Memorandum To Quash Summons
UNITED STATES DISTRICT COURT
DISTRICT OF___________________
_____________________________
}
Petitioner(s)
CIVIL NO._____________
MEMORANDUM IN SUPPORT OF MOTION
vs.
TO QUASH IRS SUMMONS DIRECTED
TO THIRD PARTIES
UNITED STATES OF AMERICA and
______________________________
Respondents
1. In 1978 the US Supreme Court in US v LaSalle National Bank, 437 US 248, 98 S.
Ct. 2357 (1978) issued a definitive ruling to set standards on the IRS’s use
of its administrative summons authority and to supplement US v Donaldson, 400 US
517 (1971).
The Court in LaSalle spelled out certain requirements which the lower courts
were to examine as to each IRS summons when contested by the taxpayer, which
upon careful examination, are most favorable
to Petitioner taxpayer above-named.
The LaSalle criteria, as written by Justice Blackman states the Summons:
A. Must not “broaden the Justice Department’s right of criminal litigation
discovery,” (page 2365).
B. “Infringe on the rule on the grand jury as the principal tool of criminal
accusation.” (page 2365)
C. Cannot be “post-referral use of the summons authority”, after the IRS “loses
its ability to compromise both the criminal and civil aspects of fraud case.”
(page 2365), ie containing use by IRS of civil summons after referring the case
to the Department of Justice for criminal prosecution.
D. “The IRS must use its summons authority in good faith” which in US v.
Powell, 379 US 48, 85 S Ct 248 (9164) consists of several elements. (page 2366):
1. “The Service must show that the investigation will be conducted pursuant to
a legitimate purpose.
2. “The inquiry may be relevant to that purpose.”
3. “That information sought is not already within the Commissioner’s
possession”, and
4. “The administrative steps required by the Code had been followed.”
5. Not an abuse of the court’s process or summonses issued for improper
purposes “such as to harass the taxpayer or to put pressure on him to settle a
collateral dispute, or for any other purpose reflecting on the good faith of the
particular investigation.”
E. “Another improper purpose. . . is to gather evidence solely for a criminal
investigation” (2366) as found at Ninth Circuit in LaSalle at 554 F 2d 302.
F. Delaying “in submitting a recommendation to the Justice Department when
there is an institutional commitment to make a referral.” (page 2367)
G. Using the civil summons when “the service merely would like to gather
additional evidence for the prosecution.” (page 2368)
H. Delaying the recommendation for prosecution to the prosecutors to “permit
the Government to expand its criminal discovery rights.” (page 2368)
I. Violating the “good-faith standard” by permitting the IRS to become an
information gathering agency for the other departments, including the Department
of Justice.” (page 2368)
J. These LaSalle “requirements are not intending to be exclusive. Future cases
may reveal the need to prevent other forms of a agency abuse of
congressional authority and judicial process.” (page 2368) (emphasis added)
K. However, the crux of the majority in LaSalle, as they disagreed with the
dissenting opinion, is expressed thusly:
“The Service does not enjoy inherent authority to
summon production of the private papers of citizens. It may
exercise only that authority granted by Congress. In §7602 Congress has
bestowed upon the Service the authority to summon production for four purposes
only for ‘ascertaining the correctness of any return, making a return where
none has been made, determining the liability of any person for any person for
any internal revenue tax.., or collecting any such liability. ‘ Congress,
therefore, intended the summons authority to be used to aid the determination
and collection of taxes. These purposes do not include the goal of filing
criminal charges against citizens. Consequently, summons authority does not
exist to aid criminal investigation solely. We have made that search and could
uncover nothing in the Code or its legislative history to suggest that Congress
intended to permit exclusively criminal use of summonses. As a result, the IRS
employs its authority in good faith when it pursues the four purposes of §7602,
which do not include aiding criminal investigations solely.”
Regardless of first impressions, the court in LaSalle did not reverse or
overturn previous cases by simply remanding the case to the District Court for
further proceedings to consider whether the Service in an institutional sense
had abandoned its pursuit of civil tax liability.
2. The Congress, in passing, the new §7609 law did not and could not overturn
the decision of the US Supreme Court in LaSalle. The principles still apply and
the Congress did not intend to give
IRS the power of the common law grand jury.
