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Ethics/Professional Responsibility

Jan. 20, 2023

Can the IRS summons your bank statements without providing notice?

The U.S. Supreme Court has agreed to decide whether the IRS may issue a summons seeking an innocent party’s records without providing that person notice.

Stephen J. Turanchik

Attorney, Paul Hastings LLP


Stephen is an attorney in the Tax practice of Paul Hastings and is based in the firm's Los Angeles office. Mr. Turanchik's practice focuses on tax controversy and litigation at the state and federal levels and tax advice on international reporting.

It is Monday morning and you arrive at your office with an urgent voicemail message from Bob at the Bank. He says the IRS served the Bank with a summons seeking all of your firm's bank statements for 2021 and 2022. Bob informs you that the IRS wants the bank statements because one of your clients owes the IRS money. Not you. Not your firm. One of your clients. You immediately call your tax attorney and ask whether you can quash the summons because you were not provided any sort of notice. Your tax attorney provides the following answer, "it is not so clear."

This can't happen in the United States, right? Well, believe it or not, there is a Circuit split on the issue. The Sixth Circuit in Polselli v. United States, 23 F.4th 616 (6th Cir. 2022) held that two law firms were not entitled to notice of third-party summonses issued solely in aid of collection of a client's tax liabilities. In Polselli, the IRS assessed a tax liability against the taxpayer and then a single IRS agent issued summonses to three banks, Wells Fargo, JP Morgan Chase, and Bank of America directing them to appear before the agent to give testimony and to produce for examination among other things, all bank statements relative to the accounts of the taxpayer's wife and the two law firms. Id., at 631. The IRS sought the law firms' records because it wanted to know how the taxpayer had paid the firms. Id. at 620.

The petitioners (the attorneys and the taxpayer's wife) filed a petition to quash the summons in U.S. District Court. The District Court determined that the petitioners were not entitled to notice of the summons, and as a consequence had no right to bring a petition to quash the summons. Polselli v. United States, 2020 WL 12688176, *5 (W.D. Mich. 2020). The Sixth Circuit in Polselli affirmed that dismissal, but acknowledged that the Ninth Circuit in Ip v. United States, 205 F.3d 1168 (9th Cir. 2000) reached a contrary conclusion. Polselli, 23 F.4th at 630.

By way of background, the Internal Revenue Code (IRC) authorizes the IRS to issue summonses to third-party recordkeepers, (including banks, credit card companies, accountants and attorneys) for documents to assist in its endeavors to collect tax from delinquent taxpayers. IRC §§7602(a), 7603(b). But, it also provides important protections for persons whose records the IRS targets. The IRS must give notice to any person who is identified in the summons at least 23 days before the record-keeper must produce documents. IRC § 7609(a)(1). "[A]ny person who is entitled to notice of a summons" has 20 days to file a petition to quash the summons in U.S. District Court. IRC §7609(b)(2).

There are few exceptions to the notice requirement including any summons "issued in aid of the collection of (i) an assessment made or judgment rendered against the person with respect to whose liability the summons is issued; or (ii) the liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i)." See IRC § 7609(c)(2)(D). The IRS argued that it did not need to provide notice to the petitioners because the summons was issued in aid of the collection of the taxpayer's assessed tax liability.

The Ninth Circuit confronted a similar fact pattern in Ip v. United States, 205 F.3d 1168, 1169 (9th Cir. 2000). In Ip the IRS summonsed petitioner's bank account without providing notice after it had levied an assessment against a corporation for which petitioner's fiancé was the agent. In Ip the IRS also argued that it was not required to provide notice to the account holder because the summons was issued in aid of the collection. The Ninth Circuit found that notice was required because Congress would not have allowed the IRS to summon a third-party recordkeeper for the information of any person without notice, and held that the notice exception applies "only where the assessed taxpayer 'has a recognizable [legal] interest in the records summoned.' " Id. at 1176. Because the taxpayer did not have recognizable interest in the account, the Ninth Circuit held the trial court wrongfully dismissed the case for failing to provide the account holder with notice of the summons. Id. at 1177.

The Sixth Circuit declined to follow the Ninth Circuit's Ip decision. The Court held that the government satisfied IRC §7609(c)(2) by showing (1) an assessment was made or a judgment was entered against a delinquent taxpayer and (2) the summons was issued "in aid of the collection" of that delinquency. Polselli, 23 F.4th at 623. The Court in Polselli was sympathetic to concerns about the IRS' access to information regarding blameless third parties, without notice, but "this possibility was not thought by Congress to create a sufficient infringement to warrant the inclusion of additional statutory notice requirements for unidentified persons." Id. 23 F.4th at 629. The Court reasoned that "[p]etitioners' conjectural fears do not defeat Congress's prerogative to prioritize the IRS's collection efforts over taxpayer privacy." Id.

On Dec. 9, the U.S. Supreme Court granted certiorari in this important case that addresses fundamental privacy rights. Polselli v. IRS, No. 21-1599, 2022 WL 17544996 (U.S. Dec. 9, 2022).


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