How To Lawfully Refuse An IRS Audit
by Marvin L. Cooley
_______________
ABOUT THE AUTHOR
Marvin L. Cooley was born December 30, 1926, on a farm near
Gilbert Arizona. He grew up in the Gilbert
area, attended elementary school in Gilbert and went to high school in the
nearby community of Mesa, Arizona graduating from Mesa High in 1946. He joined
the U.S. Army in 1946 and served in Japan from 1946 until 1948. He married
Barbara Ann Wright, a Mesa native, is the father of 10 children, and was engaged
in the occupation of farming until 1970.
Mr. Cooley commenced researching the rights of
taxpayers in the late 1960’s, due to tax problems which
some of his friends were confronted with, and due to a profound conviction that
taxpayers had some rights which they were failing to claim. He is largely
self-taught, having spent countless hours researching the subject
matter of this manual and learning from actual experience on the field of battle
in tax war. His discoveries created such a demand for his expertise that he gave
up his farming occupation in order to hit the lecture trail.
Mr. Cooley has lectured nationally for 10 years, in
virtually every state in the nation, on the rights of
taxpayers; has appeared on numerous radio and television talk shows nationwide,
and was recently featured in a syndicated article by United Press International.
He is the author of The Big Bluff 1976 and Tax Slavery or Manhood,
and publishes a national monthly newsletter entitled Tax Facts.
INTRODUCTION
This manual is divided into four parts, in order to make it as easy as possible
to follow the step by step instructions on how to lawfully refuse an IRS audit.
Part 1
is a short discussion calculated to begin the process of convincing taxpayers
that most of IRS’s demands upon them to submit to an audit of their personal
records is based on bluff and intimidation.
Part 2
deals with the IRS Summons, the authority behind it, the bluff connected with
it, what taxpayers are legally required to do when they are served one, and
how to lawfully object to and defeat its demands for information.
Part 3
discusses and illustrates the Petition to Enforce Internal Revenue Service
Summons and the Order To Show Cause, which will be served on the taxpayer if
IRS seeks court enforcement of its summons.
Part 4
instructs the taxpayer as to how to respond to the Petition To Enforce Internal
Revenue Service Summons and the Order To Show Cause, illustrates the response,
provides a motion to dismiss the petition to enforce Internal Revenue Service
Summons and a memorandum of law in support, and contains transcripts of court
hearings wherein the Court upheld the right of the taxpayer to refuse production
of the information demanded by IRS Summons.
RECOMMENDATIONS
If you follow the instructions as set forth herein, then you should meet with
no great difficulty in defending your rights, if IRS or any other government
agency attempts to compel production of your testimony and personal business
records.
You should read this manual a number of times and thoroughly familiarize your-
self with its contents.
If you want to thoroughly protect your personal records, then DON’T leave them
in the possession of any third party, such as CPAs, accountants and lawyers.
Third parties cannot claim your rights for you; IRS can compel third parties
to produce your records. Don’t rely upon the attorney-client privilege,
because
you might be disappointed.
NO THEORY
The information contained in this manual has been garnered from years of actual
experience working with and informing individual taxpayers who successfully re-
fused the production of their personal business records and testimonies in
response
to demands of tax collectors and others. It is not based on untried theory. It
has
worked very well up to this time and should continue to do so.
However, because of the vagaries of the courts, the publisher cannot guarantee
with absolute certainty that the defenses and strategies set forth herein will
prevail in all cases in all courts in the future, but they should.
TABLE OF CONTENTS
Part
1
THE BIG BLUFF......................................................1
Part
2
THE IRS SUMMONS...............................................2
APPENDIX
A
A reproduction of an IRS Summons............................5
APPENDIX
B
TRANSCRIPT OF PROCEEDING BEFORE IRS
AGENT ON SUMMONS FOR PRODUCTION OF
RECORDS AND TESTIMONY...............................6
Part
3
THE PETITION TO ENFORCE INTERNAL
REVENUE SERVICE SUMMONS AND THE
ORDER TO SHOW CAUSE....................................12
APPENDIX
A
PETITION TO ENFORCE IRS SUMMONS...........13
APPENDIX
B
ORDER TO SHOW CAUSE....................................15
Part
4
RESPONSE TO PETITION TO ENFORCE IRS
SUMMONS AND MOTION TO DISMISS WITH
MEMORANDUM OF LAW IN SUPPORT.............17
APPENDIX
A
RESPONSE TO PETITION TO ENFORCE IRS
SUMMONS..............................................................19
APPENDIX
B
MOTION TO DISMISS PETITION TO ENFORCE
IRS SUMMONS.......................................................20
APPENDIX
C
EXCERPT FROM TRANSCRIPT OF PROCEEDING
TO ENFORCE IRS SUMMONS..............................35
APPENDIX
D
TRANSCRIPT OF PROCEEDINGS TO ENFORCE
IRS SUMMONS
United States vs. Tecton.............................36
APPENDIX
E
TRANSCRIPT OF PROCEEDINGS TO ENFORCE
IRS SUMMONS
United States vs. Johnson...........................41
APPENDIX
F
TRANSCRIPT OF PROCEEDINGS TO ENFORCE
IRS SUMMONS
United States vs. Geissler............................43
APPENDIX
G
TRANSCRIPT OP PROCEEDINGS TO ENFORCE
IRS SUMMONS
United States vs. Cole..................................47
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Part 1
THE BIG BLUFF
Senator Henry Bellmon of Oklahoma, testifying before the Senate Finance
Committee October 2, 1969, said:
In a recent conversation with an official at the Internal Revenue Service, I
was amazed when he told me that ‘if the taxpayers of this country ever
discover that the Internal Revenue Service operates on 90% bluff, the entire
income taxi system will collapse.
Possibly the biggest bluff ever perpetrated upon American citizens by Internal
Revenue Service, is conning them into believing that they have no alternative
other than to produce their records and testimony when demanded by IRS agents.
There is another alternative. In the Case of Belnap vs. United States
et al , No. C-l49—71 District Court (Utah), Judge Willis Ritter said:
All you needed to do is tell him [IRS agent] you wouldn’t say anything or you
wouldn’t turn anything over to him and keep your mouth shut, and you didn’t
do that. Now, you have a Constitutional right to do that.....
The part that is important to you, Mr. Belnap, is that
you can’t be compelled to be a witness against yourself. That is what I have
been telling you about. That Fifth Amendment, in that clause about you can’t
be compelled to be a witness against yourself, is where you have a
Constitutional right that should have been asserted when you turned those
records over to him.
Judge Ritter has made it abundantly clear that the proper way to lawfully refuse
an IRS audit, is to assert your constitutional right not to be compelled to act
as a witness against yourself. Failing to assert this right constitutes a waiver
of it under the law. So, don’t waive it, if you want to keep it.
The Seventh Circuit Court, in United States vs.
Dickerson, 413 F.2d 1111, said, “only a rare taxpayer would be likely to
know that he could refuse to produce his records to IRS agents,” and “who
would believe the ironic truth that the cooperative taxpayer fares much worse
than the individual who relies upon his constitutional rights.”
A taxpayer should be aware of the fact that the right
against self-incrimination fully protects the innocent as well as the guilty and
that producing books and records and giving testimony can very definitely tend
to incriminate an innocent person. “Even a completely innocent taxpayer may be
confronted with serious difficulties if he submits to a net worth audit, said
Baily and Rothblatt, in their book entitled ‘Defending
Business And White Collar Crimes,” Bancroft-Whitney, page 273. See also Pages
329-335. Moreover, in a book entitled ‘Tax Fraud,” published by The
Institute of Continuing Legal Education, Hutchins Hall, Ann Arbor, Michigan, on
page 14, John Kennedy Lyench, Former Assistant Regional Counsel of IRS, says
that ‘one of the sad facts of this business is that the innocent are as likely
to be prosecuted as the guilty unless
you can explain errors to the satisfaction of the investigating agent”; and
that ‘many taxpayers who had not thought of defrauding the government find
themselves at trial simply because the laws have grown too complex for the
layman.’
The Supreme court has held to the effect that the right
against self-incrimination manifestly protects the innocent as well as the
guilty from unfounded, malicious, and tyrannical prosecutions, and from being
ensnared by ambiguous circumstances which cannot always be explained in a manner
consistent with innocence.
Part 2
THE IRS SUMMONS
Discussion and Instructions:
In Appendix A, page 5, you will find a reproduction of an Internal Revenue
Service Summons. It is suggested that you turn to it now, look it over and
familiarize yourself with it before reading further.
This summons is an administrative summons, which means
that it is issued by an administrative agency of the government (IRS) and is
signed by an administrative agent. It does not issue from a court. Nor does it
bear the seal of a court or the signature of a judge. But in spite of these
facts the Supreme Court—by arrogant usurpation, it appears—has upheld the
constitutionality of such summonses. In Oklahoma Press Pub. Co.
vs. Walling, 327 U.S. at 218, Mr. Justice Murphy said:
It is not without difficulty that I dissent from a procedure the
constitutionality of which has been established for many years. But I am unable
to approve the use of non-judicial subpoenas issued by administrative agents.
Excessive use or abuse of authority cannot only destroy man’s instinct for
liberty but will eventually undo the administrative processes themselves. Our
history is not without a precedent of a successful revolt against a ruler who
“sent hither swarms of officers to harass our people.”
Perhaps we are too far removed from the experiences of
the past to appreciate fully the consequences that may result from an
irresponsible though well-meaning use of the subpoena power. To allow a
non-judicial officer, armed with judicial process, to demand the books and
papers of an individual is an open invitation to abuse of that power. It
is no answer that THE INDIVIDUAL MAY REFUSE TO PRODUCE THE MATERIAL DEMANDED.
Many persons have yielded solely because of the air of authority with which the
demand is made . . .. Many invasions of private rights thus occur
without the restraining hand of the judiciary ever intervening. Only by
confining the subpoena power exclusively to the judiciary can there be any
insurance against this corrosion of liberty. [All emphasis added]
A taxpayer can be compelled to appear in response to an IRS Summons, but he can’t
be compelled to testify or produce records, if he at that time properly invokes
his Fifth Amendment right. The object in compelling appearance in response to an
IRS summons is to break down the resistance of uninformed taxpayers (which most
taxpayers are) by “the air of authority with which the demand is made.”
When it appears to an IRS agent that a taxpayer is
uncertain as to whether or not he should comply with a demand to submit to an
audit, the agent will usually read to him the contents of Section 7210 of the
Code, which provides a maximum penalty of a thousand dollar fine and a year in
jail, either or both, upon conviction, for refusing to obey an IRS Summons. But
to obey the summons, all you need do is appear. You do not have to produce your
records or answer questions, if you invoke your right.
The threat of Section 7210, together with the taxpayer’s
ignorance, is usually what induces him to comply with an IRS demand to submit to
an audit of his records. However, the Supreme Court, in Reisman vs. Caplin,
375 U.S. 440, said:
This statute [Section 7210] on its face does not apply where the witness
appears and interposes good faith challenges to the summons. . .. It is
sufficient to say that non-compliance is not subject to prosecution there
under when the summons is attacked in good faith. [Emphasis added]
Remember, all you need to do, in order not to violate Section 7210 of the code,
is appear in response to the summons at the time and place specified and make a
“good faith” challenge to it by invoking your right against
self-incrimination as grounds for refusing to produce your records and
testimony. In an article entitled “Rights of Taxpayers,” Congressional
Record, Senate, August 2, 1967, page 20961, Chief Counsel to
the Internal Revenue Service, Lester R. Vretz, said:
Good faith challenges in the form of constitutional and other
federally recognized privileges are of course recognized by the Service.
For example, the privilege against self-incrimination under the Fifth
Amendment may be a proper basis by an individual taxpayer for refusing
to answer specific questions or to furnish his records. [Emphasis added]
The above admission by Mr. Vretz was made in response to an inquiry by Senator
Long who asked, “what procedures, civil and criminal, does IRS possess for use
in cases of taxpayers who are recalcitrant as to (1) record keeping, (2) record
production, and/or (3) answering questions? Mr. Vretz further said that:
This section 7210 [the one providing a thousand dollar fine and a year in
jail for refusing to obey an IRS Summons] is stated by Reisman [Supreme Court
case, cited above] as not applicable where the summoned witness appears and
interposes good faith challenges to the summons.
Section 263 of IRS’s confidential “Handbook for
Special Agents” implies that agents should not serve a summons on a taxpayer
who is informed as to his rights because of “the adverse effect on voluntary
compliance by others if the enforcement efforts are not successful.”
