17.6.6  (12-11-2007)
Third-Party Summonses Subject to IRC § 7609

  1. IRC § 7609 contains notice and waiting period requirements which apply to all third-party summonses, except for certain limited categories discussed herein. See IRM 5.17.6.6.2, below, for a discussion of these notice and waiting periods.

    1. When a third-party summons is issued, section § 7609(a) requires notice be given to the taxpayer identified in the heading of the summons and any other person (whether an individual or an entity) identified in the description of summoned records.

    2. The notice and waiting period requirements of IRC § 7609(a) apply to third-party summonses that seek the production of any type of records or giving of testimony regarding the person(s) identified in the summons.

    3. Any noticee may intervene in any proceeding brought by the Government to enforce the summons. The summoned third-party has the right to intervene in any proceeding brought by a noticee to quash the summons. IRC § 7609(b).

    4. The notice procedures apply to almost all third-party summonses issued for examination purposes. Therefore, the Service must accurately distinguish between third-party summonses and summonses served on the taxpayer under investigation. The Service must also determine if the summons is excepted from notice under IRC § 7609(c). IRM 5.17.6.6(2) discusses the exceptions to notice requirements.

    5. In most situations, the distinction between third-party summonses and summonses served on the taxpayer under investigation is obvious. However, it is less obvious in at least two scenarios.
      i) The first scenario involves a married couple who filed joint returns and who are jointly and severally liable for payment.
      • If a summons is served in aid of the collection of an assessment, two separate summonses, one issued to the husband and one issued to the wife should be served. "In the matter" of should list both the husband and wife. This summons is excepted from notice under IRC § 7609(c)(2)(D).
      • If a summons is issued in connection with an examination of a return, this is not a collection summons and notice requirements apply. If only one spouse is summoned, the other spouse is entitled to notice under IRC § 7609(a) as a person identified in the summons. Even when both spouses are summoned (by issuing and serving separate summonses), each spouse is entitled to notice of the other spouse's summons. This procedure preserves each spouse's opportunity to move to quash the summons served on his or her spouse.
      • If a summons is issued for a period where a married couple has failed to file a return, the spouses should be treated as having separate liabilities regardless of their past filing status. These summonses should be issued for each person and should be captioned "In the matter of Taxpayer-Husband" and "In the matter of Taxpayer-Wife" respectively. No notice is required.
      ii) The second scenario involves officers or employees of taxpayer businesses, e.g., corporations and sole proprietorships. When these persons are summoned in their capacity as officers or employees, the summons is a first party summons that is excepted by IRC § 7609(c)(2)(A) from the notice requirements of IRC § 7609(a).

    6. When a third party indicates that she will voluntarily provide information but requests the service of a summons as evidence of her legal duty to testify or produce records, revenue officers should follow the notice and waiting period requirements of IRC § 7609 when issuing the summons unless the summons is excepted from these requirements by IRC § 7609(c)(2). Revenue officers should not accept the voluntary production of records before the waiting period expires.

  2. The notice and waiting period requirements of IRC § 7609 apply to all summonses except:

    • A summons served on a person with respect to whose liability the summons is issued, or any officer, or employee of that person (i.e., first party summonses). IRC § 7609(c)(2)(A).

    • A summons served to determine whether or not records of the business transactions or affairs of an identified person have been made or kept. IRC § 7609(c)(2)(B).

    • A summons served to determine the identity of holders of numbered bank accounts. (That is, accounts which are identified by a number or code rather than by name.) IRC § 7609(c)(2)(C).

    • A summons served in aid of the collection of an assessment made or judgment rendered against the person with respect to whose liability the summons is issued, or the liability at law or in equity of any transferee or fiduciary of that person. IRC § 7609(c)(2)(D).

    • A summons issued by a criminal investigator of the Service to a third-party who is not a third-party recordkeeper. IRC § 7609(c)(2)(E) .

    • A "John Doe" summons which is a summons that does not identify the person with respect to whose liability the summons is issued. IRC § 7609(c)(3), see also IRC § 7609(f).

    • A summons issued under the provisions of IRC § 7609(g) where a court determines there is reasonable cause to believe that giving notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information from other persons through intimidation, bribery, or collusion, or to flee to avoid prosecution, testifying, or production of records. IRC 7609(c)(3).

5.17.6.6.1  (12-11-2007)
Third-Party Recordkeepers

  1. A summons to a third-party recordkeeper may be served by certified or registered mail to the last known address of such recordkeeper. IRC § 7603(b). The summons may also be served pursuant to the traditional means allowed by IRC § 7603(a).

  2. Third-party recordkeepers are defined in IRC § 7603(b)(2) as:

    1. Any mutual savings bank, cooperative bank, domestic building and loan association, or other savings institutions chartered and supervised as a savings and loan or similar association under federal or state law, and any bank or credit union;

    2. Any consumer reporting agency;

    3. Any persons extending credit by credit cards or similar devices. See Treas. Reg. § 301.7609-2(a)(3). In United States v. New York Telephone, 682 F.2d 313 (2d Cir. 1982), the court held where a telephone company extends credit cards and, additionally, extends credit by other means to both its credit card holders and non-credit card holders, the telephone company is a third-party recordkeeper with respect to all records relating to those credit transactions. These similar means were third-party billings (billing a call to your own phone) and arranging billing relating to those transactions;

    4. Any broker;

    5. Any attorney;

    6. Any accountant;

    7. Any barter exchange (as defined in IRC 6045(c)(3));

    8. Any regulated investment company;

    9. Any enrolled agent; and

    10. Pursuant to section 7603(b)(2)(J), any owner or developer of a computer software source code (as defined in section 7612(d)(2)), but only when the summons seeks the production of the source code or the program and data to which the source code relates.

