The Spectacle Blog

Supreme Court to Decide Limit of IRS Summons Power

By on 5.1.14 | 11:50AM

We know this for sure: Americans can’t trust the motives of the IRS.

Does a citizen have the right to challenge the IRS’s demands for information? This seems to be the issue in a case before the Supreme Court. Michael Clarke, chief financial officer for Dynamo Holdings, says his company had no chance to question the motive behind an IRS summons for information

When they can’t get information from taxpayers voluntarily (or fast enough for their liking), the IRS issues a summons to force disclosure with a court order. The summonses are routinely rubber-stamped with approval by district courts. 

Clarke says they should have had a chance to argue the legitimacy of the summons before it was approved. He feels the summons was issued as retribution for resisting an audit. He just wants to ask why it was issued before his company was forced to provide information.

A year ago, the Eleventh Circuit Court of Appeals agreed with Clarke, so the IRS appealed. The Supreme Court heard oral arguments for the case on April 23.

The power the IRS has to issue summons is immense and largely unchecked. One small layer of accountability won’t fix the problem, but it certainly won't hurt.

Unfortunately, Robert Wood thinks it unlikely that the Supreme Court will agree to curtail this power. Questions in the oral arguments seem to indicate concern about potential “harassment” of IRS employees:

Mr. Clarke says a hearing would be a very limited intrusion on the vast powers of the IRS. But the IRS says the courts should not impose a burden on the IRS just because someone alleges the IRS had an improper purpose. Mr. Clarke suggests that the IRS is saying it should be immune from questioning, and that’s hard to swallow.

The IRS called Clarke’s case “a fishing expedition about the motives of IRS agents” and said that allowing hearings to challenge summons “would bog down tax enforcement with another layer of litigation.” Imagine that – justifying the forced disclosure of taxpayer information would just take too much time!

Will the IRS be allowed to continue its unlimited intrusion into the lives of Americans, or will the Supreme Court place a limit on their vast power? 

We’ll just have to wait and see.

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