While the Internal Revenue Service generally can be sued if it fails to notify a person or entity about a summons implicating them, the agency can issue summonses without notice under Internal Revenue Code Section 7609(c)(2)(D)(i) if the IRS is trying to collect already-assessed taxes, according to the opinion.
In Polselli's case, the IRS had made an assessment and issued the summonses to try to collect his taxes, meaning the agency had no obligation to notify his wife and the law firms about the bank summonses, the Sixth Circuit said, affirming a Michigan federal court's decision.
Him An IRS agent had issued summonses to three banks — Wells Fargo Bank NA, JP Morgan Chase Bank NA and Bank of America NA — him seeking records on accounts held by the two law firms as well as Polselli's wife, Hanna Karcho Polselli, according to the opinion.
The agent was trying to identify the location of Polselli's assets after he accrued around $2 million in unpaid taxes, and believed the closely related firms — of which he was a client — might have information on his financials, according to the opinion. The agent also suspected that Polselli had access to his wife's accounts and might have used them, the opinion said.
But the IRS didn't tell the firms or his spouse about the bank summonses. Instead, the banks themselves notified them, and Hanna Polselli and the firms subsequently filed petitions with Michigan federal court to quash the summonses, according to the opinion.
That lower court found that Hanna Polselli and the firms couldn't sue to do away with the summonses because the IRS was trying to collect the taxes assessed against Polselli, and the plain meaning of the statute allows an exception in such circumstances. The Sixth Circuit majority agreed, saying that it's clear the IRS issued the summonses in order to aid the collection of tax and locate Polselli's assets.
U.S. Circuit Judge Raymond Kethledge disagreed with the majority's decision. He found that its interpretation of the statute renders superfluous a related provision, IRC Section 7609(c)(2)(D)(ii), which allows the IRS to issue summonses without notice to help the agency collect taxes from potential fiduciaries or others who might have received a delinquent taxpayer's assets. Under the majority's interpretation of Section 7609(c)(2)(D)(i), summonses under the transferee and fiduciary provision will fall under both statutes, rendering the second one unnecessary, according to Judge Kethledge.
"If the government and the majority are right about their interpretation of Section 7609(c)(2)(D)(i), therefore, Congress was wasting its time in writing Section 7609(c)(2)(D)(ii)," Judge Kethledge said.
In Polselli's case, the IRS had made an assessment and issued the summonses to try to collect his taxes, meaning the agency had no obligation to notify his wife and the law firms about the bank summonses, the Sixth Circuit said, affirming a Michigan federal court's decision.
"We Agree With The District Court That The Summonses At Issue Fall Squarely Within The Exception Listed In
Section 7609(C)(2)(D)(I),"
The Opinion Said.
The Opinion Said.
The agent was trying to identify the location of Polselli's assets after he accrued around $2 million in unpaid taxes, and believed the closely related firms — of which he was a client — might have information on his financials, according to the opinion. The agent also suspected that Polselli had access to his wife's accounts and might have used them, the opinion said.
But the IRS didn't tell the firms or his spouse about the bank summonses. Instead, the banks themselves notified them, and Hanna Polselli and the firms subsequently filed petitions with Michigan federal court to quash the summonses, according to the opinion.
That lower court found that Hanna Polselli and the firms couldn't sue to do away with the summonses because the IRS was trying to collect the taxes assessed against Polselli, and the plain meaning of the statute allows an exception in such circumstances. The Sixth Circuit majority agreed, saying that it's clear the IRS issued the summonses in order to aid the collection of tax and locate Polselli's assets.
U.S. Circuit Judge Raymond Kethledge disagreed with the majority's decision. He found that its interpretation of the statute renders superfluous a related provision, IRC Section 7609(c)(2)(D)(ii), which allows the IRS to issue summonses without notice to help the agency collect taxes from potential fiduciaries or others who might have received a delinquent taxpayer's assets. Under the majority's interpretation of Section 7609(c)(2)(D)(i), summonses under the transferee and fiduciary provision will fall under both statutes, rendering the second one unnecessary, according to Judge Kethledge.
"If the government and the majority are right about their interpretation of Section 7609(c)(2)(D)(i), therefore, Congress was wasting its time in writing Section 7609(c)(2)(D)(ii)," Judge Kethledge said.
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