Bank Records Can Be Requested by IRS Without Notice to Third Parties, Rules Supreme Court

The U.S. Supreme Court ruled that the Internal Revenue Service can request bank records without giving notices to third parties. This ruling was made after the Supreme Court delivered its decision in Polselli v. Internal Revenue Service last week.

The U.S. Supreme Court ruled that the Internal Revenue Service (IRS) can request to summon bank records without giving notices to third parties. This ruling was made after the Supreme Court delivered its decision in Polselli v. Internal Revenue Service last week.

According to Taylor, the Polselli v. Internal Revenue Service case is about Remo Polselli owing more than $2 million to the IRS. Upon investigation, an IRS revenue officer discovered that Polselli has ownership interests in multiple businesses. The officer then suspected that these were used by Polselli to hide assets that can be used to pay taxes.

Thereafter, the officer reportedly requested the bank records of Polselli’s payments to a law firm. However, the details were not produced and a representative was not even provided to discuss the request. Due to this, the officer then requested the bank records from the banks themselves.

Reports say the officer did not give notices to any of the firms mentioned in the requests. However, the banks allegedly informed the firms about the requests and thereafter filed a lawsuit in the federal court to overturn them.

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Debate on Summoning Bank Records

According to Chung, due to a circuit split, the Supreme Court granted certiorari which reviews the decision of a lower court. This is because the Sixth Circuit previously decided that the IRS is not required to give notices to third parties when requesting bank records.

The Ninth Circuit, on the contrary, argued that the exemption will only be applicable if the taxpayer has a legal interest in the object of the requests. To decide whether a taxpayer indeed has, the Ninth Circuit takes into consideration if there was an employment, ownership, or agency between the taxpayer and the third party. Nonetheless, the Supreme Court unanimously agreed with the Sixth Circuit in the end.

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