A third-party summons is a summons directed to a person other than the person with respect to whose liability or return the summons is issued, or any officer or employee of such person. See IRM 25.5.6.3.1, Summons Subject to IRC 7609 Third-Party Notice and Waiting Period Requirements, for help identifying third-party summonses.

IRC 7602 provides the IRS with summons authority. See IRM 5.17.6.1.2.1, Statutory Authority.

IRC 7609 provides the IRS with special procedures for third-party summonses.

Delegation Order 25-1, provides the levels of authority delegated to various IRS employees to approve and perform activities concerning summonses. See IRM 1.2.2, Servicewide Delegation Orders.

Paragraph (9) in Delegation Order 25-1, lists the employees delegated to issue a summons. See IRM 1.2.2, Servicewide Delegation Orders.

The approval of the issuing officer's manager, or any supervisory official above that level, is required on a summons to a third party witness, except that such approval is not required for a third-party summons issued by a special agent. See paragraph (8) in Delegation Order 25-1. The approval is evidenced by the supervisor's signature on the summons, or by a statement on the summons, signed by the issuing officer, that he or she had prior authorization to issue the summons and stating the name and title of the authorizing official and date of authorization.

In general, the IRS should issue summonses only when the taxpayer (or other witness) will not produce the desired records or other information voluntarily. A summons is specific to each case. There are no program reports that track summonses to third-party witnesses.

The IRS employee who issued the summons keeps a copy of the original summons, Page 1 of the summons labelled "Original." The original summons is needed when referring a summons for enforcement. See IRM 25.5.10, Enforcement of Summons.

Definitions pertaining to summonses served on third-party witnesses can be found in IRM 25.5.6.3, Definitions.

The table below lists commonly used acronyms and their definitions.

IRM 25.5, Summons, provides guidelines for all IRS functions in one multifunctional handbook. The sections are:

The basic legal concepts governing the use and enforcement of administrative summonses can be found in IRM 5.17.6, Legal Reference Guide for Revenue Officers, Summonses.

The Taxpayer Bill of Rights (TBOR) lists rights that already exist in the tax code, putting them in simple language and grouping them into 10 broad categories. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights, and Policy Statement 1-236 in IRM 1.2.1, Servicewide Policy Statements.

Additional summons guidance can be found on the Summons Knowledge Base, https://portal.ds.irsnet.gov/sites/vl053/pages/default.aspx.

Summons – a summons subject to IRC 7609 third-party requirements is an administrative summons issued under IRC 7602(a)(2) , IRC 6420(e)(2) , IRC 6421(g)(2) , IRC 6427(j)(2) or, IRC 7612 , which is not described in any of the exceptions found in IRC 7609(c)(2) -(3) and that requires:

A third-party recordkeeper is defined in IRC 7603(b)(2) as:

Records - This term includes books, papers, or other data. The concept of records has been broadly construed to include an executable copy of a commercial tax software program used to prepare returns or organize business records (such as Quickbooks). However, a summons for a computer software source code cannot be issued unless certain conditions set forth in IRC 7612 are satisfied.

Examples of third-party records are:

John Doe summons - This is any summons that does not identify the taxpayer being investigated. For further information about John Doe summonses see IRM 25.5.7, Summons, Special Procedures for John Doe Summonses.

Numbered bank account - An account with a bank or similar financial institution through which a person may authorize transactions solely through the use of a number, symbol, code name or similar arrangement not involving disclosure of the account owner’s identity. See 26 CFR 301.7609-2(b)(3).

Proceeding to quash - A civil action begun in the appropriate U.S. district court to prevent compliance by a summoned third-party witness.

Intervention - The act of a person, who is not originally a party to a summons proceeding, becoming a party in order to protect his or her interests. Under IRC 7609(b)(1), any person who is entitled to notice of a third-party summons (i.e. a noticee) may intervene in any proceeding with respect to the enforcement of that summons. Also, under IRC 7609(b)(2)(C), the summoned third party has the right to intervene in any proceeding brought by a noticee to quash the summons.

Noticee - The persons entitled to notice of a third-party summons are the taxpayer identified in the heading of the summons and every person identified in the description of summoned records (other than the person summoned). The taxpayer identified in the caption of the summons is always a noticee, even though his name may not appear in the description of summoned records. A noticee has the right to be given notice of the summons, to intervene in a summons enforcement proceeding, and to bring a proceeding to quash the summons.

