On April 9, 2009, two CI agents (they usually travel in pairs for the type of activity I describe) showed up unannounced at Galloway's place of business. Often the first notice a taxpayer has of a pending CI investigation is when the CI agents show up to see if he will submit to an interview. But Galloway apparently was well-counseled or otherwise savvy enough not to appear when requested and had an employee advise the agents to talk to his lawyer. The CI agents thus, having lost the element of surprise, felt it was important to secure the files of the taxpayer's former CPA who had represented him in the audit from which the CI investigation apparently arose. So, they dashed out in handwriting a summons to the CPA and forthwith delivered it to the CPA at his office. Such summonses -- in this case, third party a recordkeeper summons -- cannot require the summonsed party to deliver the summonsed documents immediately.
Now, for some background. The IRS is authorized to issue summonses in IRS criminal and civil investigations. Generally, the notice must be served on the summonsed party and notice given to the taxpayer within 3 days of that service. Further, the return on the service (production of the documents) must not be required until 23 the issuance of the summons in order to permit the taxpayer to bring a proceeding to quash the summons. § 7609(a), here. The notice is not required if the summons is served by a CI agent, except that notice is required if the summons is to a third party recordkeeper. § 7609(c)(2)(E)(ii). The summons to a third party recordkeeper is called a third party recordkeeper summons. Third party recordkeepers include financial institutions, consumer reporting agencies, attorneys, and "accountants." § 7603(b)(2), here. The CPA in Galloway clearly fell within the scope of the third party recordkeeper definition and the summons was thus a third party recordkeeper summons. So, the summons was required to be served on Galloway, in time to permit him to pursue the proceeding to quash the summons.
I noted above that the summons was served on the CPA on April 9, 2009. The opinion says that the CIA agents interviewed the CPA on June 22, 2010, 439 days after service of the summons. During that interview, the CPA showed the CI agents some Quickbook records in his file. The question is whether the CI Agent took delivery of documents earlier than the June 22, 2010 intreview. In a footnote (Slip Op. p. 13, fn. 14), the Court says: "despite the fact that the records in question were obtained by the IRS in 2009," so I think this means that the documents were obtained in the normal course after the summons was served on the CPA.
The brouhaha in the case surrounded the original issuance of the summons. It is unusual to issue a summons "on the fly" so to speak as was done in that case. Indeed, the CI agent had only issued one such handwritten summons in his entire career. Then, when the defense team began inquiring into the summons, the IRS file copy could not be located. Further, there is no mention in the decision that the taxpayer had been served a copy of the third party recordkeeper summons. (The decision does not mention the third party recordkeeper summons (except in a parenthetical explaining a case and, perhaps by inference, from § 7609 and § 7603).) But, the CI agent advised the Government attorney (bold-face supplied by JAT):
Agent Applegate stated he would have sent a copy of the summons to Galloway after serving it on Livsey [the CPA]. (Id. at 5.) He also would have given a copy of the summons to Galloway's attorney after he received a power of attorney signed by Galloway and his attorney. (Id.) Agent Applegate said he would have written a due date on the summons for at least twenty-three days after the date of service to allow Galloway an opportunity to quash the summons. (Id.) Applegate kept all of the summonses issued in the case in a folder in his office. (Id.) However, at the time of the interview, a copy of the summons issued to Livsey could not be found in this paperwork.