Posted BY: | NwoReport
How much can the IRS snoop on your business without you knowing? A lot more now, after a recent Supreme Court decision that is raising privacy concerns among experts.
Last month, the highest court in the nation unanimously sided with the IRS in Polselli v. Internal Revenue Service, solidifying the tax agency’s ability to ask for documents or financial records of those associated with a delinquent taxpayer without notifying that third party.
The decision reinforced the tax agency’s capacity to get information under wraps, experts say, and gives the IRS too much power and too few limits on how that information can be used.
“I think the concern would be that this allows the IRS to ultimately get access to information that purportedly is in connection with collecting taxes from taxpayer A, but then, inevitably, it is information about taxpayer B that wouldn’t have otherwise been available to the IRS,” Michael Sardar, tax controversy attorney and partner at Kostelanetz LLP, told Yahoo Finance.
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Dry cleaner theory
Justice Ketanji Brown Jackson used the example of a dry cleaner to illustrate the potential extent of this law in the court brief. In summary, she offered the following.
Think about a delinquent taxpayer who frequents a mom-and-pop dry cleaner. If the IRS believes that financial records from the dry cleaner could help in tax collection, the agency could issue summons to the dry cleaner’s bank for years and years of financial statements without even notifying the shop owners.
