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Limits on Federal Subpoenas for Tax Records and IRS Information

Limits on Federal Subpoenas for Tax Records and IRS Information

The federal government has broad powers to issue subpoenas for tax records and other information held by the Internal Revenue Service (IRS). However, there are some limits and protections in place for taxpayers. This article will examine the key laws and regulations regarding federal subpoenas for tax information.

IRS Policy on Responding to Subpoenas

The IRS has internal policies outlined in the Internal Revenue Manual regarding how to handle requests or demands for IRS records or employee testimony. In general, the IRS resists producing confidential taxpayer information unless legally required to do so. All subpoenas or other requests must be immediately forwarded to the IRS Disclosure Office for review [1].

Grand Jury Subpoenas

One common way the federal government can access taxpayer records is through a federal grand jury subpoena. Rules regarding grand jury procedures and secrecy are outlined in Federal Rule of Criminal Procedure 6(e). In general, grand jury subpoenas allow broad access to taxpayer records and IRS employee testimony without notice to the taxpayer [3].

However, grand jury information cannot be disclosed outside of the grand jury process unless a specific exception applies. This provides some protections for taxpayer privacy. Improper disclosure of grand jury information can result in contempt of court charges [3].

Trial Subpoenas

Another way the federal government can obtain taxpayer records is by subpoena for an actual trial, as allowed under Federal Rule of Criminal Procedure 17. This allows subpoenas for IRS records or employee testimony at trial, even without notice to the taxpayer [6].

However, the trial judge has discretion to quash or modify the subpoena if compliance would be unreasonable or oppressive. This provides some protection against abuse of trial subpoenas [6].

IRS Summonses

The IRS has the power to issue administrative “summonses” to obtain records and testimony for civil tax matters. This power comes from Internal Revenue Code sections 7602, 7603, and 7604.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

For summonses to third-parties like banks, notice must be provided to the taxpayer. This gives the taxpayer a chance to challenge the summons in court if improper [5].

Financial Records from Banks

The Right to Financial Privacy Act generally prohibits government access to individual financial records held by banks or similar institutions without notice, judicial process, or customer authorization. However, an exception allows the IRS to obtain these records through administrative summons under IRC section 7609 [4].

Taxpayer Defenses

There are some defenses available for taxpayers facing demands for their confidential IRS records:

  • File a motion to quash the subpoena if it is overbroad, vague, or seeks privileged information
  • For third-party summonses, intervene and seek to quash the summons
  • Argue for limited redaction of sensitive information in records
  • If grand jury rules violated, seek contempt sanctions and suppression of evidence

However, courts generally defer to IRS summons and subpoenas if issued for legitimate purpose and in good faith [5].

Policy Considerations

Appropriate policy balances must be struck between law enforcement needs and taxpayer privacy rights. Some factors to consider:

  • Need to detect tax evasion and fraud vs. potential chilling effects on taxpayer rights
  • Benefits of easy IRS access vs. risks of government overreach or abuse
  • Transparency vs. grand jury secrecy rules

Congress may consider updating rules to require more notice to taxpayers or limit disclosure of sensitive information like donor lists [5].

Conclusion

The federal government has broad powers to subpoena confidential IRS records and testimony with limited notice to taxpayers. However, important checks exist like grand jury secrecy rules, court discretion, and taxpayer motions to quash improper subpoenas. Policymakers should continue to evaluate this balance of powers and rights.

References

    1. IRM 11.3.35
    2. IRM 34.9.1
    3. IRM 11.3.27
    4. IRM 9.4.4
    5. Blank Rome LLP
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