5.17.6.6.3 (10-15-2010)
Petition to Quash the Summons
A noticee who wishes to prevent compliance with the summons by the party summoned must begin a civil action in the appropriate U.S. district court to quash the summons no later than twenty days after the day notice of the summons is given. IRC § 7609(b)(2).
The noticee must mail (by registered or certified mail) a copy of the petition to quash the summons to the summoned person and a copy to the IRS officer who issued the summons. This must be done within the twenty-day period, and is a jurisdictional prerequisite to the court hearing the complaint. Yocum v. United States, 586 F.Supp. 317 (N.D. Ind. 1984); Franklin v. United States, 581 F.Supp. 38 (E.D. Mich. 1984).
The summoned party has the right to intervene in this proceeding and is bound by the decision in the quash proceeding whether he intervenes or not.
If the noticee files a petition to quash the summons, then the Service cannot examine the records until the court issues an appropriate order. The Service may only examine the records prior to the issuance of a court order if the person bringing the petition consents to the examination.
The date set for appearance cannot be sooner than the 23rd day after notice is given (as a rule of thumb, the 26th day is used). IRC § 7609(d).
IRC § 7609(d)(1) prohibits premature examination of the records at issue, not physical acceptance. In Conner v. United States , 434 F.3d 676 (4th Cir. 2006), the taxpayer appealed the district court's finding with respect to Powell's fourth prong, asserting that by accepting the records from a third party prior to expiration of the twenty-three days in which he, the affected taxpayer, could seek to quash the third-party summonses, the revenue agent did not follow IRC § 7609(d)(1) nor the IRM. The Fourth Circuit held the taxpayer’s argument was without merit. Although the IRM directed the revenue agent not to physically accept records in response to a third-party summons prior to expiration of the twenty-three day period in which the affected taxpayer could seek to quash the summons, such violation, while relevant to the bad faith inquiry presented in this case, did not constitute proof by itself of the IRS's bad faith in issuing the challenged summonses.
If the Service receives records from a third party before the expiration of the twenty-third day after notice is given:
Immediately seal the records in an appropriate container;
Mark the container with the date and time sealed; and
Secure the records until (a) any noticees have failed to file a petition to quash the summons within twenty-three days after notice or (b) the conclusion of legal proceedings addressing noticee's petition to quash the summons.
A petition to quash brought by the taxpayer suspends the period of limitations for assessment under IRC § 6501. IRC § 7609(e)(1) only tolls the statute of limitations for a taxpayer who petitions to quash the summons. If only one of the potentially responsible persons (regarding whose liabilities the Service issued separate summonses) files a petition to quash the summons, only that petitioner’s assessment statute is suspended. The statute is suspended for the period in which the proceeding and any appeals are pending.
If a summoned party’s response to a third-party exam summons (such as to determine TFRP liability) has not been resolved, the period of limitations for assessment under IRC § 6501, with respect to the taxpayer whose liability the summons is issued, is suspended beginning on the date which is 6 months after the service of the third-party summons. IRC § 7609(e)(2). The suspension ends upon final resolution of the summoned party’s response. Final resolution occurs when (a) the summons or any order enforcing all or part of the summons is fully complied with and (b) all appeals or requests for further review are disposed of or the period in which appeal can be taken or further review can be requested has expired. Treas. Reg. § 301.7609-5(e)(3).