Section 242.12 of the handbook says that “An
individual taxpayer may refuse to exhibit his books and records fog’
examination an the ground that compelling him to do so might violate his right
against self-incrimination under the Fifth Amendment . And Section 242.15 says
that “The privilege against self-incrimination must be specifically claimed,
or it will be considered to have been waived.”
The important thing to remember is that a
taxpayer does not have to do anything until he is served an IRS summons. He
doesn’t have to appear in response to a letter demanding that he submit to an
audit; he doesn’t have to respond to a telephone call from an agent making
such demands; and he doesn’t have to grant audience or reveal anything to an
agent making a personal appearance at his home, place of business, or
place of employment. But some taxpayers feel that it’s good strategy to turn
the tables and string along IRS agents and delay them by making them think you
are going to cooperate when you are really not going to, because such strategy
will frustrate IRS and delay the issuance of the summons. In other words, some
taxpayers just keep asking for postponements on grounds of a busy business
schedule, going out of town,
or they need more time to get records together or up to date, etc. They never
indicate that they are going to assert their Fifth Amendment right until they
are at the wire; that is to say, until after they have appeared in response to
an IRS Summons.
As the Seventh Circuit Court said: “The cooperative
taxpayer fares much worse than the individual who relies upon his constitutional
rights.” Or, to to quote a maxim, “the fish that keeps his mouth shut doesn’t
usually get hooked.” Consequently, if you are served with an IRS Summons
demanding your appearance and the production of your records and testimony, and
you want to assert your Fifth Amendment right as grounds
for refusing, then proceed as follows:
1. Obey the summons by appearing at the time and place
specified in the summons,
or ask for as many
postponements as you can get, based on any excuse acceptable to the
investigating agent.
2. When you do appear, take a couple of friends with
you as witnesses. if you can, and a tape recorder, if
you want to. If the IRS
agents object to the tape recorder or your witnesses, stand your ground. All
they can do is terminate the meeting and walk out on you. There is no law which
says you can’t tape record the conversation or that you can’t have friends
with you as witnesses, but there are court cases which say you can. And IRS
agents can’t compel your friends to identify themselves. If they order your
friends to leave because of failure to identify themselves, then you may leave
with them. You will not be under arrest when you go there. Don’t be bluffed.
3. When the interrogator asks if you brought your
records, refuse to answer the question, on grounds of self-incrimination. This
is very important. Don’t ever admit to having brought your records, or that
you didn’t bring them. Further, don’t ever admit that you keep records, or
that you don’t keep Them. If you ever admit to Keeping records, that you have
records, or that you brought them with you, conceivably you could later be
ordered by a judge to produce them in his chambers and called upon to justify
your claim of self-incrimination with respect to each specific record, which
otherwise you would not have to do.
You can refuse, on grounds of self-incrimination, to
answer all questions as to whether or not you keep, have, or have brought
records with you, because answering such questions could conceivably begin to
unravel a thread that might lead to a revelation that you don’t keep records,
that you destroyed them, or that you hid them, all of which constitutes a crime.
You may not have done any of this, but because the possibility exists that you
could have, you may refuse, on Fifth Amendment grounds, to answer questions
relating to your records.
The only information you have to reveal as a witness is
your name and address. You can’t invoke the right against self-incrimination
as grounds for refusing to supply such information. If, after you have invoked
your Fifth Amendment right once or twice, the investigator asks if you are going
to claim the “Fifth” on all the questions, then say that you don’t know
until you hear the questions. If he tries this tactic, he will be trying
to lead you into making a blanket objection, which you cannot legally make. As a
witness, you can only refuse to answer specific questions as they are asked.
Meaning, if you are asked fifteen questions which could tend to incriminate, and
you don’t want to answer them, then you must object fifteen times. You may
object to all the questions, other than your name and address, if you feel they
can tend to incriminate, but you must do so question by question as they are
asked. It’s not proper to say that you are going to refuse to answer all the
questions before they are asked. The theory is, that you are not supposed to
know whether or not a question could tend to incriminate until you hear it.
If you conduct yourself properly, in accord with the
instructions above, the meeting should not last more than three to five minutes
before it is terminated. If the investigator wishes to pursue the matter
further, he will have to petition a U.S. District Court for an enforcement order
under Section 7402 of the Code, which is
not usually done in the case of a taxpayer who is informed as to his rights. But
if he does, you would merely file a motion to dismiss the action on grounds of
self-incrimination, together with a memorandum of law in support. How to do this
will be discussed in Part 4, Appendix B.
4. There is no precise way to claim your Fifth
Amendment right not to be compelled to act as a witness against yourself. As
long as it is obvious that you are claiming such protection the style is
unimportant. When a question is asked which you don’t want to answer on Fifth
Amendment grounds, you can say “I object to the question on Fifth Amendment
grounds” or “I respectfully refuse to answer on grounds of
self-incrimination.” Additional questions may be objected to by saying “same
objection.”
5. You are entitled to a witness fee and travel
expenses for appearing as a witness in response to an IRS Summons, whether or
not you invoke the “Fifth.” Demand it! (See IRS Code, Section 7610, 5
U.S.C. Section 503(b), and Roberts vs. U.S. 397 F.2d 968.)
Summons
top-----------------------------------------------------------------------------------------------------------Part
TRANSCRIPT OF PROCEEDINGS BEFORE IRS AGENT ON SUMMONS
FOR PRODUCTION OF RECORDS AND TESTIMONY
The following transcript is included in this packet in order to provide a
vicarious experience and encourage the taxpayer who contemplates refusing IRS
demands for information on Fifth Amendment grounds.
At this point in time, such proceedings do not last nearly as long as the one
below involving Mr. Daly.
Mr. Daly appeared and consented to be sworn, but he refused on grounds of
self-incrimination to answer questions or produce records.
Q. Mr. Daly, have you brought with you your deposit date slips reflecting
deposits made by you in 1965 to any savings, trust, or escrow accounts or any
copies thereof?
A. Well, I wonder if we might—the purpose of your examination is to ascertain
information to complete the 1965 return, is that right?
Q. Yes, it is; to determine your tax liability.
A. Well, my last name is Daly, D-a-l-y; my first name is Jerome. My home
address is Rosemont, Minnesota, and my occupation is farmer and lawyer. My post
office address is Rosemont, Minnesota. My law office address is 28 East
Minnesota Street, Savage. I am single; and as far as the Social Security number
is concerned, I don’t remember it offhand. I think it’s 474-24-5607.
My age is 40. Now, in view of United States statutes 26, United States Code,
Internal Revenue Code, Section 7202 and 7203—well, Chapter 75 of 26 United
States Code, 7201 through 7212, including but not limited to Section 1918 (b) of
Title 28, Section 7207 of Title 26, Section 6531 of Title—no, strike that. In
the face of those criminal statutes, I am going to refuse to answer the question
that you asked me, Mr. Ehlers, upon the grounds that it infringes upon my rights
as secured by the Constitution of the United States; and more specifically the
fourth, fifth, and sixth amendments thereof.
Q. Do you have any such records in your possession or that’s under your
control?
A. The same answer. When I say (The same answer,” I am referring to the same—without
having to clutter up the records—the same objection.
Mr. Brennan: (IRS Attorney) When you say the same
objection, you mean to restate precisely the objection you made in response to
the first question, is that correct?
The Witness: To restate precisely what I have stated
previously.
Mr. Brennan: Yes, very good.
By Mr. Ehlers:
Q. Do you recall amounts and dates of your deposits of such accounts during
the year 1965?
A. Same objection.
Q. What was the source of the deposits?
A. Same objection.
Q. Mr. Daly, do you have with you your canceled checks executed by you
during the year 1965?
A. Same objection.
Q. Please detail and describe.
A. Well, it follows that I object to that also.
Q. Yes. Have you with you bank statements received by you relative to deposits
to and disbursements from bank accounts during 1965?
A. Same objection.
Mr. Brennan: May I interpose one question here. As a procedural matter in
raising your claims under the Constitution, I am wondering whether you feel it
would incriminate you to divulge whether those records are with you, and if they
are, whether then you would raise the objection in response to the questions of
whether you would make them available for our examination. Just a procedural
matter. Do you wish to indicate whether you have those records with you or do
not?
The reason I state this, I think that there may be some
authority; there may be some question as to whether the objection can be raised
without the records having been brought with you, and I am wondering if you are
satisfied that at least that the claim of the privilege is being properly raised
insofar as that question is
concerned.
The Witness: After checking Section 7210 of Title 25. I am satisfied that I am
going to stand on my objection.
[Note: Informed taxpayers never admit whether or not they have records, or’
whether or not they brought them.]
Mr. Brennan: Very good.
The Witness: I wonder if you could show me the list of questions you have and I
will take a quick glance at it and tell you which ones I will not raise
objection to.
Mr. Brennan: I think I would rather Mr. Ehlers—if it wouldn’t be too
inconvenient for you—to go over each of the questions because I think this is
more of a check list, and I think he may have questions of his own.
By Mr. Ehlers:
Q. Do you recall the amounts and dates of each of your checks executed by you
during the year ‘65?
A. Same objection.
Q. Do you recall the amounts you had on deposit during part at all of ‘65 of
such type of accounts; referring to your bank accounts, savings accounts,
escrow, any type of accounts that you would have?
A. Same objection.
Q. Do you recall what interest was there of any savings, passbooks or
certificates?
A. Same objection. And I also want to include in this objection the further
objection that it calls for evidence which might tend to lead to evidence which
might tend to incriminate myself and deprive me of my rights as secured by the
fourth, fifth, and sixth amendments. Also upon the further grounds that it might
tend to elicit information which might tend to incriminate clients I have in the
States of North Dakota, Texas, Illinois, and Kansas.
Q. Have you with you bank statements received by you relative to deposits to and
disbursements from bank accounts during the year ‘65?
A. Including clients I have in the State of Minnesota and also with that
statement it is the same objection all the way through.
Q. Okay. Have you with you certificates of deposit held by you at any time
during ‘65?
A. Same objection.
Q. Do you recall whether you had such certificates of deposit?
A. Same objection.
Q. Have you trust or escrow statements which which you have executed for any
part of 65?
A. Same objection.
Q. Do you recall the amount of commissions, interest or sales proceeds that may
have been paid or accrued to you in such agreements during ‘65?
A. Same objection; and I might also state because of the unconstitutionality of
the money system existing in the United States I don’t think it is possible
for’ me to answer your questions. I think I have already raised this objection—I
want to reassert all of the objections I have previously raised on the return,
which I filed here, also.
Q. Have you with you your cash receipt journal?
A. Same objection.
Mr. Brennan: Let me interrupt just to clarify one point. You mean to state you
just raised an objection dealing with the constitutionality of the monetary
system was it?
The Witness: Yes, I raised that, I think, on the return I filed in 1965.
Mr. Brennan: Yes, Now the question I have is: Are you raising that objection as
to the question which was just a moment ago given to you by Mr. Ehlers or are
you now raising that objection to each of the questions which Mr. Ehlers has
presented to you this afternoon?
The Witness: To each previous question also.
Mr. Brennan: Very well.
By Mr. Ehlers:
Q. Have you with you your general ledger?
A. Same objection.
Q. Have you with your your other record reflecting your receipts in ‘65 from
the rental of properties?
A. Rental parties; you mean property that I own and rent?
Q. Yes; property that you would own and rent.
A. Well, same objection.
Q. Do you have with you your records reflecting receipts from the business of
farming?
A. Same objection.
Q. Have you with you your records of receipts in 1965 of dividends and dividend
income?
A. Same objection.
Q. Have you with you your record reflecting receipts in 1965 from any other
source?
A. Same objection.
Q. What were your receipts and income in 1965?
A. Same objection.
Q. What were the sources of your receipts?
A. Same objection.
Q. Have you with you your statements reflecting purchases and sales of assets in
1965?
A. Same objection.
Q. Do you recall what your purchases and sales of assets were in 1965?
A. The same objection.
Q. Have you with you your records reflecting your basis on the assets you sold?
A. The same objection.
Q. Have you with you your cash disbursement journal , general ledger or other
records reflecting expenses paid by you in 1965 incident to your practice of
law?
A. Same objection.
Q. How about regarding the rental properties? Do you have any of your cash
disbursements journal or general ledger or other records reflecting your
expenses in connection with your rental of properties?
A. Well, I am going to make the same objection, but I mean a lot of these
questions you ask are just out in-just no materiality. But I want to make the
same objection.