3. The Third Circuit Court of Appeals on March 9, 1979 brilliantly highlighted
some of the criteria set forth in LaSalle in the ease of US v Genser (II)
595 F 2d 146, and discussed some aspects omitted from that decision. Genser
examined the substantive and procedural implications of the Supreme Court’s
decision in US v. LaSalle National Bank, supra, which described the
limits of the IRS’s authority to issue civil summonses. (page 147) Focusing on
the “institutional posture of the IRS (which) would preclude the issuance of a
civil
summons even before referral to the Department of Justice... (as) the use of
civil summons in such circumstances would expand impermissibly the government’s
right to criminal discovery. Furthermore, in some
cases, the IRS might become an information gathering agency for other
departments, including the Department of Justice.” (page 150). Further, the Genser
case relied heavily on one requirement of the LaSalle decision: that
the Service not abandon in an institutional sense the pursuant of a civil tax
determination or collection. (page 150)
The Genser Court went on to clear up an area which, due to the facts of
the case, the LaSalle Court was unable to consider:
“We recognize that Justice Blackman wrote in LaSalle of
the necessity for the taxpayer to prove that the IRS had ‘abandoned’ a civil
purpose. We do not believe, however, that the existence of a general civil
purpose for the investigation terminates judicial inquiry. The government has
failed to recognize that under LaSalle, we must
focus on the purpose of individual summons and not on the purpose of the
investigation as a whole. In this case, for example, the IRS issued 116 summons
under §7602. If any one of those summons were issued solely for a criminal
purpose, the fruits of that summons would have to be suppressed, even in the
face of an overwhelming civil purpose of the investigation as a whole. The IRS
simply would like statutory authority to issue that particular summons.” (emphasis
added) (page 150)
The Genser case, page 150, pointed out that the lower court could not limit its
inquiry as to whether or not a general civil purpose existed for the
investigation as “the abuses delineated by the LaSalle majority would go
undetected and unremedied”, because IRS might delay official referral to
Department of Justice merely to gather additional evidence for the prosecution.
The IRS should not be allowed to claim civil purpose, when, in fact, they have
abandoned all civil aspects of the case and they are only concerned about the
future location of taxpayers body and by subterfuge claim that some civil
aspects still exists.
The existence of a continuing civil purpose for each summons and each part
thereto is essential. Our interpretation of LaSalle “recognizes that each and
every summons issued under §7602 must contribute in some way to a civil
inquiry.” (page 151)
Yet, a most casual examination of the broad summons in this case reveals that
most of the documents sought thereby have no connection whatsoever with a civil
purpose.
4. In US v. Gardiner, 531 F 2d 953, the true plans of the government were
forevermore exposed. Gardiner was classified by the government as a “tax
protestor”, tried and convicted. Prior to trial he raised the issue of
selective prosecution. The government dealt with that firmly, promptly, and
conclusively” Gardiner was not
selected for prosecution because all “tax protestors” are prosecuted. The
District Attorney took the position that the protest tax return was a violation
of the law, so that the authorities had no choice but
to prosecute.
According to a newspaper reporter in Minnesota, a jury acquitted Mr. Norbert E.
Stelten, USDV - Minnesota, #3-78Ct2l on 27 Apr 78, who had exercised his
Constitutional rights on his IRS 1040 form. The
newspaper reporter questioned Assistant US Attorney assigned to the case as to
the government’s next step. The prosecuting Assistant attorney replied that
the government would continue to prosecute every known
violation of the law, every known tax protestor.
Likewise, the District Attorney in this district normally takes the position
that he must prosecute all known violations of the law. Just prior to the
initiation of summons enforcement, did the District Attorney suddenly decide
that he is not going to prosecute this citizen, even though he has been
classified as “tax protestor”?
In US v Lafko, 520 F 2d 622 (3rd 1975), the court determined that “good
faith” would be lacking if the investigory agent had already formed a firm
purpose to recommend criminal prosecution, even though
he had not made a formal recommendation. As before, numerous courts have held
that it is proper to deny enforcement of an administrative summons issued solely
for the investigation of criminal charges even
though no formal recommendations to prosecute had been made.
