In a decision at odds with five other circuit courts, the Tenth Circuit quashed IRS summonses that were issued after the 23-day notice requirement of Section 7609(a)(1) of the Tax Code. As a result, the issue could be ripe for Supreme Court review.

The IRS issued four summonses to banks in the Eastern and Western Districts of Oklahoma for records involving nursing homes owned by Sam Jewell. Because the IRS waited too long to mail the notices to Jewell, he received the notices less than 23 days before the records were to be examined. Alleging inadequate notice, Jewell filed petitions to quash the summonses in the Eastern and Western Districts of Oklahoma

The two courts split on how to interpret the notice requirement, with the Western District agreeing with the IRS and the Eastern District granting Jewell’s petition to quash. Jewell appealed the Western District ruling, and the government appealed the Eastern District ruling.

The Tenth Circuit affirmed the Eastern District of Oklahoma and reversed the ruling of the Western District on Monday.

The court noted that the Tax Code provides that notice of the summons “shall” be given within 23 days before the date of the examination. While the government characterized the delay in mailing as a technical default and that “shall” does not always signify a mandatory intent, the Tenth Circuit said the cases cited “did not disturb the age-old precept that ‘shall’ means ‘shall.’”

“Though we do not lightly create a circuit split, we are obliged to follow Supreme Court precedent, even when it might be viewed as ‘inequitable’ or as ‘form over substance,’” the court stated.

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