__________________________________________________________________
IN THE
United States Court of Appeals
FOR THE FOURTH CIRCUIT
_________
Record No. 80- 1037
_________
United States of America, Et. Al.,
Respondent
V.
Patricia Patriot, etc., Et. Al.,
&
Paul Freeman
Petitioner
__________
Brief of Petitioner
__________
Appeal from the United States District Court
For the Middle District of North Carolina
Greensboro Division
Paul Freeman Libero Maurelli
123 Main St. Tax Division – Appellate Sec.
Anytown, US 12345 U. S. Department of Justice
000-123-4567 Washington, DC 20530
Petitioner Pro Se Counsel of Record
_______________________________________________________________
TABLE OF CONTENTS
PAGE
TABLE OF AUTHORITES ………………………………………………………….. iii
STATEMENT OF ISSUES PRESENTED FOR REVIEW ………………………….. iv
STATUES & FEDERAL RULES OF PRECEDURE ………………………………... v
STATEMENT OF CASE ………………………………………………………………1
STATEMENT OF RELEVANT FACTS ………………………………………………4
ARGUMENT ………………………………………………………………………… 11
POINT ONE: SHOULD A GOVERNMENT AGENCY BE ALLOWED TO MISLEAD THE COURT? ……………………………………………………………....……….................11
POINT TWO: WAS THE IRS SUMMONS ISSUED IN GOOD FAITH? ……………………………………………………………………………….... 13
POINT THREE: DID THE DISRTICT COURT ERR IN QUASHING PETITIONER’S SUBPOENAES AND DISCOVERY? ..........…………………………………………………………………………...16
CONCLUSION…………………………..…………………………………………… 20
EXHIBIT “A” …………………………………………………………..…………….. 22
STATUTES & FEDERAL RULES OF PROCEDURE
PAGE
STATUTES
26 USC § 7203………………………………………………………………………….15
26 USC § 7602……………………………………………………………………… 6, 15
26 USC § 7609………………………………………………………………………...2, 5
26 USC § 7214………………………………………………………………………….. 9
18 USC § 6002………………………………………………………………………….10
18 USC § 6004………………………………………………………………………….10
5 USC § 552a…………………………………………………………………………….6
FEDERAL RULES OF CIVIL PROCEDURE
PAGE
RULE 34…………………………………………………………………………………7
TABLE OF AUTHORITES
PAGE
HERBERT v. LANDO ……………………………………………………………..... 16
99 S.Ct. 1635 (1979)
NEW YORK TIMES v. SULLIVAN …………………………………………………17
376 U.S. 254
UNITED STATES v. DONALDSON …………………………………………….11, 17
400 U.S. 517 (1971)
UNITED STATES v. GARDINER ……………………………………………………12
531 F.2d 953
UNITED STATES v. LA SALLE NATIONAL BANK ………………………… impasse
98 S.Ct. 2357 (1978)
UNTIED STATES v. GENSER ………………………………………………….. 18, 19
595 F.2d 146 (3d Cir., 1979)
UNITED STATES v. PORTH…………………………………………………………..8
476 F2d 519
UNITED STATES v. ROUNDTREE………………………………………………… 17
420 F2d 845
UNITED STATES v. TWEEL ……………………………………………………….. 15
550 F.2d 297
UNITED STATES v. WRIGHT MOTOR COMPANY ……………………………... 18
536 F.2d 109 (1976)
UNITED STATES v. NUNNALLY …………………………………………………..18
278 F. Supp. 843 (D.C., Tenn. 1968)
STATEMENT OF ISSUES PRESENTED FOR REVIEW
1. Should a Government agency be allowed to mislead the court?
2. Was the Summons issued in good faith?
3. Did the district court err in quashing Petitioner’s subpoenas and discovery?
STATEMENT OF CASE
For the tax years in question, 1976 and 1977, Petitioner – Appellant, Paul Freeman, a High Point, North Carolina businessman, filed income tax returns wherein he exercised his constitutional right to remain silent. Prior to that time, and ever since, Manning has been associated with and attends meetings in a political group which seeks political and tax reform in this country and reform in the collection procedure of the Internal Revenue Service (hereinafter IRS), etc. Then, Manning (hereinafter Petitioner) discovered that agents of the Criminal Intelligence Division (now Criminal Investigation Division) of the IRS were acting as undercover agents, attending meetings and taking the license tag numbers of vehicles in the vicinity of the meeting places of his and other political reform groups, and launching reprisal attacks in the news media against those who desire tax reform. These reprisals included some of the members of his favored group.