Date of service of notice - The date on which the notice is placed in the mail or delivered personally.

The notice procedures of IRC 7609(a) apply to third-party summonses issued to investigate persons who may be responsible for the trust fund recovery penalty (TFRP).

When investigating the persons who may be responsible for the TFRP, the IRS often will summons a bank (or other third party) to obtain records of the corporation's accounts. In many cases, the IRS knows of several corporate officers or employees who may be responsible for the penalty. In such cases, the IRS should issue a separate summons for each potentially responsible person and should follow the notice and waiting period requirements of IRC 7609(a). Each such summons should only have one potentially responsible person's name typed in the heading. The bank need only provide one set of documents for multiple summonses with identical document requests. See Exhibit 25.5.6-1, Sample Language for a Letter for Limiting a Response for Records for Multiple Potentially-Responsible Persons.

The potentially responsible person should be identified in the heading of the summons by name and by his or her capacity as an employee or officer of the corporation. For example, where two potentially responsible persons (an officer and an employee) have been identified, two summonses would be issued. A summons investigating the liability of John Smith, president of Corporation XYZ, Inc. would be captioned as "In the matter of John Smith, President of Corporation XYZ, Inc." A separate summons concerning the liability of an employee, John Smith, Jr., would be captioned "In the matter of John Smith, Jr., Employee of Corporation XYZ, Inc." (Since the corporate name is identified in the heading of the summons, the corporation is a noticee as well as the individual named in the heading and both the corporation and individual are required to receive notice per IRC 7609(a)(1).)

In many situations, the IRS will know the identity of many potentially responsible persons but perhaps not all. For example, Corporation A has failed to pay its employment taxes for several past quarters and there are five potentially responsible persons. If the IRS knows the identity of four of the five potentially responsible persons, the IRS will serve four summonses on the bank even though one of the summonses seeks the production of all of the documents the IRS requires for all four investigations. As a matter of law, IRC 7609 does not require the IRS to serve all four summonses; however, the IRS will serve all four as a matter of practice. To do otherwise would undermine a taxpayer's opportunity to seek to quash a third-party summons that the IRS issued to investigate his or her liability. Eliminating the taxpayer's opportunity to petition to quash would be inconsistent with congressional intent (as expressed in RRA 98) to broaden the taxpayer's access to judicial review of third-party summonses. However, the IRS need not later serve on the bank a summons that names the fifth person unless additional records are required to determine that person's liability.

When serving multiple identical summonses on a bank (or other third party) to investigate the persons potentially liable for the TFRP, inform the summoned person that the IRS need only receive one copy of the summoned information. See Exhibit 25.5.6-1 for sample language for a cover letter to accompany summonses in this situation.

IRC 7609(c)(2)(D)(i) and (ii) provide exceptions from the notice requirement of IRC 7609(a) for two different categories of collection summonses. The first category is codified in IRC 7609(c)(2)(D)(i), which provides an exception for summonses issued to aid in collecting an assessment made or a judgment rendered "against the person with respect to whose liability the summons is issued." That phrase refers to the taxpayer identified in the heading of the summons as the person being investigated. If the IRS does not have an assessed liability or judgment against that taxpayer, then it cannot use the collection exception for any third-party summons it issues in that investigation. As a result of this rule, the IRS must give notice under IRC 7609(a) when serving a summons on a third party to investigate the liability of those persons who are potentially responsible for the trust fund recovery penalty because those taxpayers' liabilities have not yet been assessed. The IRS cannot rely on the assessment against the corporation to satisfy the collection exception for these summonses, nor may it caption such summonses as issued "In the matter of the Corporation-Taxpayer." These summonses must be captioned as in the matter of the individuals being investigated as potentially responsible persons. See IRM 25.5.6.4.1, Procedures for Summonses Issued to Investigate Liabilities for the Trust Fund Recovery Penalty.

