The Lawletter Vol 36 No 6
A recent advisory issued by the Chief Counsel's Office of the Internal Revenue Service ("IRS") sets forth the IRS's position on the procedures that its agents must follow in order to obtain a taxpayer's e-mails from his or her Internet service provider ("ISP"). In I.R.S. Chief Counsel Advisory ("I.R.S. C.C.A.") 2011-41-017 (July 8, 2011), the IRS interpreted provisions of the Internal Revenue Code relating to examination of a taxpayer's records, the Stored Communications Act ("SCA"), and a decision by the U.S. Court of Appeals for the Sixth Circuit, and concluded that there are certain restrictions on the ability of an IRS agent to issue a summons to a taxpayer's ISP, seeking the contents of a taxpayer's electronic communications.
The Internal Revenue Code provides that
For the purpose of ascertaining the correctness of any return, making a return where none has been made, [or] determining the liability of any person for any internal revenue tax . . . , the Secretary [of the Treasury] is authorized—
(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry[.]
I.R.C. § 7602(a)(1)–(2). The federal SCA states that
[a] governmental entity may require the disclosure by a provider of electronic communication service of the contents of a wire or electronic communication, that is in electronic storage in an electronic communications system for one hundred and eighty  days or less, only pursuant to a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant procedures) by a court of competent jurisdiction.
18 U.S.C. § 2703(a). The Sixth Circuit, relying on the Fourth Amendment to the U.S. Constitution, recently held that since an Internet "subscriber enjoys a reasonable expectation of privacy in the contents of emails that are stored with, or sent or received through, a commercial ISP[, t]he government may not compel a commercial ISP to turn over the contents of a subscriber's emails without first obtaining a warrant based on probable cause." United States v. Warshak, 631 F.3d 266, 288 (6th Cir. 2010) (emphasis added) (citations omitted) (internal quotation marks omitted), reh'g and reh'g en banc denied, 2011 U.S. App. LEXIS 5007 (6th Cir. Mar. 7, 2011). The Warshak court also ruled that "to the extent that the SCA purports to permit the government to obtain such emails warrantlessly, the SCA is unconstitutional." Id. However, the Warshak court applied the so-called "good-faith reliance by an officer" exception to the exclusionary rule and determined that the IRS had not violated the taxpayer's constitutional rights by obtaining the e-mails at issue in that case. Id. (citing Illinois v. Krull, 480 U.S. 340, 349-50 (1987)).
In I.R.S. C.C.A. 2011-41-017, the IRS Chief Counsel advised that since an agent must obtain a warrant in order to gain access to the "contents" of a taxpayer's electronic communications that are less than 180 days old from the taxpayer's ISP, the summons issued by the IRS to an ISP in that case should have been withdrawn. I.R.S. C.C.A. 2011-41-017 concl. 1. However, the Chief Counsel also advised that with respect to the "contents" of a taxpayer's e-mails or other electronic communications that are more than 180 days old, there is a "warrantless" administrative summons procedure described in 18 U.S.C. § 2703(c)(2) that can be followed by an IRS agent in order to obtain such communications from the taxpayer's ISP. Id. Furthermore, the Chief Counsel noted that various federal courts "have recognized that a warrant is not required by the Constitution for a government entity to require an electronic communications provider to produce a customer's non‑content information regarding an electronic communication." Id. concl. 3 (emphasis added). In addition, the Chief Counsel advised as follows:
Pursuant to 18 U.S.C. § 2703(c)(2)(F), the Service may continue to use an administrative summons upon an ISP (with no "notice" to the affected customer) to request, inter alia, the "means and source of payment" for the ISP's electronic communication services to the customer, "including any credit card or bank account number." Through follow‑up requests based on this ISP customer payment information, if sought in a new summons, the revenue officer may indirectly obtain some of the potential collection asset leads he is interested in pursuing further in this case.
The above-described rulings by the IRS provide up-to-date guidance as to the IRS's position on the procedures that an IRS agent must follow in order to review the content of a taxpayer's e-mails or other electronic communications. However, it should be noted that under I.R.C. § 6110(j)(3), the Chief Counsel's Advisory "may not be used or cited as precedent." For additional discussion of I.R.S. C.C.A. 2011-41-017 and the issues surrounding the IRS's right to review a taxpayer's e-mails, see Chief Counsel Nixes IRS Agent's Attempt to Get Taxpayer Emails from Internet Service Provider, 57 Fed. Taxes Weekly Alert (RIA) art. 9 (Oct. 20, 2011).