In US v Genser (I) 582 F 2d 292, (3rd Cit. 1978), the court stated:
“We think that in consistently holding that the IRS
may not use the administrative summons to gather evidence in an exclusively
criminal investigation, the courts form Reisman (357 US 440) and Donaldson ~
onward have identified a protectible interest in the taxpayer not to be the
target of exclusively criminal investigation in which the government’s agents
have acted beyond their statutory authority... An IRS
administrative summons is a process essentially civil in character...The
statutory authority for its issuance is civil and the evidentiary objective of
the time of its issuance must be civil in nature.
Finally, the Court in US v Henry , 491 F2d 702(1974) called the IRS US
Attorney action for what it was: where information sought by the IRS summons has
obvious and strong potential for supplying
information needed in pending Federal criminal cases, use of civil summons is an
abuse of process.
Taxpayer is to the government a “tax protestor”, so the US Attorney has only
one plan: criminal prosecution. Now, the IRS, which in an institutional sense
long ago abandoned civil action against those so classified, is being used by
the Justice Department to circumnavigate the grand jury and the Fourth
Amendment.
5. Question: Should government agencies be allowed to mislead the Court?
Top level IRS authorities have announced several times on national television
that they will prosecute all those who exercise their constitutional rights on
the IRS Form 1040. In innumeratable statements to the media, the IRS and
Department of Justice has stated their policy to bring criminal prosecutions
against those who are classified as “tax protestors”. In the numerous
manuals, policy statements and procedural guidelines, the IRS clearly states
that their policy is to prepare for criminal prosecution.
Taxpayer, having been classified as a “tax protestor”, is now the object of
a criminal investigation which will undoubtedly lead to a criminal prosecution.
The government feels that it has the duty to bring criminal prosecutions against
all so called “tax rebels” for the purpose of scaring other Americans from
exercising their constitutional rights. Solely for the purpose of circumventing
taxpayers constitutional rights and the rulings of the US Supreme Court, the IRS
is now masking their avowed purpose, their known intent, and proceeding in court
under the guise of civil action. Now the government takes the position that this
is not a criminal prosecution.
Either the IRS or the governments attorney is violating established policy or
they are attempting to mislead the Court. The question then becomes whether
through subterfuge, disguise and sham proceedings, will they be allowed to use a
civil summons in furtherance of criminal prosecution. The IRS agent, in his
affidavit filed in this Court, failed to state under oath this was a civil case
only.
The courts have established a rule that the administrative summons, issued
without court approval cannot be used solely for a criminal prosecution. The US
Supreme Court in Donaldson v US 91 S Ct 534 (1971)
stated conclusively that the summons of a low level administrative officer shall
not be issued in aid of a criminal prosecution and the same shall be issued in
good faith. Further, that the chief defense when contesting an enforcement order
is that “the material is sought for the improper purpose of obtaining evidence
for use i a criminal prosecution.” The government, knowing the state of the
law, feels that they must take the position now that this is civil
investigation, even though no reasonable man can deny that this is a criminal
prosecution.
In the motion to quash and his accompanying affidavit, taxpayer lists a number
of reasons which clearly point out this is definitely a criminal investigation.
Taxpayer pointed out that the broad sweep of the governments request, the agents
reading the Miranda Rights to him and other acts which, assuming that actions
speak louder than words, show at least utter bad faith by the IRS.
The government has a file on taxpayer available to the Court, containing many
documents on taxpayer including IRS form 3949 - Intelligence Information Items
which shows the Criminal Investigation Division has “selected” Petitioner .
The Court can order the government to produce this file or examine the
documents, en camera.
Taxpayer, in his affidavit has set forth prima facie evidence that this is a
case of criminal prosecution in bad faith, which compels the court to
investigate further.
The Court of Appeals for the Fifth Circuit in US v. Tweel, 550 F 2d 297 (FLA
1977) pretty well laid down the law as to what their circuit thought about
deceit by government officials. In this case the defendant was charged with tax
evasion and false statements on the tax because the agent had used deceit,
trickery, and misrepresentation to gain access to defendant’s records.
In Tweel, the Revenue agent knew that a criminal prosecution had actually
begun, had been informed by his superiors that a search had been planned for
some time, yet the agent led the defendant to believe that only civil
proceedings existed at that time. The court held “that from the facts that we
find, the agent’s failing to appraise the defendant of the obvious criminal
nature of this investigation was a sneaky deliberate deception by the agent..
