Chief Counsel Memorandum 200143032

CONCLUSION:

1. The Hague Convention on the Service Abroad of Judicial and Extrajudicial

Documents in Civil or Commercial Matters, 20 U.S.T. 1361; 658 U.N.T.S. 163;

T.I.A.S. No. 6638; 28 U.S.C.A.; 16 I.L.M. 1339 (1977) (the “Service Convention”)

provides for service of an IRS administrative summons on a US citizen residing in

the United Kingdom, because such summons is considered an extrajudicial

document under the Convention. A properly served summons may be enforceable

in the US District Court for the District of Columbia pursuant to IRC §§ 7604 and

7701(a)(39) .

2.a. The summons may be personally served by the Revenue Service

Representative (the “RSR”) or the Assistant Revenue Service Representative (the

“ARSR”) stationed at London, after being authorized by the Central Authority of the

United Kingdom under the Service Convention.

2.b. The requesting office would forward the request in the form prescribed by the

Service Convention, and annexed to Articles 3, 5, 6, and 7, along with the

Summons, Form 2039, and a brief description of the nature of investigation, and the

proposed line of inquiry to this office. The service of the summons in the United

Kingdom will be processed by the London RSR of the Office of Director,

International (LMSB), and coordinated by this office and the office of Assistant

Chief Counsel (Collection, Bankruptcy and Summonses).

2.c. The office of the Revenue Service Representative in London is an

appropriate place for requiring the witness to appear for the summons interview.

FACTS:

We have been requested to determine if a US citizen or resident residing in the

United Kingdom, who is believed to have information relevant to IRS audits, may be

served with an IRS administrative summons in the United Kingdom.

LAW AND ANALYSIS:

1. SCOPE OF APPLICATION OF THE HAGUE SERVICE CONVENTION

Background

The most efficient means for gathering information from any country is through the

Exchange of Information article in the tax treaty the United States has signed with

that country. The US-UK income tax treaty, as currently in force, is interpreted not

to require either party to provide formal assistance to the other in exchange of

information if that party does not have a “tax interest” in the matter. In cases where

the United Kingdom does not have a tax interest, it will not use compulsive

measures to require testimony or the production of documents. In such situations,

the IRS may have to look to other means for obtaining information, such as the

Internal Revenue Code, other statutes, and the Service Convention

Authority for Administrative Summons and District Court Jurisdiction

IRC § 7602 authorizes the Service to summon any “person the Secretary may deem

proper” for ascertaining the correctness of any return and for determining the tax

liability of any person. Such summons can be issued to examine any records and

to take testimony of any person. This power to summon any person to pursue a

legitimate inquiry is subject only to the criteria established by United States v.

Powell 379 U.S. 48, (1964) and specific statutory provisions, such as IRC §

7602(d), which forbids issuance of the summons where a Justice Department

referral is in effect. The Code does not restrict the application of this section to the

geographic boundaries of the United States. Your questions raise the issue of

serving in the United Kingdom a summons under IRC § 7603(a) by delivery in hand

to a summoned party. As discussed below, the Service Convention provides

procedures for personal service of documents abroad.

Jurisdiction for enforcement of administrative summons is generally vested in the

United States district court for the district in which the summoned person resides or

is found. IRC § 7604. For purposes of enforcing an administrative summons, US

citizens and residents residing abroad are deemed to be residing in the District of

Columbia under IRC § 7701(a)(39). Although the legislative history of IRC §

7701(a)(39) is scanty, Congress was concerned that there was no provision to

enforce an administrative summons when a US citizen or resident was not found in

any US judicial district. The Senate amendment “extended the jurisdiction and the

summons power of the United States District Court of the District of Columbia to

reach US citizens and residents not present in the United States”. The Conference

agreement generally followed the Senate amendment, but added other provisions

such as the formal document request procedure found in IRC § 982, which was also

enacted under TEFRA in 1982. See Conf. Rep. No. 97-760 (1982), reproduced at

1982-2 C.B. 600, at 657-658. Thus the US District Court for the District of

Columbia is vested with jurisdiction to enforce administrative summonses issued to

US citizens and residents abroad.

Article 27 of the new US-UK income tax treaty which is pending ratification

eliminates “tax interest” as a condition for providing assistance in exchange of

information.

