143 S.Ct. 1231
U.S.2023Background
- Revenue Officer Michael Bryant began collection efforts after the IRS assessed Remo Polselli for more than $2 million in unpaid taxes and penalties.
- Bryant issued §7602 summonses (without giving notice) to a law firm and three banks seeking records relating to third parties, including Polselli’s wife and firms connected to him.
- The banks produced the summonses; the third parties filed motions to quash in district court.
- The District Court dismissed for lack of jurisdiction, holding §7609(c)(2)(D)(i) exempted the IRS from providing notice; the Sixth Circuit affirmed.
- Petitioners urged a Ninth Circuit–style rule requiring the delinquent taxpayer to have a legal or proprietary interest in the summoned records for the notice exception to apply; the circuits were split.
- The Supreme Court granted review and held the notice exception does not require that the delinquent taxpayer have a legal interest in the summoned records, affirming the Sixth Circuit.
Issues
| Issue | Plaintiff's Argument (Polselli) | Defendant's Argument (IRS) | Held |
|---|---|---|---|
| Whether §7609(c)(2)(D)(i) requires the delinquent taxpayer to have a legal or proprietary interest in the summoned records before the IRS may issue a summons without notice | The exception should be limited: no-notice summonses allowed only when the taxpayer has a legal/proprietary interest in the records (so the summons directly produces collectable assets) | The statutory exception turns on whether the summons is “in aid of the collection” of an assessment/judgment against the taxpayer; no separate legal-interest requirement | The Court rejected a legal-interest requirement: §7609(c)(2)(D)(i) requires that the summons be issued in aid of collecting an assessment/judgment against the person identified, but it does not condition the exception on the taxpayer’s legal interest in the records. |
Key Cases Cited
- United States v. Clarke, 573 U.S. 248 (2014) (recognizing broad IRS summons authority)
- Tiffany Fine Arts, Inc. v. United States, 469 U.S. 310 (1985) (third‑party summonses may be issued to obtain taxpayer-related information)
- Direct Marketing Assn. v. Brohl, 575 U.S. 1 (2015) (definition of “assessment” as official recording of taxpayer liability)
- Hibbs v. Winn, 542 U.S. 88 (2004) (distinction between liability and assessment in tax context)
- United States v. Galletti, 541 U.S. 114 (2004) (discussion of assessment as calculation/recording of liability)
- Donaldson v. United States, 400 U.S. 517 (1971) (limitations on third-party intervention before §7609 enactment)
- Bisceglia v. United States, 420 U.S. 141 (1975) (scope of IRS summons power and privacy concerns)
- Sebelius v. Cloer, 569 U.S. 369 (2013) (congressional drafting and omission inference)
- Microsoft Corp. v. i4i L.P., 564 U.S. 91 (2011) (statutory interpretation principle to give effect to every clause)
- Gutierrez v. Ada, 528 U.S. 250 (2000) (against lightly treating statutory language as superfluous)