Polselli v. Internal Revenue Service
Issues
Do the notice requirements related to an Internal Revenue Service summons on third parties apply only when the delinquent taxpayer has an interest in the records, or to all third-party summons for records?
This case asks the Supreme Court to determine whether the notice requirements of I.R.C. § 7609(c)(2)(D)(i) apply only when a delinquent taxpayer has a legal interest in the summonsed records, or if they apply broadly to summons issued for anyone’s records whenever they could be helpful in collecting a delinquent taxpayer’s liability. Hanna Karcho Polselli argues that the textual interpretation of the provision supports a legal interest requirement because such a reading gives meaning to other provisions in the statute. The Internal Revenue Service (“IRS”) counters that such a requirement is contrary to both the text of the statute and Congressional intentions when enacting the statute. The outcome of this case will determine the extent to which the privacy of the general public is protected from the government’s ability to summons information in its investigation and collection of tax liability.
Questions as Framed for the Court by the Parties
Whether the exception in I.R.C. § 7609(c)(2)(D)(i) to the notice requirements for an Internal Revenue Service summons on third-party recordkeepers applies only when the delinquent taxpayer owns or has a legal interest in the summonsed records, as the U.S. Court of Appeals for the 9th Circuit has held, or whether the exception applies to a summons for anyone’s records whenever the IRS thinks that person’s records might somehow help it collect a delinquent taxpayer’s liability, as the U.S. Courts of Appeals for the 6th and 7th Circuits have held.
The Internal Revenue Service (“IRS”) determined that Remo Polselli had underpaid his federal taxes by over $2 million throughout the course of a decade. Polselli v. United States Dep’t of Treasury-Internal Revenue Serv., at 620. After beginning an investigation to locate Polselli’s assets, the IRS determined that Polselli had used other legal entities in an attempt to prevent asset collection. Id.
Additional Resources
- Aysha Bagchi, Supreme Court Agrees to Hear Case Over IRS Bank Summons Notice, Bloomberg Tax (Dec. 9, 2022).
- Tim Shaw, Supreme Court to Take on IRS Record Summons Notice Dispute, Thomas Reuters (Dec. 15, 2022).
- Alex Swoyer, Supreme Court to Weigh Challenge to IRS Summons of Taxpayer Data without Notice, Washington Times (Dec. 21, 2022).