Supreme Court gives IRS green light to seek bank records without notice
Kaelan Deese
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The Supreme Court ruled unanimously that the Internal Revenue Service doesn’t have to notify bank account holders before requesting their records if efforts are geared toward collecting someone else’s delinquent taxes.
The IRS is given broad authority under tax code Section 7609(c)(2)(D), which exempts the agency from giving notice when a summons is issued to help collect a tax assessment “against the person with respect to whose liability the summons is issued,” according to the unanimous high court.
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The decision was authored by Chief Justice John Roberts, his first opinion out of the 25 decisions released so far this year.
“For as long as Americans have had to pay taxes, at least some have tried to avoid them. And for as long as Americans have avoided taxes, the Internal Revenue Service and its predecessors have tried to collect them. As an old joke goes: ‘I believe we should all pay taxes with a smile. I tried, but they wanted cash,'” Roberts wrote.
Even if a delinquent taxpayer doesn’t have a legal interest in the targeted records, the agency can still request records from third-party recordkeepers without first giving those keepers notice.
The opinion announced Thursday settles a two-decadelong disagreement among lower courts over an exception in a section of law governing IRS authority.
The case itself originated from an IRS agent who suspected a delinquent taxpayer, Remo Polselli, allegedly concealed his assets tied to bank accounts held in his spouse’s name. The agent subsequently issued summonses to Hanna K. Polselli’s bank and the banks for two law firms Remo Polselli used for services in the past.
Several outside parties voiced opposition and warned the justices against this outcome, including the U.S. Chamber of Commerce. The group argued in a brief that “many businesses have a far greater need for these protections because their records contain the privileged or confidential information of their customers or clients.”
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But the decision on Thursday gives favor to the IRS under President Joe Biden.
The Justice Department contended there is “nothing” in IRS code requiring the government to conduct an assessment against a taxpayer before issuing a summons to locate assets that could be available to satisfy a liability.