Petition — Moenckmeier v. United States

Supreme Court brief1979

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Gupreme Court,

FILED

SEP 28 1979

o 8 |

In The

MICHIRGL RODAK, JR., CLERK

Supreme Court of the

United States

October Term, 1978

No. q Q a 5 2 x

JEANENE MOENCKMEIER,

Petitioner,

UNITED STATES OF AMERICA and

NELSON H. PATNAUDE, Special

Agent, Internal Revenue Service

and

MIDLANTIC NATIONAL BANK

and BRIAN WAIVER,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

‘FOR THE THIRD CIRCUIT

JEANENE MOENCKMEIER

Petitioner Pro Se

1545 Ninth Avenue

San Diego, Cal. 92101

714/239-4887

In The

Supreme Court of the

United States

October Term, 1978

No.

JEANENE MOENCKMEIER,

Petitioner,

Ve:

UNITED STATES OF AMERICA and

NELSON H. PATNAUDE, Special

Agent, Internal Revenue Service

and

MIDLANTIC NATIONAL BANK

and BRIAN WAIVER,

Respondents.

| PETITION FOR WRIT OF CERTIORARI TO

: THE UNITED STATES COURT OF APPEALS

es FOR THE THIRD CIRCUIT

JEANENE MOENCKMEIER

: Petitioner Pro Se

1545 Ninth Avenue

San Diego, Cal. 92101

714/239-4887 ~

Cay Re Me eel wt tre

Fee ne da te ce mts BA

INDEX Page

Table of Authorities . .- +--+ + + «+ » iii

Petition for Writ of Certiorari . .- 1

Opinions Below. -++-+-+ + +s ** 2

SustiessG@iOh.. i .¢ + bes 4e 88.8 2

Questions Presented .- +++ + + + * 3

Primary Constitutional Provisions

& Statutes Involved .--+ + + = » 4

Statement of the Case .-++ ++ + * 5

Reasons for Granting the Writ ..- - 9

I. IT IS INCONSISTENT WITH THE

PURPOSE OF 26 U.S.C.§7609 AND IT IS

A DENIAL OF DUE PROCESS TO DENY A

TAXPAYER AN EVIDENTIARY HEARING AND

DISCOVERY, AFTER HE HAS PUT IN

ISSUE ALLEGATIONS OF THE COMPLAINT

AND RAISED PROPER AFFIRMATIVE

DEFENSES ST Penke bie SEE La. 2 + 2

II. THE DECISIONS OF THE THIRD

CIRCUIT ARE IN CONFLICT WITH THE

DECISIONS OF THE OTHER CIRCUITS

AS TO THE BURDEN WHICH MUST BE MET

BY A TAXPAYER, WHO INTERVENES AT AN

ENFORCEMENT PROCEEDING, BEFORE HE IS ENTITLED

TO AN EVIDENTIARY HEARING AND

DISCOVERY PRIOR TO THE ENFORCEMENT

: OF AN IRS SUMMONS - +++ + © © * ok?

III. THE DECISION OF THE THIRD

CIRCUIT TO AFFIRM THE DISTRICT COURT

IS INCONSISTENT WITH THE DECISION OF

THE SUPREME COURT IN U.S. V.- SAL

J LASALLE EXPANDS THE NEED FOR EVIDEN-

: ; TIARY HEARINGS AND DISCOVERY BY ADDING

TO THE POWELL TEST OF GOOD FAITH THE

REQUIREMENT OF “INSTITUTIONAL GOOD FAITH."

Conelwetem. «+s 6

Certificate of Service

Appendix ‘ie se! 285

Judgment Order of

July 17, 1979. .

Sur Petition for Rehearing

August 23, 1979 .

Order of April 11, 1979...

Order re: Stay pending

Appeal, April 18,

Affidavit of Nelson

of Dec. 19, 1978

Affidavit of Nelson

of March 15, 1979

Affidavit of Nelson

of April 10, 1979

3 62 ae

H. Patnaude

Statutes Relied Upon (full text)

A-11l

A-13

A-15

TABLE OF CITATIONS

Cases Page

Allstate Mortgage Corp. of

Florida v. Strasser, 277

Seam eee Avems BPlal & 6 ue oo « - JO

City of Rushville v. Rushville

Natural Gas, 28 N.E. 853

i ee . subs a 6 kb + + + + + Be

Donaldson v. U.S.,

Soe wens Bar CROTL) « « » 6? “ww B56

Laing v. U.S., 423 U.S. 161 (1976). . 10

Pennsylvania v. U.S.,

Soe Gee SOR (hehe? «4. 0 «. «0. » «, AQ

Santa Clara County v. Hall,

100 Cal. Rptr. 629 (1972) . ... -« 10

State of Zornes, 475 P.2d 107

CS i es he sg 4 oe, mk

U.S. v. Church of Scientology

of California, 520 F.2d 818

a A oy Se a ee ef |

U.S. v. Garrett, 571 F.2d 1323

(Gm Cae. 2P7e) » - 6 «© « @ ©

U.S. v. Genser (Genser I), 582

7.40 ane (34 Cas. 1978)... « «© 43,20

U.S. v. Genser (Genser II),595

T.ae BOG. toe Gees Ate) «2.5 0 « @ « 20

U.S... ¥. KRagey, 74 U.8. 462 (1896) .. li

U.S. v. LaSalle National Bank,

S37 UsB. SPS CAOTE) « = « © «& Deesdea4, 26

U.S. v. McCarthy, 514 F.2d 368

[ae a. SPT + 6 6 ese 17,20

U.S. v. Powell, 379 U.S. 59 (1964) . 23,24

U.S. v. Salter, 432 F.2d 697

[xe Cats ESTOS cs 0. « « « &7,38,29;21,26

U.S. v. Turner, 480 F.2d 272

[ran Gees, Garret, © © ets « @

U.S. v. Wright Motor Co., Inc.

