Quotes from Eric Hylton, Former IRS Commissioner of the Small Business/Self Employed Division; alliantgroup National Director of Compliance
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- Ruling resolves two-decade-old appeals court split
- Decision is “critical” for IRS work, former official says
The US Supreme Court on Thursday rejected a proposed limit on the IRS’s ability to demand a bank account holder’s records without giving notice as part of an effort to collect on someone else’s delinquent taxes.
The unanimous ruling, written by Chief Justice John G. Roberts Jr., endorsed a broad reading of Internal Revenue Service power under tax code Section 7609(c)(2)(D), which exempts the agency from giving notice when a summons is issued to help collect a tax assessment “against the person with respect to whose liability the summons is issued.” The question for the court was whether that exemption is confined to records in which the delinquent taxpayer has a legal interest.
“A straightforward reading of the statutory text supplies a ready answer: The notice exception does not contain such a limitation,” Roberts wrote.
The opinion addresses a longstanding circuit split on the issue. The underlying Sixth Circuit opinion in favor of the IRS aligned with a 1999 decision from the Seventh Circuit holding that the agency can issue a summons for an account holder’s records without notice to collect on someone else’s tax liabilities. The Ninth Circuit in 2000 held that, for the notice exception to apply, the delinquent taxpayer has to have a legal interest in the targeted account.
The breadth of the exception also affects whether courts can scrutinize the IRS’s actions: The federal government has only waived its sovereign immunity from lawsuits seeking to quash a summons in cases where account holders were entitled to notice.
“I think it’s a critical decision for the IRS,” said Eric Hylton, a former commissioner of the IRS Small Business/Self Employed Division and former deputy chief of the IRS Criminal Investigation Division. Hylton is now the National Director of Compliance at alliantgroup.
Hylton held several prominent positions at the IRS, including serving as Deputy of the Criminal Investigation Division and as CI’s head of International Operations. As National Director of Compliance, Eric employs his years of experience at the IRS to assist alliantgroup’s clients as an ambassador for U.S. small and medium sized businesses (SMBs) and in helping others become tax compliant.