Thursday May 18, 2023 – The Supreme Court released the much-anticipated decision in Polselli v. IRS. This case concerned a collection action of the IRS. So, I took a specific interest in this case.
While the case was often touted as a 4th amendment privacy case – that’s not how the court saw it. Rather, the court decided the case based on Statutory construction, not Constitutional Law.
Chief Justice Roberts delivered the Opinion of the Court. The court held:
“The question presented is whether the exception to the notice requirement in §7609(c)(2)(D)(i) applies only where a delinquent taxpayer has a legal interest in accounts or records summoned by the IRS under §7602(a). A straightforward reading of the statutory text supplies a ready answer: The notice exception does not contain such a limitation.”
In this case, [t]he parties did not argue, and the [court] below did not decide, the contours of [the phrase ‘in aid of the collection.'”
Justice Jackson wrote a concurring opinion (joined by Justice Gorsuch) in which she writes “Congress did not give the IRS a blank check, so to speak, to do with as it will in the collection arena.”
In her opinion, “the IRS is not necessarily exempt from notice obligations any time a tax-delinquency matter enters the collection phase.”
I only wish more Justices joined in her opinion.
While the Court upheld the IRS’s position in this instance, it did not define the full extent of the IRS’s authority to issue summonses, implying that there could be future clarification on this matter.