  3. The first nine categories of third-party recordkeepers (a through i above) are only considered to be third-party recordkeepers when they are summoned to produce records that they made or kept (or give testimony about such records) of another person's business transactions or affairs. Owners or developers of computer software source codes are third-party recordkeepers even though they may not make or keep records of another person’s business transactions or affairs.

5.17.6.6.2  (10-15-2010)
Notice and Waiting Period Requirements

  1. In the case of all third-party summonses subject to IRC § 7609(a), the following notice and waiting period requirements apply:

    1. Time - notice, along with a copy of the summons and an explanation of the noticee's right to bring a proceeding to quash, has to be given within three days of the date on which the summons was served, but no later than the 23rd day before the appearance date fixed in the summons as the date of production. IRC § 7609(a)(1).

    2. Service of Notice - same manner as provided in IRC § 7603 (relating to service of summons) or by certified or registered mail to the last known address of the noticee, or in the absence of a last known address, is left with the person summoned. IRC § 7609(a)(2).

  2. Noticee Defined - Any person (other than the summoned third-party) who is identified in a summons served on a third-party witness for the production of records or testimony relating to the person so identified. The taxpayer identified in the caption of the summons is always a noticee, even though his or her name may not appear in the description of summoned records. A noticee under IRC § 7609(a) has the right to be given notice of the summons, to intervene in a summons enforcement proceeding, and to bring a proceeding to quash the summons.

    1. In the case of bank records concerning a corporation solely owned by the taxpayer named in the summons, the corporation is a separate noticee from the taxpayer.

    2. A summons may involve the records of multiple noticees. Where there are multiple noticees who reside at the same address, separate notices are required to be sent to each individual at that address. In situations involving a husband and wife, each spouse is sent a separate notice.

    3. If the Service fails to give notice and receives the summoned information, it is possible for a court to suppress the summoned evidence. United States v. Kersting, 891 F.2d 1407 (9th Cir. 1989). See also United States v. Powell, 379 U.S. 48, 52-53 (requiring that in order to judicially enforce a summons, the Service must demonstrate that it followed all administrative steps regarding said summons imposed under the Internal Revenue Code).

  3. IRC § 7609(j) – This section provides that nothing in IRC § 7609 shall be construed to limit the Service’s ability to obtain information, other than by summons, through formal or informal procedures authorized by IRC §§ 7601 and 7602. This section indicates that the Service’s ability to seek informally the voluntary production of records, i.e., without a summons, constitutes a procedure authorized by the Code.

    1. The Service is permitted to seek financial records from financial institutions informally except in the Tenth Circuit because of its interpretation of a portion of the Right to Financial Privacy Act (RFPA), 12 USC § 3413(c). However, the RFPA only applies to a financial institution’s records for customers who are individuals or are partnerships of five or fewer individuals, so financial records of customers who are corporations, partnerships with non-individual partners, or partnerships with six or more partners are not covered by the RFPA, 12 USC §§ 3401(4) & (5), and may be sought informally within the Tenth Circuit.

    2. In general, the RFPA requires that covered account owners be given notice of (and an opportunity to challenge) a government agency’s intent to obtain records of their finances from a financial institution. However, the RFPA also provides a longstanding exception to these requirements as they apply to the Service. Section 3413(c) states: "Nothing in [the RFPA] prohibits the disclosure of financial records in accordance with procedures authorized by the [IRC]." See 12 USC § 3413(c). A more recent exception to RFPA requirements also now exists for the IRS and other Government agencies which have disbursed payments (such as tax refunds) and then need to investigate or recover (through collection efforts) an improper Federal payment (such as an erroneous refund). See 12 USC § 3413(k)(2).

    3. In Neece v. Internal Revenue Service, 922 F.2d 573 (10th Cir. 1990), the Tenth Circuit ruled that a bank’s voluntary disclosure of a customer’s financial records to the Service, without prior notice to the customer, violated the RFPA. The court reasoned that IRC § 7609, not IRC § 7602, contained the procedures for obtaining records concerning a taxpayer from a financial institution.

    Note:

    In all circuits other than the Tenth, the Service takes the position that an informal request for records is a procedure authorized under IRC § 7601. Within the Tenth Circuit, Neece should not constrain the Service from informally requesting financial records of customers who are not at all covered by the RFPA (e.g., corporations and some partnerships) or of any customers who received improper Federal payments from the Government (such as an erroneous tax refund).

