Facts
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The Internal Revenue Service (IRS) reviewed Salman’s federal income tax returns for 1976 and 1977 and notified him of a possible tax deficiency.
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The IRS offered Salman the opportunity to meet with the IRS to discuss the matter in an informal conference.
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Salman agreed to attend, but told the IRS he would do so only if:
- he could be represented by a person who was not an attorney, not a certified public accountant (CPA), and not an enrolled agent authorized to practice before the IRS;
- he could record the conference; and
- he would not be required to provide any papers at the conference.
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IRS personnel responded that IRS rules did not allow representation at the informal conference by a person who was not a lawyer, CPA, or enrolled agent.
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The IRS also told Salman that recording an informal conference was not allowed.
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The IRS further stated that, given Salman’s refusal to provide any additional papers, the IRS would not go forward with the conference.
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Salman sued Swanson and three other IRS employees, alleging that their actions deprived him of due process under the Fifth Amendment.
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The IRS employees moved to dismiss the complaint, arguing (among other grounds) that Salman had not been deprived of due process.
Issues
- Whether IRS employees deprived a taxpayer of Fifth Amendment due process by refusing to hold an informal conference unless the taxpayer complied with IRS rules on authorized representatives, non-recording, and provision of requested papers.
- Whether a taxpayer has a constitutional right to be represented at an IRS informal conference by a non-attorney, non-CPA, non-enrolled person.
- Whether a taxpayer has a constitutional right to tape-record an IRS informal conference or to require the IRS to proceed with a conference while refusing to provide any documents.
Decision
- The court granted the IRS employees’ motion to dismiss.
- The court held that Salman’s allegations did not state a claim for a Fifth Amendment due process violation based on the IRS’s refusal to proceed with an informal conference under Salman’s demanded conditions.
- The court concluded that the Constitution did not require the IRS to provide an informal conference on the terms Salman proposed, including representation by an unqualified person, tape-recording, or a blanket refusal to provide papers.
Legal Principles
- Due process in federal tax matters is generally satisfied through the statutory framework for determining and contesting tax liability, including notice procedures and access to judicial review.
- An informal, pre-assessment IRS conference is an administrative procedure; it is not, by itself, a constitutionally required hearing with trial-type features.
- The Treasury Department and IRS may set and enforce rules governing who may represent taxpayers before the IRS, and limiting representation to attorneys, CPAs, and enrolled agents does not, without more, violate due process.
- Due process does not create a standalone constitutional entitlement to record an IRS informal conference.
- The IRS may require taxpayers to provide requested papers relevant to an examination and may decline to proceed with an informal conference when a taxpayer refuses to provide any documentation.
Conclusion
The court dismissed Salman’s due process suit because the IRS’s refusal to conduct an informal conference under Salman’s preferred conditions (a non-credentialed representative, recording, and no papers) did not amount to a constitutional deprivation, given the IRS’s authority to regulate its internal conference procedures and the broader statutory avenues available to contest any deficiency determination.