.and a flagrant disregard for his rights. Further, the court found that high
level IRS officials succeeded “in making the undeniable criminal nature of
this investigation. . .We cannot condone the shocking conduct by the IRS. Our
revenue system is based upon the good faith of the taxpayers and the taxpayers
should be able to expect the same from the government in its enforcement and
collection activities.. .During oral argument, counsel for the government stated
that these procedures were ‘routine’. If this is the case, we hope our
message is clear. This sort of deception will not be tolerated and if this is
‘routine’ , it shall be corrected immediately.”
6. Question: Was the summons issued in good faith?”
Taxpayer asserts that the summons was issued in aid of the criminal prosecution
and that it also lacks good faith. In his affidavit presented to the court,
taxpayer pointed out that the summons to the banks were over broad, requesting
everything, more than just checks and statements. For a civil investigation, the
Revenue agents generally request and need only checks and figures to prove money
coming and going. However, for a criminal investigation, the Special Agents need
signature cards, loan applications, etc. By the IRS actions, letters and deed,
by their fakey position now, it is very apparent that this is an impermissible
ruse to gather evidence in a criminal investigation.
It is well settled law that summons enforcement will not be had in a criminal
investigation. Therefore, taxpayer needs to subpoena witnesses so that the court
can see that a criminal investigation has begun in earnest and that the civil
proceedings position of the government is a sham, a disguise and subterfuge. By
petitioners simply saying that he has not brought an indictment or filed papers
with his agency with the court stating conclusively that a criminal
investigation has not begun, it is itself proof.
If a record of civil prosecution has not been made, (difficult to determine
without examining internal IRS records), the test of whether a summons is
enforceable in good faith, US v Friedman, 588 F Supp 971
(1974). Taxpayer has set forth in his affidavits that he can show this
proceeding is not in good faith, especially when he has access to high level IRS
agents, Form 3949 and other memoranda.
A criminal case can be inferred from other acts of the IRS and written records.
If it is apparent that the focus and determination of a criminal prosecution is
made prior to the actual request, the written request of IRS to Justice
Department for criminal action, is immaterial. When the focus and determination
is criminal the fact
that a formal recommendation for criminal prosecution has not issued, is
irrelevant.
In taxpayers case the issue is the use, focus, determination, intent and purpose
of the government’s request. This court should take judicial notice that at
the time of the issuance of the summons, the motive, the ultimate fact, the
principal purpose for seeking the information was to prosecute criminally
taxpayer for exercising his
constitutional rights and for not complying with IRS rules.
7. Question: Is Petitioner entitled to a meaningful hearing?
The essence of a meaningful hearing is adequate information revealed to the
court by prehearing discovery and in-depth examination of the persons with
knowledge under oath at a full evidentiary hearing.
The Congress has spoken: Taxpayers are entitled to their day in court prior to a
surrendering of their privacy by third-party record keeper pursuant to summons
issued by low level administrative agents; the US
Supreme Court has spoken in LaSalle, supra: certain administrative
purposes are “improper” and, therefore, impermissible”.
Now, the burden to provide an adequate showing to this court falls on taxpayer,
yet, almost all the evidence, the facts, the documents are in the possession of
the government.
Since the case of US v LaSalle National Bank, 98 S. Ct. 2357 (1978) is
and was meant to be the dispositive, we examine the standards on discovery by
taxpayer Petitioner there:
A. “The primary limitation on the use of the summons occurs upon the
recommendation of criminal prosecution to the Department of Justice. Only at
that point do criminal and civil aspects of a tax fraud case begin to diverge.”
(page 2365) Consequently, essentially, their case must examine all the
surrounding facts and circumstances pertaining to either an actual
recommendation or an institutional commitment to so recommend.
B. “The potential for expanding the criminal discovery rights of the Justice
Department or for usurping the role of the grand jury exists at the point of the
recommendation of the special agent. But, we think the possibilities of abuse of
these policies are remote before the recommendation to Justice takes place.”
(footnote #15 on page 2365) However, these possibilities should be explored
through ample pre- trial discovery and lengthy questioning of witnesses at an
evidentiary hearing.