  4. Given the Tenth Circuit’s holding in Neece, revenue officers should follow IRC § 7609 procedures when seeking covered financial information from financial institutions governed by the Tenth Circuit’s precedents. (The Tenth Circuit encompasses Kansas, Oklahoma, Wyoming, Utah, Colorado, and New Mexico). Covered information from financial institutions should not be sought by informal means, such as by producing credentials, letters of circularization, or by any other nonsummons method if any of the following conditions exist:

    • the financial institution branch from which the information is sought is located in the Tenth Circuit;

    • the information concerns taxpayers residing in the Tenth Circuit, regardless of the location of the financial institution, or

    • the requesting IRS office is located in the Tenth Circuit, regardless of the location of the financial institution or the residence of the taxpayer.

    Note:

    Revenue officers should not attempt to obtain financial information voluntarily from financial institutions if the above conditions exist. To do otherwise could result in damages awarded against the Service and the expenditure of valuable resources in defending such damage suits. Revenue officers should seek Area Counsel’s advice if there is any doubt regarding whether Neece applies.

5.17.6.6.3  (10-15-2010)
Petition to Quash the Summons

  1. A noticee who wishes to prevent compliance with the summons by the party summoned must begin a civil action in the appropriate U.S. district court to quash the summons no later than twenty days after the day notice of the summons is given. IRC § 7609(b)(2).

  2. The noticee must mail (by registered or certified mail) a copy of the petition to quash the summons to the summoned person and a copy to the IRS officer who issued the summons. This must be done within the twenty-day period, and is a jurisdictional prerequisite to the court hearing the complaint. Yocum v. United States, 586 F.Supp. 317 (N.D. Ind. 1984); Franklin v. United States, 581 F.Supp. 38 (E.D. Mich. 1984).

  3. The summoned party has the right to intervene in this proceeding and is bound by the decision in the quash proceeding whether he intervenes or not.

  4. If the noticee files a petition to quash the summons, then the Service cannot examine the records until the court issues an appropriate order. The Service may only examine the records prior to the issuance of a court order if the person bringing the petition consents to the examination.

  5. The date set for appearance cannot be sooner than the 23rd day after notice is given (as a rule of thumb, the 26th day is used). IRC § 7609(d).

  6. IRC § 7609(d)(1) prohibits premature examination of the records at issue, not physical acceptance. In Conner v. United States , 434 F.3d 676 (4th Cir. 2006), the taxpayer appealed the district court's finding with respect to Powell's fourth prong, asserting that by accepting the records from a third party prior to expiration of the twenty-three days in which he, the affected taxpayer, could seek to quash the third-party summonses, the revenue agent did not follow IRC § 7609(d)(1) nor the IRM. The Fourth Circuit held the taxpayer’s argument was without merit. Although the IRM directed the revenue agent not to physically accept records in response to a third-party summons prior to expiration of the twenty-three day period in which the affected taxpayer could seek to quash the summons, such violation, while relevant to the bad faith inquiry presented in this case, did not constitute proof by itself of the IRS's bad faith in issuing the challenged summonses.

  7. If the Service receives records from a third party before the expiration of the twenty-third day after notice is given:

    • Immediately seal the records in an appropriate container;

    • Mark the container with the date and time sealed; and

    • Secure the records until (a) any noticees have failed to file a petition to quash the summons within twenty-three days after notice or (b) the conclusion of legal proceedings addressing noticee's petition to quash the summons.

  8. A petition to quash brought by the taxpayer suspends the period of limitations for assessment under IRC § 6501. IRC § 7609(e)(1) only tolls the statute of limitations for a taxpayer who petitions to quash the summons. If only one of the potentially responsible persons (regarding whose liabilities the Service issued separate summonses) files a petition to quash the summons, only that petitioner’s assessment statute is suspended. The statute is suspended for the period in which the proceeding and any appeals are pending.

  9. If a summoned party’s response to a third-party exam summons (such as to determine TFRP liability) has not been resolved, the period of limitations for assessment under IRC § 6501, with respect to the taxpayer whose liability the summons is issued, is suspended beginning on the date which is 6 months after the service of the third-party summons. IRC § 7609(e)(2). The suspension ends upon final resolution of the summoned party’s response. Final resolution occurs when (a) the summons or any order enforcing all or part of the summons is fully complied with and (b) all appeals or requests for further review are disposed of or the period in which appeal can be taken or further review can be requested has expired. Treas. Reg. § 301.7609-5(e)(3).

5.17.6.6.4  (10-15-2010)
Duty of Third Party on Receipt of the Summons

  1. The third party is required to assemble the records and prepare to produce them on a date specified in the summons, whether or not a petition to quash has been or will be filed. IRC § 7609(i)(1).

  2. The third party or his agent or employee who makes a disclosure pursuant to a court order or upon reliance of an IRS certificate, where no proceeding to quash the summons has been commenced, or the noticee has consented to the examination, will not be liable to any customer or other person for such disclosure. IRC § 7609(i)(3).

  3. Certificate - On the second page of the original summons is an unexecuted certification stating that the period for beginning a proceeding to quash a summons has expired and no such proceeding was begun within such period, or that the noticee consented to the examination. Upon either of these events, the authorized Service officer may so certify. Upon request of the summoned third-party, the issuing officer should furnish a photocopy of the certificate. IRC § 7609(i)(2).

