IRS Wants, IRS Doesn’t Get — The Legal Limits on IRS Authority
What This Video Covers
The IRS has extraordinary investigative authority. It can examine your returns, demand your records, summon you to testify and, in certain circumstances, seize your property without first going to court. No other federal agency has quite the same combination of reach and speed.
Key topics addressed include:
- The legal boundaries of IRS examination authority under IRC § 7602
- Attorney-Client Privilege — what it covers, when it applies and how it is waived
- The Tax Practitioner Privilege under IRC § 7525 and its significant limitations
- Work Product Doctrine — protecting your attorney’s litigation strategy and analysis
- Fifth Amendment protections in tax examinations and when they can be invoked
- Scope limitations on IRS audits — what they are allowed to examine and what they are not
- How to challenge an IRS summons in federal court
- The Taxpayer Bill of Rights and the practical protections it provides
- When “cooperation” crosses the line into self-harm
Why This Matters
The American tax system gives the IRS considerable power. But it also gives taxpayers a set of legal shields — some constitutional, some statutory, some common law — that limit what the government can compel. The problem is that these shields only work if you know they exist and if you invoke them properly. They are not automatic. The IRS will not remind you that you have the right to remain silent. It will not tell you that the document it just asked for is protected by privilege. That is your attorney’s job.
About the Presenter
Benjamin A. Goldburd, Esq.
Goldburd McCone LLP
Benjamin brings focused experience in IRS collection defense, including lien and levy disputes, CDP hearings and negotiated resolutions. Our team’s combined backgrounds in accounting, business and wealth management ensure that enforcement responses account for the full scope of a client’s financial position.
Frequently Asked Questions About IRS Authority
Can the IRS really take whatever information it wants?
No. The IRS has broad examination authority under IRC § 7602, but that authority has defined boundaries. The IRS can examine books, records, papers and other data relevant to determining the correctness of a return or determining a tax liability. The operative word is “relevant.” The IRS cannot conduct fishing expeditions, demand information unrelated to the tax years or issues under examination, or compel production of privileged communications.
Can I invoke the Fifth Amendment during an IRS audit?
You can invoke the Fifth Amendment to decline to answer questions if your answers would tend to incriminate you. This is a constitutional right that applies in any government proceeding, including a civil IRS examination. However, the Fifth Amendment generally protects testimonial evidence — what you say — not documentary evidence. Existing records like bank statements, contracts, invoices and ledgers can typically be subpoenaed regardless of whether they contain incriminating information. There are exceptions under the “act of production” doctrine, but they are narrow and fact-specific. If you believe you have Fifth Amendment exposure in a tax matter, you need an attorney advising you before you say or produce anything.
How do I challenge an IRS summons?
When the IRS issues a summons and you believe it is improper — because it seeks privileged material, because it is overbroad, because the IRS has no legitimate purpose, or because the proper administrative steps were not followed — you can file a motion to quash in federal district court. You can also intervene in an enforcement proceeding if the IRS files one after you decline to comply. The legal standard comes from United States v. Powell, which requires the IRS to show a legitimate purpose, relevance, that it does not already possess the information, and that it followed required procedures.