We are not aware of any case that has construed IRC § 7701(a)(39). If an IRS

summons could be served upon a US citizen or resident overseas under a treaty or

as otherwise recognized by international law, then the US District Court for the

District of Columbia would be properly vested with jurisdiction over summons

enforcement proceedings by virtue of IRC § 7701(a)(39).

The Hague Service Convention

We are not aware of any federal statute that prohibits, or otherwise explicitly

addresses the subject of personal service of an IRS summons on individuals who

reside abroad. But certain legal doctrines that have evolved over time in the

practice of international law proscribe such actions because they sometimes

impinge on the sovereignty of other nations. Under international law, a state may

determine the conditions for service of process in its territory in aid of litigation in

another state. Restatement of Law, Third, Foreign Relations Law of the United

States, The American Law Institute 1987 (“Restatement”), § 471(1) (Service of

Process in Foreign State). Extraterritorial service of investigative summonses by

any country without proper authority may be viewed as an exercise of its sovereign

power in the other country. The need to recognize foreign sensibilities while

serving summonses is best explained in FTC. v. Compagnie De Saint-Gobain-Pont-

A-Mousson, 636 F.2d 1300 (D.C. Cir. 1980). Generally, this extraordinary step may

be taken by a US Agency only when explicitly authorized by statute .

The Service Convention complements the Federal Rules of Civil Procedure for

service of documents abroad. This Convention is a multilateral treaty that has been

ratified by approximately twenty-three countries. The United States and the United

Kingdom became signatories to this agreement in February 1969. 28 U.S.C.A.

(Appendix following Rule 4 Fed.R.Civ.P.); 16 I.L.M. 1339 (1977). As a ratified, self-

executing treaty, the Service Convention is a “supreme law of the land”.

Ackermann v. Levine, 788 F.2d 830 (2d Cir. 1986).

The Service Convention governs the service of judicial and extrajudicial documents.

The term “extrajudicial documents” in the title, and in Article 1, of the Service

Convention refers to documents not directly connected with a lawsuit but

which require formal service under the law of the state of origin. Restatement §

471, (Service of Process in Foreign State), Reporters Notes 3. Congress

acknowledged that Article 17 of the Service Convention, (which renders the

provisions of the Convention applicable to extrajudicial documents), was intended

to include documents emanating “from administrative agencies and commissions or

other quasi-judicial tribunals in our own system”. Report of the Senate Committee

28 U.S.C. § 1783, known as the Walsh Act of 1923, is an example of a statute

by which Congress expressly approved service of documents abroad.

on Foreign Relations on the Convention on the Service Abroad of Judicial and

Extrajudicial Documents, S.Exec.Rep. No. 6, 90th Cong., 1st Sess. p. 2 (also see p.

14) (April 12, 1967). Based on these authorities, it is our view that the IRS

administrative summons is covered by the definition of the term “extrajudicial

documents” in the Service Convention.

The Service Convention applies only to “civil or commercial matters”, but these

terms are not defined in the Convention. The UK Central Authority, like its US

counterpart, has taken an expansive view of the term, “civil or commercial matters”

in serving documents issued by US Agencies. Restatement, § 471 (Service of

Process in Foreign State), Comments & Illustrations f

The UK courts have also

adopted a cooperative approach in the matter in the recent past. In In Re State of

Norway, (1989) 1 All ER 746, 28 I.L.M. 693 (1989), where Norway was seeking the

assistance of the English court to compel testimony from witnesses in England in

connection with certain tax collection proceedings, the highest court of the United

Kingdom, affirmed the order to compel testimony, and instructed that the words,

“civil or commercial matter” should be given their ordinary meaning and would

include all matters not criminal

. Thus, tax and other fiscal matters are within the

scope of both the Hague Service and Evidence Conventions. This is consistent

with the US practice to apply both Conventions broadly to all non-criminal matters.

See statement of US representative at the meetings of the Special Commission on

the Operation of the Hague Convention (June 1978), reprinted in 17 I.L.M. 1417

(1979).

Enforcement Provisions

A summons served in the United Kingdom in accordance with the Service

Convention would be backed by statutory enforcement provisions. As stated

above, IRC § 7701(a)(39) confers jurisdiction in the US District Court for the District

of Columbia, in summons enforcement proceedings.