Mr. Brennan: Well, if Mr. Daly, we can narrow the area where you have records or
have not records, it might facilitate the ultimate disposition of the case. We,
of course, are not aware of what records you do have and tried to be all
encompassing.
The Witness: Well, I understand your point, but I think I will just stand on the
same objection.
Mr. Brennan: Very well.
By Mr. Ehlers:
Q. How about in regard to the business of farming; your records such as cash
disbursements journal, general ledger or other records reflecting your expenses
in connection with farming?
A. Well, that’s the same objection.
Q. How about in regard to other transactions entered into profit? Do you have
your records in regard to that, to those?
A. Same objection.
Q. Do you recall what such expenses were?
A. Same objection.
Q. Have you brought with you your appointment book reflecting appointments with
clients during 1965?
A. Same objection.
Q. Do you recall the number of appointments you had with clients during 1965?
A. The number of appointments?
Q. The number of appointments you had with clients; with your clients.
A. I think the same objection.
Q. What is the normal fee arrangements with clients? For example, how much an
hour do you charge for general consultation?
A. Same objection.
Q. What’s your estimate as to the total time spent working for clients?
A. Same objection.
Q. What percentage of receipts did you receive from clients in 1965?
A. Same objection.
Q. Have you brought with you depreciation records or other records reflecting
assets subject to depreciation in 1965?
A. Same objection.
Q. Do you have such records as reflect the basis of such assets?
A. Same objection.
Q. Or the improvements to such assets?
A. Same objection.
Q. Depreciation allowed for such assets?
A. Same objection.
Q. The useful life of such assets?
A. Same objection.
Q. And the salvage value thereof?
A. Same objection.
Q. Do you recall what assets you may have had of such type during the year 1965?
A. Same objection.
Q. And the basis thereof, improvements, depreciation, et cetera?
A. Same objection.
Q. Mr. Daly, have you brought with you your records and documents reflecting
your gross income in 1965?
A. Same objection. I answered that, didn’t I?
Q. Or your expenditures in 1965 which may be deductible?
A. Same objection.
Q. Do you recall any other factors which may affect computation of your gross
income or the computation of your deductions?
A. In 1965?
Q. Yes.
A. Well, no other factor other than the fact that you have disrupted me by
bringing me up here.
Q. Have you with you any document related to any credit deduction allowance
which you may be entitled to for the year 1965?
A. Same objection.
Q. Do you claim any such credit deduction allowance at this time?
A. Do I claim a credit deduction allowance?
Q. Yes. Do you claim any credit deduction at this time on an allowance?
A. Same objection.
Q. Did you have a gross income of $600 or more during 1965?
A. Same objection.
Q. Who does your bookkeeping?
A. Same objection.
Mr. Ehlers: That’s all the questions that I have.
Mr. Brennan: Mr. Ehlers, you might want to consider some additional ones.
By Mr. Ehlers:
Q. What was the amount of your gross receipts in 1965?
A. Same objection.
Q. What was the amount of your total wages, if any, in 1965?
A. Same objection.
Q. What was the amount of your total business expenses?
A. Same objection.
Q. Are you under age 65?
A. I stated my age.
Mr. Brennan: May I have it restated? I must have missed it?
The Witness: 40. I suppose that that would even go to incriminate me by stating
my age.
By Mr. Ehlers:
Q. Have you anyone who you claim as a dependent under the provisions of the
Internal Revenue Code?
Mr. Brennan: For the year 1965.
Mr. Ehlers: Yes, for the year 1965?
The Witness: Same objection.
Mr. Brennan: Mr. Daly, in what respect would the last question tend to
incriminate you?
The Witness: Same objection.
Mr. Brennan: Mr. Daly, in what respect would the—any of the other questions
asked by Mr. Ehlers tend to incriminate you?
The Witness: Same objection.
Mr. Brennan: In other words, you refuse to answer the questions on the grounds
that you previously stated?
The Witness: Yes.
Mr. Brennan: Mr. Daly, at this time are you prepared to make your books and
records available to Mr. Ehlers at any location for the purposes of his making
an examination into your tax liability for the year 1965?
The Witness: Same objection.
Mr. Brennan: In other words, you refuse to answer the question on the grounds
stated in the original?
The Witness: Yes.
Mr. Brennan: May I ask how the answer to that question may tend to incriminate
you?
The Witness: Are you asking me for an advisory opinion?
Mr. Brennan: No, I am asking you what—just in what respect do you feel that
the answer to the last question would tend to incriminate you.
The Witness: Same objection.
Mr. Brennan: In other words, are you refusing to answer on the grounds you
previously stated?
The Witness: Yes.
Mr.Brennan: Anything further?
Mr.Ehlers: No. I have nothing further.
Mr.Brennan: No further questions.
(Testimony concluded)
I hereby certify that the foregoing is a true and correct transcript of my
original stenotype notes as taken at the time and place indicated.
(s) E. James Fowler, Reporter.
In a later hearing before Judge Miles W. Lord, in the United States District
Court for the District of Minnesota, Fourth Division, No. 3-66-349 Civil, all of
Mr. Daly’s objections were sustained. The Court held that
“As to each question asked, it is evident from the implications of the
question in the setting in which asked, that a responsive answer to the question
may tend to incriminate Jerome Daly.”
top---------------------------------------------------------------------------------------------------------
Part 3
PETITION TO ENFORCE INTERNAL REVENUE
SERVICE
SUMMONS AND THE ORDER TO SHOW CAUSE
SUMMONS AND THE ORDER TO SHOW CAUSE
Discussion and Instructions:
On pages 13 and 15 you will find Appendixes A and B. Appendix A is a
reproduction of a petition to enforce Internal Revenue Service Summons and
Appendix B is an order to show cause. You should turn to them now and read them,
before proceeding further, so you will be familiar with what is being discussed.
After you refuse to produce your records and testimony
in response to an IRS Summons, IRS may petition a U.S. District Court, under
Sections 7402(b) and 7604(a) of the Code, for an order enforcing the summons, as
is illustrated in Appendix A, page 13.
If (it doesn’t always) IRS petitions the Court for an
enforcement order, the Court will issue an order (denominated “ORDER TO SHOW
CAUSE,” as illustrated in Appendix B, page 15) ordering you to appear before
the Court and show cause, if you have any (which you will) why you should not be
compelled by the court to comply with the IRS Summons. Such order will usually
contain an additional order, ordering you to make a response to the petition.
This is nothing to be alarmed about. The Court will merely be ordering you to
present to the Court your legal grounds for not complying with the IRS Summons,
which if you do, and the grounds are valid and legal, the Court should dismiss
IRS’s petition to enforce its summons.
When served an order to show cause, you should prepare
a response to the petition and a motion to dismiss, together with a memorandum
of law on the right against self-incrimination, in support of your motion. Such
pleadings are discussed and illustrated in Part 4.
THE PETITION TO ENFORCE INTERNAL REVENUE
SERVICE
Part 3, APPENDIX A
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA
and
}
L.F. Andersen, Revenue officer,
of the Internal Revenue
Service,
NO. CIV 81-451 PHX-WPC
Petitioners,
vs.
PETITION TO ENFORCE INTERNAL
REVENUE SERVICE SUMMONS
John Taxpayer,
Respondent.
________________________________
The United States of America and L.F. Andersen, Revenue Officer of the Internal
Revenue Service, by their attorney, A. Bates Butler III, United States Attorney
for the District of Arizona, show unto this Court as follows:
1. This is a proceeding brought under the authority of 12 Sections 7402(b) and
7604(a) of the Internal Revenue Code of 1954, 26 U.S.C., to judicially enforce
an Internal Revenue Service summons.
2. The petitioner, L.F. Andersen, is a Revenue Officer of the Internal Revenue
Service employed in the Collection Division of the Office of the District
Director of Internal Revenue at Phoenix, Arizona.
3. The respondent, John Taxpayer, resides at 525 West 17 Dover, Phoenix,
Arizona, which is within the jurisdiction of this Court.
4. Petitioner, Revenue Officer L.F. Andersen, is conducting an investigation
into the tax liability of John Taxpayer for the calendar years 1978 and 1979, as
is set forth in the affidavit of Revenue Officer L.F. Andersen attached hereto
as Exhibit B.
5. The respondent herein is in possession and control of testimony and documents
concerning the above-described investigation.
6. On January 15, 1981, an Internal Revenue Service summons was issued by
Revenue Officer L.F. Andersen directing the respondent John Taxpayer to appear
before the petitioner, Revenue Officer L.F. Anderson, on February 9, 1981, at
10.00 a.m., at 12120 N. Central Avenue, Room 204, Phoenix Arizona, to testify
and to produce for examination books, papers, records or other data described in
said summons as is set forth in the affidavit of Revenue Officer L.F. Andersen
attached hereto as Exhibit B. The summons was served by the petitioner, L.F.
Andersen, by leaving an attested copy thereof with John Taxpayer on January 18,
1981.
A copy of the summons is attached hereto and incorporated herein as Exhibit A.
7. On February 9, 1981, the respondent John Taxpayer appeared in response to the
aforementioned summons but refused to supply the documents, records and
testimony required in the summons. The respondent’s refusal to comply with the
summons continues to date as is set forth in the affidavit of the petitioner,
Revenue
Officer L.F. Andersen, attached hereto as Exhibit B.
8. The books, papers, records or other data sought by the summons are not in the
petitioners’ possession.
9. All administrative steps required by the Internal Revenue Code, 26 U.S.C.,
for the issuance of a summons have been taken.
10. The documents sought by the summons described in paragraph VI above are
relevant to and can reasonably be expected to aid in the determination of the
correct federal income tax liability of John Taxpayer for the years 1978 and
1979. It was and is now essential to the completion of the investigation of said
tax liability that the respondent produce the materials sought by the summons,
as is set forth in the affidavit of petitioner, L.F. Andersen, attached hereto
as Exhibit B.
WHEREFORE, the petitioners, the United States of America and Revenue Officer L.F.
Andersen, respectfully pray:
1. That this Court enter
an order directing the respondent to show cause, if any he has, why he should
not comply with and obey the summons attached hereto as Exhibit A in each and
every requirement thereof;
2. That this Court grant
such other and further relief as it deems just and proper.
DATED this day of ____________ ,1981.
A. BATES BUTLER III
United States Attorney
District of Arizona
______________________
By: MICHAEL A. JOHNS
Assistant U.S. Attorney
top---------------------------------------------------------------------------------------------------------
Part 3, APPENDIX B
ORDER TO SHOW CAUSE
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
} No:
CIV 81-415 PHX WPC
UNITED STATES OF AMERICA and
L. F. ANDERSON, Revenue Officer,
of the Internal Revenue Service,
ORDER TO SHOW CAUSE
Petitioners,
V.
JIMMY GRIGSBY,
Respondent.
_________________________________
On the Petition, the Exhibits
attached thereto, and upon the Motion of A. Bates Butler III, United States
Attorney for the District of Arizona, it is,
ORDERED that Respondent Jimmy Grigsby appear
before the District Court of the United States for the
District of Arizona in that branch thereof presided over by the undersigned, in
his Courtroom in the United States Courthouse, Phoenix, Arizona, on the 15th
day of May, 1981, at 12:15 PM, to show cause why he should not be
compelled to testify and produce the documents demanded in the Internal Revenue
Service summons served upon him on January 12, 1981, by the Petitioner, Revenue
Officer L. F. Anderson; it is further,
ORDERED that copies of this Order and a Petition
and Exhibits be served upon the Respondent on or before the 21st day of May
1981.
IT IS FURTHER ORDERED that within ten (10) days
after service of copies of this Order, the Petition and Exhibits upon him,
Respondent shall file and serve a written response to the Petition, supported by
appropriate affidavit(s), as well as any motions he desires to make. All motions
and issues raised by the pleadings will be considered on the return date of this
Order. Only those issues raised by motion or brought into controversy by the
responsive pleadings and supported by affidavit(s) will be considered at the
return of this Order and any uncontested allegation in the Petition will be
considered admitted.
DATED this 17 day of April, 1981.