C. “We recognize, of course that examination of agent motive may be necessary
to evaluate the “Good Faith” factors of Powell. For example, to consider
whether a summons was issued to harass a taxpayer.” (footnote#17 page 2367)
D. “The question whether an investigation has solely criminal purposes must be
answered only by examination of the institutional posture of the IRS.” (page
2367)
E. “This means that those opposing enforcement of a summons do bear the burden
to disprove the actual existence of a valid civil tax determination or
collection purpose of the Service. After all, the purpose of the goodfaith
inquiry is to determine whether the agency is honestly pursuing the goals of
§7602 by issuing the summons.” (page 2367) (emphasis added)
F. “Without doubt, this burden is a heavy one.” (page 2367)
G. “Yet, the burden (the majority decision) imposes today --to discover the
‘institutional good faith’ of the entire Internal Revenue Service is, in my
view, even less desirable and less rewarding. The elusiveness of ‘institutional
good faith’ as described by the Court can produce little, but endless
discovery proceedings.”
(Dissenting opinion, Mr. Justice Stewart, page 2369) In other words, the Chief
Justice of the Supreme Court and three justices agree with taxpayer that to
determine the “institutional poster” of Revenue involves extensive
discovery.
8. The Third Circuit in US v Genser, 595 F 2d 146 (1979) also high- lighted the
discovery and information gathering needs of Petitioners.
A. The taxpayer must “bear the burden of proving both a pre-existing
institutional commitment to prosecute and a failure of the summons to advance
any civil purpose. (page 151)
B. The Genser Court decided wisely:
“Our reading of LaSalle suggests several guidelines for
discovery. At minimum the taxpayer should be entitled
to discover the identities of the investigating agents, the date the
investigation began, the date the agents
or agents filed reports recommending prosecution, the date the district chief of
the Intelligence Division
or Criminal Investigation Division reviewed the re- commendation, the date the
Office of Regional Counsel
reviewed the matter for prosecution and the dates of all summons issued under 26
USC §7602. Furthermore,
the taxpayer should be entitled to discover the nature of any contacts, relating
to and during an investigation,
between the investigation agents and the officials of the Department of Justice.”
(page 152)
The Genser Court recognized that certain aspects of the record revealed by these
questions may lead to the situation where “the district court must allow the
taxpayer to investigate further”, in other words, “that inordinate and
unexplained delays in the investigation” of Petitioner, as in this case, will
necessitate the opportunity to examine the IRS agents or officials involved, or
to discover documents.” (page 152)
Considering the past history of the IRS in serving as the information gathering
of various federal law enforcement task forces, considering the policies and
procedures of both the Department of Justice and IRS of handling persons
similarly classified as Petitioner, it is imperative for Petitioner to have
extensive pre-trial discovery. Without answer to his interrogatories, Petitioner
does not even know who to subpoena.
The institutional posture of both the IRS and Department of Justice, their
policy statements, procedures and guidelines on the special hand- ling, ultimate
objective of those persons classified as “tax protestors” should be examined
thoroughly by this court.
9. In the event that this Court upholds the position of the government and
orders the records to be released, Petitioner requests that the court: (a)
Orders the Respondents to furnish Petitioner with a copy of the documents
furnished to the government. (b) And require that the IRS not be allowed to use
these records in a criminal case.
10. Incidentally, authorities on IRS procedure are now stating that
administrative summons enforcement is used only in prospective criminal cases.
In civil cases, the IRS simply examines the last tax return, gathers tax due,
adjusted gross income or total income and estimate taxes owed for the year in
question. Then the taxpayer can prove assessment not owed in tax court. The very
use of §7609 enforcement means only one aspect: a criminal case solely.
In conclusion, this Court should not enforce the IRS Third Party summons because
the government has violated the LaSalle criteria, show utter bad faith, engaged
in a deliberate attempt to deceive the Court,
and has not allowed meaningful discovery to taxpayer.
I hereby certify that on or about this date I mailed a copy of this pleading
to opposing party.
Date:_______________________________
______________________________
Petitioner pro se
______________________________
______________________________
---------------------------------------------------------------------------------------------------------------
[Members area] [Home]