United States of America and Hubert J. Goodrich, Special Agent Internal Revenue Service v. Thomas F. Zack, as President

521 F.2d 1366 75-2 USTC P 9626 UNITED STATES of America and Hubert J. Goodrich, Special Agent Internal Revenue Service, Petitioners-Appellants, v. Thomas F. ZACK, as President, et al., Respondents-Appellees. No. 74-2467. United States Court of Appeals, Ninth Circuit. July 16, 1975. Scott P. Crampton, Asst. Atty. Gen., Charles Brookhart, Appellate Section, U.S. Dept. of Justice, Washington, D. C., for petitioners-appellants. Goodman, Snyder & Gang, Las Vegas, Nev., for respondents-appellees. OPINION Before WALLACE and SNEED, Circuit Judges, and EAST, * District Judge. WALLACE, Circuit Judge: 1 The government appeals from the district court's refusal to enforce an Internal Revenue Service (IRS) administrative summons requiring production of books, records and documents pursuant to 26 U.S.C. § 7604 . Acting on information secured from an informant, IRS Special Agent Goodrich verified that Dr. Zack kept two sets of books: one for cash payments from patients and one for payments made by check. Armed with this intelligence, Goodrich, after procuring a search warrant, seized various books and records from Zack's office. Subsequently, Goodrich issued an administrative summons…

The government appeals from the district court’s refusal to enforce an Internal Revenue Service (IRS) administrative summons requiring production of books, records and documents pursuant to 26 U.S.C. § 7604 . Acting on information secured from an informant, IRS Special Agent Goodrich verified that Dr. Zack kept two sets of books: one for cash payments from patients and one for payments made by check. Armed with this intelligence, Goodrich, after procuring a search warrant, seized various books and records from Zack’s office. Subsequently, Goodrich issued an administrative summons pursuant to 26 U.S.C. § 7602 requiring production of additional books, records and documents. Upon Zaek’s failure to comply, the government sought to enforce the summons. The district court denied enforcement. United States v. Zack, 375 F.Supp. 825 (D.Nev.1974). We reverse and remand.

An IRS administrative summons may be issued pursuant to 26 U.S.C. § 7602 in furtherance of an investigation to ascertain correct federal tax liabilities. Boren v. Tucker, 239 F.2d 767, 772 (9th Cir. 1956). Enforcement should be denied, however, if it is issued for an improper purpose such as solely in furtherance…

(dissenting):

I dissent. It is my belief that the District Court’s appraisal of the prior search warrant as a red flag badge of a criminal investigative purpose upon the so quickly issued administrative summons for additional information is the only logical and rational inference to be drawn. The majorities’ unfounded supposition of “[b]ut if there is, concurrent with the criminal investigation a proper civil investigation, the administrative summons would not be issued to further a solely criminal investigation” is adding pure speculation and conjecture to the record made before the District Court. The District Court should not be faulted for not supposing. I would affirm.