> When the IRS conducts an investigation for the purpose of “determining the liability” of a taxpayer...it must provide notice...But once the Service has reached the stage of “collecting any such liability” ...which is a distinct activity—notice may not be required...
TL; DR the IRS has to provide notice if investigating, but not collecting.
The IRS found Mr. Polselli liable for taxes. It subpoenaed his law firm for "cancelled checks, wire transfer/credit documents, and all other instruments used by Mr. Polselli to pay the firm." They refused, so the IRS subpoenaed the law firm's banks for the same. They co-operated and let the law firm know. (The IRS was investigating whether "money from [Poselli's LLC] was used to pay Mr. Polselli’s account at [the law firm], or to pay others through [the law firm].")
This seems reasonable. You're already on notice they're collecting. The subpoenas are targeted and subject to "a test turning on reasonableness." And there is no gag order.
Note: I am not a lawyer. Don’t take legal advice from internet comments.
I think the TLDR is a little more than that. Importantly, it's really not just about notice, it's perhaps more about being able to quash a summons. That is, the rules state that you can only file a motion to quash a summons in response to a notice. With no notice, you have no standing to quash.
The law was always clear that for a collection action, the IRS doesn't need to provide notice if the records they are targeting in a summons are for an account the delinquent taxpayer owns (or more specifically "has a legal interest in"). In this case, 3rd parties were arguing that the IRS had to give notice because Mr. Poselli didn't have a legal interest in the account records that were the target of the summons. Supreme Court basically said (unanimously) that's a BS reading of the law.
Legal isn't my forte, and I'm not a lawyer either, but it seems like overreach to me.
Specifically, say the circumstance involves someone else paying his legal fees. They are going after him for collecting, so they are already done investigating, he has an account with the law firm, but the checks that pay that account may not necessarily be paid by him.
So they'll be going after whoever helped him as though they were him. Granted its a bit of a leap and I'm not read in on the details of this particular case but it seems like this is a end-run shortcut to get around providing notice, or quashing overreach towards whoever might choose to help someone who owes outstanding taxes (for whatever reason, i.e. family?).
They'll simply make a claim against the account that paid for him even if he has no interest in that account, and it can't be quashed because no notice, and no standing without notice. That's a pretty broad overreach.
Attorney-client privilege applies to communication for the purpose of obtaining legal advice and it typically excludes anything already disclosed to a third party, like the bank in this case.
That leaks the subject line (and other metadata), so I'd hardly call PGP over Email a secure communication protocol. You have to do something like use random UUIDs as subjects so you can track conversations without leaking what they're about. It's pretty good privacy for the message body, with pretty shit usability if you want security.
What if you were to encode a message to your lawyer via your payments. Would that make it privileged? To me, a private transaction between parties subject to confidential privilege should also be subject to privilege.
The presence of a non-lawyer, non-client in a conversation makes it non-privileged. That is, if someone who is not privileged is part of the talk then it can't have privilege. Is your bank also your lawyer or a client of your lawyer? If not, then the presence of the third party in the transaction kills your privilege claim.
And having your bank share your lawyer with you might potentially open up conflict of interest questions, since your legal rights and your banks might diverge.
In-house council for a company get away with this (for internal communications) because they are lawyers for the company (right up until your interests diverge from that of the company, at which point you really want your own lawyer), but for your bank this stops being true.
Basically, you are thinking about law like an engineer, not a lawyer.
Someone else asked this upstream, but don’t you “share” your privileged communications with your (and your lawyer’s) email provider when corresponding without E2E encryption?
A third party can be necessary to facilitate the communication between the client and the attorney. A clearer example was if you needed an interpreter to speak to your lawyer - surely that conversation remains privileged and the third party in the room cannot disclose what was learned?
In your world, wouldn't every tax cheat just conceal money by routing it through their law firm? Then the government can never find out how much money you have because it would be illegal to subpoena the firm, right?
This makes sense. If the IRS had concluded a taxpayer owed a tax debt, and had to give notice every time it summonsed an entity for information in order to trace the assets, the taxpayer could just move their assets elsewhere in an endless game of cat and mouse.