As a result of his political activities, Petitioner became aware that such views and activities as his on tax reform posed a challenge to the IRS’s continuing abuses of the system. Through fear of reprisal by the IRS for his outspoken stance in opposition to their agents’ abusive methods and procedure, Petitioner filed tax returns in 1976 and 1977 (the years in question in the instant action) in which he exercised his Fifth Amendment right against self-incrimination. These returns triggered two criminal investigations of Petitioner by Plaintiff. The first in August, 1977 (this investigation was closed in November 1977 and turned over to the Audit Division of IRS), the second in September 1978. In September 1977 Special Agents Wayne Blake and Roland Anderson of the Criminal Intelligence Division, Greensboro office, read the Miranda warning to Petitioner. Following this meeting, without warning or need on or about September 13, 1977, Special Agent Blake served Petitioner’s financial institutions the 2039-A summons. Petitioner, resenting the intrusion into his personal affairs, stopped compliance pursuant to 26 USCA § 7609. On or about November 16, 1977, Petitioner received a letter from Mr. Robert LeBaube, District Director, Greensboro, NC in which Mr. LeBaube advised Petitioner that he was no longer the subject of a criminal investigation and Petitioner’s case had been referred to the Audit Division.
On July 21, 1978, a hearing was held on this matter. Testimony by Revenue Agent Stout, Chief, Criminal Investigation Division (hereinafter CID) Joseph Pagani, and District Director Robert LeBaube, of the IRS, North Carolina, indicated that no criminal investigation was presently being conducted and that no recommendation for criminal prosecution had been made to the Justice Department. Therefore, the Honorable Russell A. Eliason, or U.S. Magistrate, issued his Order for respondents to comply with the summons. Petitioner did not appeal the Magistrate’s order.
On or about September 20, 1978, Petitioner was advised by Special Agent Cecil M. Williams that he was the subject of a criminal investigation for the tax year 1977. Then, in September, October, December 1978 and January 1979 Special Agent Williams issued the 2039-A summons without warning or need. Again, Petitioner stopped compliance pursuant to 26 USCA § 7609 in an effort to protect his personal affairs, and expose, for all citizens to know, the routine procedures of deceit, trickery, and misrepresentation used to gain access to taxpayer’s records.
On June 27, 1979, a hearing was held in this matter. Petitioner appeared in Propria Persons. After an abbreviated hearing by the Honorable Russell A. Eliason, U.S. Magistrate ordered the respondents to comply with the summons.
In response to Petitioner’s motion for rehearing the Honorable Hiram H. Ward, Judge, U.S. District Court, Middle District of North Carolina, Greensboro Division (hereinafter NCDC) issued his order consolidating all of the cases.
STATEMENT OF RELEVANT FACTS
As stated, Petitioner, a member of a minority political group, filed tax returns beginning in 1976 whereby he exercised his rights guaranteed by the U.S. Constitution and Amendment V in response to specific questions on his 1040 Income Tax returns. As a result of extensive illegal political surveillance operations conducted by the IRS District Office in Greensboro, North Carolina, the IRS District Director and other Special Agents are well aware of Petitioner’s political views, membership in a particular political organization, and association with persons who have made numerous news media appearances denouncing the ethics of IRS agents in general. They are well aware of his cooperation with and support of tax reform lecturers from various parts of the country who are involved in political and tax reform activities which are considered by Plaintiffs to threaten their status quo.
