Polselli v. IRS

Background

A taxpayer, Remo Polselli, was assessed for more than $2 million in unpaid taxes. An IRS revenue officer, Michael Bryant, issued summonses to a law firm and three banks seeking records tied to Polselli and several third parties, including his wife. The IRS did not give notice to the third parties named in those summonses. The third parties moved to quash the summonses, and lower courts held the IRS need not provide notice under a statutory exception that applies when a summons is issued “in aid of” collecting an assessment.

Reasoning

The core question was whether that notice exception applies only when the delinquent taxpayer has a legal ownership interest in the records the IRS seeks. The Court said no. It explained the statute requires three things: the summons be issued to help collect, there be an official assessment or judgment, and the collection effort be against the same assessed person. The statute does not mention a requirement that the taxpayer have a legal interest in the records. The Court also rejected arguments that “in aid of” means only actions that directly produce collectible assets and explained a separate clause covers transferees and fiduciaries.

Real world impact

The decision makes it easier for the IRS to seek third-party records without first giving notice when the summons fits the statutory collection exception after an assessment. The Court declined to define all limits of “in aid of the collection,” so future disputes will turn on case-specific facts. The ruling affirms the Sixth Circuit and is unanimous.

Dissents or concurrances

Justice Jackson, joined by Justice Gorsuch, concurred to stress caution: the default rule is notice, privacy matters, and courts should carefully review whether no-notice summonses are reasonable in each case.