THE UNITED STATES DISTRICT COURT _____________DISTRICT OF ______________
___________________________
Petitioners, ) CIVIL ACTION # ______________
vs. )
The United States and ) SUMMARY OF AUTHORITIES IN SUPPORT OF
) OPPOSITION TO GOVERNMENT'S MOTION
_______________________ ) FOR PROTECTIVE ORDER
Respondents )
Petitioner above-named submits to this Court this Summary of Authorities to support his Opposition to Government's Motion for Protective Order.
1. In 1978, the US Supreme Court issued its definitive ruling in US v. LaSalle, 437 US 248, 98 S Ct 2357 (1978) whereby it supplemented its previous decision in US v. Donaldson, 400 US 517 (1971) and stated that administrative summons could not be used unless certain criteria were met. However, the Supreme Court then decided that this criteria was a burden on the Petitioner to prove, not the government. Now, it stands to reason if Petitioner has a certain burden of proof, he is entitled to discovery to meet that burden.
2. In a comparative case, the US Supreme Court ruled in Herbert vs. Lando, 99 S Ct 1635 (1979) that in those cases where previous court decisions had formed a certain burden, the party seeding 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.
In Herbert, supra, the previous case would set the standards was N.Y. Times v. Sullivan, 376 US 254, which held that a burden to prove a certain idea of personal commitment fell upon the plaintiff. In this instant cause of action, Petitioner, like the plaintiff in Herbert, supra, has the burden to prove “institutional commitment.” This “required proof” necessitates, as in Herbert, extensive discovery.
3. The LaSalle case, supra, stated that the Petitioner in an IRS summons enforcement case had 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 the Congress intend for the Petitioner to have a meaningful hearing, to have ample opportunity, prior to the actual hearing, to examine the minds and thought processes of those responsible for the proceedings. The proceeding case prior to
4. Petitioner taxpayer asserts that the summons in this case was issued following an institutional commitment of prosecute all persons classified as “tax protestors”, and the IRS has no intention whatsoever of any civil liability. Taxpayer has stated in motion and Memorandum to Quash 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 such circumstances, is a infringement on the traditional functions of the grand jury.”
Petitioner in his numerous pleadings and affidavit has controverted the government's position, has put the purpose of the summons in issue, substantially disputing the actual existence of any valid purpose for the issuance of the summons in this case.
5. In cases identical to instant case, numerous lower courts have ruled that Petitioner- “tax protestor” is entitled to answers to interrogatories, production of documents, etc.
In USA vs. Sherwood and Green, CA#'s L-80-40 & 41, USDC,
Further, “at this time the court is not prepared to say that interrogatories 2, 13, 14 and 15 (numbered interrogatories in S 7609 packet) are improper. These interrogatories address whether the IRS has already decided to recommend criminal tax prosecution of the Petitioners. In light of the decision in LaSalle National Bank, supra, such questions may be relevant to a determination of whether the summons should be enforced in this case... The petitioners (IRS) shall make all reasonable efforts to supply answers to interrogatories 2, 13, 14 and 15 by September 15, 1980.”
6. The Court in
On March 21, 1980, the Honorable Harry W. Wellford, Judge USDC W Tenn., ruled:
“That Order (of 8 Jan 80 granting Intervention) also provided for assertion of McMullen's discovery rights to support his apparent argument that the government is acting in bad faith in seeking to use civil discovery techniques to engage in a criminal investigation.
“Petitioners (IRS) and the Petitioner (taxpayer) have now filed various discovery motions and responses. McMullen has also filed a motion to quash the summons, and the government has moved to disallow his intervention. It is clear that the discovery disputes must be resolved before the court can rule on either of the latter substantive motions. McMullen is entitled to pursue legitimate discovery needed to meet his claim under the burden of United States v. LaSalle National Bank 437 U.S. 298 (1978) to prove bad faith on the part of the IRS as to his motion to quash. Only if the Petitioner's burden cannot be met should the government's motion to disallow intervention, on the ground that McMullen has not raised a substantial defense to the enforcement proceeding, be granted.
