Collapse to view only § 70.28 - Summonses excepted from 26 U.S.C. 7609 procedures.
Examination and Inspection
- SECTION § 70.21 - Canvass for taxable persons and objects.
- SECTION § 70.22 - Examination of books and witnesses.
- SECTION § 70.23 - Service of summonses.
- SECTION § 70.24 - Enforcement of summonses.
- SECTION § 70.25 - Special procedures for third-party summonses.
- SECTION § 70.26 - Third-party recordkeepers.
- SECTION § 70.27 - Right to intervene; right to institute a proceeding to quash.
- SECTION § 70.28 - Summonses excepted from 26 U.S.C. 7609 procedures.
- SECTION § 70.29 - Suspension of statutes of limitations.
- SECTION § 70.30 - Time and place of examination.
- SECTION § 70.31 - Entry of premises for examination of taxable objects.
- SECTION § 70.32 - Examination of records and objects.
- SECTION § 70.33 - Authority of enforcement officers of the Bureau.
- SECTION § 70.34 - Listing by appropriate TTB officers of taxable objects owned by nonresidents.
General Powers and Duties
Examination and Inspection
§ 70.21 - Canvass for taxable persons and objects.
Each appropriate TTB officer shall, to the extent deemed practicable, cause officers or employees under the appropriate TTB officer's supervision and control to proceed, from time to time, and inquire after and concerning all persons therein who may be liable to pay any tax, imposed under provisions of 26 U.S.C. enforced and administered by the Bureau, and all persons owning or having the care and management of any objects with respect to which such tax is imposed.
§ 70.22 - Examination of books and witnesses.
(a) In general. For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any tax (including any interest, additional amount, addition to the tax, or civil penalty) imposed under provisions of the IRC enforced and administered by the Bureau or the liability at law or in equity of any transferee or fiduciary of any person in respect of any such tax, or collecting any such liability, or inquiring into any offense connected with the administration or enforcement of the internal revenue laws that are administered and enforced by the Bureau, any appropriate TTB officer may examine any books, papers, records or other data which may be relevant or material to such inquiry; and take such testimony of the person concerned, under oath, as may be relevant to such inquiry.
(b) Summonses. For the purposes described in paragraph (a) of this section the appropriate TTB officers are authorized 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 accounts containing entries relating to the business of the person liable for tax or required to perform the act, or any person deemed proper, to appear before a designated officer or employee of the Bureau 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; and take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry. Such TTB officer may designate an appropriate TTB officer as the individual before whom a person summoned pursuant to 26 U.S.C. 7602 shall appear. Any such officer, when so designated in a summons, is authorized to take testimony under oath of the person summoned and to receive and examine books, papers, records, or other data produced in compliance with the summons. The authority to issue a summons may not be redelegated. See § 70.302 of this part for rules concerning payments to certain persons who are summoned to give information to the Bureau under 26 U.S.C. 7602 and this section.
§ 70.23 - Service of summonses.
(a) In general. A summons issued under 26 U.S.C. 7602 shall be served by an attested copy delivered in hand to the person to whom it is directed, or left at his last and usual place of abode. The certificate of service signed by the person serving the summons shall be evidence of the facts it states on the hearing of an application for the enforcement of the summons. When the summons requires the production of books, papers, records, or other data, it shall be sufficient if such books, papers, records, or other data are described with reasonable certainty.
(b) Persons who may serve summonses. Any appropriate TTB officer may serve a summons issued under 26 U.S.C. 7602.
§ 70.24 - Enforcement of summonses.
(a) In general. Whenever any person summoned under 26 U.S.C. 7602 neglects or refuses to obey such summons, or to produce books, papers, records, or other data, or to give testimony, as required, application may be made to the judge of the district court or to a U.S. magistrate for the district within which the person so summoned resides or is found for an attachment against him as for a contempt.
(b) Persons who may apply for an attachment. Appropriate TTB officers are authorized to apply for an attachment as provided in paragraph (a) of this section. The authority to apply for an attachment for the enforcement of a summons may not be redelegated.
