|The case arose after an IRS Revenue Officer, seeking to collect underpaid federal taxes by Remo Polselli, served summonses on the banks of Polselli’s wife and attorney in order to find account and financial records concerning Polselli. The IRS agent did not notify Polselli’s wife or attorney of the summonses, but the banks voluntarily did so. Polselli’s wife and attorney subsequently filed motions in federal district court to quash the IRS’s summonses.
In siding with the IRS, the district court held that Polselli’s wife and attorney are not entitled to notice of the summons and have no right to even be heard on their motions to quash the summonses. The Sixth Circuit Court of Appeals agreed and, not wanting to “significantly impede the IRS’s ‘expansive information-gathering authority,’” interpreted a federal statute to rule that the IRS may summon the recordkeeper of any person without notice to that person if the summons was issued in aid of the collection of an assessment against a delinquent taxpayer. Although the Sixth Circuit acknowledged that the IRS may be able to access information regarding blameless third parties, which could then be shared with the Department of Justice for a criminal prosecution, the court brushed aside such concerns as “conjectural fears.”
The Rutherford Institute and Cato had argued that the statute should rather be interpreted consistent with the Fourth Amendment’s privacy values and protections against unreasonable searches so that the IRS cannot sweep up sensitive information of innocent people who coincidentally happen to have the same employer, lawyer, or accountant as a delinquent taxpayer. The Supreme Court, however, affirmed the ruling of the Sixth Circuit, allowing IRS agents access to third-party financial records without any notice to the innocent account-holders, provided that the searches are done broadly “in aid of the collection” of another’s unpaid taxes.
Ethan H. Townsend, Michael B. Kimberly, and Emmett A. Witkovsky-Eldred of McDermott Will & Emery LLP advanced the arguments in the amicus brief in Polselli v. Internal Revenue Service.
The Rutherford Institute, a nonprofit civil liberties organization, defends individuals whose constitutional rights have been threatened or violated and educates the public on a wide spectrum of issues affecting their freedoms.
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