Polselli v. Internal Revenue Service

LII note: The U.S. Supreme Court has now decided Polselli v. Internal Revenue Service .


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?

Oral argument: 
March 29, 2023

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. This belief was based on various pieces of evidence, including the fact that Polselli had previously paid an outstanding tax liability from the account of a seemingly unconnected business entity, rather than his own bank account. Id. IRS Revenue Officer Michael Bryant’s investigation revealed that Polselli was concealing his assets in bank accounts under his wife’s name. Id. Bryant served a summons on Wells Fargo Bank, as well as the law firm which had represented Polselli, in an attempt to find additional information that would be useful in the recovery of assets. Id. The IRS sought to determine the source of Polselli’s funds, which bank accounts were connected to him, which entities he owned, or otherwise controlled, and which bank accounts were connected to those entities. Id. The IRS believed the law firm may have financial records which would reveal this information because Polselli had been a long time client. Id. No useful information was gained from the summons to the law firm, which claimed attorney-client privilege and maintained that they had not retained any of the documents the IRS sought. Id. Bryant continued to seek important documents, leading him to issue additional summons to JPMorgan Chase and Bank of America, requesting any financial information concerning Polselli or the law firm. Id.

Bryant did not notify Polselli’s wife, who was named on the bank accounts, or the law firm of the summonses that were issued. Id. After receiving the summons, Wells Fargo notified Polselli’s wife, and the other banks similarly notified the law firm. Id. Both the law firm and Polselli’s wife moved to quash the summons in the U.S. District Court for the Eastern District of Michigan. Id. at 621. The petitioners claimed that the IRS had not given them proper notice of the summons, as required by Internal Revenue Code (“I.R.C.” or “Code”) § 7609. Id. The United States moved to dismiss for lack of subject-matter jurisdiction, claiming that the petitioners were not entitled to notice and therefore the government had not waived its sovereign immunity. Id. The government also offered to allow the law firm to review the summonsed records in order to ensure that they only related to Polselli and the legal entities which may be holding his assets. Id. The district court ruled in favor of the government, holding that notice was not required. Id.

Both petitioners appealed the decision to the U.S. Court of Appeals for the Sixth Circuit. Id. The Sixth Circuit upheld the decision of the district court, rejecting the petitioners’ fears about an inability to challenge third party summons and holding that Congress has the power to prioritize the IRS’s ability to collect assets over taxpayer privacy. Id. at 629.

The United States Supreme Court granted Polselli certiorari on December 9, 2022. Brief for the Respondent, Internal Revenue Service at 1.



Hanna Karcho Polselli (“Polselli”) argues that the I.R.C. § 7609(c)(2)(D)(i) exception to the notice requirement contains a direct connection and legal interest requirement because the exception applies only when the summons are issued “in aid of the collection” of a tax liability. Brief for Petitioner, Polselli et al. at 19. Polselli contends that the phrase “in aid of” establishes the direct connection requirement because the activity that is providing aid must be directly related to the object that receives aid. Id. Polselli additionally contends that “collection” refers to the means used to obtain payment and does not include related activities such as determining tax liability. Id. Polselli emphasizes that the Court has interpreted the phrase “in aid of” similarly in the past and argues that the Court should continue to do so here. Id. at 21. Polselli further adds that a direct connection only exists when the delinquent taxpayer has a legal interest in the records summonsed, and as such the exception contains an additional legal interest requirement. Id. at 24.

Polselli also argues that the principles of statutory interpretation favor such a reading because interpreting § 7609(c)(2)(D)(i) narrowly gives § 7609(c)(2)(D)(ii) meaning. Id. at 25. Polselli argues that without a legal interest limitation, every summons covered by clause (ii) would fall under clause (i), rendering clause (ii) superfluous, contrary to the interpretive principle against construing clauses to be useless. Id. at 26. Furthermore, Polselli argues that the majority of clause (i) would be rendered superfluous as well if § 7609(c)(2)(D) is interpreted broadly because the clause would not need to be specifically connected to the delinquent taxpayer. Id. at 26–27. Polselli also contends that even if “in aid of” is interpreted broadly without a direct connection requirement, the principles of statutory interpretation require a reading that avoids giving the statute infinite breadth and must construe such a broad phrase by looking at the statute’s structure and purpose. Id. at 30.

