Whenever a summons is issued to a third party in regard to a issue about a taxpayer, the taxpayer has the ability to file a suit in court to prevent the third party from complying with the summons.
The reason a taxpayer may wish to do this is to prevent the third party from sharing information with that IRS that it does not want disclosed. If the taxpayer chooses to file a suit in court, the statute of limitations on assessment and collection is suspended while the matter is pending in court.
If the third party and the IRS cannot resolve the disputed summons within six months of when it was issues, the running of the taxpayer’s statute of limitations on assessment is suspended beginning six months after the summons is served and ending with the final resolution of the actually dispute.
The IRS has the ability to issue a designated summons against corporate taxpayers who fail to timely provide requested information. The purpose of a designated summons is to suspend the statute of limitations on assessment where it has been prevented from assessing tax within the normal limitations period.
A designated summons must be issued to the corporate taxpayer at least 60 days before the expiration of the statute of limitations on assessment.