Hanna and the Firms are the Petitioners in this matter. The Petitioners alleged that the IRS failed to properly notify them of the summonses pursuant to IRC § 7609(a). The IRS moved to dismiss the petitions for lack of subject matter jurisdiction, arguing that the relevant provisions of the IRC, §§ 7609(b)(2) and (h), waived its sovereign immunity from suit only for parties entitled to notice of the summonses under the Code.

Section 7609, GenerallySubchapter A of 26 U.S. Code, Subtitle F, Chapter 78, generally addresses the IRS’ procedures for “examination and inspection” related to the discovery of liability and enforcement of title. Section 7609 of the Internal Revenue Code addresses the special procedures related to third-party summonses. Section 7609 provides, in part:(a) Notice(1) In generalIf any summons to which this section applies requires the giving of testimony on or relating to, the production of any portion of records made or kept on or relating to, or the production of any computer software source code (as defined in 7612(d)(2)) with respect to, any person (other than the person summoned) who is identified in the summons, then notice of the summons shall be given to any person so identified within 3 days of the day on which such service is made, but no later than the 23rd day before the day fixed in the summons as the day upon which such records are to be examined.

ng the summoned person to give the desired information to the IRS by having the court issue an order to that effect. Disobedience of such an order would be a civil contempt punishable by the court. Reg. Sec. 301.7602-1. The summons should not require the witness to do anything other than appear on a given date to give testimony or produce existing books, papers, records, or other data. A summons cannot require a witness to prepare or create documents, including tax returns, that do not currently exist. Third-party recordkeepers are only considered to be third-party recordkeepers when they are summoned to produce records that they made or kept of another person’s business transactions or affairs.Banks are among the most commonly summoned third-party recordkeepers.Included among the other third-party recordkeepers to whom a summons may be issued are the following: any person extending credit through the use of credit cards, any broker, any attorney, and any accountant. IRC Sec. 7603(b). IRC Sec. 7609(a). The IRS may petition a district court to waive notice if the court determines, on the basis of the facts and circumstances alleged, that there is reasonable cause to believe the giving of notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information from other persons through intimidation, bribery, or collusion, or to flee to avoid prosecution, testifying, or production of records. IRC Sec. 7609(g). IRC Sec. 7609(a)(1). IRC Sec. 7609(b)(2).The summoned party has the right to intervene in this proceeding and is bound by the decision in the quash proceeding whether the party intervenes or not. IRC Sec. 6501. IRC Sec. 7609(e). IRC Sec. 7609(i). IRC Sec. 7609(c)(2)(D). The Ninth Circuit had adopted this position. Citing IRC Sec. 7609(c)(2)(D)(i). Meaning at least four Justices agreed to hear the case, following which it was placed on the Court’s docket. By “assessment,” the Code “refers to the official recording

. Polselli’s existing assessed federal tax liability and that the IRS issued the summonses in question to aid in the collection of these assessed liabilities.” Id. Because the Internal Revenue Code (“IRC”) excluded petitioners from the required notice, there was no waiver of sovereign immunity, and the District Court therefore lacked jurisdiction to entertain the motions to quash. Id., at *5. This part is important. If the IRS is not required to provide notice to a party, the United States has not waived its sovereign immunity to be sued. This means that the parties whose records have been summonsed have no recourse to contest the summons. If those parties are lucky perhaps the banks will choose not to comply with the summonses, but parties cannot realistically expect financial institutions to ignore government instructions.The Sixth Circuit affirmed in a divided opinion, reasoning that no notice was required because “the summonses at issue fall squarely within the exception listed in Internal Revenue Code § 7609(c)(2)(D)(i).” Polselli v. Department of Treasury–IRS, 23 F.4th 616, 623 (2022). The U.S. Supreme Court accepted the case because the Sixth Circuit’s ruling was in direct conflict with Ip v. United States, 205 F.3d 1168, 1175 (2000) where the Ninth Circuit found that the taxpayer must maintain a sufficient legal interest in the account including “whether there was an employment, agency, or ownership relationship between the taxpayer and third party.” Polselli v. Department of Treasury–IRS, 23 F.4th 616, 623 (2022).Requirements and Exceptions for Providing NoticeBefore the IRS can obtain the records via a summons, the IRS must first serve notice of the summons—and a copy of the summons—on “any person (other than the person summoned) who is identified in the summons.” IRC § 7609(a). Thus, generally, notice must be given to everyone identified in the summons, whether or not they are the subject of the Service’s inquiry. However, there are a number of exceptions set forth in IRC § 7609(c)(2). Relevant

