18 ms·

IRS can get financial info of third parties without notice to third parties [pdf]

173 points by WaitWaitWha 3y ago

dec0dedab0de 3y ago
Good, now file automatically for me
WaitWaitWha 3y ago
This is the Polselli v. Internal Revenue Service case. Here are some reference articles: https://www.law.cornell.edu/supct/cert/21-1599 https://www.law.cornell.edu/supct/cert/21-1599 https://www.oyez.org/cases/2022/21-1599 https://www.oyez.org/cases/2022/21-1599 https://www.scotusblog.com/case-files/cases/polselli-v-internal-revenue-service/ https://www.scotusblog.com/case-files/cases/polselli-v-inter... https://supreme.justia.com/cases/federal/us/598/21-1599/ https://supreme.justia.com/cases/federal/us/598/21-1599/ https://www.naag.org/attorney-general-journal/supreme-court-report-polselli-v-irs-21-1599/ https://www.naag.org/attorney-general-journal/supreme-court-...
altairprime 3y ago
As referenced in this judgment, here is 26 U.S. Code § 7609 "Special procedures for third-party summonses": https://www.law.cornell.edu/uscode/text/26/7609 https://www.law.cornell.edu/uscode/text/26/7609 And here is (c) (2) (D): > (c) (2) This section shall not apply to any summons (D) issued in aid of the collection of (i) an assessment made or judgment rendered against the person with respect to whose liability the summons is issued; or (ii) the liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i) (I am not your lawyer, this is not legal advice, this is not an opinion, this is just a citation.)
pizzafeelsright 3y ago
[dead]
hn_throwaway_99 3y ago
I had trouble understanding the full details of the case and issue, I thought this article gave a good, readable overview: https://www.natlawreview.com/article/government-flexes-its-summons-muscles https://www.natlawreview.com/article/government-flexes-its-s...
emkemp 3y ago
That headline doesn't read well. Maybe "IRS can sometimes get taxpayer's financial info from third parties without notifying taxpayer." The "sometimes" is important. The law normally requires notification, but an exception exists once the IRS has reached the late stage of collecting unpaid tax liability. Petitioners felt the exception only applied "when a delinquent taxpayer has a legal interest in accounts or records summoned by the IRS...." SCOTUS unanimously disagreed, based on the text of the law in question.
JumpCrisscross 3y ago
> When the IRS conducts an investigation for the purpose of “determining the liability” of a taxpayer...it must provide notice...But once the Service has reached the stage of “collecting any such liability” ...which is a distinct activity—notice may not be required... TL; DR the IRS has to provide notice if investigating, but not collecting. The IRS found Mr. Polselli liable for taxes. It subpoenaed his law firm for "cancelled checks, wire transfer/credit documents, and all other instruments used by Mr. Polselli to pay the firm." They refused, so the IRS subpoenaed the law firm's banks for the same. They co-operated and let the law firm know. (The IRS was investigating whether "money from [Poselli's LLC] was used to pay Mr. Polselli’s account at [the law firm], or to pay others through [the law firm].") This seems reasonable. You're already on notice they're collecting. The subpoenas are targeted and subject to "a test turning on reasonableness." And there is no gag order. Note: I am not a lawyer. Don’t take legal advice from internet comments.
- than3 3y ago
  Legal isn't my forte, and I'm not a lawyer either, but it seems like overreach to me. Specifically, say the circumstance involves someone else paying his legal fees. They are going after him for collecting, so they are already done investigating, he has an account with the law firm, but the checks that pay that account may not necessarily be paid by him. So they'll be going after whoever helped him as though they were him. Granted its a bit of a leap and I'm not read in on the details of this particular case but it seems like this is a end-run shortcut to get around providing notice, or quashing overreach towards whoever might choose to help someone who owes outstanding taxes (for whatever reason, i.e. family?). They'll simply make a claim against the account that paid for him even if he has no interest in that account, and it can't be quashed because no notice, and no standing without notice. That's a pretty broad overreach.
- rcme 3y ago
  How does that not violate attorney client privilege?
  - djur 3y ago
    Attorney-client privilege applies to communication for the purpose of obtaining legal advice and it typically excludes anything already disclosed to a third party, like the bank in this case.