The second category of collection summonses is described in IRC 7609(c)(2)(D)(ii), which provides an exception from the notice requirement for summonses issued to aid in collecting the liability at law or in equity of any transferee or fiduciary of a taxpayer against whom the IRS has made an assessment or obtained a judgment. The scope of this exception is limited to summonses issued to collect a transferee (or fiduciary) liability that has been assessed pursuant to IRC 6901 or otherwise finally determined by a judgment. It does not apply to summonses issued to determine whether a person is liable as a transferee pursuant to IRC 6901.

At times, the IRS may be pursuing a civil examination or a criminal investigation of a taxpayer's unassessed liabilities while it is also pursuing (or has finished pursuing) collection actions against the same taxpayer for assessed liabilities. In these circumstances, the IRS's collection functions may have obtained information by a collection summons that was excepted by IRC 7609(c)(2)(D) from the notice requirement of IRC 7609(a). In general, the IRS may share the information gathered pursuant to an excepted collection summons with examiners and criminal investigators, even though the examiners and criminal investigators would have had to give notice of the summons had they issued it. However, as explained in the scenarios discussed below, the IRS must not engage in any subterfuge by having collection personnel summon information that is only needed for the examination or criminal investigation. The collection employee must act in good faith and must have a legitimate collection purpose for summoning the information.

In the first scenario, a special agent is conducting a criminal investigation and is working with a cooperating revenue officer. Under these circumstances, the special agent should issue any third-party summons and give notice as required by IRC 7609(a) (unless the special agent's summons is not served on a third-party recordkeeper and is thus excepted from the notice requirement by IRC 7609(c)(2)(E)). To do otherwise would constitute an attempt to disguise the criminal nature of the investigation by having the collection employee issue the summons. See United States v. Tweel, 550 F.2d 297 (5th Cir. 1977) (revenue agent failed to apprise taxpayer of the obvious criminal nature of the investigation and court suppressed all evidence obtained by IRS’s silent misrepresentation). Moreover, such a summons would be unlikely to meet the requirements of a collection summons under IRC 7609(c)(2)(D).

In the second scenario, the collection employee issues a third-party summons to collect an assessed liability. After gathering the summoned information, the collection employee finds indications of criminal activity and refers the case to Criminal Investigation. The collection employee can share the summoned information with Criminal Investigation (and Criminal Investigation does not need to repeat the summons process and give notice). If the summoned information may be exculpatory then that information must be shared with Criminal Investigation. After the case is referred to Criminal Investigation, the collection employee must coordinate any further summons activity with Criminal Investigation and should follow all policies and procedures for parallel investigations. See Policy Statement 4–26 at IRM 1.2.1, Servicewide Policy Statements. A third-party collection summons must not be solely used to pursue a criminal investigation. To do so would constitute a subterfuge and would jeopardize the criminal investigation. See United States v. Tweel, 550 F.2d 297 (5th Cir. 1977). Using a collection summons solely to further a criminal investigation would also circumvent the IRC 7609(a) notice requirement if the summons was directed to a third-party recordkeeper. The collection employee's purpose for issuing the summons must be to collect the tax, not solely to develop a criminal case.

The third scenario occurs when an IRS examiner is determining a taxpayer's liabilities (e.g., by examining the taxpayer's returns) and an IRS collection employee is working to collect assessed liabilities owed by the same taxpayer for periods other than those being examined. For example, the collection employee issues a third-party summons to collect taxes assessed for the years A and B, while the examiner is investigating the taxpayer's liabilities for years C and D. So long as the collection employee summons information that "may be relevant," within the meaning of IRC 7602(a), to collecting the assessed taxes for years A and B, then the collection employee can share the summoned information with the examiner. This is appropriate because the collection employee is only summoning information that would otherwise be summoned if there were no ongoing, separate examination. However, if the examiner needs additional information, then he or she must obtain that information independently by issuing a separate third-party summons, if necessary, and by giving notice as required by IRC 7609(a).

The fourth scenario is similar to the third, except both the collection employee and the examiner are pursuing separate and independent investigations of the same taxpayer for the same year. This may occur where the IRS has assessed a trust fund recovery penalty for periods A, B, and C, and is also examining the taxpayer's income tax liabilities for those same years. The analysis and conclusions are the same as for the third scenario. So long as the collection employee only summons information appropriate to his or her case, then he or she should be able to share that information with the examiner. The collection employee must avoid summoning information solely to assist with the examination; all of the summoned information must be of a nature that may be relevant to the collection activity.