The Internal Revenue Service (“IRS”), counters that Polselli’s plain meaning interpretation of “in aid of the collection” is unpersuasive because the word “aid,” meaning to support, help, or assist, is a broadening phrase and does not have the narrowing effect that Polselli contends it does. Brief for Respondent, Internal Revenue Service at 19. Rather, the IRS argues that there are three components in the text of § 7609(c)(2)(D)(i): (1) summonses issued in aid of the collection of tax liabilities, (2) an assessment made or a judgment rendered, and (3) the person to whose liability the summons is issued. Id. at 16–17. The IRS contends that these three components are satisfied in this case: the summons were issued to help the IRS obtain payment for Mr. Polselli’s tax liability, the IRS had made an assessment of over $2 million in tax liability for Mr. Polselli, and Mr. Polselli is the person with respect to whose liability the summons were issued. Id. at 17–18. The IRS further argues that there is no legal interest requirement because the text of the statute does not refer to any legal interests or accounts, and that even if there is such a requirement, it is not connected to the legal interest limitation in the text. Id. at 21.

The IRS also argues that a narrow interpretation of § 7609(c)(2)(D)(i) is unnecessary to give meaning to § 7609(c)(2)(D)(ii) because clause (ii) creates a distinct exception from clause (i). Id. at 27. The IRS contends that there are two scenarios covered by clause (ii) that are not covered by clause (i): (1) when the government is trying to collect liability from a transferee or fiduciary instead of the taxpayer and (2) when a pre-assessment summons is issued in aid of the collection of liability of a transferee or fiduciary. Id. at 26–29. As such, the IRS asserts that even without a narrow interpretation of clause (i), clause (ii) is not superfluous and does add meaning to the statute. Id. at 25. The IRS additionally asserts that, contrary to the Polselli’s argument, a broad interpretation of § 7609(c)(2)(D)(i) does not render subsections § 7609(a) and § 7609(b) superfluous. Id. at 36. Rather, the IRS contends, § 7609(c)(2)(D) simply describes the instances where §7609(a) and § 7609(b) do not apply as Congress specified. Id.


Polselli argues that § 7609(c)(2)(D)(i) requires the taxpayer to have a legal interest in the summonsed account because the purpose of § 7609 is to provide notice and an opportunity for a taxpayer to quash the summons, and as such, a narrow interpretation of § 7609(c)(2)(D)(i) is needed to retain the broad privacy protections it guarantees. Brief for Petitioner at 27. Polselli contends that Congress enacted § 7609 for the purpose of protecting privacy interests from the government’s abuse of broad summons powers that resulted from two court decisions, Donaldson v. United States and United States v. Bisceglia. Id. at 31. Polselli further notes that Congress purposefully used language to reflect the broad scope of the protections in § 7609(a) and (b) and the narrow and tailored exceptions of § 7609(c), and as such § 7609(c)(2)(D)(i) should be interpreted narrowly to reflect Congress’s intentions. Id. at 28. Additionally, Polselli argues that interpreting § 7609(c)(2)(D)(i) narrowly furthers the purpose of § 7609 because it preserves the protections guaranteed in § 7609(a) and (b). Id. at 29.

Furthermore, Polselli maintains that the government’s interpretation of the statute defeats the purpose of § 7609 because the provision would be completely inapplicable in any case where summonses are issued in aid of collecting a previously assessed tax liability, even though it was enacted to protect against such potential privacy violations. Id. at 28-29. Polselli emphasizes that a legal interest requirement is consistent with the statute’s purpose and history because the statute protects the privacy interests of innocent parties while still allowing the IRS to easily collect tax liabilities that have already been assessed from accounts that are connected to the delinquent taxpayer. Id. at 32. Polselli argues that interpreting the statute without such a requirement undermines the purpose of § 7609 and its broad privacy protections because the § 7609(c)(2)(D)(i) exception would render the protections useless. Id. at 33.

The IRS counters that the lack of an explicit textual limitation indicates Congress’s intent to interpret § 7609(c)(2)(D)(i) broadly and without a legal interest limitation, especially because Congress imposed a similar limitation in a different section of the Code. Brief for Respondent at 22–23. The IRS agrees that § 7609 was enacted in response to Donaldson but argues that Congress did not intend to impede the government’s ability to collect tax liabilities by issuing unnoticed summonses in aid of collection. Id. at 37. Rather, the IRS contends, Congress only sought to limit the government’s ability to issue unnoticed summonses in aid of a liability investigation. Id. The IRS emphasizes that Congress did not intend to simply provide broad protections for privacy, but rather balanced the need for privacy protections during tax investigations with the need to ensure effective tax collection. Id. at 36. The IRS argues that because Congress recognized that third-party summonses were instrumental in the government’s function as a tax collector and that limiting the use of summonses in tax collection would further create issues, Congress intended for the exception to be without limitations. Id. at 37. The IRS further posits that Congress recognized that providing notice would give delinquent taxpayers time to thwart the government’s attempts to collect on tax liabilities, and as such intended to preserve the government’s ability to do so by allowing unnoticed summonses issued in aid of collection of tax liabilities. Id. at 38.