§ 70.25 - Special procedures for third-party summonses.
(a) When the Bureau summons the records of persons defined by 26 U.S.C. 7609(a)(3) as “third-party recordkeepers”, the person about whom information is being gathered must be notified in advance, except when:
(1) The summons is served on the person about whom information is being gathered, or any officer or employee of such person, or
(2) The summons is served to determine whether or not records of the business transactions or affairs of an identified person have been made or kept, or
(3) The summons does not identify the person with respect to whose liability the summons is issued (a “John Doe” summons issued under the provisions of 26 U.S.C. 7609(f)), or
(4) The appropriate TTB officer petitions, and the court determines, on the basis of the facts and circumstances alleged, that there is reasonable cause to believe the giving of notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information from other persons through intimidation, bribery, or collusion, or to flee to avoid prosecution, testifying or production of records.
(b) Within 3 days of the day on which the summons was served, the notice required by paragraph (a) of this section shall be served upon the person entitled to notice, or mailed by certified or registered mail to the last known address of such person, or, in the absence of a last known address, left with the person summoned. No examination of any records required to be produced under a summons as to which notice is required under paragraph (a) of this section may be made:
(1) Before the close of the 23rd day after the day notice with respect to the summons is given in the manner provided in this paragraph, or
(2) Where a proceeding under paragraph (c) of this section was begun within the 20-day period referred to in that paragraph and the requirements of paragraph (c) of this section have been met, expect in accordance with an order of the court having jurisdiction of such proceeding or with the consent of the person beginning the proceeding to quash.
(c) If the person about whom information is being gathered has been given notice, that person has the right to institute, until and including the 20th day following the day such notice was served on or mailed, by certified or registered mail, to such notified person, a proceeding to quash the summons. During the time the validity of the summons is being litigated, the statutes of limitation are suspended under 26 U.S.C. 7609(e). Title 26 U.S.C. 7609 does not restrict the authority under 26 U.S.C. 7602 (or under any other provision of law) to examine records and witnesses without serving a summons and without giving notice of an examination.
§ 70.26 - Third-party recordkeepers.
(a) Definitions—(1) Accountant. A person is an “accountant” under 26 U.S.C. 7609(a)(3)(F) for purposes of determining whether that person is a third-party recordkeeper if the person is registered, licensed, or certified under State law as an accountant.
(2) Attorney. A person is an “attorney” under 26 U.S.C. 7609(a)(3)(E) for purposes of determining whether that person is a third-party recordkeeper if the person is admitted to the bar of a State or the District of Columbia.
(3) Credit cards—(i) Person extending credit through credit cards. The term “person extending credit through credit cards or similar devices” under 26 U.S.C. 7609(a)(3)(C) generally includes any person who issues a credit card. It does not include a seller of goods or services that honors credit cards issued by other parties but does not extend credit on the basis of credit cards or similar devices issued by itself.
(ii) [Reserved]
(iii) Similar devices to credit cards. An object is a “similar device” to a credit card under 26 U.S.C. 7609(a)(3)(C) only if it is physical in nature, such as a coupon book, a charge plate, or a letter of credit. Thus, a person who extends credit by requiring credit customers to sign sales slips without requiring use of physical objects issued by that person is not a third-party recordkeeper under 26 U.S.C. 7609(a)(3)(C).
(b) When third-party recordkeeper status arises. A person is a “third-party recordkeeper” with respect to a given set of records only if the person made or kept the records in the person's capacity as a third-party recordkeeper. Thus, for instance, an accountant is not a third-party recordkeeper (by reason of being an accountant) with respect to the accountant's records of a sale of property by the accountant to another person. Similarly, a credit card issuer is not a third-party recordkeeper (by reason of being a person extending credit through the use of credit cards or similar devices) with respect to:
(1) Records relating to noncredit card transactions, such as a cash sale by the issuer to a holder of the issuer's credit card; or
(2) Records relating to transactions involving the use of another issuer's credit card.