aliljet 3y ago
[flagged]
- JumpCrisscross 3y ago
  > as long as those records are pertinent to the delinquent taxpayer's situation This is the summary's critical phrase, and it misses the point entirely. ("Situation" should be "liability," though that itself requires expansion into the difference between investigation, liability and assessment.)
- anigbrowl 3y ago
  Okay, this is classically nonsense that a lay person like me could never find the time or pleasure understanding. I guess I'm a lay person who's not like you then. I've tested one of the LLM's on this problem Please do not. If any HN reader is interested to get an LLM interpretation, that's well within their capability as is, but unless the topic is itself about LLMs (which this is not) then LLM output makes for utterly uninteresting comments. Without prompt and other technical details it's not helpful, and just creates clutter.
  - JumpCrisscross 3y ago
    > Please do not. If any HN reader is interested to get an LLM interpretation, that's well within their capability @dang, we hereby propose a guideline amendment: No comments that are entirely or substantially the output of an LLM.
    - chromoblob 3y ago
      When a user posts an LLM-output comment, consider them as just wanting to share it. It may or may not be interesting. I imagine there are many examples of interesting as well as uninteresting (to HN) LLM outputs. Then, use flagging or downvoting to counteract uninteresting comments specifically. (If users widely rate a comment as uninteresting, it will be successfully flagged/downvoted.)
      - 3y ago
YPPH 3y ago
This makes sense. If the IRS had concluded a taxpayer owed a tax debt, and had to give notice every time it summonsed an entity for information in order to trace the assets, the taxpayer could just move their assets elsewhere in an endless game of cat and mouse. In the present case, the taxpayer's wife said she should have been given notice since the summons affected her, not just her husband. But it's the same practical effect - you tell the wife, and the husband could move the assets.
- harry8 3y ago
  The above analysis bothers the hell out of me. Because you might do something /wrong/ we need to have secret powers executed in secret. Surely if moving assets is wrong, there's a law that says in these circumstances you may not do it. Jail is a pretty good deterrent and only one party is subject to that. Surely if the IRS wants to do these things it can notify that it has done so at the absolute minimum. Not "lack of a gag order" but a hard requirement to notify. Secret searches seem like a power that /will/ be abused. Put money on it happening. And hey, it's not like the IRS doesn't have a history of abusing power. Just ask a journalist like Matt Taibbi about the IRS response to his testifying before congress for a recent example of naked, unwarranted intimidation (Why did they do that? Is it systemic abuse? We don't even know yet! But that they surely did is not actually up for debate...)
  - coderintherye 3y ago
    Your reasoning is incorrect. The party in question already did something wrong and it was proven so.
    - harry8 3y ago
      Nonsense, the reasoning is completely sound and you have misread. The justification for secret powers executed in secret is that the "party in question" might proceed to do something else wrong in the future if they were notified. It's a classic case of, "We deem you bad so you have no further rights" justification as argued there. Read it again, it's actually a very important point. You yourself have broken laws in the past.
deleted 3y ago
[deleted]
_delirium 3y ago
> ROBERTS, C. J., delivered the opinion for a unanimous Court. Seems like not a lot of live controversy here...
ldehaan 3y ago
[dead]
al_be_back 3y ago
>> J P Morgan Chase, Bank of America, seeking among other things “[c]opies of all bank statements” relating to Mr. Polselli and petitioners ..." the above leave it open for "select * from records where customer_id = '...' " , DUMP all transactions. but the definition of “in aid of the collection.” should be yielding a narrower query, not ALL (*) transactions may be in "aid of", some may be private and even sensitive in nature yet legit. For example, the Banks could provide a sample schema (+data) with a GUI to IRS so their operatives can construct a query, providing a case/reason for requiring each column. Also a good idea to create business accounts and run all biz transactions via that, keeping private accounts for personal use.
uninformed 3y ago
B**h Better Have My Money Song by ~Rihanna~ The IRS