As previously stated, Petitioner met with Special Agent Blake and Anderson on or about September 10, 1977. He was informed he was under criminal investigation, that he had a right to remain silent; right not to furnish information; and that any information that he furnished could be used against him. Petitioner willingly and legally appeared for this interview and did not refuse to furnish documents or information. The Special Agents terminated the meeting.
Special Agent Blake without warning or need issued 2039-A summons to Petitioner’s financial institutions on or about September 13, 1977. Special Agent Blake recommended the Criminal Intelligence Division withdraw their investigation. Special Agent Blake’s superiors approved his recommendation on or about November 14, 1977.
Then on or about November 16, 1977, District Director, IRS, Mr. Robert LeBaube notified Petitioner by letter that he was no longer the subject of a criminal investigation. His letter also stated that a Revenue Agent would contact him. Without warning or need, Revenue Agent Ferdinand Stout II obtained Show Cause Orders without contacting Petitioner as his District Director wrote in his letter.
On July 21, 1978, a hearing was held. Revenue Agent Stout, Chief, CID Joseph Pagani, and District Director LeBaube, all IRS, North Carolina Division testified the criminal investigation had been closed, no criminal investigation was in process, no recommendation for criminal prosecution had been made to the Justice Department. The Honorable Russell A. Eliason, U.S. Magistrate, issued his order that the Respondents comply with the summons. Petitioner did not appeal the Magistrate’s order.
On or about September 20, 1978, Petitioner was advised by Special Agent Cecil M. Williams, that he was the subject of a criminal investigation for the tax year 1977. Special Agent Williams without warning or need did issue 2039-A summons during the months of September, October, and December 1978 and January 1979. Petitioner resented these unnecessary intrusions into his personal affairs and stopped compliance pursuant to 26 USC § 7609.
Petitioner, in an effort to expose once and for all the routine procedures of deceit, trickery, and misrepresentation used by IRS agents to gain access to taxpayer’s records, engaged in three months of diligent letter writing to the Special Agent and District Director. Finally, the District Director advised Petitioner by letter that the criminal investigation for the tax year 1976 had been reopened by Special Agent Williams in February 1979. See Exhibit 5 presented to the lower court during the June 27, 1979 hearing. Petitioner contention and IRS files will no doubt show that Special Agent Williams had reopened the criminal investigation of Petitioner in September or October 1978.
On June 27, 1979, a hearing was held in this matter. Petitioner appeared In Propria Persona. At this hearing, Petitioner maintained most strenuously that the IRS had issued the summons in the instant case for a purpose not authorized by 26 USC § 7602, namely in aid of a criminal investigation and prosecution of Petitioner. The Honorable Russell A. Eliason, or U.S. Magistrate, ordered the Respondents to comply with the summons. In response to Petitioner’s Motion for Rehearing the Honorable Hiram H. Ward, Judge NCDC issued his Order consolidating all of the cases.
Petitioner contends that IRS Special Agent Williams, CID is well aware of various political surveillance programs of the IRS which have been exposed by the Sam Ervin Senate Committee and specifically outlawed in the Privacy Act, 5 U.S.C. § 552a (e) (7). Petitioner, now being most concerned about his privacy and aware of his Constitutional and statutory rights, sent an FOIA/ Privacy Act request to the IRS in order to determine the depth and breadth of the IRS investigation of him. District Director LeBaube refused to release numerous documents and finally, Petitioner filed suit in NCDC to obtain the documents requested in his FOIA/Privacy request.
Documents obtained through discovery clearly show that Petitioner was classified as a “well know tax protestor” as early as September 1977. (See Exhibit A [IRS document copy front and back]).
On June 27, 1979 Special Agent Williams testified that he had made “no written recommendation by me” (Tr. 24) to criminally prosecute Petitioner. Joseph Pagani, Chief, CID testified “No, sir not for any year” when asked about recommendation to criminally prosecute Petitioner for the tax years 1976 and 1977. (see Tr 53). Petitioner has been classified, identified, and labeled as a “well known tax protestor”. The IRS has already made an institutional commitment, as well as having expressed in the news media, their own internal documents, and their manuals, that they prosecute all those so classified.
