Finis Cowan, Attorney - Retired CPA

An IRS summons requires taxpayers and other third parties to provide the IRS with pertinent information into the investigation and collection of taxes. Generally, a summons is issued when the IRS has attempted and failed to obtain the information from the taxpayer through voluntary means.

A summons may only be issued to secure information that may be relevant to:

• ascertain the correctness of any return
• make a return where none has been made
• determine a tax liability
• collect a tax liability
• inquire into any offense connected with the administration or enforcement of the internal revenue laws

The information may be received through oral testimony or by requesting the taxpayer’s books and records directly related to the proposed adjustment. The IRS can request any information that it requested in good faith that might throw light upon the correctness of a return.

Requirements of a Summons

Although the courts have given the IRS great latitude in the information that is requested, there are still some requirements that if not met can make the Summons unenforceable. A summons needs to meet the following requirements to be valid:

• must be properly served
• must be signed by an authorized IRS officer
• must specify the information that is being requested
• must provide a reasonable time and place of the meeting

Anytime a summons is issued the taxpayer or third party must appear in person—a representative cannot appear instead of them. However, the person or party summoned has the right to counsel. They must provide the records requested and comply with the summons. There are some grounds where the person summoned can refuse to comply with the summons, however, there must be a valid reason for any such refusal. Keep in mind that a failure to comply with a summons may result in judicial remedies.

The IRS  must apply to the local District Court in order to enforce the production of the information requested. The statute of limitations will be suspended when a lawsuit is initiated to either enforce or quash the summons and will commence again on the date that there is a final resolution regarding the summoned person’s response to the summons.

Service of Summons

In order for a Summons to be effective under IRM 25.5.3.2, it must meet certain requirements:

• the face of the summons should bear a signed attestation statement
• the summons must 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.

Time and Place Examination Set by Summons

IRM 25.5.3.4 sets out the following guidelines:

• the time and place of examination of the taxpayer’s records must be reasonable.
• the date for appearance should not be on a Saturday, Sunday, or a legal holiday.
• the date of service or the date of appearance should not be computed in the time period for the appearance or production of records (10 days for taxpayer, 23 days for third party)
• if a summoned witness cannot appear based a valid reason (such as illness) on the date fixed in the summons, the date may be continued by mutual agreement.

Rights and Privileges of Person Summoned

A person summoned to testify before the IRS or to produce records may assert certain rights or defenses including the following:

• Fifth Amendment privilege against self-incrimination (note – the privilege against self-incrimination provides that no person shall be compelled to be a witness against himself. However, information or evidence furnished voluntarily by an individual taxpayer or witness who has been summoned may be used even though it may be incriminating)
• right to be represented by counsel (note – A witness who appears in response to a summons must be afforded the opportunity to be represented by an attorney)
• attorney-client, federally authorized tax practitioner-taxpayer, husband-wife, and clergy-penitent privileges
• right to make an audio recording of the proceeding
• right to petition to quash a third-party summons
• right of third-party witness to refuse unreasonable requests and to raise appropriate defenses

Types of Summons Include:

• Those issued to the taxpayer pursuant to a tax audit
• Those issued to the taxpayer in a tax collection action
• Those issued to the taxpayer in a criminal tax investigation
• A John Doe summons, sometimes called a third-party record-custodian summons

John Doe Summons • Third-Party Record-Custodian Summons

A John Doe summons is a summons issued by the IRS to a third-party record-keeper in which the IRS instructs the third party to provide information about an unnamed or unknown taxpayer under civil or criminal tax investigation. There are special problems with John Doe summonses. The person under investigation has no opportunity to intervene or resist the IRS's reach.

IRS Summons Must Be Legitimate

The purpose of a summons must be legitimate. That is, a summons must be used to obtain relevant or material evidence, to ascertain the correctness of any tax return, to make a tax return where none has been made, to determine the tax liability of transferee, or to collect on a tax liability. The IRS is required to serve an attested copy of the summons, and the time and the place for appearance must be reasonable.

IRS Summons Related to Tax Shelters, Off-Shore Tax Arrangements

Tax shelters, particularly off-shore tax arrangements arrangements, are subject to a highly technical summons regime governed by IRS procedures that normally include settlement parameters or guidelines.

Schedule a consultation: Contact Houston IRS Summons Lawyer Finis Cowan, 713-582-6066.

As a CPA and trial lawyer, I know how to determine:

• whether summonses are procedurally defective,
• whether the scope of material described is sufficiently specific, and
  
• how to advise you on compliance with conflicting disclosure and privacy obligations.