In the present case, the taxpayer's wife said she should have been given notice since the summons affected her, not just her husband. But it's the same practical effect - you tell the wife, and the husband could move the assets.
Because you might do something /wrong/ we need to have secret powers executed in secret.
Surely if moving assets is wrong, there's a law that says in these circumstances you may not do it. Jail is a pretty good deterrent and only one party is subject to that.
Surely if the IRS wants to do these things it can notify that it has done so at the absolute minimum. Not "lack of a gag order" but a hard requirement to notify. Secret searches seem like a power that /will/ be abused. Put money on it happening. And hey, it's not like the IRS doesn't have a history of abusing power. Just ask a journalist like Matt Taibbi about the IRS response to his testifying before congress for a recent example of naked, unwarranted intimidation (Why did they do that? Is it systemic abuse? We don't even know yet! But that they surely did is not actually up for debate...)
Nonsense, the reasoning is completely sound and you have misread.
The justification for secret powers executed in secret is that the "party in question" might proceed to do something else wrong in the future if they were notified.
It's a classic case of, "We deem you bad so you have no further rights" justification as argued there.
Read it again, it's actually a very important point. You yourself have broken laws in the past.
Does a warrant to a third party require your notification? Either it does, in which case this is different, or it doesn't, in which case this is no different at all, and it's purely up to the third parties in general as to whether they want to notify you about what is (now) legal access to your records from a government entity.
Oh for goodness sakes what is going on here? So much ridiculous, wordy justification of the unjustifiable! Is it just AKTCHUALLY dialled up to eleven or something else?
There is NO WARRANT here. None. If there were a warrant then a judge could tell them to get lost. That is oversight.. If you aren't even notified you can't even get your lawyers to get a judge to do the obviously right thing when there is CLEAR abuse. Abuse that WILL happen. In secret. You can bet a lot on that, actually.
You are both completely misinterpreting my point and the tone I was intending.
I'm aware there's no warrant. You said it would be "secret", which I interpreted to mean that the parties in question may not know the information was gathered by the government from the other parties in question. I'm not sure whether that's any different than a warrant, and so if it isn't, I'm not sure your objection is well formed.
If, instead, you are upset about a lack of oversight, then you should form your objections along those lines, so people actually can engage with you on the topic fruitfully. I am, in fact, fairly open to an argument along those lines, as oversight and the lack thereof seems to cause a lot of problems. I would want to know what the thoughts of the jurists on SCOTUS was regarding that. It's probably spelled out in the majority and minority opinions to some degree.
> So much ridiculous, wordy justification of the unjustifiable! Is it just AKTCHUALLY dialled up to eleven or something else?
Perhaps what's going on is instead that you're not really communicating your point clearly, and when being asked for clarification your combativeness is causing you come come across as an asshole, and people are responding as such.
Jackson clearly cites the risk that "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."
> "...interested persons might move or hide collectable assets, making the agency’s collection efforts substantially harder."
Is that asset movement or hiding illegal? Hasn't happened yet either way.
A: Yes it is illegal. So you can go to jail for it. That's a pretty good deterrent.
A: No, it is not illegal. Then what the actual fudge? You might do something /legal/ so we'll stop you by doing it in secret? Huh?
The problem is someone might or might not move assets. The suggested solution of secrecy is just _wrong_ on every level. Get some kind of court order saying assets cannot be moved. Change the law. Do whatever. The "do it in secret" answer is just wrong and /will/ be abused.
> A: Yes it is illegal. So you can go to jail for it. That's a pretty good deterrent.
They'd have to prove mens rea, and then get a jury to throw you in jail. Over a fricking collection. Do collections agencies have to give you notice that they're going to scout out your street in order to repo your car? No? Then why should the IRS have to give you notice that they're going to scout out your bank in order to repo your assets?
Yeah it's really annoying for the government officials to have to prove you're a criminal before treating you like one. Imagine founding a nation where these employees had to actually do that?