(c) Duty of third-party recordkeeper—(1) In General. Upon receipt of a summons, the third-party recordkeeper (“recordkeeper”) must begin to assemble the summoned records. The recordkeeper must be prepared to produce the summoned records on the date which the summons states the records are to be examined regardless of the institution or anticipated institution of a proceeding to quash or the recordkeeper's intervention (as allowed under 26 U.S.C. 7609(a)(3)(C)) into a proceeding to quash.
(2) Disclosing recordkeepers not liable—(i) In general. A recordkeeper, or an agent or employee thereof, who makes a disclosure of records as required by this section, in good faith reliance on the “Certificate of the Secretary” (as defined in paragraph (c)(2)(ii) of this section) or an order of a court requiring production of records, will not be liable for such disclosure to any customer, or to any party with respect to whose tax liability the summons was issued, or to any other person.
(ii) Certificate of the Secretary. The appropriate TTB officer may issue to the recordkeeper a “Certificate of the Secretary” stating both:
(A) That the 20-day period, within which a notified person may institute a proceeding to quash the summons has expired; and
(B) That no proceeding has been properly instituted within that period.
The appropriate TTB officer may also issue a “Certificate of the Secretary” to the recordkeeper if the taxpayer, with respect to whose tax liability the summons was issued, expressly consents to the examination of the records summoned.(3) Reimbursement of costs. Recordkeepers may be entitled to reimbursement of their costs of assembling and preparing to produce summoned records, to the extent allowed by 26 U.S.C. 7610, even if the summons ultimately is not enforced.
§ 70.27 - Right to intervene; right to institute a proceeding to quash.
(a) Notified person. Under 26 U.S.C. 7609(a), the Bureau must give a notice of summons to any person, other than the person summoned, who is identified in the description of the books and records contained in the summons in order that such person may contest the right of the Bureau to examine the summoned records by instituting a proceeding to quash the summons. Thus, if the Bureau issues a summons to a bank requesting checking account records of more than one person all of whom are identified in the description of the records contained in the summons, then all such persons are notified persons entitled to notice under 26 U.S.C. 7609(a). Therefore, if the Bureau requests the records of a joint bank account of A and B, both of whom are named in the summons, then both A and B are notified persons entitled to notice under 26 U.S.C. 7609(a).
(b) Right to institute a proceeding to quash—(1) In general. Title 26 U.S.C. 7609(b) grants a notified person the right to institute a proceeding to quash the summons in the United States district court for the district within which the person summoned resides or is found. Jurisdiction of the court is based on 26 U.S.C. 7609(b). The act of filing a petition in district court does not in and of itself institute a proceeding to quash under 26 U.S.C. 7609(b)(2). Rather, the filing of the petition must be coupled with notice as required by 26 U.S.C. 7609(b)(2)(B).
(2) Elements of institution of a proceeding to quash. In order to institute a proceeding to quash a summons, the notified person (or the notified person's agent, nominee, or other person acting under the direction or control of the notified person) must, not later than the 20th day following the day the notice of the summons was served on or mailed to such notified person:
(i) File a petition to quash in the name of the notified person in a district court having jurisdiction.
(ii) Notify the Bureau by sending a copy of that petition by registered or certified mail to the Bureau employee and office designated to receive the copy in the notice of summons that was given to the notified person, and
(iii) Notify the recordkeeper by sending to that recordkeeper by registered or certified mail a copy of the petition.
Failure to give timely notice to either the summoned party or the Bureau in the manner described in this paragraph means that the notified person has failed to institute a proceeding to quash and the district court has no jurisdiction to hear the proceeding. Thus, for example, if the notified person mails a copy of the petition to the summoned person but not to the designated Bureau employee and office, the notified person has failed to institute a proceeding to quash. Similarly, if the notified person mails a copy of such petition to the summoned person, but instead of sending a copy of the petition by registered or certified mail to the designated employee and office, the notified person gives the designated employee and office the petition by some other means, the notified person has failed to institute a proceeding to quash.(3) Failure to institute a proceeding to quash. If the notified person fails to institute a proceeding to quash within 20 days following the day the notice was served on or mailed to such notified person, the Bureau may examine the summoned records following the 23rd day after notice of the summons was served on or mailed to the notified person (see 26 U.S.C. 7609(d)(1)).