5.17.6.7  (10-15-2010)
The Collection Summons Exception of IRC § 7609(c)(2)(D)

  1. The procedural rules applicable to third-party recordkeeper summonses issued under IRC § 7609(a) do not apply to collection summonses that pertain to an assessed liability, transferee liability, or a liability reduced to judgment. IRC § 7609(c)(2)(D); Ginsburg v. United States, 90 AFTR 2d 2002-6555 (D. Conn. 2002).

  2. Third-party summonses issued as part of tax delinquency investigations for trust fund recovery penalties (i.e., pre-assessment investigations) or any other investigation where no liability has been assessed are not considered collection summonses under IRC § 7609(c)(2). Accordingly, the Service must follow the notice and waiting period requirements of IRC § 7609(a) for these summonses.

  3. The Service should not issue a summons that lists the names of all potentially responsible persons for the Trust Fund Recovery Penalty in the heading of one summons and provide redacted notice copies to noticees. Thus, using an example where two potentially responsible persons, an officer and an employee, have been identified, two summonses would be issued. A summons concerning the liability of John Smith, President of Corporation XYZ, Inc., would be issued for records that may be relevant to the liability of "John Smith, as President of Corporation XYZ," and that may be relevant to the time periods at issue. A separate summons concerning the liability of employee, Mary Smith, would be issued for records that may be relevant to the liability of "Mary Smith, Employee of Corporation XYZ, Inc.," and that may be relevant to the time periods at issue. (The bank or other summoned party need only produce each summoned document once.)

  4. Notification is not required for third-party summonses issued for taxpayer delinquency accounts (TDAs) or any other investigation where an assessed liability exists for each of the periods at issue and the summons is issued in aid of collection of those assessments.

  5. Notice is required for third party summonses for taxpayer delinquency investigations (TDI) where no liability has been assessed.

5.17.6.8  (10-15-2010)
Third-Party Contact Requirements of IRC § 7602(c)

  1. IRC § 7602(c), Notice of Contact of Third Parties, requires that before Service employees initiate contact with third parties for the determination or collection of a taxpayer’s tax liability, the taxpayer must be given reasonable notice in advance that third parties may be contacted. IRC § 7602(c) also requires the Service to make a record of persons contacted and provide that record to the taxpayer upon the taxpayer’s request.

  2. Absent jeopardy circumstances, a revenue officer may not contact any third party without first providing reasonable notice to the taxpayer that contact with persons other than the taxpayer may be made. See IRM 5.1.17.3(2). A third party contact notice letter is one way to advise a taxpayer that contacts may be made by the Service with other persons.

    Note:

    In most cases, advance third-party contact notice is now accomplished by sending Pub. 1 to the taxpayer. See IRM 5.1.17.3(3). However, for TFRP or transferee investigations initiated by a revenue officer, the potentially responsible person or transferee may not have been provided with an earlier advance notice that third party contacts may be made by the Service. In this situation, send the appropriate third-party contact notice letter to the potentially responsible office or transferee before making any third-party contacts. See IRM 5.1.17.3.1

    .

  3. Refer to IRM 5.1.17, Third Party Contacts, for detailed guidance on third party contacts.

    Note:

    Service of a summons is contact with a third party. Under Treas. Reg. § 301.7602-2(e)(4), Example 4, service of a copy of the summons to the taxpayer satisfies the post-contact recording and reporting requirements of IRC § 7602(c) for this contact. The taxpayer should have been provided, however, with the advance general notice prior to the issuance of the summons. Before serving the summons, the Service should verify that the advance general notice has been provided to the taxpayer. Additionally, after making the contact when notice of the summons was not provided to the taxpayer (e.g. for a collection purpose summons), the Service must record the contact on Form 12175 and forward the form to the Section 7602(c) Coordinator.

5.17.6.9  (10-15-2010)
Unnecessary Examinations and Barred Years

  1. IRC § 7605(b) prohibits unnecessary examinations or investigations of a taxpayer and limits the Service to one inspection of a taxpayer’s books of account for each taxable year unless the taxpayer requests otherwise or unless the Secretary or his delegate after investigation, determines that further inspection is necessary and notifies the taxpayer in writing of this determination.

  2. An examination of the taxpayer’s books for the purpose of collecting the tax after an examination to determine the liability is considered to be an original examination not subject to the restrictions of IRC § 7605(b).

5.17.6.10  (10-15-2010)
Fair Credit Reporting Act

  1. Banks and other financial institutions have sometimes argued that producing records of a taxpayer’s financial transactions pursuant to a summons would violate the Fair Credit Reporting Act (FCRA), 15 USC § 1681 et seq. (1970). To protect consumers’ interests, the FCRA restricts the circumstances under which a "consumer reporting agency" may furnish a "consumer report" to third parties including the Service.

  2. A "consumer reporting agency" is defined as ". . . any person which for monetary fees or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility or interstate commerce for the purpose of preparing or furnishing consumer reports." 15 USC § 1681a. A bank may be considered a "consumer reporting agency" if it meets the above definition.

  3. The FCRA specifically excludes from its definition of a "consumer report" any report containing information solely as to transactions or experiences between the consumer and the person making the report. 15 USC § 1681a. Thus, information relating only to the bank and its customer (which is generally what the Service seeks) is not covered by the Act, and the bank can produce this summoned information without violating the FCRA. United States v. Lake County National Bank, 35 AFTR2d 75-1428 (N.D. Ohio 1975); United States v. Bremicker, 365 F. Supp. 701 (D. Minn. 1973).

