25.5.8. Use of Summons Special Applications

(1) This IRM contains guidance on the restrictions associated with an investigation of political organization finances and provides instructions for the use of summons authority to facilitate such investigations.

(2) This IRM also contains information regarding the restrictions on church tax inquiries, church tax examinations and guidance on issuing church summonses as follows:

• Restrictions on church tax inquiries and examinations

• Situations when IRC 7611 procedures are not applicable

• Collection and TEGE requirements before serving a church summons

• Church tax inquiries

• Church tax examinations

• IRC 7611 definitions

• Issuing church summonses, and

• Guidance for criminal investigation

(3) Foreign countries with tax treaties or Tax Information Exchange Agreements (TIEAs) with the United States may request information located within the United States in furtherance of a foreign tax investigation or procedure. Some such information may be obtainable through a summons issued by the IRS. The IRS is tasked with this activity as is discussed in IRM 25.5.8.4, Summons for Information Pursuant to Tax Treaties. Similarly, the IRS may request information located outside the United States in furtherance of an IRS tax investigation or procedure, where the relevant foreign country has a tax treaty or TIEA with the United States. See IRM 25.5.8.5, Records Outside the United States.

(1) IRC 7602 provides the IRS with summons authority.

(2) IRC 7609 provides the IRS with special procedures for third-party summonses.

(3) Delegation Order 25-1 provides the levels of authority delegated to various IRS employees to approve and perform activities concerning summonses. See IRM 1.2.2, Servicewide Delegations of Authority.

(4) IRC 7611 provides restrictions on church tax inquiries and church tax examinations.

(5) Delegation Order 7-3 (Rev 2) provides the level of authority to begin a church tax inquiry and/or a church tax examination. See IRM 1.2.2, Servicewide Delegations of Authority.

(1) Paragraph (9) in Delegation Order 25-1 lists the employees authorized to issue, serve and enforce summonses. See IRM 1.2.2, Servicewide Delegations of Authority.

(2) The approval of the issuing officer’s manager, or any supervisory official above that level, is required on a summons to a third party witness, except that such approval is not required for a third party summons issued by a special agent. See paragraph (8) of Delegation Order 25-1 in IRM 1.2.2, Servicewide Delegations of Authority. This approval is evidenced by the signature of the authorizing official on the summons, or by a statement on the summons, signed by the issuing officer, that prior authorization to issue the summons has been obtained and stating the name and title of the authorizing official and the date of authorization.

(3) Additional procedures for the approval and issuance of summonses concerning churches or the finances of political organizations, summonses for records located outside the United States, and summonses pursuant to tax treaties are provided throughout this section.

(4) Delegation Order 7-3 (Rev 2) delegates the authority to begin a church tax inquiry under the requirements of IRC 7611(a) and to begin a church tax examination under IRC 7611(b) to the Commissioner, Tax Exempt and Government Entities (TEGE). In situations where a church tax inquiry or examination will begin within the applicable 5 year period described in IRC 7611(f) and approval is required under that subsection, the Deputy Commissioner for Services and Enforcement is the designated official with approval authority. See IRM 1.2.2, Servicewide Delegations of Authority.

(1) In general, the IRS should issue summonses only when the information is not already in the IRS’s possession and the taxpayer (or other witness) will not produce the desired records or other information voluntarily. A summons is specific to each case. There are no program reports that track summonses to third-party witnesses.

(2) All IRS employees may use Form 2039, Summons. When circumstances dictate, Collection employees use Form 6637, Summons Collection Information Statement, Form 6638, Summons Income Tax Return and Form 6639, Financial Records Summons. See IRM 25.5.2.2.1, Description of Summons, for additional information about summons forms.

(3) When it has been determined that a summons is required in association with any of the topics discussed in this section, the IRS employee should review the pertinent sections of this IRM and obtain the appropriate approval for the summons being issued.

(1) The IRS employee who issued the summons keeps a copy of the original summons, which is Page 1 of the summons labeled "Original". The original summons is needed when referring a summons for enforcement. See IRM 25.5.10, Enforcement of Summons.

(2) A summons is specific to each case and it is incumbent upon the IRS employee who issued the summons to maintain the proper approval records associated with each summons. All approved summonses, approval memoranda and counsel review documents, where applicable, should be maintained with the summons in the administrative case file.

(1) The table below lists commonly used acronyms and their definitions.Acronyms

(2) Refer to IRM 25.5.8.3.4, IRC 7611 Definitions, for additional definitions applicable to this section.

(3) Definitions pertaining to summonses served on third party witnesses can be found in IRM 25.5.6.3, Definitions.

(1) IRM 25.5, Summons, provides guidelines for all IRS functions in one multifunctional handbook. The sections are:

• IRM 25.5.1, Introduction

• IRM 25.5.2, Preparation

• IRM 25.5.3, Procedures

• IRM 25.5.4, Examination of Books and Witnesses

• IRM 25.5.5, Summons for Taxpayer Records and Testimony

• IRM 25.5.6, Summonses on Third Party Witnesses

• IRM 25.5.7, Special Procedures for John Doe Summonses

• IRM 25.5.8, Use of Summons Special Applications

• IRM 25.5.9, Fees and Costs for Summoned Witnesses

• IRM 25.5.10, Enforcement of Summons

(2) The basic legal concepts governing the use and enforcement of administrative summonses can be found in IRM 5.17.6, Legal Reference Guide for Revenue Officers, Summonses.