When summoning a third party for records or testimony, serve notice on the taxpayer and all other noticees within three days of serving the summons.

No examination of the summoned records is allowed before the close of the 23rd full day after notice is given. Therefore, set the date for appearance:

A noticee who wishes to prevent summons compliance by the third party must begin a civil action in U.S. district court to quash the summons not later than the 20th day after the day notice of the summons is given. When the last day to file a petition to quash falls on a Saturday, Sunday, or legal holiday, the petition to quash may be timely filed on the next business day.

A noticee who brings a proceeding to quash the summons must mail (by registered or certified mail) copies of the petition to the summoned third party and to the IRS employee who issued the summons within the 20 day period.

In instances where a summons is served on a third party for records or testimony and the description of summoned records identifies another person (other than the taxpayer or summoned witness), notice will be given to such person. This person has the right to file a petition to quash the summons. A person not entitled to notice does not have the right to file a petition to quash the summons.

No examination of the summoned records is allowed before the 24th day after notice is given, or if a proceeding to quash is begun until the court so orders, or until every person that is entitled to notice consents. Form 14465, Waiver of Rights to Notice or Right to Petition to Quash, may be used to document the noticee’s consent.

IRS employees who receive a petition to quash will notify Associate Area Counsel by telephone on the same day. Within six workdays, the employee will forward to Associate Area Counsel a memorandum report or Form 4443, Summons Referral, to include the following:

Tolling of the periods of limitation on assessment and criminal prosecution occurs when the taxpayer intervenes or brings a proceeding to quash, or when a third party fails to produce the summoned records within six months of being served.

Intervention by a person other than the taxpayer or his or her agent will not suspend the running of the statutes of limitation.

The IRS and the person summoned must be sent (by certified or registered mail) a copy of the noticee’s petition to quash not later than the close of the 20 day period. If a petition to quash is not mailed to the IRS timely, the summoned person should be asked to produce the summoned information. If he or she does not, the employee should immediately forward the summons for enforcement.

Form 2039, Summons, and Form 6639, Financial Records Summons, include a notice concerning the noticee’s right to contest the administrative summons (Part D). Serve Part D on the noticee with a copy of the summons (Part C), by certified or registered mail to the noticee's last known address. Include Form 2039 Part E for a designated or related summons. Use registered mail when the notice is mailed to persons in foreign countries. The law also permits service of notice by hand delivering the documents to the noticee, or by leaving them at the noticee’s last and usual place of abode. In the absence of a last known address of the noticee, both documents can be left with the person summoned. In addition, send a copy of the notice by regular mail to the taxpayer’s authorized representative, as a courtesy.

If the IRS has been advised under IRC 6903 of the existence of a fiduciary relationship, mail notice of the summons to the last known address of the fiduciary of the person entitled to notice, even if such person or fiduciary is now deceased, is under a legal disability, or no longer exists. The filing of a power of attorney form or tax information authorization does not create a fiduciary relationship under this provision.

Complete certification of service of the summons and of giving notice on the reverse side of the original summons, Service of Summons, Notice and Recordkeeper Certificates. If there is more than one noticee, copy the form to document how notice was given to each noticee. Field Collection employees will use ICS to document the service of the summons and how notice was given. See IRM 5.17.6.4.1, Proper Service - IRC § 7603.

A noticee who files a petition to quash the summons must mail (by registered or certified mail) copies of the petition to the summoned third party and to the IRS employee whose name and address are shown on the face of the summons. If a summons enforcement action is instituted against the third party, the noticee has the right to intervene in the action. DOJ will serve the third party with process and will notify the noticee of the action via certified or registered mail.

The second page of the original summons certifies how service of the summons was made and that notice was given, or that notice was not required (e.g. for a collection summons). This page may also be used to certify that the period for beginning a proceeding to quash the summons has expired and that no such proceeding was instituted within such period, or that all of the noticees consent to the examination. Upon request of the summoned third party, the IRS employee will give a copy of this page to the summoned third party, as provided in IRC 7609(i)(2).

