Baker Hostetler income tax attorney Stuart Bassin commented on the recent IRS petition seeking leave to serve a section 7609(f) John Doe summons on the California State Board of Equalization, which the IRS had hoped would lead to information on suspected nonfiling of federal gift tax returns.
The U.S. District Court for the Eastern District of California denied the summons Petition in part because the IRS did not adequately show that the requested information was not readily available from other sources.
Bassin told Tax Analysts that the court found fault with the IRS petition because the government was casting “too wide of a net.” Courts will grant a request for a John Doe summons, but they do so only after scrutinizing the summons, he said.
“The problem here lies in the fact that the IRS is overreaching. There is no showing that the summons is targeted to catch lawbreakers, and most of the taxpayers whose information is being sought would appear to be in full compliance with the law,” Bassin said. “The IRS appears to be engaging in an unsupported fishing expedition, and that bothers me.”