HAS THE SECOND CIRCUIT WEAKENED SUMMONS ENFORCEMENT POWERS?

• Published in: Journal of Taxation Vol. 103; no. 2; p. 101
• Main Author: Jones, Philip N
• Format: Trade Publication Article
• Language: English
• Published: New York Thomson Reuters (Tax & Accounting) Inc 01-08-2005
• Subjects: Civil procedure; Compliance; Court hearings & proceedings; District courts; Enforcement; Federal court decisions; Government agencies; Judges & magistrates; Jurisdiction; Sanctions; State court decisions; Summons; Taxpayers; United States > US
• ISSN: 0022-4863

In Schulz, 95 AFTR2d 2005-3007 (CA-2, 2005) ("Schulz II"), the second Circuit declined to amend a ruling that may limit the range of sanctions available to the Service when a taxpayer refuses to comply with an IRS administrative summons, and may encourage taxpayers to ignore such summonses. The opinion came in response to an IRS motion to amend a prior ruling that the Service considered to "misapprehend" the remedies available to the IRS when a taxpayer fails to comply with a summons. Rather than granting the Service's request for clarification, the court chose instead to reinforce its prior ruling. Despite the ongoing debate and uncertainty over the powers granted to the IRS and the ability of the IRS (and the courts) to sanction noncompliant taxpayers, the good news is that taxpayers rarely will be faced with a difficult choice. As the second Circuit itself has held in Kulukundis and Becker, and as the Supreme Court held in Reisman, a taxpayer who personally appears in response to a summons and offers good faith objections to the summons will not be subject to sanctions.