______________________________
United States District Judge
[Note: This case was dismissed in favor of Mr. Grigsby. He didn’t
have to produce any records or answer any questions. As soon as Mr. Grigsby
filed his motion to dismiss, and the U.S. Attorney saw that is was on grounds of
self—incrimination, the U.S. Attorney himself moved the court to dismiss the
case. MR. Grigsby was notified that he would not even have to appear in court.]
top---------------------------------------------------------------------------------------------------------
Part 4 Instructions
AND MOTION TO DISMISS WITH MEMORANDUM OF LAW IN SUPPORT
Instructions:
On pages 19 and 20 you will find Appendixes A and B. Appendix A is an example of
a response to petition to enforce Internal Service Summons, and Appendix B is
the motion to dismiss petition to enforce Internal Revenues Service Summons. You
should turn to them now and read them, in order to get a good understanding of
what is being discussed. Be sure and read all the memorandum (14 pages) in
support of the motion to dismiss.
If you are ever ordered into court to show
cause why you should not comply with an IRS summons, proceed as follows:
1. Don’t be alarmed. You are not being arrested, nor are you going to be held
in contempt. The Court is simply asking you to state your reason for not
complying with the IRS Summons. If you state a good one, based on a recognized
legal defense, you will not be compelled to produce your records or answer
questions and the case against you will be dismissed. The worst that could
happen is that the judge could order you to
comply, if you don’t state a good enough reason for not complying.
2. Prepare a .response to IRS’s petition to enforce, by following the format
as illustrated in Exhibit A of this appendix. You will see in IRS’s petition
to enforce that a number of allegations have been made. Every allegation in the
petition which you do not specifically deny will be taken as admitted. This is a
rule of pleading in a court of law. So when preparing your response, be sure and
deny every allegation in the petition which you do not wish to admit, or that
you disagree with. The burden of proof will be upon the IRS to prove every one
of their allegations which you do not admit to.
Use Exhibit A of this appendix as a guide for
format only, because in your response you must admit, deny, and allege according
to the facts and circumstances of your own case.
If you do not have enough knowledge or
information to form a belief as to the truth of any of the allegations made in
the petition, say so, and then deny the allegation on such ground.
The example response in Exhibit A is single
spaced to conserve space. All court pleadings except for set off quotes, should
be double spaced, so when you type up your response, double space it.
3. Prepare a motion to dismiss IRS’s petition to enforce its summons. This
will be easy. Almost everything has already been prepared for you, as you should
have already seen in Exhibit B. Virtually all you will need to do is fill in the
blank spaces.
So proceed as follows:
A. Remove from this manual all of Exhibit
B, which is the motion to dismiss petition to enforce Internal Revenue Service
Summons, together with the memorandum of law in support. Altogether there will
be fifteen pages.
B. Go to a stationery store and buy a
little container of “Liguid Paper.” It will blot out printed material.
C. On the motion to dismiss, at the top,
blot out where it says “Part 4, APPENDIX B.” This should not be on the
motion to dismiss when it is filed with the Court.
D. On the motion to dismiss you will see
the numbers (1) through (7). Theses numbers should be blotted out as you supply
the information required at that spot.
At number (1) give your name, at (2) your
address, at (3) your telephone number, at (4) the district of the Court, as for
example: FOR THE DISTRICT OF ARIZONA, or SOUTHERN DISTRICT OF TEXAS, BROWNSVILLE
DIVISION. The name of the district that you are in will be on the order to show
cause served on you. Put it on your motion to dismiss as it is on the order to
show cause. At number (5) put the case number, which you will find on the order
to show cause. At number (6) type your name in capital letters, and at number
(7) sign your name.
E. On the last page of the memorandum of
law you will see numbers (8) through (11). At number (8) sign your name, at (9)
give your address, at (10) your telephone number, and at (11) the name and
address of the U.S. Attorney to whom you will mail a copy of your response,
motion to dismiss, and memorandum. The name and address of the U.S. Attorney
should be on the last page of the petition to enforce Internal Revenue Service
Summons, or in the upper left hand corner of the first page. If it isn’t, then
call the U.S. Attorney’s office in
your district and ask for the information.
4. After you have your response and motion to dismiss, together with the
memorandum, all prepared, go to the nearest copying establishment and have
copies made.
You will probably need at least two copies
for the clerk of the court, one for the U.S. Attorney, and one for yourself.
Make about six, so you will have a couple left over.
5. Mail the original and one copy of your response and motion to dismiss,
together with the memorandum, to the clerk of the U.S. District Court in your
district. The address can be obtained from the telephone directory, under U.S.
Government listings. Do this before expiration of the time limit specified in
the Court’s order for making your response.
6. Mail one copy of the same to the U.S. Attorney, whose name and address should
appear somewhere on the pleadings served upon you, if not, get the information
from the directory.
7. While awaiting the date for your appearance in court, study the memorandum of
law in support or your motion to dismiss, and familiarize yourself with all the
points of law therein.
8. At the appointed time, appear at the courtroom specified in the Court’s
order. Sit down and wait for your case to be called. When the Court is ready to
hear your case, the clerk will call out “United States of America vs. your
name.” At this point get up, walk through the swinging gate to the table
reserved for the respondent (you) or wherever the Court directs.
After the U.S. Attorney speaks his peace,
then you will be given the opportunity to speak yours. At which point you should
tell the court why you do not want to produce your records and testimony to IRS
agents. Of course, your reason should be on grounds of self-incrimination. Also
at this point you can argue the law. If the U.S. Attorney takes a position which
you feel is not correct, when it comes your turn to speak again tell the judge
why you feel the U.S. Attorney’s position in not correct and cite cases from
your memorandum in support of your position.
It is possible that you may never have to
appear in court, if the U.S. Attorney decides to withdraw after you file your
pleadings, which they have often done. [Note: Corporate officers cannot refuse
to produce corporate records on the grounds that the records would incriminate
the corporation or any officer thereof.
Corporations are considered to be public
entities—not entitled to the right. But if a corporate officer appears in
response to an IRS Summons for production of corporate records and says he doesn’t
have the corporate records in his possession, he can then invoke his individual
right against self-incrimination in response to all questions as to their
whereabouts, when he last saw them, who might have them now, or what might have
happened to them. At which point the burden would be on IRS to prove that he did
have them.
See Curcio VS U.S., 354 U.S. 118,
and U.S.VS. Ellsworth. 460 F2d 1246.]
-----------------
Part 4 Appendix A
RESPONSE TO PETITION TO ENFORCE
INTERNAL REVENUE SUMMONS
John Taxpayer
Respondent pro se
525 W. Dover,
Phoenix, Arizona 85004
Tel . 378-6602
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA et al
Petitioners,
vs.
} no: CIV
81-451-PHX-WPC
JOHN
TAXPAYER
RESPONSE TO PETITION TO ENFORCE
IRS SERVICE SUMMONS
Respondent,
Respondent, above named, admits,
denies and alleges as
1. Admits the allegations in paragraphs 3
and 6 of the
2. As to paragraph 7 of the petition,
respondent admits that he did not produce the records and testimony required in
the summons, but in lieu thereof he appeared and made a good faith challenge to
the requirements of the summons by submitting to questioning and invoking his
right against self-incrimination with respect to specific questions asked.
3. With respect to paragraph 5 of the
petition, respondent admits that he is in possession and control of testimony,
but denies that he is in possession and control of the documents required to be
produced in the summons and requires strict proof thereof.
4. With respect to paragraphs 1, 2, 4, 8,
9, and 10 of the petition, respondent is without sufficient, knowledge or
information to form a belief, and therefore denies the same and requires strict
proof thereof.
DATED this ______day of____________ ,1982.
Respectfully submitted,
___________________________
John Taxpayer
----------------------------------------------------------------------------------------------------------
Part 4 Appendix B
MOTION TO DISMISS PETITION TO
ENFORCE IRS SERVICE SUMMONS
1)
Respondent pro se
(2)
IN THE UNITED STATES DISTRICT COURT
(3)
(4)
10 UNITED STATES OF AMERICA et
al
}
Petitioners,
NO. (5)
(6)
vs
MOTION TO DISMISS PETITION
TO ENFORCE IRS SERVICE
SUMMONS
Respondent.
__________________________________
Respondent, above named, moves the Court to dismiss the above entitled action on
the ground that enforcement of the IRS Summons would compel Respondent to act as
a witness against himself, in a manner which could tend to incriminate him.
Respectfully submitted,
7)_______________________________
Respondent pro se
MEMORANDUM IN SUPPORT OF RESPONDENT’S
PROTECTION AGAINST SELF-INCRIMINATION
UNDER THE FIFTH AMENDMENT TO THE UNITED
STATES CONSTITUTION
top------------------------------------------------------------------------------------------------------
QUESTION PRESENTED PAGE 2 OF 15
WHETHER RESPONDENT CAN BE COMPELLED TO
PRODUCE EVIDENCE AGAINST HIMSELF, IN EITHER A FEDERAL OR STATE, CIVIL OR
CRIMINAL PROCEEDING, WHICH COULD BE USED AGAINST HIM IN A FEDERAL OR STATE
PROSECUTION, AFTER HE HAS PROPERLY CLAIMED PROTECTION AGAINST SELF INCRIMINATION
UNDER THE FIFTH AMENDMENT TO THE UNITED STATES CONSTITUTION?
ARGUMENT I
IN A FEDERAL OR STATE ACTION TO ENFORCE AN ADMINISTRATIVE
SUMMONS FOR THE PRODUCTION OF PRIVATE BOOKS AND RECORDS,
THE RESPONDENT CANNOT BE COMPELLED TO PRODUCE THE RECORDS
OR TO ANSWER ANY QUESTIONS WHICH MAY TEND TO INCRIMINATE
AFTER HE HAS PROPERLY ENVOKED HIS RIGHT AGAINST
SELF-INCRIMINATION
The Right is Available in All civil proceedings
To James Madison must go the credit for the Fifth
Amendment. He was its author and advocate, and due to his insistance and
unyielding demands it was finally adopted by the Constitutional Convention. In
the beginning, the courts applied the protection of the Fifth Amendment only to
defendants in criminal cases. However, in 1892, the Supreme Court extended this
protection to witnesses in criminal cases, in what was called the “Counselman
rule.” From there it was but a short step to civil cases, and since then,
there have been a series of decisions by the Supreme Court widening the
application of this protection to an increasing number of persons, applying not
only to civil cases but even to legislative hearings.
In McCarthy vs. Arndstein, 266 U.S. 34, a
unanimous Court stated the principles on which respondent relies, as follows:
I
The Government insists, broadly, that the Constitutional privilege against self—incrimination
does not
apply in any civil proceeding. The contrary must be accepted as settled, the
privilege is not
ordinarily
dependent upon the proceeding in which the testimony is sought or is to be used,
it applies
alike
to civil and criminal proceedings, whenever the answer might tend to subject
to criminal
responsibility him who give it. The privilege protects a mere witness as
fully as it does one who is also a
party
defendant. It protects, likewise, the owner of goods which may be forfeited in a
penal
proceeding.
See Counselman vs. Hitchock, 142 U.s. 547, 563, 564; 35 L ed. 110, 114 3
Inters.
Corn. Rep.
816; 12 Sup. Ct. Rep. 195. (Emphasis added)
The
protection of the Fifth Amendment against self- incrimination, as succinctly
explained by Mr. Justice Brandeis has not been restricted in later decisions. It
is equally clear that this protection applies in the instant proceeding.
Moreover, in Kastigar vs. United states, 406 U.S. 441 at 444-5, Mr.
Justice Powell unequivocally defines the scope of protection under the Fifth
Amendment privilege, saying:
It can be asserted in any proceeding, civil or criminal, administrative or
judicial, investigatory or
adjudicatory; and it protects against any disclosures that the witness
reasonably believes could be
used in
a criminal prosecution or could lead to other evidence that might be so used.
Valid Fear of Incrimination Protects Refusal
to Produce Records and Testimony to
Internal Revenue Service
A witness, summoned by the Commissioner of Internal
Revenue was held justified in refusing to answer questions put to him by a
revenue agent because of the danger of self-incrimination In re Friedman, 104 F.
Supp. 419, 41 AFTR 1266 (D.C. N.Y. 1952). In the Friedman case the Court stated
its position as follows:
The applicable law was recently restated in Hoffman vs.
United States, 341 U.S. 479, 71 Sup. Ct. 814, 818 95 L. Ed. 1118.
The privilege afforded not only extends to answers that would in themselves
support conviction
under a federal criminal
statute but likewise embraces those which would furnish a link to the chain of
evidence needed to
prosecute the claimant for a federal crime.
But one is not entitled to protection unless he has “reasonable cause to
apprehend danger
from a direct
answer.” Hoffman vs. United States, supra 341 U.S. at page 486, 71 S.
Ct. at page 818.