Petitioner testified in the instant case about receiving a letter from the District Director, in which he states Petitioner failed to file a federal tax return (Lower Court Exhibit 3). This evidence establishes the instant case was clearly in the furtherance of a criminal investigation to gather evidence for a criminal prosecution of Petitioner, simply due to the fact that he exercised his Constitutional rights on his tax return, has been classified by plaintiff as a “well known tax protestor”, “illegal tax protestor”, and filed an “illegal tax protest return” and the government has expressed its policy to bring criminal prosecution against all persons so classified.
On June 6, 1979, Petitioner filed his Request for Production of Documents, pursuant to Rule 34 of the Federal Rules of Civil Procedure, requesting:
All documents, papers, memorandum, office reports, office instruction, recommendations and all other written documents or papers in any manner connected to the summons issued to Juanita Shepherd, Supervisor of Customer Services, North Carolina National Bank-Bank Card Department, Greensboro, NC, dated October 5, 1978 and December 6, 1978.
All records, documents, materials, forms, and memoranda pertaining to the criminal investigation Paul Freeman for the tax year 1976, which was reopened February 8, 1979. This investigation was reopened as Petitioner notified this Honorable Court it would be.
All records , documents, materials, forms, memoranda, affidavits and collateral reports pertaining to the tax years 1976 and 1977 connected to the criminal IRS tax investigation of Paul Freeman.
On June 22, 1979, Petitioner filed his Motion to Compel Mr. Robert A. LeBaube to appear, produce documents, and testify in the instant case, requesting:
That the documents and testimony be relevant to the instant proceedings.
That unless Mr. LeBaube appears and produces documents and testimony, this Honorable Court will not be able to properly ascertain the just disposition of this case.
The Government filed its objections to the discovery request of Petitioner, etc., which had the effect of resolving any doubts in the Court’s and anyone else’s mind, of the true and sole nature of the administrative summons, namely solely criminal investigation by the Plaintiff. In fact the “Request for Summons Enforcement” specifically state that Mr. Manning filed a ‘protest return’ for the year 1977.” IRS files further state “The investigation was initiated as a result of the taxpayer filing a so-called ‘Porth’ type protest return for his taxable year 1977. See United States v. Porth, 426 F.2d 519 (10th Cir. 1970).”
It seems the Government’s principal way of proving that this case is mainly civil is by stating the IRS and Special Agent Williams are investigating Petitioner’s 1976 and 1977 tax liability. How can Special Agent Williams and Joseph Pagani, Chief, CID maintain a posture of civil investigation when in November 1977, Special Agent Blake, after criminally investigating Petitioner’s tax liability for 1976, recommended the CID withdraw from the case? Then CID, with the approval or Mr. Pagani, removed the CID from the case in November 1977. The audit division has responsibility of the case from November 1977 until February 1979 for the tax year 1976. Then CID takes over the responsibility of the case in February 1979. What more ridiculous practice of subterfuge could be possible? Perhaps in their anxiety to gather information to prosecute Petitioner, known to the IRS as a “well known tax protestor, an illegal tax protestor and filer of ‘Porth’ type returns” they have forgotten their agency training which includes studying 26 USCA § 7214 which provides criminal penalties against revenue agents “Who, having knowledge and information of the violation of any revenue law by any person… fails to report, in writing such knowledge or information to the Secretary or his delegate.”
In order to discover the identities of the investigating agents, the date the investigation began, the nature of any contacts relating to and between investigating agents and officials of the Department of Justice, Petitioner subpoenaed Robert LeBaube, District Director and documents pertaining to the criminal investigation. Mr. LeBaube did not even bother to make a court appearance. Petitioner maintained most strenuously that he needed the record contained in the subpoena to substantiate his defense and LaSalle burden. The Magistrate denied Petitioner his discovery thereby unfairly denying a fair opportunity for Petitioner to meet the burden of proof dictated by LaSalle.
