J.B. v. United States, No. 16-15999 (9th Cir. 2019)
Annotate this CaseThe Ninth Circuit affirmed the district court's order quashing the IRS's subpoena to the California Supreme Court that sought documents in connection with a tax audit. The panel held that "reasonable notice in advance" means notice reasonably calculated, under all the relevant circumstances, to apprise interested parties of the possibility that the IRS may contact third parties, and that affords interested parties a meaningful opportunity to resolve issues and volunteer information before third-party contacts are made. Reviewing the totality of the circumstances in this case, the panel held that Publication 1 did not provide taxpayers with the requisite reasonable advance notice. The panel explained that a reasonable notice must provide the taxpayer with a meaningful opportunity to volunteer records on his own, so that third-party contacts may be avoided if the taxpayer complies with the IRS's demand.
Court Description: Tax The panel affirmed the district court’s order quashing the Internal Revenue Service’s subpoena to the California Supreme Court, seeking documents in connection with a tax audit. Taxpayers J.B and P.B. are an elderly married couple who were selected at random for a compliance research examination, as part of the IRS’s National Research Program. In connection with the audit, the IRS issued a summons to the California Supreme Court seeking various documents, and taxpayers filed a petition to quash. The district court concluded that the IRS had not provided sufficient notice to taxpayers that it would contact the California Supreme Court, in violation of I.R.C. § 7602(c)(1)’s requirement that the IRS provide “reasonable notice in advance” to taxpayers. The panel concluded that “reasonable notice in advance” means notice reasonably calculated, under all the relevant circumstances, to apprise interested parties of the possibility that the IRS may contact third parties, and that affords interested parties a meaningful opportunity to resolve issues and volunteer information before third-party contacts are made. Although the IRS argued that its Publication 1 provided adequate notice, reviewing the totality of the circumstances, the panel agreed with the district court that
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