25.5.8 Use of Summons Special Applications

Manual Transmittal

January 27, 2016

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) IRM 25.5.8.1, re-ordered the bullets to match the chapters in this section. Also, removed the reference to Federal Officials and Employees since that information is found in IRM 25.5.6.12, Information from Federal Officials and Employees.

(2) IRM 25.5.8.2, added references to IRM 4.76.30.4, Political Organizations, and IRM 3.13.12.14, Section 527 Political Organizations, both of which define a political organization.

(3) IRM 25.5.8.2, added paragraph (5) to remind employees to attempt to get the information without a summons.

(4) IRM 25.5.8.3.1, removed paragraphs (1), (2), and (3) that describe the IRC § 7611 restrictions already listed in IRM 4.76.7.3, Situations in Which IRC § 7611 Procedures Do Not Apply.

(5) IRM 25.5.8.3.2, (1) defined the designated official as Director, EO who acts in concurrence with the TE/GE Commissioner; also removed paragraphs (2), (3), (4), and (5) that describe the church tax inquiry procedures already listed in IRM 4.76.7.4, Church Tax Inquiry.

(6) IRM 25.5.8.3.3, revised paragraph (2) and removed paragraphs (3), (4), (5), (6), (7) and (9) that describe the church examination procedures already listed in IRM 4.76.7.5, Notice of Examination, added reference to IRM 4.76.7.5, and converted the Note in (9)(d) as its own paragraph.

(7) IRM 25.5.8.3.5, updated reference to CCDM 34.6.1.3, Preparation of Suit Letters.

(8) IRM 25.5.8.4, added references in paragraph (2) to IRM 4.10.2.9, IRM 4.61.2.1, CCDM 35.4.5.2.1, and IRM 4.10.3.2. Removed the reference to “or a petition to quash is filed” since the third party has initiated court action and there is no need for Counsel to initiate action. Also, added a Note to stress that no contact be made with foreign officials without going through the office of the Commissioner, LB&I, the U.S. Competent Authority.

(9) IRM 25.5.8.4, added reference in paragraph (3) to Rev Proc 2006-54 which contains procedures for treaty-related requests.

(10) IRM 25.5.8.4, added paragraph (4) tp refer to IRM 4.60.1.2.2, Foreign-Initiated Specific Requests for Information.

(11) IRM 25.5.8.5, replaced paragraph (3) with clarification that IRS employees are not only “encouraged” to contact the U.S. Competent Authority, but are required to do so to use treaty/TIEA methods.

(12) IRM 25.5.8.5, added titles to IRM references in paragraph (4) and added reference to IRM 4.60.1.2.1, United States-Initiated Specific Requests for Information.

(13) IRM 25.5.8.5, added paragraph (5), providing references to IRM 4.61.2.2 and CCDM 35.4.5.2.1.

(14) IRM 25.5.8.5, added paragraph (6), providing guidance on information located in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands.

(15) IRM 25.5.8.6 deleted this section since this information is a duplicate of IRM 25.5.6.12, Information from Federal Officials and Employees.

(16) The revision to this IRM section includes editorial changes, formatting, and IRM reference corrections throughout.

Effect on Other Documents

This material replaces text contained in IRM 25.5.8 dated June 28, 2011.

Audience

All Operating Divisions & Functions

Effective Date

(01-27-2016)

Kristen E. Bailey
Director, Collection Policy
Small Business Self Employed

Overview

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

    • Concerning the Finances of a Political Organization,

    • Regarding Church Tax Inquiries and Examinations,

    • Pursuant to Tax Treaties,

    • For Records Located Outside the United States.

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. For more information, see IRM 4.76.30.4, Political Organizations, and IRM 3.13.12.14, Section 527 Political Organizations.

  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.

  5. Before issuing a summons, an attempt should be made to obtain the information without a summons. Refer to IRM 4.10.2.9, Requesting Information: Overview, IRM 4.61.2.1, Information Reporting and Record Keeping, CCDM 35.4.5.2.1, Formal Document Requests, and IRM 4.10.3.2, Interviews: Authority and Purpose.

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, Field Operations, CI, for prior written approval. If time is of the essence, a telephonic request can be made to the Director, 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.

TE/GE:EO

  1. A summons may be issued to obtain testimony or documents concerning a political organization (whether from the organization itself or from 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.

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.

Situations in which IRC §7611 Procedures Do Not Apply

  1. IRC §7611 specifically excludes certain IRS inquiries to churches from the restrictions it imposes. See IRM 4.76.7.3, Situations in Which IRC § 7611 Procedures Do Not Apply, for a description of these exclusions.

  2. 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 Exempt Organizations Select Check, an on-line search tool that allows users to check certain information about the federal tax statuses and filings of tax-exempt organizations, 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.

  3. 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.

  4. 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.

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.

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.

    Note:

    The designated official is the Director, Exempt Organizations who acts in concurrence with the TE/GE Commissioner.

  2. Prior to issuance of a summons to a church, a church tax inquiry is needed. Refer to IRM 4.76.7.4, Church Tax Inquiry, for church tax inquiry procedures.

  3. 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(3).

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

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. Refer to IRM 4.76.7.5, Notice of Examination, for church tax examination procedures.

  3. If the final determination results 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.

  4. 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.

  5. 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.

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.

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, Summons Handbook, Preparation. 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 34.6.1.3, Preparation of Suit Letters.

  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.

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.

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. Refer to IRM 4.10.2.9 , Requesting Information: Overview, IRM 4.61.2.1, Information Reporting and Record Keeping, CCDM 35.4.5.2.1, Formal Document Requests, and IRM 4.10.3.2, Interviews: Authority and Purpose. 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, Documents from Financial Institutions in the Tenth Circuit, 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, request Area Counsel to initiate enforcement action.

    Note:

    Under no circumstances should contact be made with foreign officials without going through the office of the Commissioner, LB&I, the U.S. Competent Authority.

  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 suspension guidelines in Rev. Proc. 2006-23 and Rev. Proc. 2006-54 (or any successor revenue procedures). Refer to IRM 5.21.7.2.1, Procedures for Working Competent Authority Cases, for collection procedures for working Competent Authority cases.

  4. For more information, see IRM 4.60.1.2.2, Foreign-Initiated Specific Requests for Information.

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, Foreign Branches of Domestic Banks, and IRM 25.5.6.7.2, Domestic Branches of Foreign Banks, for information concerning foreign banks or foreign branches of domestic banks.

  3. IRS Compliance Employees cannot issue a summons directly to any individual or entity located outside the United States. IRS employees needing foreign-based information are encouraged to make direct contact with the LB&I Deputy Commissioner’s Office to determine what information might be available from a specific country. Requests to obtain foreign-based information via a tax treaty/TIEA must be handled by that office, as the U.S. Competent Authority. Under no circumstances should contact be made with foreign officials without going through this office.

  4. For more information, refer to IRM 4.60.1.2.1, United States-Initiated Specific Requests for Information.

  5. For procedures on formal document requests, refer to IRM 4.61.2.2, Procedures for Obtaining Books and Records Located Outside the United States, and CCDM 35.4.5.2.1, Formal Document Requests.

  6. To obtain information located in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands, see IRM 5.21.2.2.3, Exchange of Information - U. S. Territories, for use of the exchange of information program and IRM 25.5.3.2.3, Summonses Issued in US Territories, for issuing a summons.