Petitioner has from the time of his filing of his 1976 and 1977 Income Tax returns offered to amend his returns if the IRS would show him how to complete the 1040 tax return form in such a manner that would not require Petitioner to waive any of his constitutional rights. The IRS has failed to come forward with a good faith offer to help Petitioner. Petitioner has offered to supply his records to the IRS if he be granted immunity from prosecution under 18 U.S.C. 6002 and 6004, so that a correct determination of any tax liability can be made. The IRS refuses to request a grant of immunity be issued so that a correct tax liability can be determined.
The IRS has the means to work with a taxpayer whereby the taxpayer does not have to waive his Constitutional rights to pay his taxes. Petitioner contends that actions speak louder than words. If the instant case were truly civil it could have been resolved with a simple grant of immunity. The IRS’s purposes are to gather information solely for a criminal prosecution of Petitioner because of his political beliefs and tax reform activities. Petitioner is viewed as a threat to the IRS status quo.
ARGUMENT
POINT ONE
SHOULD A GOVERNMENT AGENCY BE ALLOWED TO MISLEAD THE COURT?
Top level IRS authorities have announced several times on national television that they will prosecute all Fifth Amendment filers. In statements to the media, the IRS has stated their policy to bring criminal prosecution against those who exercise their constitutional rights on the 1040 forms. In their sixteen page IRS MANUAL SUPPLEMENT NO. 9G-93, dated January 10, 1979, entitled: EXAMINATION AND INVESTIGATION OF ILLEGAL TAX PROTEST-TYPE ACTIVITIES, the IRS states, unequivocally, that they consider all Fifth Amendment tax returns to be illegal and that they will prosecute those who file them, particularly the leaders of political tax reform groups:
4. In selecting cases for investigation, consideration should be given to the potential impact and/or deterrent effect a successful prosecution case will generate. “Experience in this area has indicated that cases involving leaders and/or flagrant non-compliance situations achieve the best results (see policy statement P-9-3).” Manual Supplement, No. 9G-93, supra page 6, Section 6, para. 4, (emphasis added). (Petitioner Exhibits No. 6 and No. 7- Tr. 61, submitted during June 27, 1979 hearing).
In June, 1978, the U. S. Supreme Court in the case of U.S. v La Salle National Bank, 98 S. Ct. 2357 (1978), issued a definitive ruling to supplement U.S. v Donaldson, 400 U.S. b17 (1971), which, upon careful reading, is most favorable to Petitioner’s position.
Many times Mr. Justice Blackmun, for the Court, stated that the IRS civil summons cannot be used for the “improper purpose of obtaining evidence for use in a criminal prosecution” and further, that “nothing in Section 7602 or its legislative histories suggest that Congress intended the summons authority to broaden the Justice Department’s right of criminal litigation, discovery or to infringe on the role of the Grand Jury as a principal tool of criminal accusation… Congress intended the summons authority to be used to aid in the determination of collection of taxes. These purposes do not include the goal of filing criminal charges against citizens… Congress did not intend to permit exclusively criminal use of the summons”, i.e., impermissible criminal purposes. “Similarly, the good faith standard would not permit the IRS to become an information gathering agency for other departments, including the Department of Justice, regardless of the status of criminal cases.”
The Government has, as their files indicate, classified Petitioner as a “well known tax protestor” who filed a “protest return.”
In United States v. Gardiner, 531 F. 2d 953, the true plans of the Government were forever exposed. Gardiner was classified by the Government as a “tax protestor”, tried and convicted. Prior to the trial he raised the issue of selective prosecution. The Government dealt with that firmly, promptly, and conclusively. Gardiner was not selected for prosecution because all “tax protestors” are prosecuted. The U.S. Attorney took the position that the protest tax return was a violation of the law so that the authorities had no choice but to prosecute.
In numerous press releases and statements to the media, the IRS has promised criminal prosecution against all of those classified, labeled, and identified as “tax protestors.” Petitioner is viewed by the Government as a “well known tax protestor” and the U.S. Attorney’s office has only one plan: criminal prosecution. Now is the IRS, which in an institutional sense long ago abandoned civil action against those classified as “tax protestors”, and is being used by the Justice Department to circumnavigate the traditional function of the Grand Jury?
