When information is needed for an investigation, the IRS may issue summonses to 3rd parties to obtain records. Under tax law, any person subject to an audit by the IRS has the right to petition a court to quash (or set aside) such summonses. In one case, the IRS issued summonses related to the sale of a taxpayer’s ownership interest in a limited liability company. Arguing that the summonses were “nothing more than a fishing expedition” and that the IRS hadn’t followed proper procedures, the taxpayer sought to quash the summonses. A U.S. District Court found that the taxpayer failed to show the IRS acted improperly. The motion to quash was denied. (Barlan Holdings, DC MO, 5/24/23)
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