It is worth noting that the court in FTC v. Compagnie De Saint-Gobain-Pont-A-

Mousson, which disapproved of the service by mail of the subpoena by the Federal

Trade Commission, endorsed the use of the Service Convention under certain

circumstances. See 636 F.2d 1313, 1314. The situation where the IRS seeks to

serve a summons abroad can also be distinguished from the one in FTC. The court

in FTC observed that the provision pursuant to which the Commission served the

impugned subpoena (Section 9 of the Federal Trade Commission Act, 15 USC §

49), empowered the Commission to require the attendance of witnesses and the

production of evidence only “from any place in the United States”. In contrast, IRC

The Hague Service Convention parallels the Hague Evidence Convention; and

it is the latter Convention that was applied in In Re State of Norway.

§ 7602, under which service would be attempted to summon an individual in the

United Kingdom, authorizes the summoning of any person for ascertaining the

correctness of any return without geographic limitations. The court found the

Commission’s action in FTC objectionable also because it served the subpoena on

a foreign citizen on foreign soil. The discussion in this memorandum, however,

addresses the question of serving a summons on a US citizen or resident in the

United Kingdom.

In summary, the Service Convention provides for service of documents by an agent,

and through the Central Authority of the United Kingdom. The Service Convention

applies to all civil matters which require service of judicial and extrajudicial

documents. (Article 1). We believe that an IRS administrative summons constitutes

an “extrajudicial document” for this purpose. Therefore, the service of an IRS

administrative summons under the Service Convention does not impinge on the

sovereignty of the United Kingdom. The US District Court for the District of

Columbia has the jurisdiction to enforce a summons properly served upon a US

citizen or resident who resides abroad.

2.a. HOW THE SUMMONS SHOULD BE SERVED ABROAD USING THE HAGUE

SERVICE CONVENTION

The Code and the case law generally require that an administrative summons be

served in person. The persons authorized to personally serve an IRS summons are

specific IRS employees, including revenue agents, RSRs and ARSRs. Treas. Reg.

§§ 301.7603-1(b), Treas. Reg. 301.7602-1(b), and Delegation Order No. 4 (Rev.

22) (paragraphs 7, 8, 10, and 11).

Under Article 2 of the Service Convention, each contracting state designates a

Central Authority to process transnational service of documents. Under Article 5,

the Central Authority of the state of destination arranges to have the document

served in accordance with its own law, or by any particular method requested by

the applicant, unless such a method is incompatible with its own laws. Under this

provision, the IRS can request that the summons be served by delivery in hand to

the person summoned. Personal service of documents is not incompatible with the

UK laws. Rules 6.2 and 6.4 of Civil Procedure Rules Part 34 (UK). Under Article 6,

the Central Authority or the delegate, after service, completes a certificate in the

form annexed to the Service Convention. The certificate states that the document

has been served and includes the method, the place and the date of service and

the person to whom the document was delivered. Under Article 9, each contracting

state is free to use consular and diplomatic channels to forward the documents to

the authorities designated by the other state for service.

In order to serve a summons on a US citizen or resident in the United Kingdom, the

IRS should seek the assistance of the UK Central Authority under the Service

Convention and should request that it be served in person as required by IRC §

7603(a). But under the treasury regulations the only persons authorized to serve

an IRS summons are specific IRS employees, including revenue agents, RSRs and

ARSRs. Treas. Reg. §§ 301.7603-1(b) and Delegation Order No. 4 (Rev. 22) (paras

7, 8, 10, and 11). In order to comply with this requirement, we recommend that the

RSR or the ARSR in London be designated by the UK Central Authority to serve the

summons.

2.b. RECOMMENDED PROCEDURES FOR THE SERVICE OF SUMMONS

Under Article 3 of the Service Convention, the request for service of a document

should be forwarded to the Central Authority of the receiving state in the form

prescribed in the Convention and annexed to it, without any requirement of

legalization or equivalent formality. (See Recommendation adopted by the

Fourteenth Session (Oct. 25, 1980) of the Convention, and annexed to Articles 3, 5,

6 and 7 of the Convention.) The UK Central Authority for the Service Convention

is: Her Majesty’s Principal Secretary of State for Foreign and Commonwealth

Affairs, London SW1A 2AL.

The document to be served or a copy of it should be attached to the request; and

both the request and the document should be furnished in duplicate. IRC § 7603(a)

describes how a summons may be served by an attested copy delivered in hand to

the person to whom it is directed.