POINT TWO
WAS THE IRS SUMMONS ISSUED IN GOOD FAITH?
Petitioner asserts that the summons was issued solely in aid of a criminal prosecution and it also lacks good faith. In his affidavit presented to the Court, Petitioner pointed out that the summons to the banks were overly broad, requesting everything, much more than just checks and statements, which would be all the IRS would need to compile a civil tax liability. For a civil investigation, the agents generally request and need only checks and figures to prove money coming and going. However, for a criminal investigation, Special Agents need signature cards, loan applications, etc. By the plaintiff’s actions, letters, and deeds, by their fakery, it is very apparent that this is an impermissible ruse to gather evidence in a criminal investigation. If the summons in this case were only for civil purposes, the records requested would have been limited to only those third party records which pertain to Petitioner’s civil tax liability.
A criminal case can be inferred from other acts of the plaintiff and by written records. If it is apparent that the focus and determination of a criminal prosecution is made prior to the actual request, the written request of IRS to the Justice Department for criminal action is immaterial. When the focus and determination is criminal, the fact that a formal recommendation for criminal prosecution has not been issued is irrelevant. “Internal Revenue summons issued under such circumstances is not issued in good faith.” U.S. v LaSalle, 554 F2d. 302. Likewise, in Petitioner’s case, the issue is the use, focus, determination, intent and purpose of the Government’s summons. This Court should take judicial notice that at the time of the issuance of the summons, the motive, the ultimate fact, the principal purpose for seeking the information was to prosecute the Petitioner criminally for filing a Fifth Amendment tax return.
In his Motion to Quash and the accompanying affidavit, Petitioner listed a number of reasons which clearly point out this is definitely a criminal investigation. Petitioner pointed out that the broad sweep of the Government’s summons, the agent’s reading of the Miranda rights to Petitioner and other acts which show at least utter bad faith by the Plaintiff.
The Government has a file on Petitioner which is available this Court. In that file, the lower Court could have examined, in camera, the IRS Forms 4135 (criminal Investigation Control Notice) and other documents. Petitioner in his affidavit had set forth prima facie evidence that this is a case of criminal prosecution in bad faith. The lower court should have turned over to Petitioner this file for him to prove to the Court the bad faith, or the Court could have examined the file itself and ruled accordingly and it failed to do either.
In the instant case the district court limited its inquiry to the existence vel non of a general civil purpose for the investigation. In so doing the abuses delineated by the LaSalle majority have gone undetected and unremedied. Under the lower court’s reading of LaSalle, as long as the IRS had not yet determined the full scope of civil liability the fear of delay by the IRS in making referral to the Justice Department expressed by Justice Blackmun would be perfectly permissible. Similarly, the Government presumably would allow the Justice Department to use the IRS as an “information gathering agency” as long as the IRS had not closed its civil investigation. LaSalle, of course, prohibits such subterfuge.
In the lower court Manning maintained most strenuously that the IRS had issued the summons in question for a purpose not authorized by 26 U.S.C. § 7602. (Tr 15,16,25,26,27,32,37,38,45,46,48,50,54,55, and 65).
The burden of proof is on the Petitioner to prove the summons was not issued in good faith. Petitioner was entitled to an adversary hearing with discovery to meet the burden.
The Court of Appeals for the Fifth Circuit, in U.S. v. Tweel, supra 550 F. 2d 297 (1977) laid down the law as to what their circuit thought about deceit by governmental officials. In this case the defendant was charged with tax evasion and false statements on his tax return. The main evidence against him were documents he gave to the IRS agents voluntarily. The conviction was thrown out because the agent had used deceit, trickery, and misrepresentation to gain access to defendant’s records.
