IRS Summons – Inspection of Tax Records

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7^th Circuit Court of Appeals

Case Name: United States of America v. Titan International, Inc.

Case No.:14-3789

Officials: POSNER, WILLIAMS, and SYKES, Circuit Judges.

Focus: IRS Summons – Inspection of Tax Records

Company required to comply with IRS request to re-inspect books despite previous review and despite 26 U.S.C. Sec. 7605(b) right to deny inspection.

“This case is more like Digby than Reineman. The IRS first inspected Titan’s 2009 records to verify its net operating loss in connection with an audit of its 2009 tax return. The IRS now seeks to inspect those same records for the purpose of auditing Titan’s 2010 tax return in order to determine the validity of its 2010 net-operating-loss carryforward. Much like the pass-through loss at issue in Digby (and unlike the deduction at issue in Reineman), the net-operating-loss carryforward on the 2010 tax return cannot be verified unless the IRS inspects the 2009 records. Accordingly, the summons for inspection of Titan’s 2009 books and records for the purpose of auditing its 2010 tax return does not require written notice and a finding of necessity by the Secretary under § 7605(b).”

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.