As with any IRS Courtesy Investigation request, the requesting office is expected to

provide the receiving office with all of the essential information on the Summons,

Form 2039. At a minimum, the following should be included in the summons or in

the attachments: (i) The name(s) and address(es) of the taxpayer(s) under

examination (information that is also necessary to provide the taxpayer proper

notice of the summons under IRC § 7609(a)(1), and an opportunity to file a petition

to quash); (ii) The tax period(s) involved; (iii) The IRS office examining the US

taxpayer(s); (iv) The name and address of the third party witness to be served with

the summons; and, (v) The list of specific books, records, papers and other data the

witness is expected to bring with him to the summons interview.

The RSR’s office may fill in the other required information on the Summons, Form

2039: (i) The name, the business address and telephone number of the IRS officer

before whom the witness is to appear (the RSR or Assistant RSR, in this case); (ii)

The place and time for appearance of the witness (generally, at least 24 days after

the summons is served on the witness and the taxpayer(s) has been given notice

and the required opportunity to quash; see IRC §§ 7609(a)and (b)(2), and IRM

109.1.3.4(2)a; (iii) Details regarding the required manner of service upon the

witness (i.e., hand delivery in person); and, (iv) Details regarding how notice of the

summons was given to the taxpayer.

We expect that the revenue agent(s) investigating the case would take part in the

interview. In the event it is not practicable, along with the basic information

described above, the requesting office will also need to devise some means of

outlining the matters to be covered during the witness interview, including the

follow-up type questions that the RSR/ARSR may have to ask.

In addition, as provided in the Recommendation adopted by the Fourteenth Session

(Oct. 25, 1980), and annexed to Articles 3, 5, 6 and 7 of the Service Convention,

additional information has to be provided in the prescribed form entitled Request for

Service Abroad of Judicial or Extrajudicial Documents (copy attached). A request

that the documents be served in person in accordance with the provisions of

subparagraph (b) of the first paragraph of Article 5 of the Service Convention

should be clearly stated in the form. To ensure proper procedures and

coordination, any summons that is to be served under the Service Convention

should be sent to this office for review before it is sent to the RSR. If necessary,

we will also coordinate matters with the US Department of Justice Office of Foreign

Litigation, which is the Central Authority for the United States under the Service

Convention.

Under Restatement § 442(1)(c) (Request for Disclosure: Law of the United States),

the authority issuing the summons is required to take into account the following

factors while preparing it: the importance to the investigation of information sought;

the degree of specificity of the request; the availability of alternative means of

securing the information; the extent to which noncompliance with the request would

undermine important interests of the United States; and how compliance would

affect the important interests of the country whence the information is sought.

2.c. PLACE TO BE DESIGNATED FOR APPEARANCE

We agree with you that a witness residing in the United Kingdom should be

requested to appear for the interview at the office of the RSR in London. Pursuant

to IRM 109.1.3.4(1)c and d, the IRS generally makes a summons returnable at a

place that suits the witness’s convenience if he is cooperative, and at the IRS

officer’s or employee’s office if he is not. Since the interview of a witness residing

in the United Kingdom is likely to be conducted by the RSR or his delegate, their

office is the natural choice for this purpose. In summoning a witness who resides

abroad, the convenience of the witness should also be taken into account.

CASE DEVELOPMENT, HAZARDS AND OTHER CONSIDERATIONS:

In the last paragraph of your analysis of Issue 2.a. on page 9 of your memorandum,

you have concluded that an IRS administrative summons may be served in the

United Kingdom pursuant to the Service Convention by any of the following means:

(1) forwarding the summons to the UK Central Authority for service by the Central

Authority, or a (private) agency arranged by the Central Authority; or (2) serving the

summons directly through US diplomatic or consular agents such as the Service’s

Revenue Service Representative in the United Kingdom”. Pursuant to Treas. Reg.

§§ 301.7603-1(b)(1) and 301.7602-1(b), only “designated officer(s) or employee(s)

of the Internal Revenue Service” are authorized to serve an IRS administrative

summons, to be persons before whom the summoned person must appear, or to

take testimony under oath from the summoned persons. Under Delegation Order

Number 4 (Rev. 22), RSRs and ARSRs have been designated to perform these

duties. (See paras 7, 8,10, 11, and 13). The revenue agents, however, are

prohibited from serving the summons outside of the United States by international

law and the manual. See CCDM 42.2.1.1(12). In these circumstances, only the

RSRs and ARSRs may serve the summonses and take testimony from the

summoned persons.

This writing may contain privileged information. Any unauthorized disclosure of this

writing may have an adverse effect on privileges, such as the attorney client

privilege. If disclosure becomes necessary, please contact this office for our views.