The IRS additionally asserts that Polselli misunderstands the purpose of § 7609 as an unlimited notice guarantee and mischaracterizes Congress’s response to Donaldson. Id. at 39. In particular, the IRS points out that Donaldson was a case that dealt only with the issue of summonses used in aid of a liability investigation, not a collection of tax liability. Id. As such, the IRS asserts that Polselli is wrong in characterizing Congress’s intent as purely protecting privacy rights and argues that Congress sought to balance the need for privacy protections with the need for effective tax collection. Id. The IRS further asserts that the statutory history does not support a legal interest limitation because Congress specifically stated that the notice procedures of § 7609 would not apply in cases where summonses are issued solely for the purposes of tax collection. Id. The IRS argues that Congress was concerned about summonses only in cases where they are used to obtain information for purposes other than tax collection, and as such the legal interest limitation is irrelevant. Id.



The Center for Taxpayer Rights (“CTR”), in support of Polselli, argues that allowing the IRS to issue summonses to third parties without notice would be detrimental to the privacy rights of taxpayers and put sensitive information at risk. Brief of Amici Curiae Center for Taxpayer Rights et al., in Support of Petitioners at 5. CRT maintains that, in enacting § 7609, Congress sought to protect the civil rights of taxpayers, including the right to privacy. Id. at 9­­­–10. CTR claims that the balance of privacy and efficient tax collection can only be achieved by requiring notice when third-party summonses are issued. Id. at 13.

The Internal Revenue Service (“IRS”) refutes the claim that notice is required for privacy, instead arguing that privacy rights are well protected in the Code even when notice is not provided. Brief for the Respondent at 43. The IRS asserts that the information collected via a summons is limited to that which is relevant to the inquiry, and all other information is excluded. Id. Further, the IRS highlights that they are prevented from disclosing the information gained through a summons and would face potential civil and criminal liability if released. Id. at 44. Therefore, the IRS maintains that taxpayers would not face privacy risks, regardless of notice. Id. at 43.


The Chamber of Commerce, in support of Polselli, argues that third parties will be harmed if the IRS is not required to give notice of summons. Brief of Amici Curiae The Chamber of Commerce of the United States of America, in Support of Petitioners at 15. The Chamber of Commerce warns that when the IRS does not provide notice of a summons, the burden shifts to the third party who must choose between angering the IRS by notifying a customer themselves or alienating the customer by silently complying. Id. at 16. Further, the Chamber of Commerce insists that the IRS will increase the number of summonses issued if they are not required to provide notice, which will increase the third-party costs associated with compliance. Id. at 19.

The IRS argues that the majority rule for courts nationwide has been to not require notice of summons, and therefore the burden on third parties would not increase from current levels since IRS practices would not meaningfully change. Brief for the Respondent, Internal Revenue Service at 44. Additionally, the IRS contends that customer annoyance is not a concrete harm to the banking industry. Id. at 45. Finally, the IRS argues that there is no indication that Congress wanted to balance the ability of the IRS to collect taxes against the convenience of bank practices. Id.


The National Taxpayers Union Foundation (“Foundation”), in support of Polselli, contends that requiring the IRS to provide notice is an important check on overzealous tax enforcement. Brief of Amici Curiae National Taxpayers Union Foundation, in Support of Petitioners at 7. The Foundation maintains that notice is an important protection for innocent parties. Id. Further, the Foundation argues that notice is key in quickly moving a case to the Appeals Office of the IRS or to a court’s jurisdiction, both of which provide protections for innocent parties against collections. Id.

The IRS counters that summonses are not issued when improper, such as when the third party only has a tenuous relationship to the taxpayer that is under investigation. Brief for the Respondent at 45. The IRS maintains that agents must obtain authorization from a supervisor before issuing a summons, which helps to prevent summonses that would be abusive to innocent parties. Id. Finally, the IRS contends that other safeguards are in place which allow a court to review a summons when a taxpayer believes that it was issued on pretextual grounds. Id. at 45–46.


Written by:

Rachel Lu

Erik Olson

Edited by:

Victoria Quilty


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