(3) The Taxpayer Bill of Rights (TBOR) lists rights that already exist in the tax code, putting them in simple language and grouping them into 10 broad categories. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights and Policy Statement 1-236 in IRM 1.2.1, Servicewide Policy Statements.

(4) Additional summons guidance can be found on the Summons Knowledge Base, https://portal.ds.irsnet.gov/sites/vl053/pages/default.aspx

(1) If conformity with IRM 25.5.8 or an exception to the provisions of IRM 25.5.8 is desired, a memorandum request with a copy of the proposed summons will be submitted by the Special Agent in Charge, Criminal Investigation (CI), to the Director, Field Operations, CI, for prior written approval. If time is of the essence, a telephonic request can be made to the Director, Field Operations, CI, followed immediately by a memorandum.

(2) If there is a question as to the legal sufficiency of the proposed summons and time permits, refer the summons to the appropriate Area Counsel office for a preliminary legal review prior to referral of the request to Headquarters for approval.

(1) A summons may be issued to obtain testimony or documents concerning a political organization (whether from the organization itself or from a recordkeeper, such as a bank), if needed, to determine the exempt status or tax liability of an organization under examination. Refer toIRM 25.5.2, Exhibit 25.5.2-1, for summons preparation.

(2) The TEGE Area Manager must authorize the summons before it is issued. The signature must be on the original and all copies of the summons. Official electronic signatures are acceptable. The IRS employee should:

1. Prepare a detailed memo to the Area Manager, explaining the need for the summons.

2. Retain a copy of such memo in the examination administrative file.

3. Refer any questions about the legal sufficiency of the proposed summons to TEGEDC Area Counsel for a preliminary legal review before forwarding it to the Area Manager, for approval.

(3) In situations requiring expeditious handling, the Area Manager may give oral authorization to issue a summons to a political organization. A statement signed by the issuing IRS employee, on the original and all copies of the summons, must specify that the IRS employee had prior authorization by the Area Manager, and include the date authorized. This statement may be written manually or electronically in the "Signature of Approving Officer" blank space on the summons. Such authorization should be confirmed by the Area Manager in writing as soon as possible after the summons is issued.

(1) IRC 7611 specifically excludes certain IRS inquiries to churches from the restrictions it imposes. See IRM 4.75.39.4, Situations in Which IRC 7611 Procedures Do Not Apply, for a description of these exclusions.

(2) The restrictions of IRC 7611 do not apply to routine requests. Routine requests are requests for information the IRS needs to administer the Internal Revenue Code apart from requests for information needed to determine an organization’s exempt status or to assess tax. Routine requests include (but are not limited to) questions regarding:

1. The filing or failure to file any tax or information return by the church.

2. Compliance with income tax or FICA withholding responsibilities.

3. Supplemental information needed to complete the mechanical processing of any incomplete or incorrect return filed by a church.

4. Information needed to process letter ruling requests or applications for exemption.

5. Information necessary to process and periodically update registrations for tax-free transactions (excise tax), elections for exemptions from windfall profits tax, or employment tax exemption requests by a church.

6. Information identifying a church that will be used by the IRS to update its Exempt Organizations Select Check, an on-line search tool that allows users to check certain information about the federal tax statuses and filings of tax-exempt organizations, and other computer files, and

7. Confirmation that a specific business is or is not owned or operated by a church.

(3) The restrictions of IRC 7611 must be observed if an organization claims to be a church. When there is reason to believe an organization’s claim to be a church is frivolous, TEGEDC Area Counsel’s opinion must be secured before a determination is made that IRC 7611 is not applicable.

(4) IRC 7611 applies to schools operated as part of a church or convention or association of churches. However, IRC 7611 does not apply to a separately organized or incorporated church-supported school, or other organization incorporated separately from the church.

(5) The provisions ofIRC 7611 are not applicable to summonses issued to aid in the collection of liabilities already assessed.

(1) The reasonable belief and notice requirements of IRC 7611 must be satisfied before a church tax inquiry can begin. There must be a reasonable belief by the designated official that the organization:

1. May not qualify for exemption under IRC 501(a), or

2. May not be described as a church under IRC 509(a)(1) andIRC 170(b)(1)(A)(i), or

3. May be carrying on an unrelated trade or business within the meaning of IRC 513 or may be otherwise engaged in activities subject to taxation under the Internal Revenue Code, or

4. May have engaged in an excess benefit transaction under IRC 4958.

(2) A church tax inquiry is needed prior to issuance of a summons to a church. See IRM 4.75.39.7, Church Tax Inquiry.