  4. In general, the consumer reporting agency may only provide a consumer report to the Service if one of the permissible purposes listed in 15 USC § 1681b(a) is satisfied. That section provides that a consumer reporting agency may furnish a consumer report under certain limited circumstances, which include:

    • responding to a court order (15 USC § 1681b(a)(1));

    • acting pursuant to the consumer’s written instructions (15 USC § 1681b(a)(2));

    • disclosing the report to a person the consumer reporting agency has reason to believe intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer (15 USC § 1681b(a)(3)(A)).

  5. In most cases involving collection of an assessed tax, the Service’s requests for full credit reports fit within the permissible purpose provision relating to credit set forth in 15 USC § 1681b(a)(3)(A).

  6. Based on written opinions by the Federal Trade Commission, the Service takes the view that a credit relationship exists within the meaning of subsection 1681b(a)(3)(A) where the Service has an assessment lien against the taxpayer, has reduced a taxpayer’s liability to judgment, or has entered into an offer in compromise or settlement agreement with the taxpayer. Accordingly, in these collection cases, the Service can obtain a full credit report pursuant to subsection 1681b(a)(3)(A) without issuing a summons.

  7. Some cases handled by revenue officers begin as tax delinquency investigations, i.e., the investigation begins before there is an assessed tax liability, usually because the taxpayer failed to file a tax return. In these cases, the Service must issue a summons to obtain a credit report; it cannot lawfully request a credit report informally under 15 USC § 1681b(a)(3)(A). See IRM 5.1.18.20, Credit Bureaus, the Fair Credit Reporting Act, and Credit Reports. The Service can obtain a full credit report by issuing a summons because this action satisfies the permissible circumstance requirement of 15 USC § 1681b(a)(1), which provides that a consumer reporting agency may furnish a full credit report "in response to the order of a court having jurisdiction to issue such an order ... ." The Service takes the position that a third-party recordkeeper summons satisfies the court order requirement in subsection 1681b(1)(a) because IRC § 7603(b)(2)(B) specifically contemplates the IRS issuing a third party summons to a consumer reporting agency under the FCRA and IRC § 7609(i) protects a third party that responds to a summons if the person entitled to notice of the summons does not file a timely motion to quash with the district court. Subsection 1681b(a)(1) does not require the Service to be a creditor of the taxpayer before acquiring a full credit report by summons.

  8. Any questions concerning the scope of the Fair Credit Reporting Act or its application to specific situations should be referred to Area Counsel.

5.17.6.11  (12-11-2007)
Constitutional Defenses

  1. The First Amendment to the Constitution guarantees the right of free expression; this includes the right to assemble freely; freedom of the press; freedom of religion; and freedom of speech.

  2. The Fourth Amendment protects against unreasonable searches and seizures. Unlike the Fifth Amendment, discussed below, corporations and other organizations are entitled to the protection afforded by the Fourth Amendment.

  3. The Fifth Amendment affords a person a privilege against self-incrimination. It applies to both documentary requests and requests for oral testimony. There are different analyses for each type of request.

  4. Area Counsel should be contacted in any case in which the taxpayer raises a constitutional defense to summons enforcement, or for any questions concerning the application of a constitutional argument to a specific situation.

5.17.6.12  (12-11-2007)
Notification to Witness of Constitutional Rights

  1. The type of information sought by a revenue officer through the issuance of a summons generally does not tend to develop criminal potential of a case. Therefore, it is not mandatory that the person summoned be informed of his constitutional privilege against self-incrimination. In any case in which the revenue officer believes the criminal potential is so manifest that a warning may be appropriate, Area Counsel should be contacted.

5.17.6.13  (12-11-2007)
Privileges Based on Confidential Relationships

  1. Certain confidential relationships between a taxpayer and a witness or another person may give rise to a claim of a privilege from testifying or providing information pursuant to a summons. In the context of IRS summonses, the determination of whether a particular matter is privileged is governed by federal law. Questions concerning the validity of a privilege or its applicability to a particular situation should be referred to Area Counsel.

  2. A person cannot successfully refuse to testify or provide information solely on the basis that she stands in a confidential relationship with another person. The burden is on the witness first to establish the facts on which the asserted privilege is based and then to demonstrate how, and the extent to which, the requested information is covered by the privilege. United States v. Kovel, 296 F.2d 918 (2d Cir. 1961).

  3. A person may forfeit a privilege either by expressly waiving it or failing to assert it. Fed.R.Civ.P. 12(b); see Hunt v. Blackburn, 128 U.S. 464 (1888); Colton v. United States, 306 F.2d 633, 637 (2d Cir. 1962), citing United States v. United Shoe Mach. Corp., 89 F.Supp. 357, 358-59 (D. Mass. 1950).

