Taxpayer’s Defenses

It is in the context of summons and subpoenas that contestable issues occur promoting the need for the government in its supervisory role to utilize what is referred to as a Formal Document Request procedure and the use of treaty agreements. In understanding Formal Document Requests and treaty agreements, it is advantageous to first understand the glitches and defenses to the process available in the international context regarding summons and subpoenas.

There are two (2) basic taxpayer’s defenses asserted in resistance to summons and subpoenas. One such defense is that the taxpayer lacks the necessary control of the information sought to verify in satisfaction of the reporting requirements. The second basic defense is that to comply with the issued summons or subpoena would violate blocking statutes of a particular country. It is the success of the taxpayer with these basic defenses that create the necessity of the government to utilize Formal Document Requests and treaty agreements.

The crux of a taxpayer’s posture in its effort to avoid compliance with a summons or a subpoena is sometimes based on the lack of United States or other country’s jurisdiction, premised upon a lack of due process. The issue is raised as to the question of proper in personam jurisdiction in the service of summons and subpoenas on a foreign taxpayer. In determining a due process issue, the government is asserting judicial jurisdiction, in personam, based on due process of law. In this jurisdictional sense, due process arises when a statutory provision or constitutional authorization purports to provide a United States court a jurisdictional basis, and the assertion complies with due process notions. Read More