IRS agents conducting audits have the power to issue summonses requiring taxpayers and third parties to produce documents and testify under oath. Recipients of summonses can avoid providing the requested evidence by showing that the summons was issued for an improper purpose. This past term, the U.S. Supreme Court resolved a circuit split as to what showing a party must make to obtain an evidentiary hearing as to whether a summons was improper. In United States v. Clarke,1 the court unanimously decided this discrete, but important question by holding that the party must “plausibly rais[e] an inference of bad faith” to receive a hearing. While the decision resolves this issue, it leaves open other potentially significant questions that counsel representing recipients of summonses must consider.

Background

Under 26 U.S.C. §6201, the IRS is “authorized and required to make the inquiries, determinations, and assessments of all taxes” imposed by the Internal Revenue Code. Further to this responsibility, Congress has provided the IRS broad statutory authority to issue summonses “[f]or the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax…or collecting any such liability.”2 A summons may require an individual to appear before the IRS, produce documents relevant or material to the inquiry, and/or give testimony.

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