Willful Failure to Obey
Summons
7210-
Failure to Obey Summons: Willful Failure to Obey Summons
[58-2 USTC ¶9885]
United States of America
, Appellee v. George Becker, Defendant-Appellant
(CA-2),
U. S. Court of Appeals, 2nd Circuit, Docket No. 25180, 259 F2d 869,
10/22/58, Affirming decision of District Court, 58-1 USTC ¶9403
[1939 Code Sec. 3614--substantially unchanged in 1954 Code Sec. 7602;
1939 Code Sec. 3616(b)--similar to 1954 Code Sec. 7210]
Criminal offenses: Willful failure to obey summons: Production of
books and records.--Where taxpayer failed to appear and testify and
to produce certain books and records because, he alleged, the books and
records specified had been destroyed by fire (some of which were
subsequently produced in compliance with a grand jury subpoena), the
court affirmed the District Court's holding that the taxpayer willfully
and knowingly neglected to comply with the summons and that evidence in
the record established guilt beyond a reasonable doubt.
Eugene O.
Cobert, of Liebowitz, Cobert & Deixel, New York City (Roy M. Zeig,
of Liebowitz, Cobert & Deixel, New York City, on brief), for
defendant-appellant. Mark F. Hughes, Jr., Asst. United States Atty., S.
D. N. Y., New York City (Arthur H. Christy, United States Atty., and
George I. Gordon, Assistant United States Atty., New York City, on
brief), for appellee.
Before CLARK,
Chief Judge, and
MEDINA
and LUMBARD, Circuit Judges.
PER CURIAM:
In this case
Judge Dawson, sitting without a jury after waiver by the defendant,
found as a fact beyond a reasonable doubt that defendant willfully and
knowingly neglected to produce certain of the books and papers called
for by a summons served upon him by a special agent of the Internal
Revenue Service. This finding is amply supported by the evidence. The
detailed statement of facts in the court's memorandum opinion [58-1 USTC
¶9403] belies defendant's assertion that it disregarded defendant's
request for special findings of fact under Rule 23(c) of the Federal
Rules of Criminal Procedure. We also find insubstantial the other
alleged errors. Accordingly, defendant's conviction under 26
U. S.
C. §7210 is affirmed.
[88-1 USTC ¶9315] United States of
America and William D. Lutgen, Revenue Agent, Internal Revenue Service,
Petitioners v. Carter Family Trust, James R. Sattler, Trustee,
Respondent United States of America and William D. Lutgen, Revenue
Agent, Internal Revenue Service, Petitioners v. James R. Sattler Family
Trust, Helen Sattler, Trustee, Respondent United States of America and
William D. Lutgen, Revenue Agent, Internal Revenue Service, Petitioners
v. Jalen Je Peux Trust, Helen L. Sattler, Trustee, Respondent United
States of America and William D. Lutgen, Revenue Agent, Internal Revenue
Service, Petitioners v. James R. Sattler and Helen L. Sattler,
Respondent
U.S.
District Court, No. Dist. Ind., Hammond
Div., LaFayette, L 84-62, --L 84-65,
2/14/85
, 602 FSupp 82
[Code Secs. 7204 ,
7210 , 7602
, 7604 and 7852
--Result unchanged by the Tax Reform Act of 1986 ]
Summons: Wilful failure to obey: Enforcement: Privacy Act:
Applicability.--On a second motion for an order to show cause,
summonses were ordered enforced because they met the standards
established in Powell, ((SCt) 64-2
USTC ¶9858 , 379 US 48). A declaration filed by the IRS agent who
issued the summonses and who was conducting the IRS tax investigation
was sufficient to establish the requisite standard for enforcement of
the summonses. The court rejected the taxpayers' argument that The
Privacy Act, 5 U.S.C. §552
et seq. required the IRS to submit a notice of some type stating the
purpose for which the information was sought. Accordingly, it ordered
the taxpayers to comply with the summonses and warned that a failure to
comply would result in a fine, imprisonment or both, together with the
costs of prosecution.
David H.
Miller, Assistant United States Attorney, Fort Wayne, Ind. 46802, for
petitioner.
MEMORANDUM
AND ORDER
I.
SHARP, Chief
Judge:
These actions
are presently before the court on the second motion for show cause order
of petitioners, United States of America (the Government), and William
D. Lutgen, Revenue Agent, Internal Revenue Service (IRS) filed
July 30, 1984
.
The facts
underlying this cause are as follows. The Government served summonses
for tax information on respondents, Carter Family Trust, James R.
Sattler, Trustee, James R. Sattler Family Trust, Helen L. Sattler,
Trustee, Jalen Je Peux Trust, Helen L. Sattler, Trustee, and James R.
