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Supreme Court's Decision in Clarke: Implications in Light of New IDR Directives

Related Practice Area: Tax

On June 19, the U.S. Supreme Court, in U.S. v. Clarke, addressed when a taxpayer is entitled to an evidentiary hearing at which IRS officials can be examined on their reasons for issuing a summons. The Court held that while a naked allegation of improper purpose is not sufficient to challenge the issuance of a summons, when “the taxpayer can point to specific facts or circumstances plausibly raising an inference of bad faith,” the taxpayer is entitled to an evidentiary hearing on the question of whether the summons was issued for an improper motive.  While the taxpayer is not required to possess direct evidence of bad faith, the taxpayer “must offer some credible evidence supporting his charge.”  

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