Supreme Court Provides Standard for Evidentiary Hearing in IRS Summons Enforcement Proceeding


On June 19, 2014, the Supreme Court unanimously ruled that taxpayers have a right to an evidentiary hearing in an IRS summons enforcement action when the taxpayer “offers some credible evidence supporting his charge” of improper purpose.  The facts of the case (Clarke) are discussed in a prior post.

The Supreme Court rejected the Eleventh Circuit’s view that the mere allegation of specific facts entitles a person to examine the IRS officials responsible for issuing the summons.  Instead, the court held that a “taxpayer is entitled to examine an IRS agent when he can point to specific facts or circumstances plausibly raising an inference of bad faith.”  According to the Supreme Court, circumstantial evidence can suffice, and “a fleshed out case” is not demanded.

The Supreme Court remanded the case to the Eleventh Circuit to determine whether Clarke was entitled to an evidentiary hearing under this standard.  The Court noted that on remand the Eleventh Circuit must take into account the district court’s broad discretion as to whether a taxpayer has shown enough to require the examination of IRS agents. 

The Supreme Court left open the issue as to whether the validity of a summons is judged at the time of issuance or at the time of enforcement.  The Supreme Court’s decision is available here.

The Supreme Court’s decision is important in light of the new Information Document Request (IDR) process, which will likely lead to more summons enforcement proceedings.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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