7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

Handbook 109.1
Summons Handbook


Chapter 1
Introduction

Contents

[109.1] 1.1  (04-30-1999)
Overview

  1. The Summons Handbook provides guidelines for use by the Collection Division, Criminal Investigation, Examination, and Employee Plans & Exempt Organization. Specific function directed guidelines are covered where appropriate.
  2. This chapter contains the following sections:
    • Provisions of law
    • Authority
    • Factors to consider
    • Description of summons (Form 2039)

[109.1] 1.2  (04-30-1999)
Provisions of Law

  1. The provisions of the law relating to the use and enforcement of a summons are contained in the following sections of the Internal Revenue Code:
    1. IRC 7602 Examination of Books and Witnesses
    2. IRC 7603 Service of Summons
    3. IRC 7604 Enforcement of Summons
    4. IRC 7605 Time and Place of Examination
    5. IRC 7609 Special Procedures for Third-Party Summonses
    6. IRC 7610 Fees and Costs for Witnesses
    7. IRC 7612 Special Procedures for Summonses for Computer Software
    8. IRC 7622 Authority to Administer Oaths and Certify
    9. IRC 7402 Jurisdiction of District Courts
    10. IRC 7210 Failure to Obey Summons
    11. IRC 6420(e)(2), 6421(g)(2) and 7427(j)(2)
    12. IRC 6503(j) Designated and Related Summons

[109.1] 1.3  (04-30-1999)
Authority

  1. Authority has been granted to the Commissioner of Internal Revenue by 26 CFR 301.7602-1(b), 301.7603-1, 301.7604-1 and 301.7605-1(a) and the authorities contained in Section 7609 of the Internal Revenue Code of 1986 and vested in the Commissioner of Internal Revenue Service by Treasury Order No. 150-10 and delegated to the officers and employees of the Internal Revenue Service specified in paragraphs 1 through 6 of Delegation Order No. 4 (as revised) to:
    1. issue, serve and enforce summonses;
    2. set the time and place for appearance;
    3. take testimony under oath of the person summoned;
    4. to receive and examine data produced in compliance with the summons; and
    5. to perform other related duties described in Internal Revenue Code Sections 7609 (f), (g) and (i) (2).

[109.1] 1.3.1  (04-30-1999)
Authority to Issue "John Doe" Summonses

  1. Delegation Order No. 4, Authority 1 provides the authority to issue a summons and to perform the other functions listed in Section 1.3, to the District Directors, and the following, when the proper name(s) of the taxpayer(s) is not identified because unknown or unidentifiable (hereinafter called a "John Doe" summons):
    1. Director (International District Operations),
    2. Director (International Programs),
    3. Chiefs of Divisions (District Criminal Investigation, Collection, Examination, and Employee Plans and Exempt Organizations).

[109.1] 1.3.2  (04-30-1999)
Authority to Issue Summonses Except "John Doe" Summonses

  1. Delegation Order No. 4, Authority 2 provides the authority to issue summonses except "John Doe" summonses, and to perform other related functions as stated in Delegation Order No. 4, Authority 1 and delegates this authority to:
    1. Director, Office of Investigations and Technology,
    2. Special Agents,
    3. Group Managers (including large case managers) in District Collection, Examination, and Employee Plans and Exempt Organizations

[109.1] 1.3.3  (04-30-1999)
Authority to Issue Summons Requiring Approval (Except "John Doe" Summonses)

  1. Delegation Order No. 4, Authority 3 provides the authority to issue summonses, (except "John Doe" summonses) and to perform other related functions as stated in Delegation Order No. 4, Authority 1. The following officers/employees are authorized to issue a summons to a third party witness, where the issuing officer's manager, or any supervisory official above that level, has authorized the issuance of the summons in advance (evidenced by the supervisor's signature on the summons, or by a statement on the summons, signed by the issuing officer, that he or she had prior authorization to issue the summons and stating the name and title of the authorizing official and date of authorization).
    1. Internal Revenue Agents,
    2. Estate Tax Attorneys,
    3. Estate Tax Examiners,
    4. Revenue Service and Assistant Revenue Service Representatives,
    5. Tax Auditors,
    6. Revenue Officers, GS-9 and above,
    7. Tax Law Specialists,
    8. Compliance Officers.

