Recent Developments in IRS Summonses

Price: $224 eLearning


Sign up today for an entire year of unlimited access to relevant, timely professional learning courses, including webinars, eLearning courses, or OnDemand offerings, and keep your professional credits up to date. All for just $399. Learn more.



Diverse and significant issues have arisen recently in connection with IRS summonses. This webinar will discuss some of those issues, including:

Mandatory LB&I summonses: The Internal Revenue Manual has long instructed that, before issuing a summons, an agent should weight the importance of the desired information against 1) the tax liability involved; 2) the time and expense of obtaining the records; 3) the likelihood of having to institute court action; 4) the potential general adverse effect on compliance if enforcement efforts are unsuccessful; and 5) the status of the case related to any pending criminal investigations. LB&I, however, has issued a new directive requiring that, if a taxpayer does not timely respond to an IDR, a delinquency notice will be issued; if there is still no response, a pre-summons letter will issue; and finally, a summons will be issued and enforced. This procedure is mandatory and has no exceptions, i.e. all LB&I delinquent IDRs will result in summonses, and those summonses will all be enforced. This new regime goes hand in hand with new pre-IDR procedures, where the examiner will discuss with the taxpayer the contents of an IDR before it is issued; this is intended in the long run to decrease to number of summons enforcement actions.

Fifth Amendment Act of Production Privilege: For almost half a century, the Supreme Court has recognized that the very act of producing certain documents can be testimonial and thus falls within the Fifth Amendment’s protections. However, this Act of Production Privilege has been eroded by six circuits when it comes to production of records of foreign bank accounts – even though the act of producing such records will undoubtedly be self-incriminating. These circuits have applied (dubiously, this presenter believes) the Required Records Doctrine, under which records required to be kept under a non-criminal statutory regime may be exempt from the Act of Production Privilege. The Supreme Court has refused certiorari in three of these cases. The reasoning of these cases may – as the Department of Justice appears to have recognized – be applied to other records required to be maintained by statute.

United States v. Clarke: In a 2013 unpublished opinion, the Eleventh Circuit held, in keeping with prior Eleventh Circuit precedent, that a taxpayer who merely alleged that a summons was issued for an improper purpose was entitled to an evidentiary hearing in order to question IRS officials about their reasons for issuing the summons. One of the “improper purposes” alleged was that the IRS issued the summons as retaliation for the taxpayer’s refusal to sign a statute extension. The government sought Supreme Court review, which was granted, and the case will be argued on April 23, 2014. The government’s position is that the four factors established in United States v. Powell, 379 U.S. 48 (1964) are sufficient to protect taxpayers against abusive summons practices. Other circuits have agreed with the government’s position. The question is whether the Supreme Court will broaden a taxpayer’s rights in a summons enforcement proceeding, or whether it will rein in the Eleventh Circuit.

During this practical webinar, Rule will cover:
• New LB&I rules requiring that summonses be issued in response to all delinquent IDRs, and will discuss how these rules may operate in practice.
• The Fifth Amendment Act of Production Privilege, and its recent curtailment in connection with records of foreign bank account records.
• How this narrowing of Act of Production Privilege may have future repercussions in connection with other areas of recordkeeping.
• The United States v. Clarke case, to be argued before the United States Supreme Court on April 23, 2014, and whether the case will affect the burdens of production and proof when an IRS summons is attacked as having being issued for an improper purpose.

Educational Objectives:
• Determine how LB&I will issue IDRs and summonses and how these new rules may affect the audit process; 
• Recognize burden of proof issues when a summons is challenged by a taxpayer as having an improper purpose; and 
• Analyze the recent curtailment of the Fifth Amendment act of production privilege through the required records exception in the context of foreign bank account records.



Caroline Rule, J.D. is a partner in the New York City law firm of Kostelanetz & Fink, LLP.  She has extensive experience representing clients who are facing investigation or prosecution for alleged tax fraud and other white collar crimes.  Ms. Rule has successfully represented clients in sensitive Internal Revenue Service audits, "tax shelter" matters, criminal charges for failure to file tax returns, and failure to report offshore assets.   Ms. Rule is a member of the New York Council of Defense Lawyers.  She is a member of the Committee on Civil and Criminal Tax Penalties of the Tax Section of the American Bar Association, and a member of the Criminal Advocacy Committee of the New York City Bar Association. Ms. Rule is a Master of the Federal Bar Council Inn of Court, and a member of the Federal Bar Council Special Committee on Sentencing Reform and Alternatives to Incarceration.  Ms. Rule has been recognized by “New York Super Lawyers” since 2011.  She is the author of the BNA Portfolio IRS Procedures, Examinations and Appeals, Portolio 623-3rd, and serves on the Bloomberg BNA U.S. Income Advisory Board.