5.17.6.14  (10-15-2010)
Attorney-Client Privilege

  1. In general, communications from a taxpayer to an attorney made in confidence for the purpose of obtaining legal advice are privileged, and the attorney cannot be compelled to disclose that information to the Service. 8 Wigmore, Evidence § 2291 (McNaughton rev. 1961); United States v. United Shoe Mach. Corp., 89 F.Supp. 357, 358-59 (D. Mass.1950). Also, if the taxpayer creates records to facilitate the exchange of privileged communications with the attorney, those records are privileged. United States v. Davis, 636 F.2d 1028, 1041 (5th Cir. 1981); United States v. Bartlett, 449 F.2d 700, 703 (8th Cir. 1971). However, if a taxpayer turns over pre-existing records to an attorney, the Service can obtain those records by summons, unless the records were otherwise privileged from production while in the taxpayer’s possession. Id.

  2. As the foregoing information suggests, the attorney-client privilege is not all-inclusive and does not protect everything an attorney may do for a client. The privilege is confined to communications made in confidence by the client for the purpose of obtaining legal advice from an attorney. United States v. Rockwell International, 897 F.2d 1255 (3d Cir. 1990). The client in a corporate setting may be any officer or employee of the corporation. Upjohn v. United States, 449 U.S. 383 (1981). Also, underlying factual information can be obtained from the employees whether or not this same information has been communicated to the corporation’s attorney. Books and records of a taxpayer are not privileged merely because they are in the hands of his attorney. If the records were compellable from the taxpayer, the taxpayer cannot cloak them with the privilege by transferring them to an attorney. Fisher v. United States , 425 U.S. 391 (1976).

  3. Ministerial or clerical services are not within the attorney-client privilege. Records of financial transactions involving monies paid by or on behalf of a client to an attorney are not covered by the privilege. When an attorney acts as the client’s business advisor, or agent for the receipt or disbursement of money or property to or from third parties, the attorney is not acting in a legal capacity and records of such transactions are not privileged. United States v. Davis, 636 F.2d 1028 (5th Cir.), cert. denied, 454 U.S. 862 (1981). The identity of a client or the fact that a given individual has become a client are matters which are not usually within the privilege in the absence of special circumstances. United States v. BDO Seidman, 337 F.3d 802 (7th Cir. 2003); United States v. Sidley Austin Brown & Wood LLP, 2004-2 USTC 50,289 (N.D. Ill. 2004).

  4. The preparation of a tax return is primarily an accounting service. When an attorney prepares his or her client’s tax returns, the workpapers produced by the attorney while preparing the returns and the tax records on which they are based are not shielded by the attorney-client privilege. United States v. Under Seal, 748 F.2d 871, 877 (4th Cir. 1984); United States v. Lawless, 709 F.2d 485, 487 (7th Cir. 1983) ("When information is transmitted to an attorney with the intent that the information will be transmitted to a third party (in this case on a tax return), such information is not confidential." ); United States v. Frederick, 182 F.3d 496 (7th Cir. 1999); United States v. Pipkins, 528 F.2d 559, 563 (5th Cir. 1976) ("Courts have refused to apply the privilege to information that the client intends his attorney to impart to others." ). The same is true of the communications between the client and the attorney about the return being prepared. Id.

5.17.6.15  (10-15-2010)
Attorney Work-Product Doctrine

  1. The work-product doctrine protects documents prepared by an attorney acting for his client in anticipation of or for use in litigation. Hickman v. Taylor, 329 U.S. 495 (1947); United States v. Textron, Inc., 577 F.3d 21 (1st Cir. 2009); United States v. Davis, 636 F.2d 1028 (5th Cir. 1981); Hodges, Grant & Kaufmann v. United States, 768 F.2d 719 (5th Cir. 1985); Fed.R.Civ.P. 26(b)(3) (protecting against disclosure of the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation).

  2. This doctrine applies to IRS summonses. Upjohn Co. v. United States, 449 U.S. 383 (1981); Borstein v. United States, 977 F.2d 112 (4th Cir 1992).

  3. The obligation imposed by a tax summons remains subject to traditional privileges and limitations, United States v. Euge, 444 U.S. 707 (1980), and nothing in the language or legislative history of the IRS summons provisions suggests an intent on the part of Congress to preclude application of the doctrine to tangible things constituting attorney work product, absent a showing by the IRS of substantial need and inability to obtain the equivalent without undue hardship.

  4. In United States v. Adlman, 134 F.3d 1194 (2d Cir. 1998), the Second Circuit held that the work product protection should be granted if the document could fairly be said to have been prepared "because of" the prospect of litigation. In order to determine whether a document was prepared because of anticipated litigation, a court should look to the purpose or function for which a document was prepared, rather than to the content of the document. United States v. Textron, Inc., 577 F.3d 21 (1st Cir. 2009); United States v. Roxworthy, 457 F.3d 590 (6th Cir. 2006).

5.17.6.16  (10-15-2010)
Federally Authorized Tax Practitioner-Taxpayer Privilege

  1. Prior to the IRS Restructuring and Reform Act of 1998 ("RRA 1998" ), the accountant-client privilege was only provided by law in some states; it was not recognized in Federal law. Couch v. United States, 409 U.S. 322 (1973); United States v. Arthur Young, 465 U.S. 805 (1984). With the enactment of IRC § 7525 by RRA 1998, the attorney-client privilege was extended to include communications between a taxpayer and a tax practitioner, including accountants, to the extent that such communications would be considered privileged communications if they were between a taxpayer and an attorney.