(c) Presumption no notice has been mailed. Title 26 U.S.C. 7609(b)(2)(B) permits a notified person to institute a proceeding to quash by filing a petition in district court and notifying both the Bureau and the summoned person. Unless the notified person has notified both the Bureau and the summoned person in the appropriate manner, the notified person has failed to institute a proceeding to quash. If the copy of the petition has not been delivered to the summoned person or the person and office designated to receive the notice on behalf of the Bureau within 3 days from the close of the 20-day period allowed to institute a proceeding to quash, it is presumed that the notification has not been timely mailed.
§ 70.28 - Summonses excepted from 26 U.S.C. 7609 procedures.
(a) In aid of the collection of certain liabilities—(1) In general. Title 26 U.S.C. 7609(c)(2)(B) contains an exception to the general notice requirement when a summons is issued to a third-party recordkeeper. That section excepts summonses issued in aid of the collection of the liability of any person against whom an assessment has been made or judgment rendered or the liability at law or in equity of any transferee of such a person.
(2) Examples. Examples of summonses referred to in paragraph (a)(1) of this section are:
(i) Summonses issued to determine the amount held in a bank in the name of a person against whom an assessment has been made or judgment rendered;
(ii) Summonses issued to enforce transferee liability for a tax which has been assessed.
(b) Numbered account (or similar arrangement). Under 26 U.S.C. 7609(c)(2), a summons issued solely to determine the identity of a person having a numbered account (or similar arrangement) with a bank or other institution is excepted from the requirements of 26 U.S.C. 7609. A “numbered account (or similar arrangement)” under 26 U.S.C. 7609(c)(2) is an account through which a person may authorize transactions solely through the use of a number, symbol, code name, or other device not involving the disclosure of the person's identity. A “person having a numbered account (or similar arrangement)” includes the person who opened the account and any person authorized to use the account or to receive records or statements concerning it.
§ 70.29 - Suspension of statutes of limitations.
(a) Suspension while a proceeding under 26 U.S.C. 7609(b) is pending. Under 26 U.S.C. 7609(e)(1), the statutes of limitations of 26 U.S.C. 6501 and 6531 are suspended if a notified person with respect to whose liability a summons is issued, or the notified person's agent, nominee, or other person acting under the direction or control of the notified person, takes any action as provided in 26 U.S.C. 7609(b).
(1) Agent, nominee, etc. A person is a notified person's agent, nominee, or other person acting under the direction or control of a notified person for purposes of 26 U.S.C. 7609(e) if the person with respect to whose liability the summons is issued has the ability in fact or at law to cause the agent, etc., to take the actions permitted under 26 U.S.C. 7609(b). Thus, in the case of a corporation, direction or control by the notified person may exist even though less than 50 percent of the voting power of the corporation is held by the notified person.
(2) Period during which a proceeding, etc., is pending. Under 26 U.S.C. 7609(e), the statute of limitations shall be suspended for the period during which a proceeding and any appeals regarding the enforcement of such summons is pending. This period begins on the date the petition to quash the summons is filed in district court. The period continues until all appeals are disposed of, or until the expiration of the period in which an appeal may be taken or a request for a rehearing may be made. Full compliance, partial compliance, and noncompliance have no effect on the suspension provisions. The periods of limitations which are suspended under 26 U.S.C. 7609(e) are those which apply to the taxable periods to which the summons relates.