[109.1] 1.3.4  (04-30-1999)
Authority to Serve Summons

  1. The authority to serve summonses whether issued personally or by another official is provided per Delegation Order No. 4, Authority 4 and delegated to:
    1. Each of the officer/employees listed in Authorities 1,2 and 3 of Delegation Order No. 4,
    2. Revenue Officers and Tax Examiners, GS-5 and above (whose duties include contacting taxpayers in person),
    3. Revenue Officer Aides, GS-5 and above,
    4. Tax Fraud Investigative Aides, GS-5 and above,

[109.1] 1.3.5  (04-30-1999)
Authority to Designate

  1. Delegation No. 4, Authority 5 provides for the authority to designate any of the following officer/employees as the individual before whom a summoned person shall appear, and for the designated individual to take testimony under oath of the person summoned, to set the time and place of examination and to receive and examine data produced in compliance with the summons:
    1. Assistant Chief of Division and/or Branch Chief (District Criminal Investigation, Collection, Examination, and Employee Plans and Exempt Organizations),
    2. Deputy Assistant Commissioner (International),
    3. Special Agents,
    4. Case Managers,
    5. Group Managers,
    6. Internal Revenue Agents,
    7. Estate Tax Attorneys,
    8. Estate Tax Law Clerks,
    9. Estate Tax Examiners,
    10. Revenue Service and Assistant Revenue Service Representatives,
    11. Tax Auditors,
    12. Revenue Officers,
    13. Compliance Officers,
    14. Tax Examiners whose duties include contacting taxpayers in person,
    15. Tax Law Specialists,
    16. Service Center Tax Examiners in the correspondence examination function.
  2. This authority is delegated to each of the officers/employees listed in Authorities 1,2 and 3 of Delegation Order No. 4.
  3. District Directors, Service Center Directors, and the Director, Office of Investigations and Technology may redelegate this authority to
    1. Student Trainees (Revenue Officer), (Internal Revenue Agent), and (Special Agent), and
    2. Examination Aides, Tax Fraud Investigative Aides and Revenue Officer Aides. Provided each student trainee or aide receives appropriate supervision from a Revenue Officer, Tax Auditor, Internal Revenue Agent, Special Agent as applicable.

[109.1] 1.3.6  (04-30-1999)
Authority to Administer Oaths and Certifications

  1. Delegation Order No. 4, Authority 6 provides for the authority to administer oaths and affirmations and to certify to those papers when necessary except that the authority to certify shall not apply to papers or documents whose certification is authorized by separate order or directive. This authority is delegated to each of the officers/employees listed in Authorities 1, 2, 3 and 5 of Delegation Order No. 4, except for Tax Examiners and Tax Fraud Investigative Aides.
  2. Tax Examiners and Tax Fraud Investigative Aides are not designated to administer oaths or to perform the other functions mentioned in these paragraphs. They may, however, certify the method and manner of giving notice after serving summonses.

[109.1] 1.4  (04-30-1999)
Factors to Consider Before Issuing a Summons

  1. Attempt to obtain information voluntarily from taxpayers and witnesses prior to issuing a summons. Consent may be obtained voluntarily by acquainting the taxpayer or witness with the provisions of the Internal Revenue Code. See the reverse side of Form 2039-A.
  2. Consider all surrounding circumstances before issuing a summons. Analyze each situation in the light of its particular facts and circumstances. Weigh the importance of the desired information against the:
    1. tax liability involved,
    2. time and expense of obtaining the records,
    3. probability of having to institute court action,
    4. adverse effect on voluntary compliance by others if the enforcement efforts are not successful,
    5. whether a criminal case is pending.
  3. Additionally, consider serving a summons in the following situations:
    1. No records are made available to permit an adequate examination within a reasonable period of time.
    2. Submitted records are known or suspected to be incomplete. Additional records are presumed to be in the possession of the taxpayer or a third party that may disclose material matters not reflected in the submitted records (i.e. broker statements, contracts, and bills for legal expenses).
    3. Taxpayers or taxpayers' representatives will not seriously attempt to provide documentation for substantiation to the examiner because they intend to offer records and explanations at another level or after a notice of deficiency has been issued.
    4. The existence and location of records are in doubt. A summons may be issued to require testimony, under oath, as to what records exist and the location of such records. A subsequent summons may be issued describing the records. If the records are in the possession or custody or subject to the control of the person who has testified, it may be served at the time of the testimony or thereafter.

