Karcho Polselli v. IRS (21-1599)

argument 21-1599

Karcho Polselli v. IRS

Supreme Court of the United States 50 min 6 speakers 8 chapters transcribed 8 days ago official recording ↗

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What is the purpose of Section 7609 and why did Congress enact it?

John G. Roberts 0:01

We'll hear argument next in case twenty one fifteen ninety nine, uh Pulselli versus the Internal Revenue Service. Mr. Twarevsky.

Unknown 0:10

Mr. Chief Justice, and may it please the court. Congress enacted Section seventy six zero nine to give the public critical privacy rights to notice and an opportunity to quash third party IRS summonses. Congress carefully limited the exceptions to those rights. In Clause one, Congress allowed the IRS to forego notice for a summons issued, quote, in aid of the collection of an assessment against the person with respect to whose liability the summons is issued. In Clause two, Congress separately dispensed with notice for summonses, quote, issued in aid of the collection of the liability of any transferee or fiduciary of a delinquent taxpayer with an assessment or judgment. But the Sixth Circuit, like the IRS, nullified most of what Congress wrote.

Unknown 0:55

It read clause one to contain just nine words a summons issued in aid of the collection of an assessment, period. The IRS says those nine words mean that any time it's made an assessment, there are no judicially reviewable limits on its power to issue secret, over broad, third-party summonses. So nothing stops the IRS from secretly summonsing all unredacted bank records of anyone who ever received money from a delinquent taxpayer, a lawn care company, a friend splitting a dinner check through Venmo, or as here, a law firm. Never mind cost two. Never mind the rest of the words in clause one. Never mind the different language Congress used in another exception for summonses issued in connection with a criminal investigation.

Unknown 1:43

The Sixth Circuit and IRS's interpretation is inconsistent with the statute's text, context and purpose, and it would create the same opportunity for abuse the Congress sought to eradicate. The question isn't whether the IRS can summon the records it needs, only whether it can do so secretly and without judicial oversight. The IRS says, Trust us, we police ourselves, but Congress repudiated that approach when it enacted Section seventy six zero nine's privacy protections for innocent third parties. I welcome the Court's questions.

Clarence Thomas 2:14

Uh you said that the uh IRS is not reading the uh entire uh entirety of the clauses. Would you tell us exactly what you're relying on?

Unknown 2:26

Um Well we are relying on the well the the broad priv the broad notice rights in section seventy six oh nine A and B. And then for purposes of the exception in Clause one, um we are relying on the fact that an assess that it has to be an aid of the collection of an assessment made with respect to a particular taxpayer. So the aid Aid of the collection language has to be understood to require a direct connection between the summons and the act of collecting, which th which means getting the money into the Federal Fisk. Aid of collection has to be understood to r to mean a direct connection in light of a few considerations. One is the ordinary usage of that term. Two is the contrast between the language that Congress used there in aid of and the language that Congress used in C two E in connection with, which is broader and relates to, and F one, which this Court also has said has a broadening effect.

Unknown 3:30

This Court has interpreted similar language, such as in the electric power supply case, where it interpreted affecting to mean directly affecting, in order to put reasonable limits on seemingly broad terms. And lastly, we're relying on the fact that under our interpretation, there is separate meaning to clause one and clause two, whereas the government's interpretation creates massive surplusage by rendering all of clause two and much of clause plus one meaningless within this statute. Congress was simply ra wasting its time in writing those provisions, which is what Judge Cethlidge recognized in dissent below.

Clarence Thomas 4:04

The only pro the problem is the the limiting language that you're asking about isn't there. It says the issued in aid of the collection of an assessment made or judgment rendered against the person. So where's the rest of your limiting language?