173 points by WaitWaitWha 3y ago

Good, now file automatically for me

This is the Polselli v. Internal Revenue Service case. Here are some reference articles: https://www.law.cornell.edu/supct/cert/21-1599 https://www.law.cornell.edu/supct/cert/21-1599 https://www.oyez.org/cases/2022/21-1599 https://www.oyez.org/cases/2022/21-1599 https://www.scotusblog.com/case-files/cases/polselli-v-internal-revenue-service/ https://www.scotusblog.com/case-files/cases/polselli-v-inter... https://supreme.justia.com/cases/federal/us/598/21-1599/ https://supreme.justia.com/cases/federal/us/598/21-1599/ https://www.naag.org/attorney-general-journal/supreme-court-report-polselli-v-irs-21-1599/ https://www.naag.org/attorney-general-journal/supreme-court-...

altairprime 3y ago

As referenced in this judgment, here is 26 U.S. Code § 7609 "Special procedures for third-party summonses": https://www.law.cornell.edu/uscode/text/26/7609 https://www.law.cornell.edu/uscode/text/26/7609 And here is (c) (2) (D): > (c) (2) This section shall not apply to any summons (D) issued in aid of the collection of (i) an assessment made or judgment rendered against the person with respect to whose liability the summons is issued; or (ii) the liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i) (I am not your lawyer, this is not legal advice, this is not an opinion, this is just a citation.)

pizzafeelsright 3y ago

[dead]

hn_throwaway_99 3y ago

I had trouble understanding the full details of the case and issue, I thought this article gave a good, readable overview: https://www.natlawreview.com/article/government-flexes-its-summons-muscles https://www.natlawreview.com/article/government-flexes-its-s...

emkemp 3y ago

That headline doesn't read well. Maybe "IRS can sometimes get taxpayer's financial info from third parties without notifying taxpayer." The "sometimes" is important. The law normally requires notification, but an exception exists once the IRS has reached the late stage of collecting unpaid tax liability. Petitioners felt the exception only applied "when a delinquent taxpayer has a legal interest in accounts or records summoned by the IRS...." SCOTUS unanimously disagreed, based on the text of the law in question.

JumpCrisscross 3y ago

> When the IRS conducts an investigation for the purpose of “determining the liability” of a taxpayer...it must provide notice...But once the Service has reached the stage of “collecting any such liability” ...which is a distinct activity—notice may not be required... TL; DR the IRS has to provide notice if investigating, but not collecting. The IRS found Mr. Polselli liable for taxes. It subpoenaed his law firm for "cancelled checks, wire transfer/credit documents, and all other instruments used by Mr. Polselli to pay the firm." They refused, so the IRS subpoenaed the law firm's banks for the same. They co-operated and let the law firm know. (The IRS was investigating whether "money from [Poselli's LLC] was used to pay Mr. Polselli’s account at [the law firm], or to pay others through [the law firm].") This seems reasonable. You're already on notice they're collecting. The subpoenas are targeted and subject to "a test turning on reasonableness." And there is no gag order. Note: I am not a lawyer. Don’t take legal advice from internet comments.

than3 3y ago
Legal isn't my forte, and I'm not a lawyer either, but it seems like overreach to me. Specifically, say the circumstance involves someone else paying his legal fees. They are going after him for collecting, so they are already done investigating, he has an account with the law firm, but the checks that pay that account may not necessarily be paid by him. So they'll be going after whoever helped him as though they were him. Granted its a bit of a leap and I'm not read in on the details of this particular case but it seems like this is a end-run shortcut to get around providing notice, or quashing overreach towards whoever might choose to help someone who owes outstanding taxes (for whatever reason, i.e. family?). They'll simply make a claim against the account that paid for him even if he has no interest in that account, and it can't be quashed because no notice, and no standing without notice. That's a pretty broad overreach.
rcme 3y ago
How does that not violate attorney client privilege?
- djur 3y ago
  Attorney-client privilege applies to communication for the purpose of obtaining legal advice and it typically excludes anything already disclosed to a third party, like the bank in this case.