“The Petitioner's motions to compel and any other pending discovery disputes are therefore referred to the Magistrate for a hearing, if necessary, and determination. In addition, McMullen's motion to quash the summons and the government's motion to disallow intervention are referred to the Magistrate for a report and recommendation.”
In accordance with Judge Wellford directions, US Magistrate Aaron Brown added on 21 April 80:
“It is undisputed that Mr. McMullen is presently under investigation by the Criminal Intelligence Division of the Internal Revenue Service and that he has, as he contends, been classified as a tax protestor. Mr. McMullen has filed several sets of interrogatories, some against individuals who are not parties to this suit, and has sought production of documents including all documents in the hands of the Internal Revenue Service concerning him. Judge Wellford has ruled that Mr. McMullen is entitled to reasonable discovery to permit him to undertake to meet his burden of proof under United States vs. LaSalle National Bank, 437, U.S. 298 (1978)...
“I find that McMullen is entitled to see the entire file on him and then specifically request those documents for which he seeks production.
“The following is, therefore, ORDERED:
A representative of the plaintiff shall make available to Mr. McMullen in
“Within fifteen days from the date of the above review by Mr. McMullen, he shall file within the court a list of those documents from his file of which he seeks production together with an explanation of how the particular documents are relevant to the issues of this litigation and how the documents support his position. I will then rule on what documents Mr. McMullen is entitled to.
“Within fifteen days from the date Mr. McMullen receives copies of the documents allowed by the court he shall file a written response to the government's motion for summary judgment. A further hearing will be held, if one is deemed necessary, and a report will be made to the district court.
7. In a number of other cases, many taxpayers – Petitioners were allowed pre-hearing discovery even before the heavy burden was set by LaSalle.
In US vs. Roundtree, 420 F 2d 845, (5th 1969), a taxpayer who claimed harassment was entitled to depose internal revenue agent to investigate the IRS purpose. In another case, US v. Nunally, 278 F Supp 843 (
In US v. Wright Motor Company, 536 F 2d 109 (1976), the lower court dismissed 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 protective order, the District Court determined that a taxpayer will be permitted to take the deposition to investigate the purpose of the request for documents.
8. Question 1: What does the Tax Reform Act mean?
The people through their elected representatives have spoken: The Tax Reform Act of 1976 provided in “Special Procedures for third-party summonses” (now IRC § 7609) that taxpayers have the right to intervene in summons enforceful proceedings directly against third parties, the banks and financial institutions of the taxpayer. Congress, intending for the taxpayers' intervention to be meaningful, obviously meant for discovery, depositions, interrogatories, request for admission, as evidenced by the fact that the Congress stayed the Statue of Limitations in both civil and criminal proceeding during the intervention proceedings.
Since Wright Motor Company supra and Roundtree supra , were decided prior to the passage of the Tax Reform Act, we can now assume that Congress was aware these cases and intended to allow their continued strength. In Roundtree, the court discussed some theory, holding: “In terms of protection to the individual, a summons submitted to the court for enforcement is at least equivalent to a search warrant.” Further, the court felt “Congress recognized a need for a curb on investigative powers of a low level revenue agent.”
Additionally, the legislative history of the Tax Reform Act of 1976, insofar as 26 USC § 7609, found in the US Congressional and Administrative News, pages 3202 and 3208 provides: The purpose of this proceeding (intervention under 7609) is to facilitate the opportunity of the noticee (Petitioner) to raise defenses which are already available under law.
9. Question: Is Petitioner entitled to a meaningful hearing?
The essence of a meaningful hearing is adequate information revealed to the Court by prehearing discovery and in-depth examination of the persons with knowledge under oath at a full evidentiary hearing.
The Congress has spoken: Taxpayers are entitled to their day in court prior to a surrendering of their privacy by third-party record keeper pursuant to summons issued by low level administrative agents; the US Supreme Court has spoken in LaSalle supra : Certain administrative purposes are “improper” and therefore “impermissible.”
Now the burden to provide an adequate showing to this Court falls on Petitioner – yet almost all the evidence, the facts, the documents are in the possession of the government.
Since the case of US v. LaSalle National Bank 98 S. Ct 2357 (1978) is and was meant to be the dispositive, we examine the standards on discovery by the taxpayer Petitioner there: