An IRS summons is an administrative order. The IRS cannot jail anyone for ignoring it. To force compliance, it has to ask a federal court, and IRC 7604(a) gives the district court for the district where the summoned person resides or is found jurisdiction to compel attendance, testimony and production of records.

That court step is where the law protects you. A judge, not a revenue agent, decides whether the summons will be enforced, and the judge applies a test the Supreme Court set more than 60 years ago.

The Powell test

In United States v. Powell, 379 U.S. 48 (1964), the IRS summoned a corporation's president to produce records for years that, absent fraud, were closed by the statute of limitations. He argued the IRS had to show probable cause to suspect fraud. The Supreme Court disagreed and held that the IRS need not meet any standard of probable cause to obtain enforcement.

Instead, the Court said the IRS must show four things:

  • the investigation will be conducted pursuant to a legitimate purpose;
  • the inquiry may be relevant to that purpose;
  • the information sought is not already within the IRS's possession; and
  • the administrative steps required by the Code have been followed.

The Court also said the taxpayer is entitled to an adversary hearing before enforcement, may challenge the summons on any appropriate ground, and that a court may not permit its process to be abused, for example by a summons issued to harass the taxpayer or to pressure a settlement of a collateral dispute. The burden of showing an abuse of process is on the taxpayer.

IRM 25.5.10.3 restates these four elements as the standard the IRS must meet, and notes the administrative-steps element is usually understood to refer to the issuance and service requirements of IRC 7602 and 7603.

How the IRS gets to court

The road to enforcement is documented in IRM 25.5.10. For a collection summons, the revenue officer prepares a summons referral, generally within 14 days after the appearance date, under IRM 25.5.10.4.1.1. After review, a "last chance" letter goes out over the signature of IRS counsel, setting a new appointment at least 15 days after the referral, under IRM 25.5.10.4.1.3. The IRM notes this letter is often effective in getting compliance without litigation.

If you still do not comply, the IRS employee prepares a declaration, counsel reviews it, and the matter goes to the Justice Department and the local U.S. Attorney. IRM 25.5.10.4 says the court may issue an order to show cause why the summons should not be obeyed, or an order directing compliance, and may modify the summons if compliance would be unreasonable or oppressive. Proceedings are usually decided on declarations and argument.

Cases the IRS is told not to refer

IRM 25.5.10.3 lists situations potentially involving an abuse of process, where IRS employees are instructed not to refer a summons for enforcement:

  • the summoned party has offered to comply or asked for a reasonable extension;
  • the summoned party appeared and denied under oath having the documents, unless there is good reason to believe otherwise;
  • the IRS has already had the documents long enough to examine and copy them;
  • the records were demanded before the summoned party could reasonably produce them;
  • the summons seeks a repeat examination of the same records for the same purpose in circumstances suggesting harassment, implicating IRC 7605(b);
  • the summons was not issued by a properly delegated official;
  • the summons was not properly served under IRC 7603;
  • the summons does not meet the timing rules in IRC 7605(a) or IRC 7609(a)(1), or a third-party summons does not meet the notice requirements of IRC 7609(a).

This list is useful twice. Before a referral, it tells you what to raise with the IRS. In court, it tells you which facts might support a Powell defense.

Defenses that can work

Most Powell defenses come down to a few themes. The information is already in the IRS's possession: the IRM itself notes, for example, that W-2 and 1099 forms are customarily in the IRS's possession and can be a defense unless the IRS explains why it cannot produce them from its own records. The summons is overbroad or not described with reasonable certainty. An administrative step was skipped, such as proper service or required notice. A Justice Department referral was in effect, which bars the summons under IRC 7602(d). A valid privilege applies to specific questions or documents. Or the purpose is improper.

What does not work is arguing that you do not owe the tax, or, after Powell, that the IRS lacks probable cause. Those arguments ask the court to resolve questions the enforcement proceeding is not designed to decide.

Constitutional defenses deserve care. IRM 25.5.5.4.1 explains the IRS's position that there is no Fifth Amendment privilege in the contents of voluntarily prepared, pre-existing records, but that the act of producing them can be protected in some circumstances, such as a sole proprietor producing business records. Corporations have no Fifth Amendment privilege. These are fact-specific questions, and the privilege must be asserted to specific questions or documents, not as a blanket refusal.

Narrowing instead of all-or-nothing

Enforcement is not always a yes or no. IRM 25.5.10.4 and 25.5.10.4.5 note that the court may modify a summons if compliance would be unreasonable or oppressive, and that when declarations sharply dispute whether records are under the summoned person's control, the court usually resolves that question in the enforcement proceeding. For a third-party summons, the person entitled to notice can raise these points through a petition to quash, discussed in third-party summonses and the petition to quash.

That gives you a practical goal short of defeating the summons: limiting it to the years, accounts and categories of records that actually bear on the IRS's stated purpose.

Contempt and criminal exposure

If a court orders compliance and you disobey, IRM 25.5.10.4.4 explains the consequences. Civil contempt is designed to coerce compliance, and a person may be jailed until they comply. Criminal contempt is designed to punish. For criminal contempt, the government must prove beyond a reasonable doubt that the person willfully failed to comply with a lawful order and that the records were within the person's power and control.

Separately, IRC 7210 makes it a crime to neglect to appear or produce records in response to a summons, with a fine of up to $1,000, up to a year in prison, or both. IRM 25.5.10.5 says the government must prove the person was duly summoned, did not appear or produce, had at least some of the records in existence and under control, and willfully and knowingly neglected to comply.

The statute of limitations angle

Delay has consequences. If the taxpayer under investigation brings a proceeding to quash a third-party summons, IRC 7609(e)(1) suspends the assessment and criminal limitations periods while it is pending. And if a third party's response to a summons is unresolved for 6 months after service, IRC 7609(e)(2) suspends those periods until it is resolved. Fighting a summons can extend the time the IRS has to act, which is worth weighing against what the fight would gain.

Strategy

The best summons outcomes rarely come from a courtroom. They come from engaging before the appearance date, narrowing the request, producing what is properly due, and asserting specific privileges where they genuinely apply. If the summons has real defects, raise them in writing before the referral and again in response to the last chance letter. The full set of statutory limits is in limits on IRS summons power.

If you are on the receiving end of a summons in an audit, the firm's main site has a broader discussion of IRS audits. The Powell standard is easy for the IRS to meet in an ordinary case. The cases where it fails are the ones where someone took the time to check each element.