Sattler and Helen L. Sattler, (taxpayers pursuant to 26 U.S.C. §7602
) on
September 19, 1983
. The taxpayers did appear at the offices of the IRS but they refused to
provide the summonsed information.
The Government
commenced these cases by filing petitions to enforce the IRS summonses
pursuant to 26 U.S.C. §7604
on
May 16, 1984
. In such motions, the Government requested this court to order
respondents to show cause why they should not comply with the IRS
summonses issued
September 19, 1983
and to appear to give testimony with respect to their tax liability for
the taxable years 1980 and 1981. The Government further requested costs
for maintaining these actions. The court entered the order to show cause
on
May 16, 1984
; however, the taxpayers did not comply with such order.
Thereafter, on
August 22, 1984
, this court once again ordered the taxpayers to appear and show cause
why they should not be held in contempt of court for failing to obey
this court's order of
May 16, 1984
. A show cause hearing was held on
October 25, 1984
in
Lafayette
,
Indiana
, at which time the taxpayers did appear but without counsel. At that
hearing, both parties were to supplement the record with any further
briefs by
November 11, 1984
. A letter from the taxpayers was filed
November 23, 1984
.
II.
In order to
establish a right to summons enforcement, the IRS need only show:
1. the
investigation is conducted pursuant to a legitimate purpose;
2. that the
materials sought may be relevant to that purpose;
3. that the
information being sought is not already in the possession of the IRS;
and,
4. that all
administrative steps required by the Internal Revenue Code with respect
to summons have been followed.
United
States v. Powell [64-2
USTC ¶9858 ], 379 U.S. 48, 57-58 (1964). See also United States
v. Kis [81-2
USTC ¶9659 ], 658 F.2d 526, 536 (7th Cir. 1981).
The
requisite showing is generally made by the affidavit of the Agent who
issued the summons and who is seeking enforcement. Indeed, no more than
that is necessary to make the prima facie case. Kis, 658
F.2d at 536. Moreover, the threshold of relevance is a low one.
Id.
at 537. Internal Revenue Code §7602
, 26 U.S.C. §7602 authorizes
the IRS, in the course of an audit, to "examine any books, papers,
records, or other data which may be relevant . . . to such
inquiry" (emphasis added). Thus, "the government need show
only that inspection of the desired record 'might throw light' upon the
correctness of the taxpayer's return and liabilities." Kis,
658 F.2d at 537.
In support of
its enforcement motion in each of the above captioned cases, the
Government filed a Declaration by William D. Lutgen, the Internal
Revenue Agent who issued the summonses and who is conducting the IRS tax
investigation. That declaration is sufficient to establish the requisite
standards for enforcement of the summonses.
Once the
government has established its prima facie case, the taxpayer
must answer the government's case alleging specific facts in rebuttal,
facts that permit at least an inference that some wrongful conduct by
the government exists. Mere allegations of bad faith will not suffice,
nor will legal conclusions or memoranda of law. Kis, 658 F.2d at
539. The taxpayers must prove that "the government has abandoned in
the institutional sense its pursuit of possible civil penalties."
Id.
at 538.
The taxpayers
in this case have made no such showing. They base their refusal to
comply with the IRS summonses on The Privacy Act, 5 U.S.C. §552
et seq. Both at the
October 25, 1984
hearing and in their
November 19, 1984
letter to this court, the taxpayers have contended that The Privacy Act
requires that the IRS submit a notice of some type stating the purpose
for which information is sought. They further argue that the IRS is
intent on subjecting them to an "illegal fishing expedition"
the results of which may be used "to concoct charges" of a
criminal nature against them. See Transcript of Show Cause Hearing of
October 25, 1985
at pp. 9-10.
The court
finds the arguments of the taxpayers to be without merit. As discussed
above, the Government has established its prima facie case by meeting
the standards set out in Powell, supra, and Kis, supra,
for enforcement of the summonses. The taxpayers' arguments are
tantamount to mere allegations of bad faith, evidence held to be
insufficient to rebut the government's case under the standards set
forth in Kis, supra. Moreover, taxpayers' reliance on The Privacy
Act is misplaced. The purpose of The Privacy Act is to protect citizens
against improper disclosure of information about them that may be held
by government agencies; it was not intended to be used to shield
individuals from compliance with disclosure requirements mandated by
law.
Accordingly,
it is the order of this court that the taxpayers COMPLY with the
summonses issued by the Government on
September 19, 1983
at a date and time designated by the IRS upon receipt of this order. The
Government's petition for costs in DENIED. The court further notes this
record reflects that the taxpayers chose to ignore a prior order of this
court issued
May 16, 1984
; the taxpayers are here advised that this court expects strict
compliance with this order. A failure to comply will result in a fine,
imprisonment or both, together with the costs of prosecution, pursuant
to 26 U.S.C. §7210 .
SO ORDERED.