IRS summonses in an examination: when examiners use them, the limits, and how enforcement works

The authority

IRC 7602(a) authorizes the IRS, to ascertain the correctness of a return, make a return where none was made, determine any liability, or collect it, to examine relevant records, to summon the taxpayer, its officers or employees, record custodians “or any other person the Secretary may deem proper” to appear, produce records and testify under oath, and to take testimony. IRC 7602(b) adds that the purposes include inquiring into any offense connected with the internal revenue laws. The summons is Form 2039. IRM 25.5.5.2 confirms that taxpayer testimony may be summoned and that taxpayer records may be summoned whether held by the taxpayer or by others, including third-party recordkeepers.

When examiners issue one

The manuals frame the summons as a second step. IRM 25.5.1.3 starts with: “Attempt to obtain information voluntarily from taxpayers and witnesses prior to issuing a summons.” Examiners are told to weigh the tax involved, the cost of getting the records, the likelihood of court action, the effect on voluntary compliance if enforcement fails, and any criminal investigation. The IRM then lists situations where a summons should be considered:

1. Records were requested and not produced within a reasonable time.
2. No records are made available for an adequate exam within a reasonable time.
3. Submitted records are known or suspected to be altered or incomplete, or other records likely exist (broker statements, contracts, legal bills).
4. The taxpayer or representative will not try to substantiate because they intend to present records at another level or after a notice of deficiency.
5. The existence or location of records is in doubt; a summons for testimony about what exists can come first.

In SB/SE, IRM 4.10.2.10.2 says: “Do not summons the records unless the action is first approved by the group manager.” If there are signs of a criminal investigation, the special agent is contacted first. In LB&I, a summons normally follows the mandatory IDR enforcement process (delinquency notice and pre-summons letter), prepared with Counsel; if a taxpayer says it will not produce without a summons, the IRS goes straight to the summons. See information document requests.

Statutory limits

IRM 25.5.1.3.3 reads 7602(d) narrowly: it bars a summons for the same taxpayer, tax and period referred to the Department of Justice, but generally not for a different tax or period, with Counsel coordination.

Third-party summonses and quash petitions

When a summons to a third party (a bank, a customer, an accountant) seeks records or testimony about a person identified in it, IRC 7609(a) requires notice to that person “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” for the examination of the records, with a copy of the summons and an explanation of the right to quash. Notice is sufficient if served under IRC 7603 or mailed by certified or registered mail to the last known address.

The person entitled to notice can begin a proceeding to quash in U.S. district court “not later than the 20th day after the day such notice is given”, and within the same 20 days must mail a copy of the petition by registered or certified mail to the person summoned and to the IRS office named in the notice (IRC 7609(b)(2); IRM 25.5.10.3). The noticee can also intervene in an enforcement proceeding. Calendar the 20 days from the notice date immediately; missed deadlines are rarely excused.

Two Supreme Court decisions mark the edges of these rules. In Tiffany Fine Arts, Inc. v. United States, 469 U.S. 310 (1985), the IRS summoned a taxpayer under examination for the names of its licensees, whose own liabilities it also meant to investigate; the Court held that a summons served on a known taxpayer with that dual purpose does not have to go through the John Doe procedure of IRC 7609(f) “as long as all the information sought is relevant to a legitimate investigation of the summoned taxpayer.” A client under exam therefore cannot resist a summons for customer, investor or licensee lists by demanding the ex parte court approval that a John Doe summons requires. In Polselli v. IRS, 598 U.S. 432 (2023), the Court held that the notice exception in IRC 7609(c)(2)(D)(i) for a summons “issued in aid of the collection of” an assessment against the taxpayer applies whether or not the taxpayer has a legal interest in the summoned account, so third parties whose bank records are summoned to help collect an assessed liability get no notice and have no quash remedy. That exception is confined to collection: an examination summons is issued to determine a liability, not to collect one, so it still carries IRC 7609(a) notice and the 20-day quash right.

A copy of a third-party summons given to the taxpayer satisfies the third-party contact recording requirement, so the summons will not appear separately on a contact list (IRM 25.27.1.4). See third-party contacts.

Rights of the person summoned

Counsel

A witness who appears must be allowed counsel, but counsel cannot control or delay the interview (IRM 25.5.5.4.2). The right in IRC 7521(b)(2) to suspend an interview to consult a representative does not apply to an interview required by an administrative summons, so the examiner continues.

Fifth Amendment

Under IRM 25.5.5.4.1, a summoned person may refuse to answer questions that would tend to incriminate, but has no Fifth Amendment privilege in the contents of voluntarily created, pre-existing documents. The act of producing them may be testimonial, so a privilege can exist for an individual's own records, including a sole proprietorship's. “The privilege against self-incrimination under the Fifth Amendment does not apply to corporations,” and a corporate officer cannot refuse to produce corporate records held in an official capacity (IRM 25.5.5.4.1.2). The privilege is personal: records transferred to a third party can be summoned from that party, except records transferred to an attorney to get legal advice that were protected in the taxpayer's hands.