aliljet 3y ago

[flagged]

JumpCrisscross 3y ago
> as long as those records are pertinent to the delinquent taxpayer's situation This is the summary's critical phrase, and it misses the point entirely. ("Situation" should be "liability," though that itself requires expansion into the difference between investigation, liability and assessment.)
anigbrowl 3y ago
Okay, this is classically nonsense that a lay person like me could never find the time or pleasure understanding. I guess I'm a lay person who's not like you then. I've tested one of the LLM's on this problem Please do not. If any HN reader is interested to get an LLM interpretation, that's well within their capability as is, but unless the topic is itself about LLMs (which this is not) then LLM output makes for utterly uninteresting comments. Without prompt and other technical details it's not helpful, and just creates clutter.
- JumpCrisscross 3y ago
  > Please do not. If any HN reader is interested to get an LLM interpretation, that's well within their capability @dang, we hereby propose a guideline amendment: No comments that are entirely or substantially the output of an LLM.
  - chromoblob 3y ago
    When a user posts an LLM-output comment, consider them as just wanting to share it. It may or may not be interesting. I imagine there are many examples of interesting as well as uninteresting (to HN) LLM outputs. Then, use flagging or downvoting to counteract uninteresting comments specifically. (If users widely rate a comment as uninteresting, it will be successfully flagged/downvoted.)
    - 3y ago

YPPH 3y ago

This makes sense. If the IRS had concluded a taxpayer owed a tax debt, and had to give notice every time it summonsed an entity for information in order to trace the assets, the taxpayer could just move their assets elsewhere in an endless game of cat and mouse. In the present case, the taxpayer's wife said she should have been given notice since the summons affected her, not just her husband. But it's the same practical effect - you tell the wife, and the husband could move the assets.

harry8 3y ago
The above analysis bothers the hell out of me. Because you might do something /wrong/ we need to have secret powers executed in secret. Surely if moving assets is wrong, there's a law that says in these circumstances you may not do it. Jail is a pretty good deterrent and only one party is subject to that. Surely if the IRS wants to do these things it can notify that it has done so at the absolute minimum. Not "lack of a gag order" but a hard requirement to notify. Secret searches seem like a power that /will/ be abused. Put money on it happening. And hey, it's not like the IRS doesn't have a history of abusing power. Just ask a journalist like Matt Taibbi about the IRS response to his testifying before congress for a recent example of naked, unwarranted intimidation (Why did they do that? Is it systemic abuse? We don't even know yet! But that they surely did is not actually up for debate...)
- coderintherye 3y ago
  Your reasoning is incorrect. The party in question already did something wrong and it was proven so.
  - harry8 3y ago
    Nonsense, the reasoning is completely sound and you have misread. The justification for secret powers executed in secret is that the "party in question" might proceed to do something else wrong in the future if they were notified. It's a classic case of, "We deem you bad so you have no further rights" justification as argued there. Read it again, it's actually a very important point. You yourself have broken laws in the past.

deleted 3y ago

[deleted]

_delirium 3y ago

> ROBERTS, C. J., delivered the opinion for a unanimous Court. Seems like not a lot of live controversy here...

ldehaan 3y ago

[dead]

al_be_back 3y ago

>> J P Morgan Chase, Bank of America, seeking among other things “[c]opies of all bank statements” relating to Mr. Polselli and petitioners ..." the above leave it open for "select * from records where customer_id = '...' " , DUMP all transactions. but the definition of “in aid of the collection.” should be yielding a narrower query, not ALL (*) transactions may be in "aid of", some may be private and even sensitive in nature yet legit. For example, the Banks could provide a sample schema (+data) with a GUI to IRS so their operatives can construct a query, providing a case/reason for requiring each column. Also a good idea to create business accounts and run all biz transactions via that, keeping private accounts for personal use.

uninformed 3y ago

B**h Better Have My Money Song by ~Rihanna~ The IRS