    1. IRC § 7525 extends the application of the attorney-client privilege to communications between a taxpayer and any "federally authorized tax practitioner" with respect to "tax advice" to the extent the communication would be considered a privileged communication if it were between a taxpayer and an attorney. The law merely extends the application of the attorney-client privilege to other individuals, it does not modify the attorney-client privilege of confidentiality. Thus, as with the attorney-client privilege, information disclosed to an authorized practitioner acting beyond the capacity of providing confidential federal tax law advice will not be privileged. United States v. KPMG, LLP, 316 F.Supp.2d 30 (D.D.C. 2004).

    2. The American Jobs Creation Act of 2004 amended IRC § 7525(b) by providing that the tax practitioner privilege does not apply to written communications in connection with the promotion of the direct or indirect participation of any person in any tax shelter. Prior to this amendment, the exception to the privilege was limited to written communications of this type regarding corporate tax shelters. The Government has the burden to prove preliminary facts in support of the IRC § 7525(b) exception to the privilege. United States v. BDO Seidman, LLP, 492 F.3d 806 (7th Cir. 2007). "Promotion" of a taxpayer’s participation in a tax shelter means simply "furtherance" or "encouragement" , and is not limited to the marketing of a pre-packaged, one-size-fits-all tax shelter product. Valero Energy Corp. v. United States, 569 F.3d 626 (7th Cir. 2009). However, there is no necessary "written communication" when a participant in an oral conversation merely prepares personal notes of the conversation. Countryside Limited Partnership v. Commissioner, 132 T.C. No. 17 (2009).

    3. The privilege may be waived by any disclosure of the privileged information to a third party not sharing a common legal interest with the client or not necessary to the tax practitioner-client consultation.

    4. "Federally authorized tax practitioner" means any individual who is authorized under federal law to practice before the IRS. See Circular 230. The term includes attorneys, certified public accountants, enrolled agents and enrolled actuaries. The term "tax advice" means advice given by an individual with respect to matters within the scope of that individual’s authority to practice before the Service. IRC § 7525(a)(3).

    5. The privilege may only be asserted in:
      (1) any noncriminal tax matter before IRS (IRC § 7525(a)(2)(A)), and
      (2) any noncriminal tax proceeding in federal court brought by or against the United States. (IRC § 7525(a)(2)(B)).

    6. The privilege may not be asserted to prevent the disclosure of information to any regulatory body other than the IRS, such as the Securities and Exchange Commission (SEC), including in an administrative or a court proceeding.

5.17.6.17  (12-11-2007)
Physician-Patient Privilege

  1. In general, there is no federally recognized privilege as to communications between a taxpayer and a physician. United States v. Moore , 970 F.2d 48, 50 (5th Cir. 1992).

  2. The Health Insurance Portability and Accountability Act, (Pub. L. 104-191, enacted August 21, 1996), now provides privacy rights for individuals whose health care records are maintained by "covered entities." When seeking documents from health care providers, consult with Area Counsel.

    Note:

    In Jaffee v. Redmond, 518 U.S. 1 (1996), the Supreme Court ruled that communications between a psychotherapist and a patient are protected from compelled disclosure under Rule 501 of the Federal Rules of Evidence. This privilege includes communications made by patients to psychiatrists, psychologists, and licensed social workers.

5.17.6.18  (12-11-2007)
Non-IRC Limitations on IRS Summons Authority

  1. The authority of the Service to issue and enforce summonses is governed by IRC § 7602 et seq., which gives the Service broad powers to summon any information that may be relevant to the investigation of a person's tax liability. The Service’s summons powers should not be limited except by clearly expressed Congressional intent or clearly recognized privileges and immunities. In United States v. Arthur Young & Co., 465 U.S. 805, 816 (1984), citing, United States v. Bisceglia, 420 U.S. 141 (1975), the Supreme Court stated that except for traditional privileges and limitations, " other restrictions upon the [Service’s] summons power should be avoided absent unambiguous directions from Congress."

  2. Although courts have been reluctant to circumscribe the Service’s summons power as granted to it by Congress, privacy rights have developed in the form of a patchwork of industry and sector-specific statutes that can be found in statutes other than the Code. When Congress has intended to exclude the Service from general restrictions placed on government investigatory powers contained in statutes other than the Code, it has done so explicitly. For example, Congress provided an exception for the Service from the strictures contained in the Right to Financial Privacy Act, 12 USC §§ 3401 et seq., so long as the Service followed Code procedures. See 12 USC § 3413; Neece v. United States, 922 F.2d 573 (10th Cir. 1990).

  3. Certain federal privacy statutes were designed to protect the right to privacy from private and government sector infringement by imposing limitations on the Service’s summons authority. These limitations must be complied with before a party may disclose information to the Service pursuant to a summons. Examples of these statutes include the following:

    • the Health Insurance Portability and Accountability Act, (Pub. L. 104-191, enacted August 21, 1996);

    • the Family Educational Rights and Privacy Act, 20 USC § 1232g (FERPA);

    • the Employee Polygraph Protection Act, 29 USC §§ 2001–2009 (EPPA);

    • the Cable Communications Policy Act, 47 USC §§ 551 et seq. (CCPA);

    • the Video Privacy Protection Act, 18 USC § 2710 (VPPA);

    • the Communications Assistance for Law Enforcement Act, Pub. L. 103-414, Oct. 25, 1994 (CALEA);

    • the Electronic Communication Privacy Act of 1986, 18 USC §§ 2701 et seq. (ECPA); and

    • Part D of the Social Security Act, 42 USC §§ 651-669.