(3) Taking of action as provided in 26 U.S.C. 7609(b). Title 26 U.S.C. 7609(b) allows intervention by a notified person as a matter of right upon compliance with the Federal Rules of Civil Procedure. The phrase “takes any action as provided in subsection (b)”, found in 26 U.S.C. 7609(e), includes any intervention whether or not 26 U.S.C. 7609(b) is specifically mentioned in the order of the court allowing intervention. The phrase also includes the fulfilling of only part of the requirements of 26 U.S.C. 7609(b)(2), relating to the right of a person to institute a proceeding to quash. Thus, for instance, if a notified person notifies a person who has been summoned by sending a copy of the petition by registered or certified mail but does not mail a copy of that notice to the appropriate person and office under 26 U.S.C. 7609(b)(2)(B), the notified person has taken an action under 26 U.S.C. 7609(e).
(b) Suspension after 6 months of service of summons. In the absence of the resolution of the third-party recordkeeper's response to the summons described in 26 U.S.C. 7609(c) or the summoned party's response to a summons described in 26 U.S.C. 7609(f) the running of any period of limitations under 26 U.S.C. 6501 or under 26 U.S.C. 6531 with respect to any person with respect to whose liability the summons is issued (other than a person taking action as provided in 26 U.S.C. 7609(b)) shall be suspended for the period:
(1) Beginning on the date which is 6 months after the service of such summons, and
(2) Ending with the final resolution of such response.
§ 70.30 - Time and place of examination.
(a) Time and place. The time and place of examination pursuant to the provisions of 26 U.S.C. 7602 must be such time and place as may be fixed by an appropriate TTB officer and as are reasonable under the circumstances. The date fixed for appearance shall not be less than 10 days from the date of the summons.
(b) Restrictions on examination of taxpayer. No taxpayer is to be subjected to unnecessary examination or investigations, and only one inspection of a taxpayer's books of account shall be made for each taxable year unless the taxpayer requests otherwise or unless an authorized internal revenue or an appropriate TTB officer, after investigation, notifies the taxpayer in writing that an additional inspection is necessary.
§ 70.31 - Entry of premises for examination of taxable objects.
(a) General. An appropriate TTB officer may, in the performance of his or her duty, enter in the daytime any building or place where any articles or objects subject to tax are made, produced, or kept, so far as it may be necessary for the purpose of examining said articles or objects and also enter at night any such building or place, while open, for a similar purpose.
(b) Distilled spirits plants. Any appropriate TTB officer may, at all times, as well by night as by day, enter any plant or any other premises where distilled spirits are produced or rectified, or structure or place used in connection therewith for storage or other purposes; to make examination of the materials, equipment and facilities thereon; and make such gauges and inventories as such officer deems necessary. Whenever any appropriate TTB officer, having demanded admittance, and having declared his or her name and office, is not admitted to such premises by the proprietor or other person having charge thereof, such officer may at all times, use such force as is necessary for such officer to gain entry to such premises.
(c) Authority to break up grounds. An appropriate TTB officer, and any person acting in his or her aid, may break up the ground on any part of a distilled spirits plant, or any other premises where spirits are produced or rectified, or any ground adjoining or near to such plant or premises, or any wall or partition thereof, or belonging thereto, or other place, to search for any pipe, cock, private conveyance, or utensil; and, upon finding any such pipe or conveyance leading therefrom or thereto, to break up any ground, house, wall, or other place through or into which such pipe or other conveyance leads, and to break or cut away such pipe or other conveyance, and turn any cock, or to determine whether such pipe or other conveyance conveys or conceals any spirits, mash, wort, or beer, or other liquor, from the sight or view of the appropriate TTB officer, so as to prevent or hinder such officer from taking a true account thereof.
§ 70.32 - Examination of records and objects.
Any appropriate TTB officer may enter, during business hours, the premises of any regulated establishment for the purpose of inspecting and examining any records, articles, or other objects required to be kept by such establishment under 18 U.S.C. chapter 40 or 44, or provisions of 26 U.S.C. enforced and administered by the Bureau, or regulations issued pursuant thereto.
§ 70.33 - Authority of enforcement officers of the Bureau.