(3) If a church fails to respond to the inquiry notice, see IRM 4.75.39.7.7, Follow-up on Church Tax Inquiry Notice and follow the procedures in IRM 25.5.8, Church Tax Examination, before serving a summons on a church.

(4) Refer to IRM 25.5.8, Church Tax Examination, if the final determination will result in the assessment of additional tax (other than by voluntary filing).

(1) The IRS employee should initiate steps to begin a church tax examination if the church does not respond to the church tax inquiry or the response does not resolve the IRS’s concerns. Notice of examination and opportunity for conference requirements of IRC 7611 must be satisfied prior to the examination. See IRM 4.75.39.8, Church Tax Examination.

(2) The scope of a church tax examination is limited to determine:

1. The initial or continuing qualification of the organization under IRC 501(c)(3), including classification as a church under IRC 509(a)(1) and IRC 170(b)(1)(A)(i).

2. The amount, if any, of tax due to unrelated business activity within the meaning of IRC 513 or other activities that may be subject to tax, or

3. The amount of any IRC 4958 tax from a disqualified person with respect to a transaction involving a church.

(3) A church tax examination can only begin if certain notice of examination and opportunity for conference requirements, set forth in IRC 7611, are first satisfied. Refer to IRM 4.75.39.8, Church Tax Examination, for church tax examination procedures.

(4) To initiate a Notice of Examination, the IRS employee will prepare a draft notice of examination for the signature of the designated official. See IRM 4.75.39.8.1, Preparing the Notice of Examination. Before sending the Notice of Examination to the designated official for approval, the IRS employee must forward the entire file to TEGEDC Area Counsel through the Area Manager. Counsel will provide an opinion regarding the appropriateness of the examination. See IRM 4.75.39.8.2, Area Counsel Pre-Issuance Review. After Counsel approves the action and the designated official signs the church tax examination letter, the notice may be issued. Refer to IRM 4.75.39.8.3, Issuance of Notice of Examination.

(5) A summons may be issued if the church does not provide the information requested during the examination. The IRS employee should prepare a summons and forward it to TEGEDC Area Counsel for review as soon as circumstances indicate that the church will not voluntarily provide the information requested. Refer to IRM 25.5.8, Issuing Church Summonses and IRM 4.75.39.10, Summons.

(6) If the final determination results in the assessment of additional tax (other than by voluntary filing), refer the proposed assessment to TEGEDC Area Counsel for approval. Counsel must furnish written approval that the IRS has substantially complied with the provisions of IRC 7611. See IRM 4.75.39.11, Closing Letters, Report of Examination and Mandatory Review Requirements. Attach Counsel’s memorandum to a return prepared under IRC 6020(b) when submitted for assessment.

(7) If the IRS has not substantially complied with the church tax inquiry and examination procedures, a summons enforcement proceeding brought by the IRS to gain access to church records may be stayed by the Court until the IRS complies with IRC 7611 procedures.

(1) The term church includes:

1. Any organization claiming to be a church, and/or

2. Any convention or association of churches.

(2) A church tax inquiry is any inquiry to a church (other than an examination) to serve as a determining basis for whether a church is:

1. Tax exempt under IRC 501(a) by reason of its status as a church, or

2. Carrying on an unrelated trade or business (within the meaning of IRC 513), or

3. Engaged in activities which may be subject to taxation.

(3) A church tax examination is any examination of church records or the religious activities of any church to determine if a church is:

1. Tax exempt under IRC 501(a) by reason of its status as a church, or

2. Carrying on an unrelated trade or business (within the meaning of IRC 513), or

3. Engaged in activities which may be subject to taxation.

(4) Church records include:

1. All regularly kept church corporate and financial records;

2. Corporate minute books, contributor and membership lists, and church books of account, and;

3. Private correspondence between a church and its members that is in the possession of the church.

(1) Comply with the requirements of IRC 7611 before issuing a summons to a church to secure:

1. Information requested during the examination which the church refuses to provide.

2. Information about a church’s federal filing requirement, and

3. Delinquent returns.

Note: IRC 7611 is not applicable to routine requests as described in IRM 25.5.8.3 or when the purpose of the summons is to secure information to aid in the collection of liabilities already assessed.

(2) A church summons must be prepared in accordance with procedures in IRM 25.5.2, Summons, Preparation and IRM 4.75.39.10, Summons.

(3) Modify the preprinted description of purpose on the summons form to reflect the specific purpose of the church summons. Contact TEGEDC Area Counsel for assistance in drafting the appropriate language. TEGEDC Area Counsel must review the proposed summons before issuance.

(4) Refer the summons to TEGEDC Area Counsel for enforcement if a church does not comply with the summons. After reviewing the summons enforcement request and preparing the suit letter, TEGEDC Area Counsel will refer the matter to the National Office for review pursuant to CCDM 34.6.1.3, Preparation of Suit Letters.

(5) If the IRS has not substantially complied with the church examination procedures, a summons enforcement proceeding brought by the IRS to gain access to church records may be stayed by the Court until the IRS complies with IRC 7611 procedures.