Comments on original source tax material selected for practical utility, matter for reflection and humor. Material is imported from my original blog Passive Activities and Other Oxymorons and my current primary blog Passive Activities on forbes.com. For the latest material go to forbes.com.
The transfer of information to this blog did not go nearly as quickly as I hoped, but it should accelerate soon.
In the meantime I am open to guest posts.
The IRS Chief Counsel has advised an agent that under current law it is not worth attempting to enforce a summons against an Internet Service Provider to turn over the contents of e-mails in a collections case. Here is the background:
The Service is seeking to collect more than a quarter million dollars assessed against an apparent shell entity taxpayer which received largetax refunds, arising from improperly claimed tax credits. The revenue officer is seeking to identify sources from which collection may be made, including from the assets of a suspected alter ego of the taxpayer. To learn more about the suspected alter ego’s finances, specifically to whom and where the suspected alter ego may have transferred funds, the revenue officer served a summons upon an ISP headquartered within the Ninth Circuit. The summons requests the contents of the suspected alter ego’s electronic messages and other communications for a period exceeding two years, through the date of the ISP’s compliance with the summons. The revenue officer indicates is particularly interested in receiving the most recent e-mails, those the suspected alter ego sent or received within the last 180 days before the ISP complies with the summons. In response to the summons, the ISP first sent the revenue officer a letter, informing him of some of the relevant SCA limitations contained in 18 U.S.C. §§ 2703(a)-(b) and 2705.
In a subsequent conversation, a representative of the ISP informed Counsel that the ISP would not voluntarily comply with the summons, in large part due to the recent Warshak decision by the Sixth Circuit. You requested our advice on how to proceed with respect to the summons.
The Chief Cousel advised the agent to abandon the request that had been made to the ISP:
….the summons the Service issued to the ISP should be withdrawn for violating the SCA. In particular, the summons requests from a provider of electronic communicationservices (the ISP) the contents of electronic communications (including all e-mails) for an ISP customer that have been in electronic storage by the ISP for the 180 days preceding the Service’s issuance of the administrative summons and prospectively, after the date of issuance until the date the ISP complies with the summons, in violation of 18 U.S.C. § 2703(a). This section of the SCA provides, in pertinent part, that a governmental entity may require an ISP or other provider of electronic communications services to disclose the contents of an electronic communication the ISP has maintained in electronic storage for 180 days or less, only pursuant to a warrant issued under the procedures described in the Federal Rules of Criminal Procedure by a court of competent jurisdiction. The procedures described in Federal Rule of Criminal Procedure 41 for a warrant to seek electronically stored information were not followed by the revenue officer in this case; further, the revenue officer would not be eligible to seek a warrant for the civil (as opposed to criminal) tax law provisions he is engaged in seeking to enforce in this case.
It is worth noting that the taxpayer’s privacy, here, depended on a decision made by the ISP. This was not a criminal case and the agent was just seeking leads to find assets. If the agent had been successful there might not have been a forum in which the legality of the search could have been challenged by the taxpayer.
The Chief Cousel also advised the agent against other attempts to obtain e-mail contents. There was a fairly extensive discussion of the 2010 Sixth Circuit decision – United States v. Warshak.
The agent was, however advised, that a summons for non-content information would be acceptable:
…the current controversy concerning the constitutionality under the Fourth Amendment of the SCA permitting governmental entities to obtain the “content” of more than 180-day old customer e-mails and other electronic communications from an ISP by means short of a court-approved warrant, upon a showing of “probable cause,” should not affect the Service’s ability to continue to use an administrative summons to obtain from an ISP the non-content records concerning a customer’s electronic communication services
Non-content information includes the email addresses that the account has been communicating with. It also includes the means of payment for the ISP services, which could provide leads to other assets.