Persons who are entitled to notice and to file a petition to quash when a summons is issued may waive such rights via a general waiver form. Form 14465,Waiver of Rights to Notice or Right to Petition to Quash, is suggested for waiver purposes. For a noticee other than the taxpayer, Signature of Taxpayer should be modified to say Signature of Noticee. All third parties involved in the waiver should be given a copy of the waiver for their records. Prepare the waiver in triplicate; retain the original, give one copy to the summoned party and one copy to the noticee.

If all persons entitled to notice waive their rights, the time and place of examination must not be less than 10 days from the date of service. The witness may voluntarily comply at an earlier time.

Payments for mileage, witness fees, and expenses may be made to persons who are summoned. See IRM 25.5.9, Summons, Fees and Costs for Summoned Witnesses.

The third party:

The law provides that the third party will, upon receipt of the summons:

A third party is not liable to any customer or other person for such disclosure if the disclosure of records was made in good faith reliance on the IRS’ certification that:

Attempt to coordinate the service of summonses pertaining to the same person at or near the same time, if possible. Likewise, make requests to the court for the exemption from the requirement of notice relative to the same person at the same time, provided that the witnesses to be summoned may all be found in the applicable judicial district.

A summons served on a domestic bank to produce records of one of its foreign branches may be enforceable even if compliance would constitute a violation of the laws of the foreign country. The basis for compelling production of records is that a bank, like any other corporation, is presumed to be in possession and control of its own books and records. Courts have reasoned that any officer or agent of the corporation who has power to cause the branch records to be sent from a branch to the home office for any corporate purpose has sufficient control to cause them to be sent when summoned pursuant to IRC 7602.

In determining whether to enforce a summons where the laws of the country in which the information is located bar such production, the courts balance the interests of the foreign country in blocking production of the records against the importance of the records to the United States. The courts have used the following 5-part test to determine whether a foreign blocking law should be recognized:

Compliance employees cannot issue a summons directly to an individual or entity located outside the United States. See IRM 25.5.8.5, Records Outside the United States, for additional information.

The United States courts have jurisdiction over a domestic branch of a foreign corporation and over its records located in this country.

A domestic branch that sends its records to a foreign bank for storage may argue that it has relinquished control over such records. However, in determining whether to enforce a summons for such foreign-based records, a U.S. court would utilize the same balancing test described in IRM 25.5.6.7.1(2). Depending upon the age of U.S.-generated bank records, the Bank Secrecy Act and other U.S. laws and regulations may also be argued to prohibit the U.S. bank from storing its customer records offshore.

IRC 7612:

Before issuing a summons for a computer software code, the IRS must demonstrate:

This determination must be made by a management official not lower than the group/case manager. The group/case manager should contact Associate Area Counsel regarding how this determination should be made.

Exceptions:

Cooperation Required: If the taxpayer fails to turn over the executable code and the associated data, and the owner fails to turn over the executable code within 180 days, the IRS does not have to demonstrate that it is unable to otherwise reasonably ascertain the correctness of any item on a return from the taxpayer’s books, papers, records, or other data, or from the executable code and any associated data, and the IRS does not have to identify the portion, item, or component of the source code needed to verify the correctness of such item on the return before a summons for the computer software source code may be issued.

Actions required by the IRS to trigger the 180 day period under IRC 7612(b)(3) are:

Under IRC 7612(c), in any proceeding to enforce a summons for any portion of software (which includes both source code and the executable code), a court may issue a protective order to prevent the disclosure of such software. In addition, any software that the IRS obtains during the course of any examination is subject to the safeguards listed below. However, prior to receiving any software, whether by court order or voluntarily from the taxpayer or the software owner, Associate Area Counsel must be consulted in order to establish the procedures that must be followed to comply with the statutory (and judicial, where applicable) requirements for safeguarding the software. The safeguards include:

Responsibilities:

The following definitions apply for purposes of IRC 7612:

The summons rules are effective for summonses issued, and software acquired, after 7/22/98.

The software protection rules apply to

On some occasions, the IRS has found it helpful to employ outside experts to assist in the analysis of a particular source code. The outside expert used must agree in writing:

The IRS must provide the taxpayer and the owner of any interest in the software with a written agreement between the IRS and any person who is not an officer or employee of the United States and who will analyze or have access to such software which contains the above agreement.