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September 10, 2012


Summoning the Will to Challenge IRS Document Requests

Summons. The word itself is enough to get virtually anyone’s attention, regardless of how much he or she knows about the law.

That is entirely understandable. After all, the word “summons” is a long-standing legal term for requiring someone to appear in a court proceeding.

In the context of tax law, what does it mean, then, when the IRS issues an “administrative summons” seeking to obtain information from a taxpayer?

It means, for one thing, that the agency is ratcheting up the pressure on taxpayers suspected of not paying the tax they owe. With a summons in hand, the IRS can try to get the taxpayer to turn over financial records or other information – with the threat of seeking a court order to compel compliance if the taxpayer does not hand over the data.

Tax professionals in the field have noticed a big increase in disputes over these summonses in recent years. The Taxpayer Advocate Service reports that the number of disputes has tripled in less than a decade. It has gone from 44 in 2005 to 132 last year.

With the federal deficit at such a high level, IRS revenue agents are under enhanced pressure to find documents that show some type of failure to pay required taxes. The agents therefore tend to seek vast numbers of documents, and to use the summons process as a way to get the taxpayer to give them up.

The result, however, is more and more tax litigation challenging the issuance of the summons itself.

Unfortunately, there is no clear data available on how often IRS agents may threaten a taxpayer with a summons without actually issuing one.

It does seem clear, though, that the IRS is increasingly making summons to be a frequent part of the exam process. If a taxpayer resists an informational request for documents, the next step is often a summons.

Source: “IRS wields summons to pry info out of wealthy, companies,” Chicago Tribune / Reuters, Kim Dixon, 8-17-12

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our tax litigation page.