The mere assertion of privilege does not immunize him; the court must determine
whether his refusal
is justified and may “require that he is mistaken” in his refusal. Hoffman
vs. United States, Supra
341 U.S. at
page 486, 71 S. Ct. at page 818. The claimant is not required to prove the
precise danger since
by doing so he would be forced to disclose those very facts which the privilege
protects.” United
States vs. Weisman, 2 Cir., 111 F.2d 260, 262. Finally to sustain the
privilege, it need only be
evident from
the implications of the question, in the setting in which it is asked that a
responsive answer to the
question or an explanation of why it cannot be answered might be dangerous
because injurious
disclosure could result. Hoffman vs. United States, supra, 341 U.S. at
pages 486—487, 71 S. Ct.
at page 818.
Concededly, the claim was not stated by the witness with the meticulous clarity
demanded of a legal craftsmen, but fundamental rights do not hang by the tenuous
thread of a layman’s knowledge of the niceties of law. It is sufficient it
appears that he is attempting to assert his constitutional privilege. The plea,
rather than the form in which it is asserted, determines whether the privilege
against self-incrimination is to be upheld. Although inartistically expressed it
is clear that the witness intended to claim his privilege against possible
federal, as well as state prosecution. See United States vs. St. Pierre,
supra, 128 F.2d at
page 980.
In an opinion by Chief Judge Kirkpatrick of the United
States District Court for the Eastern District of Pennsylvania, United States
vs. Vadner, 119 F. Supp. 330, 45 AFTR 717 (1954) the court upheld the
refusal of a taxpayer to disclose assets and produce records where his plea of
self-incrimination was based upon the Fifth Amendment. The Chief Judge stated
the grounds for the Court holding as follows:
I am of the
opinion that the defendant’s refusal, based on the Fifth Amendment privilege
against self-incrimination, to make disclosure of his assets, was justified by
the recent decisions of the Supreme Court in the Hoffman v. United States,
341 U.S. 479, 71 S. Ct. 814 95 F. Ed. 1118; Greenburg vs. United States,
343 U.S. 918, 72 S. Ct. 674, 96 L. Ed. 1332; and Singleton v. United States,
343 U.S. 944, 72 S. Ct. 1041, 96 L. Ed. 1349 cases.
In Hill vs. Philpott, 445 F.2d
144, the Seventh Circuit Court said:
In numerous cases where the Internal Revenue Service has sought court
enforcement of its
summons pursuant to statute (26 U.S.C. Sec. 7402), courts have held that a
taxpayer may refuse
production of personal books and records by assertion of his privilege against
self-incrimination.
See, e.g., Stuart v. United States, 416 F.2d 459 (5th Cir. 1969); United
States v. Cohen, 388
F.2d 464 (9th Cir. 1967); United States v. Kleckner, 273 F. Supp. 251
(S.D. Oh. 1967) App.
Dism. 382 F.2d 1022 (6 Cir. 1967).
In the Hill case, supra, the Internal Revenue
agents had obtained Dr. Hill’s records via search warrant issued by the
District Court. Dr. Hill moved the District Court to suppress the evidence and
order the records returned, which was denied. An appeal was taken to the Seventh
Circuit Court, which reversed and remanded, and in footnote No. 6 said:
On oral argument government’s counsel suggested that it would have proceeded
by
summons in this case, but the defendant would have destroyed the records. Of
course his
destruction of the records would have been a pointless gesture, because as the
government has
been willing to admit, had it proceeded by summons, he could have relied on the
Fifth Amedment
privilege and refused production. . .
Mr. Jerome Daly of Savage, Minnesota appeared pursuant to an Internal Revenue
Summons but refused to produce his private financial records or answer
questions. He was later held in contempt of court. An appeal was taken to the
Eighth Circuit Court, which remanded the case to the district court for a
plenary hearing on appellant’s objections, as such had never been accorded to
the appellant. On July 17, 1968, Daly appeared before the U.S.District Court,
District of Minnesota, Third Division, No. 3-66-349, for the hearing. After
considering Daly’s objections the Court held:
“As to each question asked, it is evident from
the implications of the question in the setting in which asked, that a
responsive answer to the question may tend to incriminate Jerome Daly.” The
Court ordered that “IT IS HEREBY ORDERED that the order of this Court dated
May 3, 1967, adjudging Jerome Daly in contempt
• of the court’s order of December 28, 1966 is hereby vacated.”
In United States vs. Vivian Kellems, Civil
Action No. 1313-665,in the U.S. District Court for the District of Connecticut
John M.Walters, Assistant Attorney General, withdrew the Government’s request
for the enforcement of Internal Revenue Summons after Vivian Kellems properly
plead the Fifth Amendment protection against self-incrimination. Mr. Walter’s
letter to the Court said:
“Dear Judge Zampano
“Mr. Jeffrey Snow of
this office, handling the above styled case, has informed me that he had a short
conversation with you on March 31 , 1970. As you know it is the wish of this
office, having studied the transcript of the hearing to withdraw our request for
enforcement of the three summonses at issue. We are of the opinion that Miss
Kellems has properly pleaded the Fifth Amendment privilege against
self-incrimination as to her payment records [emphasis added].
“We have prepared the
enclosed order for your signature.
“Sincerely yours,
“JOHNNIE M. WALTERS
‘‘Assistant Attorney General
“Tax Division”
The Court’s order read:
On motion of the petitioners to withdraw their request for enforcement of the
three Internal
Revenue Summonses at issue, it is ORDERED that said summonses are withdrawn and
that the
petition is dismissed.
On May 19, 1967, Commissioner of Internal Revenue,
Sheldon S. Cohen, submitted a memorandum to Senator Edward V. Long, Chairman of
the Subcommittee on Administrative Practice and Procedure, on remedies, civil
and criminal, possessed by the Internal
Revenue Service “in cases of Taxpayers who are recalcitrant as to (1) record
keeping, (2) record production, and/or (3) answering questions.” Senator Long’s
Subcommittee was making an investigation in depth of the Internal Revenue
Service. He presented Commissioner Cohen’s report to the Senate on August 2,
1967. See
“Rights of Taxpayers,” Congressional Record—Senate, August 2, 1967,
page 20961, wherein Lester R. Vertz, chief counsel of the Internal Revenue
Service, said:
Good faith challenges in the form of Constitutional and other federally
recognized privileges
are of course recognized by the Service. For example, the privilege against
self-incrimination under
the Fifth Amendment may be a proper basis by an individual taxpayer for refusing
to answer specific
questions or to furnish his records.
On March 8th and 9th, 1971, W. Vaughn Ellsworth of
Mesa, Arizona appeared before the U.S. District Court for the District of
Arizona at Phoenix, Case No. Civ. 70—587, in response to a petition to enforce
Internal Revenue Summons. On page 10 of the transcript, line 7, the Court said:
If they were trying to get your personal tax records and not your corporate tax
records, then
I would be on your side, and all the law is on your side. Because all the
different amendments you
have cited are available to an individual. If your personal records were
involved, you are not
required to produce those, if you should choose not to, and stand on your right
against
self-incrimination, if they are personal records. [Page 79,line 3]
In the “Handbook for Special Agents” of the
Internal Revenue Service, agents are instructed that “an individual taxpayer
may refuse to exhibit his books and records for examination on the ground that
compelling him to do so might violate his right against self-incrimination”
(Sec. 242.12); and that “the privilege against self-incrimination must be
specifically claimed, or it will be considered to have been waived” (Sec.
242.15).
In the case of United States vs. Petersen, Civ.
No. 74-42-PHX-WPC, U.S. District Court for the District of Arizona, Asst. U.S.
Attorney James P. Loss, in his response to the motion to dismiss, page 3, line
9, said:
In the case of a taxpayer whose personal books and records and testimony are
demanded, the
existence of a Fifth Amendment privilege would seem unarguable ....
Admittedly, a
taxpayer can be compelled to appear in response to an Internal Revenue Summons,
and a willful and contumacious refusal to do so would subject the taxpayer to
criminal penalties under Section 7210 of the Code (U.S.C. Title 26) or contempt
charges under Section 7604. However, the Supreme Court,
in Reisman vs. Caplin, 375 U.S. 440, said:
This statute [Section 7210] on its face does not apply where the witness appears
and
interposes good faith challenges to the summons. . . . It is sufficient to say
that non-compliance is not
subject to prosecution there under when the summons is attacked in good faith.’
end of page 8 of 15
Moreover, under the Reisman doctrine, failure to appear in response to the IRS
summons is not punishable by fine, imprisonment, or contempt, unless the
summoned party “wholly made default or contumaciously refused to comply.”
Absent the required contumacious refusal to appear in response to the summons,
it would
seem clear that the law authorizes only compelled appearance.
A case in point is United States vs. Johnson, No. CIV-8’
78-687-PHX-WEC, U.S. District Court for the District of Arizona. In this case
Internal Revenue Service petitioned the Court to enforce the summons served on
the taxpayer. Whereupon the taxpayer claimed the Fifth Amendment privilege.
Consequently, the court ordered:
IT IS ORDERED that the
above—named respondent shall in all respects comply with the Internal Revenue
Service Summons which is the subject of this action, subject to respondent’s
right under the 5th Amendment of the U.S. Constitution, to refuse to answer any
question or produce any document which
the respondent believes may tend to incriminate him, within 30 days of the date
of this Order.
IT IS FURTHER ORDERED
that each of the parties may record the interview by tape recorder or other
method at their own expense if they wish to do so.
DATED
this 3d day of October, 1978. [Emphasis added]
In the case of United States vs. Nichols,
CIV-79-8-PHX-CAM, U.S. District Court for the District of Arizona, Internal
Revenue Service petitioned the Court for an order enforcing Internal Revenue
Service Summons. The respondent moved to dismiss the action on grounds of
self-incrimination. After receiving a
copy of respondents motion to dismiss, together with a memorandum of law in
support, the U.S. Attorney himself moved the court to dismiss the case, as
follows:
Petitioners move the court to enter its order vacating its Order To Show Cause
in this Internal Revenue Service summons enforcement matter and dismissing the
action pursuant to Rule 41(a), Federal Rules of Civil Procedure, without
prejudice or costs.
And the Court ordered:
Upon
the motion of the petitioners, it is ordered that the Order To Show Cause issued
in this matter is vacated and the action is dismissed without prejudice or
costs.
A case virtually identical to Nichols, supra, is United States vs. Grigsby, CIV—8l—415—PHX-WPC,
U.S. District Court for the District of Arizona. Grigsby failed to appear in
response to an Internal Revenue Service Summons for production of records. The
Service petitioned the Court for an enforcement order. Grigsby moved to dismiss
on grounds of self-incrimination, with a supporting memorandum of law. The U.S.
Attorney did not even ask the Court to compel Grigsby’s appearance, he just
filed the following motion:
Petitioners move the
Court to vacate its Order to Show Cause and to dismiss this action without
prejudice or costs, in light of Respondent’s assertion of the Fifth Amendment
self-incrimination clause in response to the Internal Revenue Service Summons
which is the subject of this summons enforcement proceeding. .
And the Court ordered:
Upon the motion of the
Petitioners and good cause appearing,
IT IS ORDERED that the
Order to Show Cause herein set for May 15, 1981 at 12:15 p.m. is vacated and the
action is dismissed without prejudice or costs.
In the case United
States vs. Walker, CIV-74-B-l , U.S. District Court for the Southern
District of Texas, Brownsville Division, the civil action docket reveals that
“Walker-Court compels deft. to appear as summoned but has the right to keep
silent on any questions that might incriminate him.” (Emphasis added)
In United States vs.
Cole, CIV-79-678-PHX-CAM, U.S. District Court for the District of Arizona,
the respondent failed to appear in response to an Internal Revenue Service
Summons. Internal Revenue Service Petitioned the Court for an enforcement order.
Respondent was ordered by the Court to appear and show why he shouldn’t be
compelled to testify and produce the documents demanded in the Internal Revenue
Service Summons. Respondent appeared at the specified time and submitted a
motion to dismiss on grounds of self-incrimination, together with a memorandum
of law in support. Whereupon the Court ‘Ordered and Adjudged that the
Petitioner take nothing, and that the petition and action are dismissed.’
Finally, in United States
vs. Dickerson, 413 F.2d 1111, the Seventh Circuit Court said, “only a rare
taxpayer would be likely to know that he could refuse to produce his records to
IRS agents.”