In Tweel, supra, the revenue agent knew that a criminal prosecution had actually begun, had been informed by his superiors that a search had been planned for some time, yet the agent led the defendant to believe that only civil proceedings existed at that time. The Court held “that from the facts that we find, the agent’s failing to apprise the defendant of the obvious criminal nature of his investigation was a sneaky deliberate deception by the agent… and a flagrant disregard for his rights.” Further, the Court found that high level IRS officials succeeded “in making clear the undeniable criminal nature of the investigation… We cannot condone the shocking conduct by the IRS. Our revenue system is based upon the good faith of the taxpayers and the taxpayer should be able to expect the same from the government in its enforcement and collection activities…. During oral argument, counsel for the government stated that these procedures were ‘routine’. If this is the case, we hope our message is clear. This sort of deception will not be tolerated and if this is ‘routine’ it shall be corrected immediately.”
POINT THREE
DID THE DISTRICT COURT ERR IN QUASHING PETITIONER’S SUBPOENAS AND DISCOVERY?
The NCDC quashed Petitioner’s Motion’s for Discovery and to produce Documents, which were essential for Petitioner’s responsibility to bear the weight of having to prove the LaSalle burden.
The Supreme Court has already decided that the LaSalle burden for Petitioner was for Petitioner to prove, not the government. It stands to reason if Petitioner has a certain burden of proof; he is entitled to discovery to meet that burden.
In Herbert v Lando, 99S. Ct. 1635 (1979), the Supreme Court stated that in those cases where previous court decisions had formed a certain burden the party seeking to satisfy that burden was entitled to extensive pre-trial discovery. Given the required proof, Mr. Justice White, speaking for the Court, mentioned many times that the plaintiff could obtain the necessary evidence to prove the critical elements in his cause of action, even if the plaintiff had to focus on defendant’s conduct and state of mind. It would only seem fair and in the interest of justice that when a respondent, or in the instant case, Petitioner, is actually the person or party that has the burden of proof, that he actually is in the position of the “plaintiff” and not the reverse. Therefore, discovery should have been granted prior to the hearing.
In New York Times v. Sullivan, 376 U.S. 254, the Supreme Court held that a burden to prove a certain idea or personal commitment fell upon the plaintiff. In the instant cause of action, Petitioner, like the plaintiff in Herbert, supra, and in New York Times, supra, has the burden to prove “institutional commitment” for criminal prosecution. This “required proof” necessitates extensive discovery.
In LaSalle, supra, the court stated that the Petitioner in an IRS Summons Enforcement Hearing has the burden to prove the “improper purpose” of the “institutional commitment.” It stands to reason, especially after the Tax Reform Act of 1976, that the Courts and Congress intended the Petitioner to have a meaningful hearing and to have ample opportunity, prior to the actual hearing, to examine the minds and thought processes of those responsible for the proceedings. The preceding case to LaSalle, United States v. Donaldson, supra, stated that the burden of showing abuse of the Court’s process is on the taxpayer. This burden was increased in LaSalle, supra, making discovery even more important.
Petitioner asserts that the summons in this case were issued following an institutional commitment to prosecute all persons classified as “tax protestors” and the IRS had no intention whatsoever of pursuing civil liability. In a number of other cases, many taxpayers-petitioners were allowed pre-hearing discovery even before the heavy burden set forth in LaSalle.
For example, in United States v. Roundtree, 420 F. 2d 845, a taxpayer who claimed harassment was entitled to depose the Internal Revenue Agent to investigate the IRS purpose of issuing a summons.
Petitioner has stated that he seeks to prove that in this case the IRS summons is an “impermissible” ruse to gather evidence in a criminal investigation and the entire proceedings, under the circumstances, is an infringement on the traditional functions of the Grand Jury.
In another case, United States v. Nunnally, 278 F. Supp. 843 (D.C., Tenn. 1968), upheld by the Circuit Court at 498 F 2d. 144, the taxpayer was held to have the right of discovery and even to take depositions.