Other privileges

Attorney-client privilege and the IRC 7525 privilege for tax advice from federally authorized tax practitioners in noncriminal matters apply to summonses. IRM 25.5.5.4.3 says the 7525 privilege “must be asserted by the taxpayer” and that the IRS should ask for a privilege log. The 7525 privilege excludes written communications promoting participation in a tax shelter. Accountants' workpapers are not privileged in the IRS's view (IRM 4.10.2.10.2), and the Supreme Court agrees: in United States v. Arthur Young & Co., 465 U.S. 805 (1984), it refused to create a work-product immunity for an independent auditor's tax accrual workpapers, holding that restrictions on the summons power beyond the traditional privileges should be avoided “absent unambiguous directions from Congress” and that there is no accountant-client privilege. The IRC 7525 privilege discussed above is the later statutory exception, and it is limited to tax advice from a federally authorized practitioner.

Recording

A summoned interview can be audio recorded by the taxpayer with 10 days' advance notice and the taxpayer's own equipment; the IRS also records, and cameras and video are not permitted (IRM 25.5.5.4.4).

Appearing

IRM 25.5.10.2 tells IRS employees to inform the witness that the witness must appear in person with the records and either comply or refuse with reasons, that failure to comply may lead to judicial remedies, and that “A representative of the witness cannot appear in lieu of the witness on the appearance date set in the summons.” If there is a valid reason such as illness, the date can be moved by mutual agreement, confirmed by letter. If privilege is claimed, the examiner asks every question so each is answered or met with a specific assertion, keeps a record of each question and response, and has a second IRS employee attend. Prepare the witness the same way: a blanket refusal is weaker than a question-by-question record.

For third-party witnesses, the taxpayer has no right to attend: “The taxpayer has no right to be present or to have the taxpayer's counsel present during the questioning of a third-party witness.”

Enforcement

A person who does not comply faces civil enforcement under IRC 7604 in the U.S. district court where the person resides or is found, or criminal proceedings under IRC 7210 (IRM 25.5.10.3). In an exam, the examiner sends a referral memorandum to Associate Area Counsel within six working days of noncompliance, with affidavits on issuance, service and noncompliance; Counsel forwards approved cases to the U.S. Attorney (IRM 25.5.10.4.3).

The standard is United States v. Powell, 379 U.S. 48 (1964). The Supreme Court held that the IRS need not show probable cause to enforce a summons, even for a year whose ordinary assessment period has run, but it “must show that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner's possession, and that the administrative steps required by the Code have been followed”; IRM 25.5.10.3 lists the same four elements. Powell also said a court may refuse to lend its process to a summons issued for an improper purpose, “such as to harass the taxpayer or to put pressure on him to settle a collateral dispute,” but “The burden of showing an abuse of the court's process is on the taxpayer.” In United States v. Clarke, 573 U.S. 248 (2014), the Court held that a taxpayer may examine IRS agents about their reasons for issuing a summons only when the taxpayer “points to specific facts or circumstances plausibly raising an inference of bad faith”; a bare allegation of improper purpose is not enough, although circumstantial evidence can suffice. In practice the IRS makes its Powell showing by a short declaration from the issuing agent, and a client who wants a hearing on motive must come to court with specific facts (for example, a documented statement that the summons is leverage to settle a different dispute, which is the Powell example) rather than suspicion. IRM 25.5.10.3 also tells employees not to refer a summons for enforcement in situations that could be an abuse of process, including:

1. The summoned party has offered to comply or asked for a reasonable extension.
2. The party appeared and denied under oath having the records, unless there is good reason to believe otherwise.
3. The IRS has already had the records long enough to examine and copy them.
4. The records were demanded before they could reasonably be produced.
5. The same records are sought again for the same purpose in circumstances suggesting harassment (IRC 7605(b)).
6. The summons was not issued by a delegated official, not properly served under IRC 7603, or did not meet the timing rules of IRC 7605(a) and 7609(a) or third-party notice rules.

IRM 25.5.10.3 also notes that a court refused enforcement for failure to follow the third-party contact notice rules of IRC 7602(c), citing J.B. v. United States, 916 F.3d 1161 (9th Cir. 2019). Before an enforcement hearing, check every procedural step: delegation, service, timing, notice, Letter 3164.

Effect on the statute

A summons can suspend the assessment statute. If the person whose liability is at issue petitions to quash or intervenes, IRC 7609(e)(1) suspends the period while the proceeding and appeals are pending. Separately, IRC 7609(e)(2) suspends the period for the taxpayer from six months after service of a third-party summons until final resolution of the summoned party's response, if the response is not resolved. See the assessment statute of limitations.

Questions practitioners ask