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Polselli v. Internal Revenue Service

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Supreme Court of the United States
Polselli v. Internal Revenue Service
Term: 2022
Important Dates
Argued: March 29, 2023
Decided: May 18, 2023
Outcome
affirmed
Vote
9-0
Majority
Chief Justice John Roberts • Clarence Thomas • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch • Brett Kavanaugh • Amy Coney Barrett • Ketanji Brown Jackson

Polselli v. Internal Revenue Service is a case that was decided by the Supreme Court of the United States on May 18, 2023, during the court's October 2022-2023 term. The case was argued before the Supreme Court of the United States on March 29, 2023.

In a 9-0 opinion, the Court affirmed the judgment of the United States Court of Appeals for the Sixth Circuit. The Court held that when the IRS issues a summons for the purpose of collecting a tax liability, the exception to the notice requirement in 26 U.S.C. § 7609 applies regardless of whether or not the taxpayer has a legal interest in the record being summonsed.[1][2]

HIGHLIGHTS
  • The issue: The case concerned the scope of § 7609(c)(2)(D)(i) and the relationship that summonsed records have with delinquent taxpayers. Click here to learn more about the case's background.
  • The questions presented: "Whether the exception in § 7609(c)(2)(D)(i) applies only when the delinquent taxpayer owns or has a legal interest in the summonsed records (as the Ninth Circuit holds), or whether the exception applies to a summons for anyone’s records whenever the IRS thinks that person’s records might somehow help it collect a delinquent taxpayer’s liability."[3]
  • The outcome: In a unanimous opinion, the Court affirmed the judgment of the United States Court of Appeals for the Sixth Circuit. The Court held that when the IRS issues a summons for the purpose of collecting a tax liability, the exception to the notice requirement in 26 U.S.C. § 7609 applies regardless of whether or not the taxpayer has a legal interest in the record being summonsed.[1]


    • The case came on a writ of certiorari to the United States Court of Appeals for the Sixth Circuit. To review the lower court's opinion, [1].

    Timeline

    The following timeline details key events in this case:

    • May 18, 2023: The U.S. Supreme Court affirmed the judgment of the United States Court of Appeals for the Sixth Circuit.
    • March 29, 2023: The U.S. Supreme Court heard oral argument.
    • December 9, 2022: The U.S. Supreme Court agreed to hear the case.
    • June 24, 2022: Hanna Karcho Polselli, Abraham & Rose, P.L.C., and Jerry R. Abraham, P.C. appealed to the U.S. Supreme Court.
    • January 7, 2022: The 6th Circuit affirmed the district court's ruling that the court lacked subject-matter jurisdiction on the case and, under the circumstances, the petitioners were not entitled to notice and could not petition to squash the summons.[4]

    Background

    Remo Polselli accumulated over $2 million in unpaid federal tax liabilities. Suspecting that he may have been hiding his assets by transferring them to other entities or people, the IRS issued summonses to various banks to obtain the financial records of Polselli's wife, hanna, and law firms that he received services from. The IRS did not notify Hannah or the law firms about the summonses. After learning about the summonses through their banks, Hannah and the firms attempted to quash the summonses in the United States District Court for the Eastern District of Michigan.[2][5]

    According to 26 U.S.C. § 7609(a)(1), when IRS summons a third party for a taxpayer's records, they are usually required to notify the taxpayer. However, an exception in 26 U.S.C. § 7609(c)(2)(D)(i) allows the IRS to issue such summonses without notifying the taxpayer if the summons was used to help collect delinquent tax payments.[6] The United States District Court for the Eastern District of Michigan concluded that the exception applied to the IRS's summonses because the summonses were issued to collect Polselli's unpaid tax liabilities. Therefore, the IRS was not required to notify Hannah or Polselli's law firms. The United States Court of Appeals for the Sixth Circuit affirmed this decision.[7]

    Questions presented

    The petitioner presented the following questions to the court:[3]

    Questions presented:
    “ Whether the exception in § 7609(c)(2)(D)(i) applies only when the delinquent taxpayer owns or has a legal interest in the summonsed records (as the Ninth Circuit holds), or whether the exception applies to a summons for anyone’s records whenever the IRS thinks that person’s records might somehow help it collect a delinquent taxpayer’s liability.

