One of the most critical issues a taxpayer can face during an IRS audit is deciding what information to provide to the IRS. The IRS will typically request information either informally through an Information Document Request (IDR), or formally through an Administrative Summons (Summons). Deciding how to respond can depend on which type of request the taxpayer receives. This article discusses the formal request, the Summons, and typical defenses to a Summons.

A Summons is a formal request for documents and information an IRS Revenue Agent will issue to compel the taxpayer or a third party to produce documents or information relating to a taxpayer’s tax return. Unlike an informal request, the IRS can file a lawsuit in a district court to enforce a Summons.

In the past, the IRS used a Summons to acquire information typically when a taxpayer was not volunteering information in response to IDRs. It is now becoming more common for the IRS to issue a Summons to acquire information even when a taxpayer is providing information.

Under Internal Revenue Section 7602, the IRS can use the Summons to “compel relevant or material testimony and/or the production of relevant or material books, papers, records or other data for examination” for any of the following purposes:

  1. Ascertaining the correctness of any return;
  2. Making a return where none has been made;
  3. Determining the liability of any person for any Internal Revenue tax;
  4. Determining the liability at law or in equity of any transferee or fiduciary of any person in respect of any Internal Revenue tax;
  5. Collecting any Internal Revenue tax liability; and,
  6. Inquiring into any offense connected with the administration or enforcement of the Internal Revenue laws, including criminal investigations.

To enforce the Summons, the IRS must show the following:

  1. The investigation is being conducted pursuant to a legitimate purpose;
  2. The inquiry is relevant to that purpose;
  3. The information the IRS is seeking is not already in the Service’s possession; and,
  4. The IRS has taken the administrative steps necessary to the issuance of a summons.

The decision of how to respond to a Summons is an important one. The taxpayer can challenge that the IRS’s Summons does not meet one of these four criteria. The taxpayer can also avoid producing information pursuant to the attorney-client privilege or work-product privilege. It is important for taxpayers and third-parties who receive a Summons to consult with an attorney to determine all options available for challenging a Summons.