United States of America and Donald Jackson, Special Agent v. Charles H. Stuckey, and Morry Weinstein, Intervenor-Appellant

INTRODUCTION

Weinstein appeals a district court’s order enforcing administrative tax summonses issued pursuant to 26 U.S.C. § 7602 . Weinstein failed in district court to prove his contention that the summonses were issued in bad faith in aid of a criminal prosecution. On appeal he argues that he failed because the district court improperly denied his request for discovery and abused its discretion in limiting the evidentiary proceedings.

We affirm.

FACTS

Morry Weinstein is a tax attorney who was arrested along with others by agents of the Drug Enforcement Administration (DEA) for alleged possession of hashish. The agents seized drugs, cash and various bank receipts. The DEA immediately notified the Internal Revenue Service (IRS) of the arrests.

Weinstein was indicted and pleaded not guilty to the drug offense. Prior to trial certain evidence unrelated to Weinstein was ordered suppressed. Weinstein’s indictment was dismissed without prejudice. After dismissal of Weinstein’s indictment, the Assistant U. S. Attorney, acting pursuant to 26 U.S.C. § 6103 (i), obtained an ex parte order that allowed him access to information gathered by the IRS in its investigations.

Weinstein…

concurring:

I concur in Judge Skopil’s opinion, and agree that taxpayer has not met his burden of showing such a likelihood of bad faith on the part of IRS as would warrant the granting of discovery and further hearing.

I would add that where, as here, preliminary investigation suggested that the taxpayer, known to be engaged in income producing professional activity, had for two years failed to file income tax returns, the IRS, under any rational view of its function, was obligated to inquire further as to taxpayer’s liability. A recognition by the revenue agents of this institutional obligation could hardly be other than in good faith. Here, Agent Utaski testified that he had checked with the Fresno Service Center of the IRS to ascertain whether taxpayer had filed returns for 1975 and 1976, and had been told that there was no record of such filing. Further, he had been told by Agent Gibson in San Rafael that Gibson had no record of any returns for 1975 and 1976 having been filed by taxpayer. This may be hearsay as to the fact of filing, but it is competent evidence of Utaski’s good-faith belief that no returns had been filed for those years. 1

As to the institutional good…

(dissenting):

I am not able to agree with the decision to affirm the order of enforcement of the IRS summonses. I therefore respectfully dissent from that decision. The procedure followed in the District Court was in my opinion wrong and was contrary to the controlling guidance in United States v. Church of Scientology, etc., 520 F.2d 818 (9th Cir. 1975); the procedural errors of the District Court—particularly the refusal to permit appellant Weinstein to present evidence—denied appellant elementary due process and violated his constitutional rights. As a result of the procedural errors below no factual record was made sufficient to enable either the District Court or this Court to determine whether the summonses should be enforced or not. Accordingly, I would reverse the order appealed from and would remand with instructions to grant appropriate discovery to appellant, to afford appellant an opportunity to present evidence at an adequate adversary hearing, and to determine on a more complete record whether the summonses should be enforced.

Not only was the action of the Court below procedurally wrong; that action also violated substantive law principles repéatedly declared by…

646 F.2d 1369 81-1 USTC P 9476 UNITED STATES of America and Donald Jackson, Special Agent, Petitioners/Appellees, v. Charles H. STUCKEY et al., Respondents, and Morry Weinstein, Intervenor-Appellant. No. 79-4691. United States Court of Appeals, Ninth Circuit. Argued and Submitted April 16, 1980. Decided June 1, 1981. John M. Youngquist, San Francisco, Cal., for petitioners/appellees. Daniel Ross, Washington, D. C., argued, for respondents; Gilbert E. Andrews, Washington, D. C., on brief. Appeal from the United States District Court for the Northern District of California. Before MERRILL and SKOPIL, Circuit Judges, and WYATT, * District Judge. SKOPIL, Circuit Judge: INTRODUCTION 1 Weinstein appeals a district court's order enforcing administrative tax summonses issued pursuant to 26 U.S.C. § 7602 . Weinstein failed in district court to prove his contention that the summonses were issued in bad faith in aid of a criminal prosecution. On appeal he argues that he failed because the district court improperly denied his request for discovery and abused its discretion in limiting the evidentiary proceedings. 2 We affirm. FACTS 3 Morry Weinstein is a tax attorney who was arrested…