Wednesday February 22, 2023 – The Supreme Court is currently hearing an IRS case that could have a major impact on all Americans. The IRS wants to be able to access bank and other business records without notifying anyone. As it stands, the IRS has wide-reaching authority to obtain these records by simply issuing a subpoena in secret.
This case will decide if these actions violate the Fourth Amendment rights of third parties, such as customers and clients.
The Chamber of Commerce wrote in a brief that businesses must choose between two options in response to an IRS summons: “challenging the summons by filing a petition with the Tax Court or complying with the subpoena and disclosing confidential information to the IRS.” This creates a catch-22 situation, as businesses cannot challenge the summons without first complying with it, and could be penalized for not doing so in the interim.
This District Court decision in this case, Polselli v. United States Polselli v. United States, No. 19-10956, 2020 U.S. Dist. LEXIS 260543, at *1 (E.D. Mich. Nov. 16, 2020), and the 6th Circuit Appellate decision affirming the case, dangerously limits the privacy rights of individuals, weakens businesses’ ability to protect their customers’ information, and creates an environment in which businesses are forced to comply with IRS requests or face consequences.
Attorney Steven A. Leahy reviews this case and the implications should the United Supreme Court uphold it on Today’s Tax Talk.