Two recent decisions confirmed the broad administrative summons
authority of the Internal Revenue Service (IRS). In the first, the
US Supreme Court resolved a circuit conflict regarding notice
requirements for third-party IRS summonses. In the second, the US
Court of Appeals for the Third Circuit confirmed the primacy of the
Internal Revenue Code (IRC) over state law insurance and privacy
laws.
Polselli v. Internal Revenue
Service1
Mr. Polselli owed over $2 million to the IRS, was not
forthcoming with payment and, moreover, appeared to be hiding
assets with accommodating parties. The IRS assigned a revenue
officer to track down where his assets might be. The investigation
pointed to several potential repositories of relevant financial
information, including a law firm, the taxpayer's wife and a
company through which Mr. Polselli had made one tax payment of
$300,000. The officer issued summonses under the authority of IRC
section 7602 to three banks where the law