  4. When these statutes or others emerge in your cases, contact Area Counsel for advice as to their impact.

5.17.6.19  (10-15-2010)
Rights Claimed by Summoned Persons

  1. A witness appearing in response to an administrative summons will frequently claim other rights. Two frequently encountered are the rights to be represented by counsel and to make an audio recording of the summoned interview.

5.17.6.19.1  (12-11-2007)
Right to Counsel

  1. A witness appearing in response to a summons is clearly entitled to be represented by counsel of her choice. 5 USC § 555(b).

  2. Whether the witness may be entitled to any counsel of her choice has been the subject of some controversy. If a taxpayer’s counsel appears to represent persons with conflicting interests, such as representing both the taxpayer and a summoned third-party witness, consult the Summons Handbook at IRM 25.5.5.5, Dual Representation, and Area Counsel.

5.17.6.19.2  (12-11-2007)
Right to Make Audio Recording of the Proceeding

  1. Taxpayers or their representatives may ask to make audio-tape recordings of the proceedings as long as 10 calendar days advance notice of intent to record is provided to the Service. If the taxpayer asks to record the interview, the Service employee must also record the meeting.

  2. Cameras or videotape equipment are not permitted. At no time should employees try to physically confiscate this equipment. Revenue officers should follow the requirements of IRC § 7521 and the procedures set forth in IRM 5.1.1.8 concerning audio-taped interviews.

5.17.6.20  (12-11-2007)
Witness Fees

  1. IRC § 7610(a)(1) provides that persons who are summoned are entitled to receive witness fees and travel expenses. Such persons may be taxpayers or third parties, and they may obtain payment upon request. It should be noted that the conditions under which a summoned person may obtain payment for witness fees and travel expenses are separate and distinct from those under which payment for other costs associated with summons compliance may be authorized.

  2. IRC § 7610(a)(2) provides that the Service will pay certain third parties for the direct costs incurred in locating, reproducing or transporting records in compliance with a summons.

  3. The costs for which such third parties may claim payment are in addition to, and not a substitute for, witness fees and travel expenses.

  4. Refer to Treas. Reg. § 301.7610-1(c)(2) for specific payment rates for search, reproduction, and transportation costs.

5.17.6.21  (12-11-2007)
Injunctive Relief

  1. In general, neither the witness, nor a third party, including the taxpayer, is entitled to declaratory or injunctive relief through a suit brought to quash a summons. Such persons have an adequate remedy at law by a challenge to the summons before the examining agent and before the district court at the summons enforcement proceeding. Reisman v. Caplin, 375 U.S. 440 (1964).

5.17.6.22  (12-11-2007)
Criminal Proceedings

  1. IRC § 7210 makes it a crime for a person to refuse or fail to testify or appear when summoned. That section provides for a fine of not more than a thousand dollars or imprisonment for not more than one year, or both, together with costs of prosecution, upon conviction.

  2. The possibility of criminal prosecution under this section is, of course, a powerful tool at the disposal of the Service to compel compliance with the administrative summons. However, a conviction under IRC § 7210 does not accomplish the primary purpose of the summons, namely, obtaining the needed information, because any proceedings to enforce the summons would be held in abeyance pending the outcome of the criminal proceedings.

  3. Criminal proceedings may be effective when, for example, the person summoned falsely claims the documents have been destroyed.

5.17.6.23  (12-11-2007)
Civil Enforcement

  1. The judicial device for enforcing the administrative summons is provided by IRC §§ 7402(b) and 7604. These sections provide a means of requiring the person summoned to comply.

  2. IRC §§ 7604(a) and 7402(b) provide that jurisdiction to compel summons compliance is in the United States District Court for the district in which the summoned person resides or is found. The effect of a proceeding under IRC § 7604 is to obtain the assistance of the court in forcing the summoned person to give the desired information to the Service by having the court issue an order to that effect. Disobedience of such an order would be a civil contempt punishable by the court.

  3. Disobeying a court’s summons enforcement order can be addressed by both civil and criminal contempt proceedings.

    • Civil contempt is designed to coerce compliance.

    • Criminal contempt is designed to punish disobedience.

5.17.6.24  (10-15-2010)
Summonses Issued to Debtors in Bankruptcy

  1. The automatic stay provisions of 11 USC § 362(a)(6) prohibit "any act to collect, assess or recover a claim that arose before the commencement of the case under this title."

  2. The Office of Chief Counsel has determined that service of a collection summons is an "act to collect" and should not be issued while the automatic stay is in effect. IRM 5.17.8.10(2), Automatic Stay - 11 USC §. 362.

  3. Summonses issued as part of Delinquent Return Investigation (DEL RET), or any other investigation where the liability at issue has not been assessed or determined through a court judgment, are not considered collection summonses. Accordingly, these summonses would not violate the automatic stay provision of 11 USC § 362(a).

  4. The automatic stay provisions of 11 USC § 362(a) do not bar the issuance of exam purpose summonses.


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