United States v. Dynavac, Inc.

In this consolidated appeal, Dynavac, Inc., Donald J. Helmer, and Morgan T. Wright (91-56376) and Curtis J. Corn (91-56539) (collectively “respondents”) appeal the district court’s orders enforcing summonses of the Internal Revenue Service (“IRS” or “government”), pursuant to 26 U.S.C. §§ 7601 and 7602, to examine their business records which are being held by the United States Attorney. The principal issue we consider is whether these business records, previously submitted to the grand jury as part of a criminal investigation, are “matters occurring before the grand jury” under Federal Rule of Criminal Procedure 6(e) and therefore protected from subsequent disclosure in a civil tax investigation. The district court permitted disclosure without a showing that the request was “preliminary to or in connection with a judicial proceeding” under United States v. Baggott, 463 U.S. 476 , 103 S.Ct. 3164 , 77 L.Ed.2d 785 (1983), or whether the IRS had shown “particularized need” as required by United States v. Sells Engineering, Inc., 463 U.S. 418 , 103 S.Ct. 3133 , 77 L.Ed.2d 743 (1983).

*1410 I.

The Internal Revenue Service is presently investigating the federal income tax liability of…