The leading case in this area is United States v. Wright Motor Company, 536 F. 2d 109 (1976), whereby the lower court dismissed the proceeding and almost held the IRS agent in contempt, because the agent, during deposition, refused to answer specific questions about the criminal investigation of the taxpayer. Disregarding the Government’s request for a Protective Order, the District Court determined that a taxpayer would be permitted to take the deposition to investigate the purpose of the request for documents.
In United States v. Genser, 595 F. 2d 146 (3rd Cir., 1979), that Court explained, expanded, and applied the LaSalle case to a particular case. The Genser, supra, Court agreed with LaSalle that the taxpayer was to bear the burden of proving both the pre-existing institutional commitment to prosecute and failure of the summons to advance a civil purpose, however, the Genser, supra, Court ruled that a taxpayer should be entitled to discover the nature of any contacts relating to and during the investigation between the investigating agents and the officials of the Department of Justice. In Petitioner’s case, he filed a Motion to produce documents and subpoenaed the IRS’s District Director to establish, for the record, the Genser questions. In the Motion to Produce Documents, Petitioner sought numerous documents pointing out frequent and constant contact by the investigating agents with the Department of Justice and the lower court should have allowed Petitioner to investigate further, prior to the hearing.
Documents in the IRS files show the “institutional posture” is that Petitioner was a “well known tax protestor”, “illegal tax protestor”, and filer of ‘Porth’ type “tax protest returns”. In attempting to establish firmly and set guidelines for discovery under LaSalle, the Genser, supra, Court stated:
“[O]ur reading of LaSalle suggests several guidelines for discovery. At a minimum, the taxpayer should be entitled to discover the identities of the investigating agents, the date the investigation began, the dates the agent or agents filed reports recommending prosecution, the date the district chief of Intelligence Division or Criminal Investigation Division reviewed the recommendation, the date the Office of Regional Counsel referred the matter for prosecution, and the dates all summons issued under 26 U.S.C. § 7602. Furthermore, the taxpayer should be entitled to discover the nature of any contacts, relating to and during the investigation, between the investigating agents and officials of the Department of Justice.” U.S. v Genser, supra, 595 F.2d at 152.
The Genser, supra, guidelines are exactly on point with the questions stated in the instant Petitioner’s case. Further, the Genser Court stated:
“[W]here this information or other evidence introduced by the taxpayer reveals (1) that the IRS issued summons after the investigating agents recommended prosecution, (2) that inordinate and unexplained delays in the investigation transpired, or (3) that the investigating agents were in contact with the Department of Justice, the district court must allow the taxpayer to investigate further.”
Genser, supra, at 152.
CONCLUSION
First, the IRS sixteen page Manual Supplement No. 9G-93, dated January 10, 1979, entitled: Examination and Investigation of Illegal Tax Protest-Type Activities, the IRS states, unequivocally, that they consider all Fifth Amendment tax returns to be illegal and outline “institutional procedure to prosecute all those who file, particularly, leaders of political tax reform groups.”
Second, IRS documents have classified, identified, and labeled Petitioner a “well known tax protestor”, an “illegal tax protestor” and a filer of ‘Porth’ type “tax protest returns”.
Third, Petitioner has offered to supply his books and records to the IRS so that a correct determination of a tax liability could be made if the IRS would simply show Petitioner how to complete a 1040 tax return without waiving his Constitutional rights. The IRS refused to do this. Petitioner also offered to supply his books and records if the IRS would issue a grant of immunity against the use of his books and records in a criminal prosecution. The IRS has thus far refused to cooperate with Petitioner.
Fourth, the overwhelming evidence in this case points to a criminal prosecution solely and is, hence, illegal pursuant to LaSalle.
Fifth, Petitioner’s subpoenas and discovery motions which were valid and necessary for him to prove his “heavy burden” should not have been quashed.
For these reasons, this Honorable Court should order this case be remanded with adequate pre-hearing discovery and opportunity for pro se Petitioner to question witnesses crucial to his defense.
DATED: March 17, 1980
RESPECTFULLY SUBMITTED:
____________________________
PAUL FREEMAN
Petitioner – Appellant
123 Main St.
Anytown, US 12345