Federal Right Against Self—incrimination
is Controlling in State Proceedings
The Supreme Court has
made it abundantly clear, with respect to the federally guaranteed right against
self-incrimination, that the states are bound by the very same law and standards
which bind the Federal Government. Speaking for the Court, Mr. Justice Brennan,
in Malloy vs. Hogan, 378 U.S. 1 at 11, said:
It would be incongruous
to have different standards determine the validity of a claim of privilege based
on the same feared prosecution, depending on whether the claim was asserted in a
state or federal court. Therefore, the same standards must determine whether an
accused’s silence in either a federal or state proceeding is justified.
end of page 11 of 15
In Malloy at
8, the Court declared that:
The Fourteenth Amendment secures against state invasion the same privilege that
the Fifth Amendment guarantees against federal infringement—the right of a
person to remain silent unless he chooses to speak in the unfettered exercise of
his own will, and to suffer no penalty, as held in Twining, for
such silence.
and that:
This conclusion is
fortified by our recent decision in Mapp vs. Ohio, 367 U.S. 643
overruling Wolf vs. Colorado, 338 U.S. 25, which had held “that in a
prosecution in a State court for a State crime the Fourteenth Amendment does not
forbid the admission of evidence obtained by an unreasonable search and
seizure,’ 38 U.S., at 33. Mapp held that the Fifth Amendment privilege against
self-incrimination implemented the Fourth Amendment in such cases, and that the
two guarantees of personal security conjoined in the Fourteenth Amendment to
make the exclusionary rule obligatory upon the States, 116 U.S. 616, decided in
1886, which, considering the Fourth and Fifth Amendments as running “almost
into each other,” id., at 630, held that “Breaking into a house and opening
boxes and drawers are circumstances of aggravation; but any forcible
and compulsory extortion of a man s own testimony or OT his private papers to be
used as evidence to convict him of crime or to forfeit his goods, is within the
condemnation of [those Amendments] . . .
In another case, Murphy vs. Waterfront Commission, 378 U.S. 52, decided
the same day as Malloy, supra, the High Court held:
That a state witness may
not be compelled to give testimony which may be incriminating under federal law
unless the compelled testimony and its fruits cannot be used in any manner by
federal officials in connection with a criminal prosecution against him.
ARGUMENT II
THE RECORDS SOUGHT BY PETITIONER ARE
PRIVATE AND NOT PUBLIC RECORDS
T
the records sought by
petitioners are not corporate records, which must be produced at the suit of the
state, as no privilege against self-incrimination exists as to such records. Wilson
vs. United States, 221 U.S. 361, and Hale vs. Henkel , 201 U.S. 43.
They are not records of “transactions which are appropriate subjects of
governmental regulation and the enforcement of restrictions validly
established,” such as where government has the right to control and regulate
the sale of prescription drugs to protect the health and safety of society, as
was the case in United States vs. Sherry, 294 F. 684; they are not
records required to be kept which are “essential to the national security and
defense, and for the successful prosecution of the war, to secure an adequate
supply of foods, feeds, fuel, etc. ,“ which was the case in United States
vs. Mulligan, 286 F. 893; and they are not records of “sales of
intoxication liquors made by him, which should be subject to public inspection
at reasonable times,” as was the case in State vs. Donovan, 10 N.D.
203, 86 N.W. 709. Furthermore:
The Governments anxiety
to obtain information known to a private individual does not without more render
that information public; if it did no room would remain for the application of
the constitutional privilege. Nor does it stamp information with a public
character that the Government has formalized its demands in the attire of a
statute; if this alone were sufficient, the constitutional privilege could be
entirely abrogated by any Act of Congress. Marchetti vs.United States,
390 U.S. 39 at 57.
Finally:
The individual may stand
upon his constitutional rights as a citizen. He is entitled to carry on his
private business in his own way. His power to contract is unlimited. He owes no
duty to the State or his neighbors to divulge his business, or to open his doors
to an investigation, so far as it may tend to criminate him. He owes no such
duty to the State, since he receives nothing there-from, beyond the protection
of his life and property. His rights are such as existed by the law of the land
long antecedent to the organization of the State, and can only be taken from him
by due process of law, and in accordance with the Constitution. Among his rights
are
a refusal to incriminate himself, and the immunity of himself and in accordance
with the Constitution. Among his rights are and his property from arrest or
seizure except under a warrant of the law. He owes nothing to the public so long
as he not trespass upon their rights. Hale vs. Henkel, supra,
ARGUMENT III
NO SANCTIONS WHATSOEVER CAN LAWFULLY
BE IMPOSED UPON ONE WHO VALIDLY ASSERTS THE RIGHT
AGAINST
SELF-INCRIMINATION
For asserting the privilege against self-incrimination, the claimant is to
“suffer no penalty” (Malloy, supra, at 8) and he is to suffer no economic
sanctions or loss of his means of livelihood. Lefkowitz vs. Turley, 414
u.s. 70). See also Garrity vs. New Jersey, 385 U.S. 493; Gardner vs.
Broderick, 392 U.S. 273; Lefkowitz vs. Cunningham, 431 U.S. 801; Raphal
vs. Conrad, 371 F. Supp. 256; Spevick vs. Klein, 378
U.S. 511; and Blackburn vs. Alabama, 361 u.s. 199.
ARGUMENT IV
RESPONDENT’S FEAR OF INCRIMINATION
IS SUBSTANTIAL AND REAL
In light of, but not
limited to, U.S.C. Title 26, Sections 7201 to 7211 inclusive and Section 6103
(c) to (o) inclusive, it is readily apparent that the information demanded from
respondent in the Internal Revenue Service Summons, which petitioners ask this
Court to enforce, could substantially tend to incriminate respondent; and that
in light of of the above cited statutes, it cannot reasonably be concluded that
respondent’s fears of incrimination are frivolous or imaginary.
CONCLUSION
Respondent has validly
claimed and is entitled to protection against self-incrimination provided by the
Fifth Amendment to the United States Constitution.
Respectfully submitted,
_____________(8)________________
Respondent pro se
(9)
(10)
Copy of the foregoing, together with the response, was mailed
this_____day of____________ , 20_ _ to:
(11)
Page 15 of 15
top--------------------------------------------------------------------------------------------------------
Part 4 Appendix C
EXCERPT FROM TRANSCRIPT OF PROCEEDING TO
ENFORCE INTERNAL REVENUE SERVICE SUMMONS
The
following partial transcript is from the case of United States vs. Awerkamp,
in the United States District Court for the Southern District of Illinois,
before the Honorable Omer Poos, July 2, 1973. This part of the transcript has
been excerpted and reproduced here because it's the most interesting part.
‘MR. HOENIG” is the U.S. Attorney; “THE COURT” is the judge; and Mr.
Awerkamp, the taxpayer, isn’t saying much at this point. We’ll break in on
the dialogue:
THE COURT: This man can claim that constitutional right any time he wants to.
MR. HOENIG: He can.
THE COURT: An nobody can prevent him from claiming it. You can’t, you can’t
disobey —.
MR. HOENIG: (Interposing) We are not trying--we are not saying that he does not
have the right to invoke the 5th Amendment privilege.
THE COURT: That’s what he has done, then.
MR. HOENIG: But what we are saying is he can only invoke it if, if he is in
legitimate fear of criminal prosecution, and
THE COURT: (Interposing) That isn’t what the Constitution says. The
Constitution
says nobody can be compelled under any guise of law to give testimony against
them-
selves.
MR. HOENIG: That’s true, in fear, but again we have to determine, the
Court--it’s
the discretion of the Court to deterrmine—-.
THE COURT: (Interposing) No, it is not the Court’s discretion, it is what the
Constitution says.
MR. HOENIG: Then my only--I only would say to the court--.
THE COURT: (Interposing) Can you show me some cases now that you have that say
that you have the right to make him do that?
MR. HOENIG: Well, again, I rely on our memorandum, which I’ve filed with the
Court, and I rely heavily on that, and my question to the Court would be any
time any
man--any question was asked of a man in a Court of law, all he would have to do
would
take the 5th Amendment--.
THE COURT: That’s all he has to do.
MR. HOENIG: And our complete system would fall apart, it would seem to me, but
I can’t——.
THE COURT: (Interposing) Why did the forefathers put that in the Constitution?
MR. HOENIG: True, if the man is legitimately in fear of criminal prosecution.
THE COURT: No, that isn’t what the Constitution says. The Constitution says
everybody shall be protected from that right whether they are in fear or not in
fear.
MR. HOENIG: All right, Your Honor, I’ll have to yield to the Court’s
interpretation.
-----------------
Part 4, Appendix D
EXCERPT FROM TRANSCRIPT OF PROCEEDING TO
ENFORCE INTERNAL REVENUE SERVICE SUMMONS
United States vs. Tecton
In The United States District Court For The
Eastern District of ‘Virginia, Alexandria Division, Friday, January 9, 1981,
Civil Action No. 30-1134-A:
P R 0 C E E D I N G S
THE CLERK: Civil Action 80-1184—A. United States vs. Tecton.
MR. WILLIAMS: This is an enforcement action against the defendant, Michael
Tecton.
THE COURT: What’s the question?
MR. WILLIAMS: Your Honor, Mr. Tecton was ordered to produce certain documents
and he failed to do so, and a show cause order was issued to come forward
to show the Court why he should not be compelled to produce the documents.
He is here today, I assume, prepared to do so.
THE COURT: What’s the question? Who ordered him to produce them?
MR. WILLIAMS: The order to produce the documents was by I.R.S. summons,
and they issued an order for him to show cause why he did not comply with their
I.R.S. summons.
THE COURT: All right, why he didn’t comply with the summons, but no court
order[ed] him to produce any documents?
MR. WILLIAMS: That’s correct.
MR. TECTON: Your Honor, the order to show cause is defective since is says
I did not appear at the time I was summoned and I did appear.
THE COURT: Let me see the show cause order.
What’s the matter with the show cause order?
MR. TECTON: He says I didn’t appear at a summons.
THE COURT: It doesn’t say that at all. They ordered you to appear before
the court.
MR. TECTON: No. He said --
THE COURT: (Interposing) I’ve got it in front of me. I can read it. It
orders that you appear before this court.
MR. TECTON: Paragraph 4.
THE COURT: There’s no paragraph 4 on this order
[Note: The judge is confused. He is referring to the Court’s order to show
cause, whereas Mr. Tecton is referring to IRS’s petition to enforce its
summons.]
MR. TECTON: In the petition of the I.R.S.
THE COURT: I’m not interested in the order of the I.R.S. I’m interested in
Judge Bryan’s order. There’s nothing wrong with Judge Bryan’s order.
The order directs you to show cause; to appear here today.
MR. TECTON: Okay.
THE COURT: And show cause why you should not come to testify and produce
records. That is the only thing. And I assume you have some objection to
testifying
before the I.R.S?
MR. TECTON: Yes, I do.
THE COURT: Tell me why.
MR. TECTON: The first objection --
THE COURT: That’s the only thing you’re ordered to do.
MR. TECTON: The first objection, Your Honor, is that they have no jurisdiction-
THE COURT: For what?
MR. TECTON: To be in this court.
THE COURT: Who hasn’t?
MR. TECTON: I.R.S.
THE COURT: Next question.
MR. TECTON: For the following reasons -—
THE COURT: That is frivolous. The I.R.S. has no jurisdiction. This Court
has jurisdiction to hear it. The motion is denied. That’s ridiculous.
MR. TECTON: In their petition -—
[Note: Mr. Tecton was warned not to
bring up this issue, and others which he was determined to plead. He was advised
to file the motion to dismiss on grounds of self—incrimination; to support it
with the memorandum of law; to stick to that one issue and not bring up anything
else; and to keep his mouth shut about his personal legal theories and
grievances. Since he asserted only the defense of self-incrimination in his
written legal pleadings (which were filed with the Court by his wife, who told
me that if I would tell her what to do she
would do it) this defense is what the Court was prepared to rule on. Mr. Tecton
was very lucky that he was before a judge that was willing to instruct him as to
his valid legal defense, and that he had a devoted and loyal
wife who wanted to see him win his case.]
THE COURT: (Interposing) Look, all they ask you to do is to testify and
produce documents about your taxes. Now you’ve got to appear.
Now as far as I’m concerned, you can tell them to go jump in the lake when
you get there if you want to. I don’t know that you have to talk, but they
have
the right to subpoena you and ask you question about your taxes and you know it.
You can stand on your Constitutional rights and tell them it’s none of their
business if you want to, and it’s their move. [All emphasis added]
MR. TECTON: I don’t know what taxes they’re after.