    [8]

    		”

    Oral argument

    Audio

    Audio of oral argument:[9]




    Transcript

    Transcript of oral argument:[10]

    Outcome

    In a 9-0 opinion, the Court affirmed the judgment of the United States Court of Appeals for the Sixth Circuit. The Court held that when the IRS issues a summons for the purpose of collecting a tax liability, the exception to the notice requirement in 26 U.S.C. § 7609 applies regardless of whether or not the taxpayer has a legal interest in the record being summonsed. Chief Justice John Roberts delivered the opinion of the court.[1]

    Opinion

    In the court's majority opinion, Chief Justice John Roberts wrote:[1]

    “ The statute sets forth three conditions to exempt the IRS from providing notice in circumstances like these. First, a summons must be “issued in aid of . . . collection.” §7609(c)(2)(D). Second, it must aid the collection of “an assessment made or judgment rendered.” §7609(c)(2)(D)(i). By “assessment,” the Code “refers to the official recording of a taxpayer’s liability.” Direct Marketing Assn. v. Brohl, 575 U. S. 1, 9 (2015); see also Hibbs v. Winn, 542 U. S. 88, 100 (2004). Section 7609(c)(2)(D)(i) does not excuse notice, therefore, until the IRS makes an official assessment or a judgment has been rendered with respect to a taxpayer’s liability. Third, a summons must aid the collection of assessments or judgments “against the person with respect to whose liability the summons is issued.” §7609(c)(2)(D)(i). This requirement links the subject of the assessment or judgment with the subject of the collection effort—they must concern the same delinquent taxpayer. None of the three components for excusing notice in §7609(c)(2)(D)(i) mentions a taxpayer’s legal interest in records sought by the IRS, much less requires that a taxpayer maintain such an interest for the exception to apply.

    [8]

    		”
    —Chief Justice John Roberts

    Concurring opinion

    Justice Ketanji Brown Jackson filed a concurring opinion, joined by Justice Neil Gorsuch.

    In her concurring opinion, Justice Ketanji Brown Jackson wrote:[1]

    “ The bottom line is this: As I read the statute, the IRS is not necessarily exempt from notice obligations any time a tax-delinquency matter enters the collection phase. Rather, the exception in §7609(c)(2)(D)(i) merely reflects Congress’s determination that, in some situations, requiring the agency to provide notice in connection with its tax-collection efforts would undermine the balance that the statute strikes with its default-notice requirement. Consequently, I believe that both courts and the IRS itself must be ever vigilant when determining when notice is not required. Doing so properly involves a careful fact-based inquiry that might well vary from case to case, depending on the scope and nature of the information the IRS seeks.

    [8]

    		”
    —Justice Ketanji Brown Jackson

    Text of the opinion

    Read the full opinion here.

    October term 2022-2023

    See also: Supreme Court cases, October term 2022-2023

    The Supreme Court began hearing cases for the term on October 3, 2022. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[11]


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 U.S. Supreme Court, "Polselli et al. v. Internal Revenue Service," May 18, 2023
    2. ↑ 2.0 2.1 SCOTUSblog, "Polselli v. Internal Revenue Service," May 18, 2023 Cite error: Invalid <ref> tag; name "SCOTUSblog" defined multiple times with different content
    3. ↑ 3.0 3.1 U.S. Supreme Court, "21-1599 POLSELLI V. INTERNAL REVENUE SERVICE," December 9, 2022
    4. ↑ Casetext, Polselli v. United States Dep't of Treasury-Internal Revenue Serv., January 7, 2022
    5. ↑ Oyez, "Polselli v. Internal Revenue Service," March 29, 2023
    6. ↑ Casetext, Polselli v. United States Dep't of Treasury-Internal Revenue Serv., January 7, 2022
    7. ↑ United States Supreme Court, Hanna Karcho Polselli, Abraham & Rose, P.L.C., And Jerry R. Abraham, P.C., Petitioners V. United States Department of The Treasury— Internal Revenue Service—On Petition for a Writ of Certiorari to The United States Court of Appeals for the Sixth Circuit, March 29, 2023
    8. ↑ 8.0 8.1 8.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    9. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued March 29,2023
    10. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued March 29,2023
    11. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed January 24, 2022
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