eals for the Third Circuit confirmed the primacy of the Internal Revenue Code (IRC) over state law insurance and privacy laws.Polselli v. Internal Revenue ServiceMr. Polselli owed over $2 million to the IRS, was not forthcoming with payment and, moreover, appeared to be hiding assets with accommodating parties. The IRS assigned a revenue officer to track down where his assets might be. The investigation pointed to several potential repositories of relevant financial information, including a law firm, the taxpayer’s wife and a company through which Mr. Polselli had made one tax payment of $300,000. The officer issued summonses under the authority of IRC section 7602 to three banks where the law firm, the wife and the company had accounts. The officer did not give notice to any of the third parties prior to issuing the summons. After learning of the summonses from the banks, the third parties moved to quash.The precise question was whether the third parties were entitled to notice under IRC section 7609(a)(1) and thereby had standing to move to quash the summonses or whether the exception to the notice requirement under IRC section 7609(c)(2)(D)(i), where a summons is “issued in aid of the collection of an assessment made [against the delinquent taxpayer],” applied, thus resulting in lack of standing and ultimately lack of jurisdiction. The petitioners relied upon a Ninth Circuit decision that narrowed the scope of the IRC section 7609(c)(2)(D)(i) exception to those circumstances where the delinquent taxpayer had proprietary interest in the information sought by the summons. The Sixth, Seventh and Tenth Circuits found no such limitation on the exception in part because the statute did not contain one.The Supreme Court unanimously rejected the Ninth Circuit’s application of IRC section 77609(c)(2)(D)(i) and found the petitioners had no standing to quash. At the risk of oversimplification, the Supreme Court opened the American Heritage Dictionary of 1969, looked up the word “aid” and determi

In 2016, a federal court authorized the IRS to serve a John Doe summons on a U.S.-based cryptocurrency exchange. In 2021, two federal courts in California authorized the IRS to serve two John Doe summons on two cryptocurrency exchanges and one digital wallet institution.When the IRS investigates potential violations of internal revenue law by unknown persons, groups, or classes of persons, the IRS will seek a John Doe summons, which is authorized under Internal Revenue Code § 7609(f). With a normal summons, the IRS seeks information about a specific taxpayer whose identity is known; in contrast, a John Doe summons allows the IRS to obtain information about any taxpayer within an “ascertainable group or class of persons.”

“[D]efendant Galloway moves to suppress from admission into evidence the tax records received from CPA Livsey by IRS agents, arguing that 26 U.S.C. § 7609 and the Code of Professional Conduct for CPA’s conferred upon him a reasonable expectation of privacy in the documents he had provided to his accountant, Livsey. (Doc.

Departing from longstanding and established precedent in this and other circuits, the panel's decision subjects the John Doe summons power to abuse by allowing the IRS to make broad requests to law firms to circumvent the privilege.Notes A John Doe summons is "[a]ny summons described in 26 U.S.C.§ 7609(c)(1)." See 26 U.S.C. § 7609(f).

Lawyers who receive subpoenas requiring the disclosure of client identities should carefully consider whether the clients' identities and the substance of the legal services are inextricably connected, and they should be prepared to document this position in camera.Notes1 "A John Doe summons is any summons described in 26 U.S.C. § 7609(c)(1) (covered summons) which does not identify the person with respect to whose liability the summons is issued." Id. at *1.

In affirming the District Court’s decision, the Court of Appeals ruled that Taylor Lohmeyer could not use the privilege as a “blanket” to circumvent compliance with the summons, but may have viable arguments to shield disclosure of specific documents through the use of a privilege log.The dispute arose in the context of a “John Doe” summons, a procedure whereby the IRS seeks documents for an unidentified U.S. taxpayer because the name of the taxpayer under investigation is unknown to the IRS. See generally 26 U.S.C. § 7609(c)(1), (f). To initiate the summons, the procedure requires the IRS to first make an ex parte showing that (1) the summons relates to the investigation of a particular person or ascertainable group of persons; (2) there is a reasonable basis for believing that such person, group, or class of persons may fail or may have failed to comply with the federal tax laws; and (3) the information sought is not readily available from other sources.