When collection agencies perform secret searches of your property, that's a crime! Call the police.
What happens in public is different to what the government or anyone else can legally do to find out about what you do and have in private? Search warrants exist based on that distinction. Crazy I know but true!
You can be treated like a criminal prior to being found guilty. This is called being arrested, being held pending bail, or, as you yourself mention, a search warrant.
> When collection agencies perform secret searches of your property, that's a crime!
Banking records are not your property. They are the property of the bank. Neither are Google Map photos.
That's a new one, you have no right to privacy for your banking records. Obviously you don't actually believe that when seeing it written out.
This is a change in what conduct is considered legal. Didn't used to be, now found that it is. You might like to ponder why it was considered not legal for the IRS for such a long, long time. And what changed to push it this direction. Best to you.
Due process is a thing worth defending. I think that's still a popular opinion. There are consequences for government agents if the lie to get a warrant, make arrests without probable cause and NONE of that happens in secret which is the WHOLE point here. All of it.
Lawyers have specific duties as officers of the court. It would have been better had this been determined based on that.
Based on this particular case I assume the IRS and law enforcement would be barred from taking any action against the third parties based on material discovered in their bank accounts, as they only had the right to search said bank accounts for material pertinent to the second party.
As long as this would be held to be true (should it ever come up in a future case), due process, and the 4th amendment, would be protected.
So when someone at the IRS with no oversight does something utterly evil and totally illegal for whatever reason they had and your business gets ruined as a result, you are bankrupted and you could have easily prevented it all because any judge would have seen it your way but you didn't get to take it to a judge because it was secret, you're ok with this?
To prevent you from maybe doing something that is presumably already illegal in the future.
Of course if the something isn't illegal so the secrecy is required to prevent you from taking wholly legal actions then that's also ok?
Why is there /any/ need for /any/ secrecy here at all?
> when someone at the IRS with no oversight does something utterly evil and totally illegal for whatever reason they had and your business gets ruined as a result, you are bankrupted
From a subpoena? How? Whom? Is the concern the bank will run out of resources with which to respond to court orders?
You know what can be ruinous? A flippantly-filed warrant.
> prevent you from maybe doing something that is presumably already illegal in the future
What? A suspected tax dodge's lawyers bank was asked to provide accounts from or to which the suspect wired money. This wasn't a fishing expedition; the IRS convinced a judge to grant the subpoena. They asked the bank for records, then the bank let the lawyers know it complied.
This wasn't in pursuit of a future crime. The IRS had already found Polselli liable. He had been noticed of this liability. Then they went to collect.
The future crime is him possibly moving or hiding assets, which is the justification for the secrecy. If that asset movement were not possible there's no need of secrecy. If the asset movement is not a crime then it's even worse.
> future crime is him possibly moving or hiding assets, which is the justification for the secrecy
This is sort of like saying cops wear bulletproof vests to prevent the future crime of their murder. Or that we put bars on jail cells to prevent the future crime of escaping prison. Or that we lock doors to prevent the future crime of theft.
Like, sure. That too. But there’s a more-obvious motivation: preventing the behaviour per se.
> If the IRS had concluded a taxpayer owed a tax debt, and had to give notice every time it summonsed an entity for information in order to trace the assets, the taxpayer could just move their assets elsewhere in an endless game of cat and mouse.
This is just ends-justify-the-means reasoning. Unless there is a more principled reason, and maybe there is, Im not sure and endless game of cat and mouse is wrong.
Possession isn't legal right. If the person doesn't have legal right to the assets (because, for instance, a third party, such as the IRS, is owed the assets) then there is no legal need to notify them.
To look at it another way. What benefit, other than moving the assets, would the person receive from a notification?
> What benefit, other than moving the assets, would the person receive from a notification?
Standing to quash. That said, this case isn’t about the target receiving notice. The suspect’s lawyers’ banks were subpoenaed, and the lawyers objected to not being noticed. Nowhere is the suspect’s right to notice debated.
The same justification used for no knock raids. These are the type of people to defend the patriot act had it been made about tax evasion or stopping misinformation rather than terrorism.