Appropriate TTB officers may perform the following functions:
(a) Carry firearms;
(b) Execute and serve search warrants and arrest warrants, and serve subpoenas and summonses issued under authority of the United States;
(c) In respect to the performance of such duty, make arrests without warrant for any offense against the United States committed in their presence, or for any felony cognizable under the laws of the United States if they have reasonable grounds to believe that the person to be arrested has committed, or is committing, such felony; and
(d) In respect to the performance of such duty, make seizures of property subject to forfeiture to the United States.
§ 70.34 - Listing by appropriate TTB officers of taxable objects owned by nonresidents.
Whenever there are any articles in any internal revenue district subject to tax, which are not owned or possessed by, or under the care or control of, any person within such district, and of which no list has been transmitted to the appropriate TTB officer, as required by law or by regulations prescribed pursuant to law, an appropriate TTB officer shall enter the premises where such articles are situated, make such inspection of the articles as may be necessary, and make lists of the same according to the forms prescribed. Such lists, being subscribed by the appropriate TTB officer, are sufficient lists of such articles for all purposes.
General Powers and Duties
§ 70.40 - Authority to administer oaths and certify.
Appropriate TTB officers are authorized to administer such oaths or affirmations and to certify to such papers as may be necessary under the tax laws administered by the Bureau, the Federal Alcohol Administration Act, or regulations issued thereunder, except that the authority to certify must not be construed as applying to those papers or documents the certification of which is authorized by separate order or directive.
§ 70.41 - [Reserved]
§ 70.42 - Returns prepared or executed by appropriate TTB officers.
(a) Preparation of returns—(1) General. If any person, required by provisions of 26 U.S.C. enforced and administered by the Bureau or by the regulations prescribed thereunder to make a return, fails to make such return, it may be prepared by an appropriate TTB officer provided the person required to make the return consents to disclose all information necessary for the preparation of such return. The return upon being signed by the person required to make it must be received by the appropriate TTB officer, as the return of such person.
(2) Responsibility of person for whom return is prepared. A person for whom a return is prepared in accordance with paragraph (a)(1) of this section shall for all legal purposes remain responsible for the correctness of the return to the same extent as if the return had been prepared by such person.
(b) Execution of returns—(1) General. If any person, required by provisions of 26 U.S.C. enforced and administered by the Bureau or by the regulations prescribed thereunder to make a return, fails to make a return at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the appropriate TTB officer must make such return from such officer's own knowledge and from such information as the officer can obtain through testimony or otherwise.
(2) Status of returns. Any return made in accordance with paragraph (b)(1) of this section and subscribed by the appropriate TTB officer is prima facie good and sufficient for all legal purposes.
(c) Cross references. (1) For provisions that the return executed by an appropriate TTB officer will not start the running of the period of limitations on assessment and collection, see 26 U.S.C. 6501(b)(3) and § 70.222(b) of this part.
(2) For additions to the tax and additional amounts for failure to file returns, see section 6651 of the Internal Revenue Code.
(3) For additions to the tax for failure to pay tax, see sections 5684, 5761, and 6653 of the Internal Revenue Code.
(4) For failure to make deposit of taxes or overstatement of deposit claims, see section 6656 of the Internal Revenue Code.
(5) For an additional penalty for tendering a bad check or money order, see section 6657 of the Internal Revenue Code.
(6) For certain failures to pay tax with respect to cases pending under Title 11 of the United States Code, see section 6658 of the Internal Revenue Code.
(7) For failure to supply identifying numbers, see section 6676 of the Internal Revenue Code.
(8) For penalties for aiding and abetting understatement of tax liability, see section 6701 of the Internal Revenue Code.
(9) For criminal penalties for willful failure to make returns, see sections 7201, 7202, and 7203 of the Internal Revenue Code.
(10) For criminal penalties for willfully making false or fraudulent returns, see sections 7206 and 7207 of the Internal Revenue Code.
(11) For authority to examine books and witnesses, see section 7602 of the Internal Revenue Code and § 70.22.