Doctor Battles IRS Summons (and Loses)

The IRS summons is the most powerful too that the IRS has in its tax collection arsenal. The recent US v. Battle provides a good example of how the IRS uses the summons.

The taxpayer in this case is a Houston physician who filed “inaccurate tax returns” (to the tune of $600,000) for four tax years and filed no tax returns for six tax years. The IRS no doubt sent the doctor an information document request to gather the doctor’s records, but the IRS was not satisfied with the doctor’s response. The IRS then issued the doctor a summons to request the doctor turn over his records; however, the doctor failed to comply with the summons.

Pursuant to the standard procedures, the IRS then petitioned the district court to enforce the summons. The doctor opted to represent himself at this hearing. Unfortunately the doctor tried to use the hearing to contest the underlying tax assessment, etc. As the court noted, the summons enforcement hearing is not the forum to contest the underlying tax assessment. Rather, the issue in a summons enforcement hearing is whether the taxpayer is required to turn over documents.

The district court ordered the doctor to appear in two weeks with an “attorney or accountant” to present the doctor’s challenges to the summons and to bring the records that the IRS requested to court with him. The court also suggested that the doctor pay 70% of the taxes assessed by the IRS to demonstrate the doctor’s good faith effort to comply with our tax laws. The doctor appeared in court on the proscribed day with an accountant, but without a tax attorney or the records and without paying any taxes. The court entered an enforcement order, requiring the doctor to appear with the records later that same day.

The doctor showed up later that day, again without the records or a tax attorney. The doctor argued that he had a Fifth Amendment right to not produce the documents, which the court gave little credence to. The court then held the doctor in contempt of court and had him taken into custody. Three days later the doctor’s associate produced the requested records and the doctor was set free.

The doctor then appealed the contempt order and the enforcement order to the Fifth Circuit Court of Appeal – again, without the help of a tax attorney. In this appeal, the doctor made various arguments – all of which were, well, unsuccessful.

The taxpayer in this case probably devoted a lot of time to preparing and presenting his case and what does he have to show for it (other than three days of free room and board)? We all have to pick our battles in life, and usually contesting an IRS summons without sound arguments and competent tax counsel isn’t a battle worth fighting. This taxpayer would have been better of by (1) being honest and providing the IRS will his records, (2) coming clean and filing amended tax returns as quick as possible, and (3) hiring a tax attorney to help him with his IRS troubles.