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Can You Fight an IRS Summons? Supreme Court Says Maybe

By Brett Snider, Esq. on June 22, 2014 | Last updated on March 21, 2019

The U.S. Supreme Court has ruled that a taxpayer can challenge an IRS summons, only if the taxpayer can meet a minimum standard of proof.

The Court's unanimous decision in United States v. Clarke held that taxpayers can ultimately challenge IRS summonses (yes, that's the plural of summons) as long as there are some specific facts that show they were issued in bad faith.

Reports in the news about this case have been a bit misleading, so here's what the High Court actually said about fighting an IRS summons:

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Not All IRS Summonses Can Be Challenged

The Internal Revenue Service (IRS) is authorized under federal law to send out legal summonses to taxpayers requesting financial documents, records, or even the taxpayer himself (or herself) to appear in court. Unlike a summons in a regular court case, there are special rules when dealing with an IRS summons, and they certainly should not be ignored.

The Wall Street Journal reported that the Supreme Court ruled taxpayers aren't "automatically" entitled to challenge an IRS summons. This is mostly true, but misses the larger point of the ruling. The Clarke case dealt with taxpayers who suspected the IRS was issuing summonses as a harassment tactic (i.e., in bad faith).

The IRS cannot issue a summons in bad faith, but a taxpayer can only challenge a summons when there are some "specific facts or circumstances plausibly raising an inference of bad faith." Here the Supreme Court disagreed with lower courts that a challenge on bad faith is guaranteed to any taxpayer, but the actual standard for bad faith challenges is fairly weak tea.

Very Taxpayer-Friendly Standard for Challenges

Unlike the WSJ, Reuters reported the Clarke case was a win for taxpayers, declaring that they have a "right" to challenge IRS summonses when they can show bad faith. The word "right" may be a bit strong, but the sentiment is dead on: The Court has established a legal standard for allowing taxpayers to challenge IRS summonses.

This standard should keep out any completely empty or baseless bad-faith claims against the IRS, but the bar is set pretty low. Similar to the standard of proof required for a federal pleading, allegations of IRS bad faith need only be supported by some facts that create a plausible inference of bad faith. Even circumstantial evidence will do.

One tax attorney told Reuters that in the past, evidentiary hearings on this issue were "rarely granted." With this new Supreme Court standard, taxpayers may have a much better chance of challenging an IRS summons.

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