Our system of taxation relies on self- assessment. This means it relies upon the taxpayer to disclose all information necessary for the determination and collection of taxes. However not all taxpayers share this spirit of “volunteerism”. Therefore, Congress has given the IRS the authority to issue a summons.
A summons is a powerful enforcement tool that gives the IRS authority to require 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.
Who May Be Summoned?
The following individuals may be summoned:
- the taxpayer (the person liable for the filing of tax returns, or the paying of taxes)
- an officer or employee of the taxpayer
- a person having possession, custody, or care of the books of account
- a person who might have information which would assist the IRS in determining a liability making a return, or collecting a liability
What Information May be Requested with a Summons?
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 has not been given the statutory power to enforce a summons. Rather, 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 188.8.131.52, 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 184.108.40.206 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