United States of America, Plaintiff-Appellant-Cross-Appellee v. Author Services, Inc., Defendant-Appellee-Cross-Appellant

The United States petitioned the district court to enforce an Internal Revenue Service (IRS) summons served on Author Services, Inc. (ASI) in connection with a criminal tax investigation of L. Ron Hubbard. ASI contended the IRS was not acting in good faith and sought an evidentiary hearing to support that contention. ASI appeals from the district court’s denial of its request for an evidentiary hearing and from the enforcement order; the United States appeals from the district court’s restriction on the IRS’s use of the documents, prohibiting release of the documents to any other government agency without a court order unless criminal tax prosecution is sought. We affirm.

BACKGROUND

In August 1984 the Los Angeles District Office of the IRS began a tax investigation of individuals connected with the Church of Scientology (Church), including L. Ron Hubbard. On September 13, 1984 the IRS served an administrative summons in connection with the Hubbard investigation on ASI, a literary business management company whose principal client was L. Ron Hubbard.

ASI refused to produce the documents because it could not get the IRS to agree to a nondisclosure agreement specifying the IRS…