What is an IDR (Information Document Request)?
IDR stands for Information Document Request. An IDR is issued on IRS Form 4564. It is a form that the IRS uses during a tax audit to request information from the taxpayer. in many tax audits the IRS will issue an IDR at the beginning of the audit and then issue additional Information Document Requests as the case progresses. IDRs are authorized by Internal Revenue Code Section 7601 which empowers IRS employees to "inquire after and concerning all persons who may be liable for any internal revenue tax." Internal Revenue Code Section 7602 also authorizes the IRS to examine any books, materials, data or papers which MAY be relevant material.
Although it might not seem like it, there are options i how to respond to an IDR. If you do not respond to an IDR or the IRS doesn't like the answers you give, then it is quite possible that the IRS Revenue Agent assigned to your case will issue a summons. The IRS is authorized to issue summonses pursuant to Internal Revenue Code Section 7602. That section grants very broad authority for the IRS to:
1. Summons any person liable for a tax or anyone having possession or control over papers to appear before the IRS to produce any such papers or other data; and
2. To take any relevant or material testimony under oath.
The IRS can investigate and issue a summons merely on a suspicion that the law is being violated or even if it wants assurance that it is not! Holyfield v. United States, 909 F.2d 201, 205 (7th Cir. 1990).
Despite this very broad language, the courts have placed various limits on the subpoena power. Some of those limits are set forth in the U.S. Supreme Court case of United States v. Powell, 379 U.S. 48 (1964). Under the so-called Powell requirements the IRS must show that:
- The inquiry is being conducted for a legitimate purpose
- The inquiry is relevant to the purpose
- The information being requested is not already within the possession of the IRS; and
- The administrative steps that the Internal Revenue Code requires have been taken.
- The IRS has recommended that the Department of Justice start a grand jury investigation;
- The IRS has recommended a criminal prosecution; or
- The Department of Justice has made a request to the IRS for tax returns or tax return information of any person pursuant to Internal Revenue Code Section 6103(h)(3)(B).
- The right to be represented by counsel
- The right to invoke the 5th amendment purpose against self-incrimination
- The right to assert various other privileges including the spousal and marital privileges, the doctor-patient privilege, or the federally authorized tax practitioner privilege; and
- The right to make an audio recording of the summons hearing pursuant to Internal Revenue Code Section 7521.