[109.1] 1.4.1  (04-30-1999)
Documents from Financial Institutions in the Tenth Circuit

  1. As indicated in subsection 1.4(1), Service employees should attempt to obtain information informally from third party sources. If the third party voluntarily provides the information, the Service need not follow formal summons procedures. This approach also applies when seeking financial records from financial institutions, except in cases governed by the Tenth Circuit's interpretation of the Right to Financial Privacy Act (RFPA). In general, the RFPA requires that account owners be given notice of (and an opportunity to challenge) a government agency's intent to obtain records of their finances from a financial institution. However, the RFPA also provides an exception to these requirements as they apply to the Service. Specifically, section 3413(c) states: "Nothing in [the RFPA] prohibits the disclosure of financial records in accordance with procedures authorized by the [IRC]." In all circuits other than the Tenth, the Service takes the position that an informal request for records is a procedure authorized under IRC 7602. The Tenth Circuit reached the opposite conclusion in Neece v. Internal Revenue Service , 922 F.2d 572 (10th Cir. 1990) and ruled that a bank's voluntary disclosure of a customer's financial records to the Service, without prior notice to the customer, violated the RFPA. The Tenth Circuit reasoned that IRC 7609, not section 7602, contained the procedures for obtaining records concerning a taxpayer from a financial institution. See subsection 1.4.1(6) below for a discussion of IRC 7609(j), enacted in RRA 1998, as it affects this reasoning.
  2. The Tenth Circuit states are Kansas, Oklahoma, Wyoming, Utah, Colorado, and New Mexico.
  3. When issuing a summons, follow the procedures of IRC 7609 (if applicable), and refrain from seeking financial information from financial institutions by using only credentials, letters of circularization (for example: Letters 1040(DO), 1029(DO), and LP62(ACS)) or any other nonsummons method if the following conditions exist:
    1. the financial institution is located in the Tenth Circuit;
    2. the information sought concerns taxpayers residing in the Tenth Circuit, regardless of the location of the financial institution;
    3. the Internal Revenue Service office is located in the Tenth Circuit, regardless of the location of the financial institution or the residence of the taxpayer.
  4. Seek the advice of District Counsel if there is any doubt as to whether Neece applies.
  5. Do not attempt to obtain financial information voluntarily from financial institutions if the above conditions exist. To do otherwise could result in actual and punitive damages awarded in suits against the Service, and the expenditure of valuable resources in defending such damage suits.
  6. In RRA 1998, Congress enacted IRC 7609(j), which provides that nothing in IRC 7609 shall be construed to limit the Service's ability to obtain information, other than by summons, through formal or informal procedures authorized by IRC 7601 and 7602. This section indicates that the Service's ability to informally seek the voluntary exchange of records, i.e., without a summons, constitutes a procedure authorized by the Code. Nevertheless, the Service will follow the Neece ruling in cases described in 1.4.1(3).

[109.1] 1.4.2  (04-30-1999)
Documents from Financial Institutions Located in Circuits Other than the Tenth Circuit

  1. The Service does not follow the Neece rationale in other circuits; therefore, information may continue to be obtained voluntarily from financial institutions in other circuits using credentials or voluntary methods.

[109.1] 1.4.3  (04-30-1999)
Considerations and Limitations on Issuance of a Summons

  1. Use credentials or circular letters (Letters 1040(DO), 1029(DO) and LP62(ACS)) to get information when possible.
    NOTE:
    Special Agents, Criminal Investigation, should ensure that the requirements stated in IRM Handbook 9.3 Chapter 1 Sub-Section 1.3.3 are met when using circular letters.
  2. Collection/Exam/EP/EO should get clearance from CI and/or District Counsel before issuing a summons in connection with a pending criminal case to:
    1. Obtain more information from the taxpayer or a witness.
    2. Uncover assets to apply against assessed liabilities.
    NOTE:
    Collection personnel can issue a summons if firm indications of fraud have not been developed.
  3. As required by IRC 7602(d), do not issue a summons to investigate a taxable year (or period) where the Service has referred the same taxpayer's case and the same taxable year (or period) to the Department of Justice for criminal prosecution.
  4. Do not issue a summons to request proof of filing, copies of returns, or proof of payment if the desired documents are available from Service records.
  5. Employment and excise tax returns can be processed under IRC 6020(b).
  6. IRC 6331(g) forbids the levy or