THE COURT: You go over there and answer some questions. I imagine they’ll
tell you. It’s very simple.
MR. TECTON: Okay, I would like to get them on the stand -—
THE COURT: (Interposing) You’re not going to get them on the stand here.
I’m doing the ruling. I will rule that the I.R.S. has got the right to
question
you. They’ve got the right to question me or any other citizen about his
taxes.
[Note: What the judge says is true. When one is subjected to the subpoena power
of the government, then one must appear in response to the summons, identify
one’s self, consent to be sworn, and then decide with respect to each question
as it is asked whether to assert the right not to be compelled to act as a
witness against one’s self.] Now, you’ve got certain rights that you don’t
have to give evidence to incriminate yourself. [Emphasis added] It’s their
business to take it up from there on.
MR. TECTON: Your Honor, I believe they
do have the right to question the
states, but not individuals.
THE COURT: They’ve got the right to question you.
MR. TECTON: Not under Article 1, Section 11/111 of the U.S. Constitution.
THE COURT: I’m directing you to do it, and I’ll give you a friendly tip.
You know what I told you, and don’t waste your time and don’t waste mine.
I know you’re an expert on taxes, an alleged expert. You’ve been before
this Court on tax matters before, correct?
MR. TECTON: Yes.
THE COURT: So we both know that. So let’s don’t get into any gymnastics.
Mr. TECTON: I’m not.
THE COURT: You are.
MR. TECTON: I Don’t think you have any jurisdiction.
THE COURT: I’ve ruled I have jurisdiction, so that ends it.
MR. TECTON: They’re requiring me to give evidence.
THE COURT: You’re not required to give evidence. I made that clear to you.
MR. TECTON: They are seeking --
THE COURT: (Interposing) I ruled they have the right to ask you to produce
about your taxes and to produce documents. I likewise ruled you have to show up,
and if you don’t, I’ll put you in jail; is that clear?
MR. TECTON: Yes.
THE COURT: All right.
Now, I have not ruled that you have to answer any questions that you believe
will incriminate you in any way. You don’t have to answer it.
MR. TECTON: I haven’t so far.
THE COURT: And you’re not going to produce any documents that might in-
criminate you; you have that right.
MR. TECTON: I have put in the pleadings -— I pled that the Fourth and
Fifth Amendments --
THE COURT: (Interposing) So the record is clear, I’ll tell them now, so you
can save time -— I’ll let them have a meeting right now out in the hallway
in
one of the rooms -— it’s a public hallway -— and you just sit down and you
refuse
to answer questions about your taxes for fear of incrimination and you refuse to
produce any documents. [Emphasis added]
MR. TECTON: That’s what I stated in my pleadings.
THE COURT: All right, but that doesn’t mean you can’t show up.
What else do we have?
MR. WILLIAMS: Basically, Mr. Tecton showed up and basically he didn’t produce
any documents and that’s why we have the show cause order.
THE COURT: All right.
You don’t contend he has to tell you anything, do you?
MR. WILLIAMS: Our position is that when somebody raises a Fifth Amendment
objection, he doesn’t have a right to make just a blanket objection.
The Fourth Circuit has stated, Your Honor -- and I’ll pass this case up to
you --
THE COURT: What case?
MR. WILLIAMS: U.S. vs. Harrison.
THE COURT:
What is the Harrison case all about?
MR. WILLIAMS: Well, Your Honor, that was a summons also.
THE COURT: What’s the question.
MR. WILLIAMS: It’s addressed at the bottom of page 5 and the top of page 6.
THE COURT: Do you contend if he seriously claims that giving any information
on taxes would incriminate him under his Fifth Amendment right, certainly he’s
got the right to take it. [Emphasis added]
MR. TECTON: I don’t owe any taxes.
THE COURT: I understand you say you don’t owe any taxes.
MR. TECTON: I don’t owe any.
THE COURT: Well, they don’t believe you and that is why they want to quest-
ion you about it. You’ve got the perfect right to say, ‘I refuse to
answer on the
grounds any statement I might make might incriminate me.’ [Emphasis
added]
You’ve got that right.
MR. TECTON: The original summons I’d appeared before and I protested -- it
was served without an order.
THE COURT: Well, look, as far as I’m concerned, there’s no justification
for this monkey business. I know that you claim that the I.R.S. laws are all
unconstitutional.
MR. TECTON: Not all.
THE COURT: I don’t know which ones you overlooked, but --
MR. TECTON: (Interposing) Some are legal.
THE COURT: But seriously, you’ve got the right to make that contention and
if they can show —— the burden is on them to show that you’ve got income
and if
you don’t file a tax return -—
MR. TECTON: I do file.
THE COURT: Well, then, if they think it is incorrect, they have the right
to look into it; but they can’t make you give any evidence to incriminate
your-
self.
MR. WILLIAMS: The purpose of this summons was because an assessment has been
made for back taxes on Mr. Tecton and this is an effort to facilitate
collection.
THE COURT: What do you want him to tell you?
MR. WILLIAMS: We want to ask him questions about his assets, what he has and
where.
THE COURT: And he’s saying he won’t answer that on grounds it might
incriminate him.
[Note: Mr. Tecton had filed a tax return reporting his income and expenses and
admitted to the amount of income tax he owed, but be refused to pay it. This is
why IRS was trying to find out what he had and where—so they could sieze
enough of his property to satisfy his tax debt. But it appears that he had all
of
his property hidden and nothing in his own name—probably in trusts.]
MR. WILLIAMS: That’s what he’s saying.
THE COURT: Do you think he can’t?
MR. WILLIAMS: I believe he cannot. I think ultimately what we’re asking for
the Court to do is adopt the procedure set forth by the Fourth Circuit.
THE COURT: What does the Fourth Circuit say?
MR. WILLIAMS: The bottom of page 5, the last two lines and the top of page 6.
MR. TECTON: Pardon me Judge. I’m not claiming the blanket Fifth Amendment
he alleges here. I’m claiming the Fourth and Fifth and other Constitutional
protection
on specific issues.
THE COURT: I don’t have the slightest idea that I.R.S., if they want to,
can enforce any claim they’ve got against this man. I’m not the I.R.S. If
he’s
making revenue, income and they claim there’s a deficiency and they’re
prepared
to levy in anything he’s got, the burden is on them.
MR. TECTON: May I say I declare what they’re doing is illegal and they say
what they’re doing is lawful. I asked them to sue me, have a civil proceeding
and get a jury and find out, but they will not do it.
THE COURT: I have no control of that.
All right. I’m directing you to appear and you state your grounds in writing.
And the answers to their questions, if you want to take the Fifth Amendment,
you take it and we will rule on it. If you don’t appear --
MR. TECTON: I’ll appear.
THE COURT: (Continuing) -— I’ll have to put you in jail for failure to
appear.
I will give you a date certain.
MR. TECTON: I need at least two weeks.
THE COURT: No, you don’t.
MR. TECTON: I don’t know the questions.
THE COURT: You’re not going to get it. You know right now whether you’re
going to take the Fifth Amendment or not.
MR. TECTON: I Don’t know on what questions.
THE COURT: I won’t give you two weeks.
MR. WILLIAMS: Can we do it Monday, Your Honor?
THE COURT: What time?
MR. WILLIAMS: Nine a.m.?
THE COURT: All right. I will direct you to appear at Bailey’s Crossroads
at 9:00 a.m., Monday and answer the questions they ask you, and if you want to
take the Fifth, you go ahead and take the Fifth Amendment or whatever it is.
[Emphasis added]
MR. TECTON: May I make a motion now?
THE COURT: Yes.
MR. TECTON: That under the Sixteenth Amendment they have no jurisdiction
over me. They have jurisdiction over the states.
THE COURT: That motion is denied. I’m directing you to be there. You answer
the questions and you can take the Fifth. I’m not asking you to state anything
you don’t want to state [emphasis added], but just state it [the Fifth
Amendment objection]
for the record so then we’ll have a basis.
Mr. Tecton appeared before the IRS, as the Court ordered, objected on Fifth
Amendment grounds to questions which he did not wish to answer, and IRS
abandoned any further attempt to compel answers from him.
top------------------------------------------------------------------------------------------------------
Part 4 Appendix E
TRANSCRIPT OF PROCEEDINGS TO ENFORCE
INTERNAL REVENUE SERVICE SUMMONS
United States vs. Johnson
In The United States District Court For The District Of Arizona, Phoenix
Division, October 2, 1978, Civil Action No. 78—687:
THE CLERK: Case No. Civil
78-687, Phoenix, United States of America versus Peggy J. Johnson, for hearing
pursuant to Order that Respondent appear to show cause why she should not be
compelled to appear and testify as commanded in IRS summons.
MR. JOHNS: Michael Johns,
for the United States, your Honor. These two IRS summons enforcement cases. The
Respondents have filed Responses in which they point out that at the time they
came in to comply with the Summons, they wished to record the summons procedure
in the event they might wish to raise their
Fifth Amendment rights. [Emphasis added]
We have gotten permission
from the District Director to allow them to bring in their recording devices,
and the IRS, in turn, will make their own recording, and there will be a record,
if they want to make a record on it, and on that basis we would ask that the
Summons be enforced.
THE COURT: Do you understand what he said?
PEGGY JOHNSON: I take it that we go ahead and agree to give them what they want,
then they will allow us to have a tape recording, right?
THE COURT: Right.
PEGGY JOHNSON: And they, in turn, will have one also.
MR. JOHNSON: That is what we originally told them.
THE COURT: And you can also, at any time you desire to, you cannot answer any
questions based on your privilege under the Fifth Amendment, if you care to do
so.
[Note: This means that the Johnson's
can refuse to answer any questions that they feel could tend to incriminate, as
the court order later established.]
PEGGY JOHNSON: This is what we care to do.
THE COURT: Very well.
There may be an Order requiring production of the records and interviews,
subject to the understanding the Court has just announced.
[Note: The order issued by the court read as follows:
“IT IS ORDERED that the above-named
respondent shall in all respects comply with the Internal Revenue Service
Summons which is the subject of this action, subject to respondent’s right
under the 5th Amendment of the U.S. Constitution, to refuse to answer any
question or produce any document which the respondent believes may tend to
incriminate him [emphasis added], within 30 days of the date of this Order.
IT IS FURTHER ORDERED that each of
the parties may record the interview by tape recorder or other method at their
own expense if they wish to do so.”]
MR. JOHNS: Yes, your Honor. I will put that in the form of an Order and sub-
mit it this afternoon.
THE COURT: Very well.
THE CLERK: Would that be as to both cases? I believe there is someone here on
the second one for Mr. Speiser.
MR. JOHNS: That is on the two Johnson cases.
THE COURT: Thank you.
THE CLERK: Case No. Civil 78- --
MR. JOHNSON: May I ask now where do we go from here at this particular point? In
all honesty, I don’t really trust the Internal Revenue Department after I have
been treating them, and I put my trust in you and God, so I want to make a point
here --
THE COURT: I think your trust in God is safer.
MR. JOHNSON: Amen. Thomas Jefferson says, don’t trust man and the good of
men, but only by a change of the Constitution.
MR. JOHNS: Your Honor, the procedure we had in mind is to simply send him a copy
of the Order and then he can go down and meet with the Revenue Officer.
THE COURT: When you get a copy of the Order in the mail, then call the Internal
Revenue Office and make an appointment to go down with your equipment and your
records.
MR. JOHNSON: Now, you say for myself to make an appointment, because last time I
was down there, he didn’t give me an opportunity. He said get down here with
your records. That is what I did, because I was scared to death with these
people. I don’t have to be scared of them; only God.
THE COURT: I don’t blame you. When you receive the copy of the Order in the
mail, then you call the Internal Revenue Office and tell them that pursuant to
the Order of the Court, you would like to make an appointment to go over the
records and answer any questions they care to propound to you, or to take your
Fifth Amendment privileges. [Emphasis added] And then they will make you an
appointment to go down and see them. Okay?
MR. JOHNSON: Thank you.
THE COURT: Very well.
THE CLERK: Case No. -—
PEGGY JOHNSON: May I ask a question?
THE COURT: Yes.
PEGGY JOHNSON: The fact that we are going to claim our Fifth Amendment rights
[emphasis added], don’t we just claim our Fifth Amendment rights today?
THE COURT: You better go down and find out what they want to know first. Then
you can take your Fifth Amendment rights. You don’t have to respond if you
want to take your Fifth Amendment rights. [Emphasis added]
PEGGY JOHNSON: When we went there, Mr. Morgan got very upset, and I don’t want
him getting upset.
