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U.S. Supreme Court Ruling Gives IRS “Startlingly Broad Authority”

The U.S. Supreme Court unanimously ruled last week that the IRS can secretly obtain the financial records of third parties in delinquent taxpayer cases.

The IRS, which received $80 billion to hire 87,000 additional employees via the Inflation Reduction Act, doesn’t have to notify parties who aren’t under investigation when seeking banking records related to the tax delinquency of another person.

According to The Epoch Times, one lawyer said the new ruling gives the IRS “startlingly broad authority to pry into the financial records of people who may be only remotely connected to a delinquent taxpayer.”

The ruling is a victory for the Biden administration and its efforts to harass working-class Americans.

The Epoch Times provided further details:

At oral arguments on March 29, the justices seemed sympathetic to the claim of the wife of a man who owed substantial taxes that the IRS went too far in pursuing her bank records without prior notice. At the same time, they acknowledged that the agency needs effective tools to attempt to collect delinquent accounts.

Chief Justice John Roberts wrote the court’s opinion (pdf) in Polselli v. IRS, court file 21-1599, which was issued on May 18.

The IRS claims that Remo Polselli owes $2 million in assessed taxes and penalties and issued summonses without notice seeking financial records from banks. His bank records and those of his wife, Hanna Polselli, and law firms that performed work for them were sought.

The Biden administration said the IRS doesn’t need to provide notice to third parties and that having to do so would give delinquent taxpayers “a head start in hiding assets.” Besides, the administration argued, people involved in the process have access to the courts to combat alleged abuses.

“The IRS also may serve a summons to ‘collec[t] any such liability.’ Ibid. These summonses can extend to third parties beyond the taxpayer under investigation,” Chief Justice John Roberts wrote in the opinion.

“Accordingly, the IRS may request the production of ‘books, papers, records, or other data’ from ‘any person’ who possesses information concerning a delinquent taxpayer,” Roberts added.

Zero Hedge added:

In a separate opinion which Roberts concurred with, Justice Ketanji Brown Jackson wrote that Congress has “recognized that there might be situations, particularly in the collection context, where providing notice could frustrate the IRS’s ability to effectively administer the tax laws.”

“For instance, upon receiving notice that the IRS has served a summons, interested persons might move or hide collectable assets, making the agency’s collection efforts substantially harder.”

According to Paul Sherman, counsel for the Institute for Justice, a nonprofit public interest law firm, “The Supreme Court’s ruling grants the IRS startlingly broad authority to pry into the financial records of people who may be only remotely connected to a delinquent taxpayer.”

“That ruling raises serious Fourth Amendment concerns. Thankfully, the Court stressed that its ruling was narrowly focused on the statutory question before it. In a future case, the Court should address the constitutional limits on the government’s power to demand access to people’s most sensitive financial information.”

Read the full opinion from Chief Justice Roberts.


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