Daily Tax Update - June 19, 2014: US Supreme Court Holds Taxpayer Can Challenge IRS Summons

US Supreme Court Holds Taxpayer Can Challenge IRS Summons: Today, the US Supreme Court held that a taxpayer has a right to conduct an examination of Internal Revenue Service (IRS) officials regarding their reasons for issuing a summons when the taxpayer points to specific facts or circumstances plausibly raising an inference of bad faith.  United States v. Clarke, Sup. Ct. Slip Op. No. 13-301, rev’g United States v. Clarke, 517 Fed. App’x 689 (11th Cir. 2013).

In Clarke, the IRS had issued summonses to four individuals associated with a limited partnership that the IRS believed had information and records relevant to the tax obligations of the partnership and its partners.  None of the individuals complied with those summonses.  The IRS instituted proceedings in District Court to compel the individuals to comply with the summonses.  The individuals challenged the summonses on the grounds that they were issued to punish the partnership for refusing to agree to additional extensions of the applicable statute of limitations and to evade the Tax Court’s limitations on discovery.  They supplied some circumstantial evidence for these accusations.  The District Court denied the individuals any opportunity to examine the IRS agents and ordered that the individuals comply with the summonses.  The Eleventh Circuit reversed, holding that the individuals were entitled to an adversary hearing upon making allegations of improper purpose.

Read more via: http://www.steptoe.com/publications-9669.html

Rep.  McCarthy Elected House Majority Leader:   Rep. Kevin McCarthy (R-CA) was elected today by Republicans as the next House Majority Leader. McCarthy will assume his new post when Rep. Eric Cantor steps aside on July 31.