Being audited by the IRS is easily one of the most stress-inducing, harrowing experiences for a United States citizen… especially one who believes they’ve been acting in good faith. When an audit of your taxes has been initiated, one of the first documents you’ll receive from the Internal Revenue Service is called an “Information Document Request,” more commonly known as an “IDR.” You’ll know it’s an IDR when the letter is labeled IRS Form 4564.
Simply put, an IRS IDR is exactly what it sounds like: a formal request to examine just about any material under the sun that the IRS thinks will help them with their audit. That might include electronic records, books, files, financial papers — you name it. If the IRS so much as suspects you might possibly be liable for internal revenue tax, they wield massive power under Internal Revenue Code Section 7601. That’s right: they don’t need to have ironclad proof in order to make these invasive inquiries. They simply need to have suspicion of your liability to start digging through your records and possessions.
Where things get even more sobering are in Internal Revenue Code Section 7602(d), which gives the IRS the power to issue you a summons regarding this matter. This might be due to your non-responsiveness, the incompleteness of your answers, the tone of your answers, or truly any other plausible reason they might have. Section 7602 is quite broad in terms of the power it grants the IRS to compel you to appear and even give sworn material testimony under oath.
There is some good news if you’ve received an IRS Summons, in the form of the U.S. Supreme Court case United States v. Powell. This precedent gave birth to what are known as the “Powell requirements,” a set of checks and limits on the IRS’ summons power in an IDR scenario.
The Powell requirements are concerned with four main issues:
As you might have guessed from reading the Powell requirements, they are set out primarily to prevent a taxpayer from being unfairly harassed or singled out by the IRS or one of their agents. Thanks to Powell, a summons associated with an IDR can’t be used as a tool of intimidation or retribution by the Internal Revenue Service.
So, what is an “illegitimate purpose” in the context of Powell? Again, the aforementioned harassment would be illegitimate; the use of the summons to affect the taxpayer’s involvement in a collateral dispute; or any reason other than a genuine need for the information or documentation requested by the IDR.
What about the second Powell requirement, about relevancy? That one makes a lot of sense, too: it’s ensuring that you can’t be dragged over the coals in the course of a bogus inquiry, simply to unearth damning information that’s related to an entirely different matter. In other words, your financial privacy can’t be used as a piggy bank to shake loose details that can help the IRS in another investigation.
The third Powell requirement, about the IRS already having access to the information, is specifically preventing unfair harassment. Again, the IRS can’t use a summons as a punitive weapon to scare or rattle you when they already know the details of an IDR. This prevents a waste of resources, as well as protecting your right to be treated fairly under the law.
Finally, Powell affirms that it is incredibly important to follow the administrative guidelines laid out in painstaking detail by the Internal Revenue Code. If any steps were skipped, or details were missed in the execution of your IDR or summons, Powell gives you firm legal standing to push back against the IRS in this matter.
When it comes to dealing with the IRS, a common theme we’ve seen from our clients as well as the public as a whole is the instinct to ignore them and hope they go away. It’s a totally understandable emotional reaction, made even more relatable when you realize just how many people take this approach to receiving frightening letters from the IRS.
However, as we’ve explained on this blog before, this is probably the worst way to go about dealing with the IRS. The Internal Revenue Service is one of the most dogged, tenacious, and powerful creditors the world has ever known. Burying your head in the sand and hoping they forget about you is always a losing strategy.
We understand you may have ignored, or you may be considering ignoring, an IRS Information Document Request. At first, you might not notice any consequences from this approach — but don’t be fooled. That’s only because the Supreme Court ruled that IRS agents have no ability to unilaterally compel you to appear, or punish you for ignoring your summons.
However, that does not mean that you have a free loophole to avoid this process. The District Court can, and will, hold a hearing that results in an order that requires you to appear in person. Once that happens, the full weight of the law will be behind that summons… carrying consequences including huge fines or putting you behind bars for contempt of court.
Vic Abajian is a former IRS senior Trial Attorney who knows exactly how to handle the tax information and document request you’ve been sent. Getting an IDR from the IRS can be an anxiety-inducing moment — but one phone call to Abajian Law will start to put your mind at ease.
The expert tax law attorneys at Abajian Law are extremely familiar with your rights and options when it comes to responding to an IDR. If you’ve received one, you absolutely have the right to retain an attorney. You also have the right, via the 5th amendment, to not incriminate yourself. You have certain privacy privileges as well, which a seasoned attorney can ascertain if they apply to your situation.
An IDR might be scary for you, but it’s just another day at the office for the Abajian Law tax lawyers. The legal team at Abajian Law has years of experience building IDR response strategies to put you in the strongest position possible moving forward with your audit. We know how to engage in fierce negotiations with the IRS that set clear limits on their IDR as it pertains to your situation. You have a right not to be excessively, improperly, or unfairly burdened by this process… and Abajian Law will passionately and intelligently fight for that right on your behalf.
Don’t ignore your Information Document Request or try to respond on your own. This is a serious matter that deserves the attention of legal professionals who have dedicated their lives to the art of protecting you when an IDR reaches your mailbox. Contact us right now for a discreet, confidential consultation about your rights and legal options.