If you have any further questions, please call Vijay Rajan at (202) 874-1490.

Ricardo A. Cadenas

Senior Technical Reviewer, Branch 1

Office of Associate Chief

Counsel (International)

Attachment to TL-N-1955-01

REQUEST, CERTIFICATE AND

SUMMARY OF THE DOCUMENTS TO BE SERVED

Annexes Provided for Articles 3, 5, 6 and 7 of the

Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in

Civil and Commercial Matters

On 25 October 1980, the Fourteenth Session adopted a Recommendation on information to

accompany judicial and extrajudicial documents to be sent or served abroad in civil or

commercial matters; Practical Handbook on the Operation of the Hague Convention of 15

November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or

Commercial Matters .

ANNEX TO THE CONVENTION

Forms

REQUEST FOR SERVICE ABROAD OF JUDICIAL OR EXTRAJUDICIAL

DOCUMENTS

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or

Commercial Matters,

signed at The Hague, the 15th of November 1965.

Identity and address Address of receiving

of the applicant authority

The undersigned applicant has the honour to transmit - in duplicate - the documents listed

below and, in conformity with Article 5 of the above-mentioned Convention, requests prompt

service of one copy thereof on the addressee, i.e,

(identity and address)

……………………………………………………………………………………………………

…………………

……………………………………………………………………………………………………

…………………………

a) in accordance with the provisions of sub-paragraph (a) of the first paragraph of Article 5

of the Convention*.

b) in accordance with the following particular method (sub-paragraph (b) of the first

paragraph of Article 5)*: …………………..

……………………………………………………………………………………………………

…………………………

……………………………………………………………………………………………………

…………………………

c) by delivery to the addressee, if he accepts it voluntarily (second paragraph of Article 5)*.

The authority is requested to return or to have returned to the applicant a copy of the

documents - and of the annexes* - with a certificate as provided on the reverse side.

List of documents

……………………………………………………………………………………………………

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……………………………………………………………………………………………………

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Done at . . . . . . . . . . . , the . . . . . . . .

Signature and/or stamp.

* Delete if inappropriate.

Reverse of the request

CERTIFICATE

The undersigned authority has the honour to certify, in conformity with Article 6 of the

Convention,

1) that the document has been served*

the (date)

……………………………………………………………………………………………………

………………………

at (place, street, number)

……………………………………………………………………………………………………

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……………………………………………………………………………………………………

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- in one of the following methods authorised by Article 5:

a) in accordance with the provisions of sub-paragraph (a) of the first paragraph of Article 5

of the Convention*.

b) in accordance with the following particular method*:

……………………………………………………………………………….

……………………………………………………………………………………………………

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c) by delivery to the addressee, who accepted it voluntarily* .

The documents referred to in the request have been delivered to:

(identity and description of person)

……………………………………………………………………………………………

……………

……………………………………………………………………………………………………

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relationship to the addressee (family, business or other):

……………………………………………………………………………..

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2) that the document has not been served, by reason of the following facts*:

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In conformity with the second paragraph of Article 12 of the Convention, the applicant is

requested to pay or reimburse the expenses detailed in the attached statement*.

Annexes

Documents returned:

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In appropriate cases, documents establishing the service:

……………………………………………………………………………...

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Done at . . . . . . . . . . . , the . . . . . . . .

Signature and/or stamp.

* Delete if inappropriate.

SUMMARY OF THE DOCUMENT TO BE SERVED

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or

Commercial Matters,

signed at The Hague, the 15th of November 1965.

(Article 5, fourth paragraph)

Name and address of the requesting authority:

…………………………………………………………………………………………..

……………………………………………………………………………………………………

…………………………………………………………

Particulars of the parties*:

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JUDICIAL DOCUMENT**

Nature and purpose of the document:

……………………………………………………………………………………………………

…

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…………………………………………………………Nature and purpose of the proceedings

and, where appropriate, the amount in dispute:

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Date and place for entering appearance**:

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Court which has given judgment**:

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Date of judgment**:

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Time-limits stated in the document**:

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EXTRAJUDICIAL DOCUMENT**

Nature and purpose of the document:

……………………………………………………………………………………………………

…

……………………………………………………………………………………………………

…………………………………………………………

Time-limits stated in the document**:

……………………………………………………………………………………………………

…

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* If appropriate, identity and address of the person interested in the transmission of the

document.

** Delete if inappropriate.