The Supreme Court ruled Thursday the Internal Revenue Service did not have to give a delinquent taxpayer’s wife and law firm notice that it had summoned bank records linked to the man in an attempt to uncover and collect his assets.
Abraham & Rose PLC and Jerry R. Abraham PC represented Remo Polselli, the delinquent taxpayer, and his wife, Hanna Karcho Polselli.
An IRS agent sought the law firms’ bank records over a multiyear period but did not give the firms notice. The law firms were notified by the bank and moved to halt the summons. The firms argued that the move violated their privacy interests and those of their other clients.
The IRS had summoned the information to find the source of Mr. Polselli’s funds for paying the law firms. The feds sought roughly $2 million from him.
Generally, the IRS must give a third-party notice when it seeks records so the individual can protest the summons.
However, some exceptions are under the Internal Revenue Code. For example, if a judgment is rendered against an individual, the IRS does not have to provide notice to a third party when it seeks records in connection with collecting on the judgment.
Chief Justice John G. Roberts Jr. authored the court’s unanimous opinion published Thursday. He sided with the IRS, reasoning detectives use similar tactics as IRS agents during their investigations.
“A detective might order forensic testing or speak to witnesses to help identify a culprit, even if those activities are unlikely — in and of themselves — to solve the crime. Similarly, documents in the accounts belonging to Mrs. Polselli … may be a step in a paper trail leading to assets owned by Mr. Polselli,” he wrote.
The court declined to find any sort of exception for records related to a legal interest.
“Had Congress wanted to include a legal interest requirement, it certainly knew how to do so,” the chief justice wrote, saying the statute does not speak to such a protection.
The court’s ruling Thursday affirmed lower courts’ judgment for the IRS.
Critics of the IRS, meanwhile, have said there needs to be a check on the agency as the feds plan to expand its scope with more manpower.
The Biden administration has allocated to the IRS $80 billion from the $740 billion Inflation Reduction Act. The agency plans to add personnel and resources to close the $600 billion annual deficit between the taxes it collects and the levies owed.
• Alex Swoyer can be reached at aswoyer@washingtontimes.com.
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