The General Enforcement of The IRS Summons, Civil Enforcement, Criminal Contempt, Criminal Enforcement
General Enforcement Procedures used by the Internal Revenue Service
1.
A summoned party who fails to comply with a summons may be subject to:
1.
criminal proceedings under IRC 7210.
2.
civil proceedings under IRC 7604 to enforce compliance.
2.
IRS will consider recommending civil enforcement action or criminal action when the person summoned neglects or refuses to comply. Do not refer a summons for enforcement in the following situations that might involve an abuse of process, or in other similar situations, as follows:
1.
The summoned party or their representative has contacted the Service and indicated a willingness to comply with the summons but has requested a reasonable extension of time within which to comply.
2.
The summoned party has appeared and denied under oath the possession or control of the documents called for in the summons, unless there is a good reason to believe the contrary.
3.
The Service has had possession of the documents for a sufficient period of time in which to examine and copy them.
4.
Records of financial transactions are demanded before the summoned party could reasonably be expected to produce them.
5.
More than one examination of the same records for the same purpose is sought under circumstances that might suggest harassment.
6.
The summons has not been issued by a proper, delegated official.
7.
The summons has not been properly served under.
8.
The summons does not comply with the time requirements for production of documents.
9.
The summons to a third party does not comply with the notice requirements.
Civil Enforcement of the Federal Summons by the Internal Revenue Service
1.
IRC 7604 provides for the civil enforcement of a summons.
2.
Under IRC 7604(b), enforcement action may be initiated by applying for an attachment for an arrest against a person who has failed to obey a summons to a district judge or magistrate judge. When the person is brought before him or her, the district judge or magistrate judge will issue whatever order deemed proper to enforce compliance with the summons and to punish such person for default or disobedience. When a petition for attachment is filed, the court may choose to proceed by issuing an order to show cause why the summons should not be obeyed. It may also modify the summons if compliance would be unreasonable or oppressive.
3.
Enforcement proceedings are usually commenced by filing a petition for a court order directing compliance with the summons. The summons (or a copy) should be attached to the petition or offered in evidence; otherwise, the court may not enforce it. Based upon the allegations, the court may issue either an order to show cause, or an ex parte (only one party represented) order directing compliance with the summons. The use of procedures other than attachment is authorized by IRC 7604(a), which grants district courts jurisdiction to enforce compliance by appropriate process.
Civil and Criminal Contempt Regarding the IRS Summons
1.
A person refusing to obey a court order to comply with a summons (civil enforcement) may be held in contempt of court. The contempt proceedings may be civil or criminal, or both. A defendant may be purged of civil contempt by complying with the court order, but punishment for criminal contempt is usually not conditional. Use of civil or criminal contempt, as with civil or criminal enforcement, depends on whether the purpose is to compel compliance with the summons or to punish disobedience and protect the authority of the court.
2.
A civil contempt proceeding may be commenced by a motion requesting that the person summoned be adjudged in contempt and punished. The recalcitrant party may then be committed to jail until he or she complies with the court order.
3.
A criminal contempt proceeding can be undertaken only on notice given by the judge in open court in the presence of the defendant, by an order to show cause, or by an order of arrest, unless the contempt was committed in the presence of the court. The notice must state essential facts, which constitute criminal contempt and describe the criminal contempt as such.
4.
For criminal contempt, the government must prove beyond a reasonable doubt that the defendant willfully failed to comply with a lawful court order and show that summoned records are presently within the defendant?s power and control. Presumption of continued possession and existence is not enough to shift the burden of proof to the defendant unless the time span is short and there is no outside motivation for destruction of the particular records.
Use of Declarations in Federal Summons Proceedings of the Internal Revenue Service
1.
To support applications for court orders directing compliance with a summons, prepare a declaration (Exhibit 25.5.10?3 contains a sample) detailing the nature and purposes of the examination, the testimony and records desired, and their relevancy. Enforcement proceedings are usually held solely upon declarations and oral argument. The declaration must show the person summoned has possession, care, or custody of the desired records and the records are material and relevant to the tax liability of the person being investigated. If the summons pertains to a year previously examined, attach a copy of the Area Director?s reopening letter. Some courts may require an affidavit under oath with the same basic information.
2.
If the declarations sharply dispute whether the records are subject to the control of the summoned person, the court will usually resolve the issue in the summons enforcement proceeding. When a petition for enforcement is filed, the court may choose to proceed by issuing an order to show cause why the summons should not be obeyed. It may also modify the summons if compliance would be unreasonable or oppressive.
Criminal Enforcement of Summons of the Internal Revenue Service
1.
A person who neglects to appear or to produce records pursuant to a summons may be criminally prosecuted under IRC 7210. The government must be able to prove that:
1.
The defendant was duly summoned to appear to testify or to appear and produce certain records.
2.
The defendant did not appear or produce such records.
3.
At least some of the records called for by summons were in existence and in the defendant?s control.
4.
The defendant willfully and knowingly neglected to appear and produce them.
2.
It has been held that neglect as used in this Code section means more than mere inadvertence. To make a criminal offense of neglect in this situation would imply that the person summoned must have:
1.
willfully failed to comply with the summons; and
2.
knowledge that he or she was failing to do what the summons required him or her to do.
3.
Refusal to obey a summons could lead to a prosecution under IRC 7203 for willful failure to supply information required by the law. Proof that the refusal was intentional and without legal justification is not sufficient. The government must establish that the refusal was prompted by bad faith or evil intent; i.e., that the defendant did not believe in good faith that refusal was legally justified.
4.
Requests for criminal action for failure to obey summonses issued by the area civil functions will be referred by the appropriate Field Territory Manager to CI for evaluation. If CI does not initiate an investigation, CI will notify the Field Territory Manager of the referring function, and thereafter the referring function may then make a referral to CT Counsel for civil enforcement action. No attempt should be made to enforce obedience with the summons while criminal action is being considered.
5.
If CI determines that criminal action for failure to obey a CI-issued summons will be undertaken (rather than enforced obedience) the matter will be assigned for criminal investigation. No attempt should be made to enforce obedience with the summons while considering criminal action.
6. There are several other factors that go into the decision and are up to the judgment of the Revenue Officer or compliance official.
This information comes from code Section 7603 and has been modified . Should you have any questions, call Fresh Start Tax 1-866-700-1040.