The IRS Can Summons California For Property Transfer Records

As noted by Janet Novack at, Judge England of the District Court for the Eastern District of California last week issued an order permitting the IRS to serve a “John Doe” summons on the California State Board of Equalization.  The summons seeks the names of residents who transferred property to relatives for little or no considerations.  The IRS hopes that the information it receives will identify individuals who should have, but did not, file Forms 709 – Gift Tax Returns.

According to Ms. Novack’s post, the IRS’ efforts involving information obtained from other states has yielded examinations of 658 taxpayers, of which 238 should have, but did not, file a Form 709 for their respective transfers.  Of those 238 non-filers, 20 have been assessed their tax liabilities.

As we noted in our own discussion of this topic last spring, state agencies are not the only non-tax source of information that the IRS can use to identify potential tax liabilities.  In the corporate context, revenue agents will mine press releases, websites, SEC filings, and many other sources to identify information that may conflict with what a company says in the midst of an examination.

The start of a new year is as good a time as any to think about coordination among corporate departments and to consider how statements by one part of a company may affect its tax positions (or other legal exposures for that matter).  Often times, the IRS doesn’t need a summons (or an IDR, for that matter) to gather useful information.

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