That headline doesn't read well. Maybe "IRS can sometimes get taxpayer's financial info from third parties without notifying taxpayer."
The "sometimes" is important. The law normally requires notification, but an exception exists once the IRS has reached the late stage of collecting unpaid tax liability. Petitioners felt the exception only applied "when a delinquent taxpayer has a legal interest in accounts or records summoned by the IRS...." SCOTUS unanimously disagreed, based on the text of the law in question.
> (c) (2) This section shall not apply to any summons (D) issued in aid of the collection of (i) an assessment made or judgment rendered against the person with respect to whose liability the summons is issued; or (ii) the liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i)
(I am not your lawyer, this is not legal advice, this is not an opinion, this is just a citation.)
>> J P Morgan Chase, Bank of America, seeking among other things “[c]opies of all bank statements” relating to Mr. Polselli and petitioners ..."
the above leave it open for "select * from records where customer_id = '...' " , DUMP all transactions.
but the definition of “in aid of the collection.” should be yielding a narrower query, not ALL (*) transactions may be in "aid of", some may be private and even sensitive in nature yet legit.
For example, the Banks could provide a sample schema (+data) with a GUI to IRS so their operatives can construct a query, providing a case/reason for requiring each column.
Also a good idea to create business accounts and run all biz transactions via that, keeping private accounts for personal use.
Okay, this is classically nonsense that a lay person like me could never find the time or pleasure understanding.
I guess I'm a lay person who's not like you then.
I've tested one of the LLM's on this problem
Please do not. If any HN reader is interested to get an LLM interpretation, that's well within their capability as is, but unless the topic is itself about LLMs (which this is not) then LLM output makes for utterly uninteresting comments. Without prompt and other technical details it's not helpful, and just creates clutter.
When a user posts an LLM-output comment, consider them as just wanting to share it. It may or may not be interesting. I imagine there are many examples of interesting as well as uninteresting (to HN) LLM outputs. Then, use flagging or downvoting to counteract uninteresting comments specifically. (If users widely rate a comment as uninteresting, it will be successfully flagged/downvoted.)
> When a user posts an LLM-output comment, consider them as just wanting to share it
I don’t think it’s in bad faith. It’s just useless and derailing, analogous to the “don't comment about the voting on comments” rule. If something is routinely downvoted, it’s fair to give folks a head up.
I just meant that I think there are many such comments that won't be downvoted, and I think many such comments are not useless and derailing. Just downvote those that are.
People often get confused about negative feedback without specific details. I understand that people just want to share things, but do that with friends. IT's like commenting with a list of Google search results.
Suppose I had not introduced my comment as being primarily generated by an LLM, how would you have policed this or reacted? And to be clear, my comment is doing quite poorly which seems to show the system is working, but I wonder if the summary, judged exclusively on the merits of its content, would have done as poorly? In the absence of my own personal time and alternate summaries in the comments at the time I posted, I found the two paragraphs from this LLM to be pretty damn good.
And yes, I understand the concern about machines batting around ideas with humans, but it seems like up and down votes are working, admittedly to my disadvantage today.
> as long as those records are pertinent to the delinquent taxpayer's situation
This is the summary's critical phrase, and it misses the point entirely. ("Situation" should be "liability," though that itself requires expansion into the difference between investigation, liability and assessment.)
TL; DR the IRS has to provide notice if investigating, but not collecting.
The IRS found Mr. Polselli liable for taxes. It subpoenaed his law firm for "cancelled checks, wire transfer/credit documents, and all other instruments used by Mr. Polselli to pay the firm." They refused, so the IRS subpoenaed the law firm's banks for the same. They co-operated and let the law firm know. (The IRS was investigating whether "money from [Poselli's LLC] was used to pay Mr. Polselli’s account at [the law firm], or to pay others through [the law firm].")
This seems reasonable. You're already on notice they're collecting. The subpoenas are targeted and subject to "a test turning on reasonableness." And there is no gag order.
Note: I am not a lawyer. Don’t take legal advice from internet comments.