THE COURT: I am the Judge that is ruling on this matter, and that is the ruling
of the court.
PEGGY JOHNSON: You are going to back it up, right?
THE COURT: He [the IRS officer] will comply with the Order.
PEGGY JOHNSON: Thank you, sir.
--------------------------------
Part 4, Appendix F
TRANSCRIPT OF PROCEEDINGS TO ENFORCE
INTERNAL REVENUE SERVICE SUMMONS
United States vs.
Geissler
In The United States District Court For The District Of Idaho (Boise), March 29,
1982, Civil No. 82-1038:
THE COURT: Call the next matter.
THE CLERK: Case No. 82-1038, United States of America, et al., versus
Francis C. Geissler for order to show cause.
THE COURT: Mr. Geissler, have you seen the memorandum that the government
filed this morning? I guess this morning. No. They filed it last week.
MR. GEISSLER: I have received a memorandum.
THE COURT: It’s what they call a prehearing memorandum for the United States
of America.
MR. GEISSLER: I received one last Friday.
THE COURT: Yes, that’s the one. You’re not represented by counsel, I take
it.
MR. GEISSLER: No, Your Honor.
THE COURT: Do you want to have an attorney here?
MR. GEISSLER: No, Your Honor.
THE COURT: All right. Just so we have it on the record, the essence of that
memorandum is that one can’t take a blanket. The cases seem to hold that it
[one]
can't take a blanket Fifth Amendment objection to an IRS summons, but must
specifically if that's what one wants to do, take the Fifth Amendment to each of
the questions asked or alternatively, I suppose, to each of the documents
involved.
On the other hand, as far as the government was concerned, apparently the
government briefing nor does mine indicate that any court is holding that one
has
to produce documents where they do legitimately take the Fifth Amendment. I
select
to ask of you as an Assistant United States Attorney if you know that it is the
government’s position that no tax returns have been made, no valid tax
returns,
or is this a routine audit?
MR. HOWE: Your Honor, my belief is that no tax returns have been filed in
this matter. And I would represent --
THE COURT: So we do have a potential of criminal activity assuming for the
moment that there was income that would require a return?
MR. HOWE: That is always a possibility. [Emphasis added] There is not a
special agent assigned to this case at this time.
THE COURT: I understand. But the best information the government has is that
there has not been returns on it?
MR. HOWE: Yes, sir.
THE COURT: What's your desire? To question this witness on each of these
documents or ...
MR. HOWE: Yes, sir.
THE COURT:.... or supposing we just go down the list and inquire of him if he
takes the Fifth Amendment on each one. Is that satisfactory to you?
MR. HOWE: Yes, Your Honor.
THE COURT: Is that agreeable, Mr. Geissler?
MR. GEISSLER: He wants to question me?
THE COURT: I’m suggesting that I do it if that is all right with you.
MR. GEISSLER: Your Honor, I would like to say something before.
THE COURT: Let me say to you that if you’re going to take the Fifth
Amendment, you have to take the Fifth Amendment. That’s the reason.
What I propose to do is look at the summons and ask you about the various
categories of documents and ask you if you’re willing to turn those over to
the
government. And if you’re not, why not. And at that point, I would assume you
would say, “I’m not willing to because to do so would be to give testimony
against
myself and would violate my Fifth Amendment right.”
MR. GEISSLER: I understand that, Your Honor, but there is some questions as
to what they do want.
THE COURT: You don’t understand the subpoena?
MR. GEISSLER: No, I don’t, Your Honor.
THE COURT: Do you know what documents are reflecting receipts of taxable
income?
MR. GEISSLER: Yes, Your Honor.
THE COURT: Okay, Do you know what wage statements are, W-2 forms?
MR. GEISSLER: Yes, Your Honor.
THE COURT: Do you know what a Form 1099 regarding interest or dividend in-
come is?
MR. GEISSLER: I understand all the documents first ——well, let me go through
this, Your Honor.
THE COURT: Somebody has given you a bunch of stuff to read?
MR. GEISSLER: No. I have prepared this myself. It’s just outlining what they
ask for, and it’s different each time.
THE COURT: All right. Let me hear you.
MR. GEISSLER: First of all, on the Internal Revenue summons, Exhibit B, they
asked —— that’s -— Exhibit B of the petitioners -— they want all
records and
documents in my control or possession. Then in the petition —~
THE COURT: Of course, that isn’t true. That starts out not being accurate,
because that sentence says, “Reflecting the receipts of the taxable income by
use for the years 1977 through 1980.” That’s the full request.
MR. GEISSLER: Right. The Exhibit B?
THE COURT: Yes. But it doesn’t stop at all documents and records in your
possession. It’s those reflecting on your income for those years.
MR. GEISSLER: Right. I understand that. And then in petitioners’ first order
which has been vacated, it specifically required me to produce by order, the
Internal Revenue summons, all documents and records demanded by the summons
excluding Forms 1099, W—2, and documents prepared or executed by me.
Then on the second order to show cause filed by petitioners specifically
included on Lines 27 and 28 on the first page and I quote, “The records
required
by the Internal Revenue summons served upon him on or about July 10.” Which to
my understanding, it includes those Forms 1099, W—2, and documents prepared
and
executed by me.
THE COURT: Well, let’s get rid of that right now. Does the government request
those documents?
MR. HOWE: Your Honor, we do not request Forms 1099, Forms W-2, and documents
prepared or executed by this taxpayer.
THE COURT: Those then the Court considers are not being requested; and there-
fore, no summons under any circumstance will be enforced requiring you to do
this.
So then we’re down to -—
MR. GEISSLER: Well, Your Honor, I would like to move for dismissal for the
fact that they have no cause for an order. They -—
THE COURT: Well, how about the records of the deposits to bank accounts
during the years ‘77 through ‘80? Are you willing to provide those?
MR. GEISSLER: Well, it says documents prepared and executed by me they do
not want. Or am I misunderstanding?
THE COURT: That’s what he says. So I would assume that a deposit record
wouldn’t be, but a bank account would be.
MR. GEISSLER: Would be or wouldn’t?
THE COURT: The return that you get from the bank showing all of your deposits
and your withdrawals on a sheet of payment -- you know what those are?
MR. GEISSLER: Yeah, yes.
THE COURT: That’s one of the things they are asking for if I understand
them. Now, the question is, are you willing to produce that under the subpoena,
or do you take your Fifth Amendment as to that?
MR. GEISSLER: I would have to take the Fifth Amendment on that, Your Honor.
THE COURT: And why?
MR. GEISSLER: Because of -- because --
THE COURT: You feel the answer would incriminate you?
MR. GEISSLER: Yes, Your Honor.
THE COURT: “All books, records, documents, and receipts regarding wages,
salaries, tips, fees, commissions, and other compensations for services
including
the receipt of property or other money; income derived from business, gains
from deals in property, interest, rental dividend income, alimonies, income from
life insurance policies, and endowment contracts; pensions, income from
discharge
of indebtedness, distributed shares of partnership gross income, and income from
an estate or trust.’
Are you willing to furnish that kind of information?
MR. GEISSLER: No, Your Honor, I would have to take the Fifth on that.
THE COURT: And for what reason?
MR. GEISSLER: Because it would tend to incriminate me.
THE COURT: And any other documents bearing on your taxable income not signed
by yourself and not the specifics that are excluded? Any of those that were
asked
for, would you produce them?
MR.GEISSLER: No, Your Honor, I would have to take the Fifth on that.
THE COURT: And Why?
MR. GEISSLER: Because it would tend to incriminate me.
THE COURT: Does the government have anything to offer?
MR. HOWE: No, Your Honor. We would rest on the affidavit which was previously
submitted to the Court. And just for the record, the witness is available for
cross examination.
THE COURT: Very well. The motion to enforce the subpoena or the summons is
denied on the grounds that those items that continue to be requested are
objected to
by the target taxpayer on the basis that they tend to incriminate him,
and he raises the constitutional right not to produce such documents,
information
against himself. [Emphasis added]
So you U.S. Attorney] might want to appeal this one. You didn’t appeal the
last one.
THE CLERK: Please stand.
MR. HOWE: Your Honor, will the Court be preparing an order in this matter?
THE COURT: No. If you want one to use for an appeal, draft it and send the
copy over to Mr. Geissler for any comment he wants to have.
(To the defendant) And I'll hold it up for long enough to hear from you in
writing if you have any objection to the form. Instead of having you do it I
will have him [U.S. Attorney] draw it up. He has got secretaries and I assume
you
don’t have unless that's your good looking secretary with you; is it?
MR. GEISSLER: This is my moral support, Your Honor.
THE COURT: I see.
THE CLERK: The Court will be adjourned.
(The proceedings then concluded.)
top-------------------------------------------
Part 4, Appendix G
TRANSCRIPT OF PROCEEDINGS TO ENFORCE
INTERNAL REVENUE SERVICE SUMMONS
United States vs. Cole
In the United States District Court
For The District Of Arizona (Phoenix), September 24, 1979, Civil No. 79-678:
THE CLERK: Civil 79-678 Phoenix, USA, et al, versus George F. Cole.
MR. JOHNS: The United States is ready, Your Honor.
THE COURT: Have you read -- have you received from Mr. Cole his response?
MR. JOHNS: No, I have not, Your Honor.
THE COURT: Do you have a copy to give the Government?
MR. COLE: Yes
THE COURT: In essence he simply has claimed the Fifth Amendment. [Emphasis
added]
THE COURT: Are you Mr. Cole, sir?
MR. COLE: Yes, Ma-am.
MR. JOHNS: May I have a moment.
THE COURT: Please sit down, we will come back to you.
[Note: The U.S. Attorney had not received a copy of Mr. Cole’s response until
Mr. Cole submitted it at the hearing. It took the U.S. Attorney by surprise.]
You [meaning Mr. Cole] should have given him a copy [ahead of time].
(Brief interruption-other cases called)
THE CLERK: Civil 79-678, USA et al, versus George F. Cole.
On for Hearing Pursuant to Order that Respondent Appear to Show Cause.
MR. JOHNS: Up to this point Mr. Cole has never appeared in front of the IRS
or any other manner raised his Fifth Amendment.
Of course if he does so we have no recourse but to go ahead and dismiss the
action. [Emphasis added] I do think that if he is going to raise his Fifth
Amendment he should do it on the record rather than do nothing and cause these
proceedings to be instituted and make further proceedings to be instituted.
[Note: The U.S. Attorney means that Mr. Cole should have appeared at the IRS
office pursuant to their summons and asserted his Fifth Amendment right there,
so
the matter could have been dropped there, if IRS had wished to do so.]
I notice that in the Memorandum Mr. Cole asserts that there is a Fifth
Amendment privilege, a matter which we don’t doubt [emphasis added]. But even
in
the moving papers he doesn’t -- he does assert the Fifth Amendment.
Rather than have to have another hearing before the IRS where he does appear
and raise the Fifth Amendment if he could do do now I think that would certainly
take care of the matter.
THE COURT: Is that your position, that you personally with respect to the
Summons that you have previously been issued -— I assume you have a copy of
that, Mr. Cole?
MR. COLE: Yes, sir.
COURT: That you wish to take the Fifth Amendment
COLE: It is hard to know how to phrase it.
COURT: Well, you either say yes or no.
COLE: Yes.
COURT: All right. So that means that you do not wish to respond to the
Subpoena to produce your records and other matters set forth in the Subpoena
well, at any rate it was a Subpoena issued for you to appear on the
June, 1979, at 10:00 a.m. and it was issued the eighth of May, 1979 by --
JOHNSON: Jack Carroll , Revenue Officer, and you have a copy of that subpoena.
COLE: Yes, sir
THE COURT: And that is the one that you do not wish to respond to on the
ground of the Fifth Amendment. You do not wish to incriminate yourself.
MR. COLE: Yes.
THE COURT: So there you are.
MR. JOHNS: Thank you, Your Honor.
THE COURT: It is on the record here with the Court Reporter. Thank you.
* ** * *
Mr. Cole later received a copy of the Courts order by mail , reading as
follows:
‘This action came on
for consideration before the Court, Honorable C.A.
Muecke, United States District Judge, presiding, and the issues having been duly
considered and a decision having been duly rendered,
It is Ordered and
Adjudged that the Petitioner [IRS] take nothing, and that
the petition and action are dismissed.”
----------------------------------------------End
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