What to Know If You Receive an IRS Summons Letter
The IRS has broad authority to conduct investigations and audits that may uncover civil or criminal tax liability. They use a variety of tools to investigate potential wrongdoings, including summons letters. The IRS may send you a summons letter, or they may send this letter to a third party to obtain information about you.
While it may be anxiety-inducing to deal with an IRS summons, knowing what to expect and how to respond can help you feel prepared. To get help now, contact us at Seattle Legal Services today.
Key Takeaways
- The IRS’s rights – The IRS is legally permitted to send a summons to investigation targets and those with information relevant to their investigations.
- Your rights – People named in a summons have the right to contest the summons, but the IRS generally succeeds at proving that the information they’ve requested is necessary.
- Failing to comply with a summons may land you in court, and further failure to cooperate can mean being held in contempt.
- The IRS may use information from a summons for audits, criminal investigations, and the location of assets.
What is an IRS Summons?
An IRS summons is a request for information needed to conduct an investigation into a potential civil or criminal tax matter. The IRS has the legal authority to issue summonses under 26 U.S. Code 7602.
There are several types of summonses, and the type of summons you receive may influence how you respond and how much danger you’re in. Depending on what the IRS asks of you, you may need to send information to a local field office or present documents in person.
- Direct – A direct summons is one that the IRS sends to the person they are investigating. For example, if they are investigating the owner of a company for criminal tax fraud, they would send a summons to the owner to demand relevant records and documents.
- Third-Party – The IRS often gets information from other sources to strengthen its case against the targets of its investigations. Third-party summonses are sent to anyone other than the person being investigated and their employees or officers.
- John Doe – John Doe summonses are used when the IRS cannot or does not identify a specific individual while investigating potential violations. This type of summons doesn’t identify the potentially liable party, instead allowing the IRS to gather information from people in a certain group.
The Role of IRS Form 2039
IRS Form 2039 is the official form used to summon an individual or party to either produce documents or appear at a specific place. The form names the person it is addressed to, the industry or area, the tax periods in question, and who you must appear in front of. It also includes the specific documents, books, records, or forms you are required to give to the IRS.
The form also includes parts of the Internal Revenue Code that are relevant to summonses and the IRS’s right to serve and enforce them.
How to Respond to an IRS Summons
To start, you shouldn’t let the thought of ignoring an IRS summons cross your mind. These are incredibly serious legal documents, and if you ignore them, the IRS won’t just give up and go away. Whether you’re the target of an investigation or a third party with relevant information, you have to address this situation head-on.
Start by reviewing the document in detail. This can be difficult after the anxiety of being served, so you may want to reach out to a tax attorney before you try to parse the summons on your own. Once you understand what the summons is for and what the IRS is requesting, you can decide how to respond.
We always recommend talking to a tax professional when you are named in a summons. If you receive a direct summons, you are under investigation by the IRS, and that is always a serious situation. Even if you’re a third party and the IRS is just requesting information, it can be helpful to verify that you are complying correctly and that you aren’t under investigation.
Note that you do have the right to appeal an IRS summons. However, the odds are stacked against you in this area — the IRS is very careful about covering its bases and ensuring that its summonses are legally enforceable before executing them. But if you want to go this route, you can discuss it with your tax attorney.
Verifying That Your Summons is Legally Enforceable
If you contest the summons, the IRS has an obligation to prove to the court that the summons is enforceable. The information requested in a summons must be relevant to a legitimate investigation, based on an inquiry related to the investigation in question, used to collect information the IRS does not yet have access to, and compliant with the Internal Revenue Code. If you believe your summons falls outside these parameters, a call to a tax attorney is your next step.
Summonses must also contain specific information to be enforceable. Required information includes the name and address of the subject of the investigation, the tax periods being investigated, the identity of the person the IRS is requesting information from, an overview of the data being requested, and a deadline.
What Happens If You Ignore an IRS Summons?
If you fail to respond with the requested information or show up at the correct time and place, the IRS will take the issue to court. They’ll then show the court that the information they are requesting is necessary for their investigation, and the court will likely agree that the summons can be enforced. At this point, you are legally required to comply, and failing to do so may result in being held in contempt.
People who ignore an IRS summons often do so because they believe that they put themselves or their associates in danger by complying. However, by the time the IRS has reached the point of issuing summonses, they have already verified the information they need and their legal authority to demand it.
How a Tax Professional Can Help You Respond to a Summons
Even with legal assistance, receiving a summons generally results in sending the requested information or appearing before the IRS to answer questions. This is just the nature of IRS investigations and the care they take with ensuring that their summonses can be enforced.
However, a tax attorney can help you if you want to learn about your options beyond providing the requested information. For example, if you believe the statute of limitations has expired for the tax period in question or that the summons violates your rights, an attorney can help you plead your case to the court.
If you plan on providing the requested information, do you still need to talk to a tax attorney? Many people choose to do so, thanks to the severity of what’s at stake during an IRS investigation. If the summons is a direct summons, it’s definitely worth talking to a tax lawyer—you may be facing criminal charges, and you need to be proactive about your defense. Even if you just need to verify that you aren’t part of the group under investigation, talking to a lawyer may be worth the peace of mind it brings.
The IRS uses summonses to conduct civil and criminal fraud investigations, conduct audits, create Substitute for Return, and track down assets. If you’ve received a summons in the mail, you must respond promptly to avoid being held in contempt. Talking to the team at Seattle Legal Services can help you understand your rights and obligations as a taxpayer. Call us at 206-536-3152 or send us a message online to discuss your concerns now.
Frequently Asked Questions
What is IRS Form 2039 used for?
IRS Form 2039 is the summons form sent by the IRS to targets of investigations or third parties with relevant information. It includes information on what time period they’re investigating, whom they are investigating, and the documents and records they are requesting from you.
Is an IRS summons the same as being audited?
Not necessarily. While an IRS summons may be used to request information or documents for an audit, there are several other reasons that you may receive a summons from the IRS. Some of these reasons are more serious than an audit, so you should handle this issue with care and respond promptly.
Can I refuse to comply with a summons?
The IRS has the legal authority to issue summonses, and if you refuse to comply, they will bring the issue before the court. This generally results in you having to comply anyway. If you don’t think you should have to cooperate, discuss your thoughts with a tax attorney before deciding how to respond.
How do I know if a summons is legit?
An IRS summons must be served by hand delivery or at your last known address. To verify that the summons you’ve received is valid, you can contact the IRS directly via the phone numbers on their website to ensure that you are not the target of a scam.
Do I need a lawyer to respond to an IRS summons?
You are not legally required to have an attorney to respond to an IRS summons, but many people choose to retain one anyway. If you are the subject of an investigation, it is highly recommended that you have your own legal representation.
Sources:
https://www.irs.gov/pub/irs-pgld/ppt2-summons.pdf
https://www.justice.gov/sites/default/files/tax/legacy/2011/08/31/SumEnfMan_July2011.pdf
https://www.irs.gov/irm/part34/irm_34-006-003
https://www.law.cornell.edu/uscode/text/26/7602
https://www.irs.gov/pub/irs-wd/0950044.pdf
https://www.irs.gov/irm/part25/irm_25-005-006
https://www.irs.gov/irm/part25/irm_25-005-007
https://www.justice.gov/sites/default/files/usao-sdny/legacy/2015/03/25/Exhibit%20E%20Summons.pdf