536 F.2d 1090 (Sth Cir. 1976) .. 17,21

« e 17,21

obs? ee

iii

Constitution of U.S.

I li Oe ee 4,9,10,16

Statutes

26 U.S.C.§7602 ...

26 U.S.C.§7604 ...

26 U.S.C.§7609 ..

“a oe ee ee Sr ge a

«0 © «, © Speebbeae

9,19,11,12,13,14,15,22

Federal Rules

Federal Rules of Civil Procedure 52(a). 7

Legislative History

"Tax Reform Act of 1976, P.L. 94-455,"

H.R.REP. NO. 94-648, 94th Cong., 2d

Sess., reprinted in [1976] U.S.

CODE CONG. & AD. NEWS 2897. .. 11,12,14

IN THE SUPREME COURT

OF THE UNITED STATES

October Term, 1978

No. 79-

JEANENE MOENCKMEIER,

Petitioner,

Vv.

UNITED STATES OF AMERICA and

NELSON H. PATNAUDE, Special

Agent, Internal Revenue Service

and

MIDLANTIC NATIONAL BANK

and BRIAN WAIVER,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS’

FOR THE THIRD CIRCUIT

The petitioner JEANENE MOENCKMEIER

respectfully prays that a writ of

certiorari issue to review the Judgment

Order of the United States Court of

Appeals for the Third Circuit rendered

on July 17, 1979 affirming the Order of

the United States District Court for the

District of New Jersey to enforce an

administrative Internal Revenue Service

summons and to deny petitioner an eviden-

tiary hearing and discovery prior to

enforcement of said summons.

OPINIONS BELOW

Third Circuit. There was no formal

‘Opinion rendered by the U.S. Court of

Appeals for the Third Circuit. The judg-

ment entered on July 17, 1979 affirming

the order of the U.S. District Court for

the District of New Jersey in Civil Action

No. 79-158 is set forth in the appendix

at A-l. Also set forth in the appendix

at A-3 is the denial of the petition for

rehearing entered August 23, 1979.

District Court. There was no formal

Opinion in the district court below.

The district court orally denied

petitioner's motions for an evidentiary

hearing and discovery from the bench on

April 9, 1979. The final judgment

entered on April 11, 1979 compelling

enforcement of the administrative I.R.S.

Summons and denying a stay pending appeal

is set forth in the appendix at A-4.

No findings of fact and conclusions of

law were issued by the district court.

JURISDICTION

The judgment of the U.S. Court of

Appeals for the Third Circuit was

entered on July 17, 1979. A timely

petition for rehearing was denied on

August 23, 1979. The judgment and

denial of petition for rehearing are

set forth in the appendix at A-1l and A-3

respectively. The jurisdiction of this

Court is invoked under 28 U.S.C.§1254(1).

PO MT eT ne nn ee ee ee

QUESTIONS PRESENTED

I. IS THE TAXPAYER, WHO INTERVENES,

PURSUANT TO 26 U.S.C.§7609, AT AN ENFORCE-

MENT PROCEEDING TO JUDICIALLY ENFORCE AN

I.R.S. SUMMONS, ENTITLED, UNDER THE DUE

PROCESS CLAUSE OF THE FIFTH AMENDMENT,

TO A MEANINGFUL HEARING TO CHALLENGE THE

VALIDITY OF THE SUMMONS?

Petitioner says: Yes.

II. DOES 26 U.S.C.§7609 AND THE DUE

PROCESS CLAUSE OF THE FIFTH AMENDMENT,

REQUIRE THAT A TAXPAYER, WHO INTERVENES

PURSUANT TO 26 U.S.C.§7609 AND WHO

PUTS IN ISSUE ALLEGATIONS OF THE

COMPLAINT AND RAISES PROPER AFFIRMATIVE

DEFENSES, BE GIVEN AN EVIDENTIARY HEARING

AND DISCOVERY?

Petitioner says: Yes.

III. DOES LASALLE EXPAND THE NEED FOR

EVIDENTIARY HEARINGS AND DISCOVERY BY

ADDING TO THE POWELL TEST OF GOOD FAITH

THE REQUIREMENT OF “INSTITUTIONAL GOOD

FAITH?"

Petitioner says: Yes.

| i i s Code, Section 7609 (e)

PRIMARY CONSTITUTIONAL PROVISIONS | Title 26, United State '

aes TOTOLVED Suspension of Statute of Limitations

Constitution of the United States,

| If any person takes any action as

Amencment .V; provided in subsection (b) and such

No person shall nor shall person is A cagpes grote Dat an gro ty to

an jability the s n

be deprived of life, liberty, or for tel cf a hot dale agent, nominee,

property, without due process of or other person acting under the

ss | direction or control of such aay dl

| he running of any period oO

Title 26, United States Code, Section 7602: ) then t g

: limitations under section 6501

| (relating to the assessment and

ami collection of tax) or under section

si iil ep i a atta , 6531 (relating to criminal prosection)

Bai’: with respect to such person shall

For the purpose of ascertaining the be suspended for the period during

correctness of any return, making a which a proceeding, and appeals

return where none has been made, therein, with respect to the

determining the liability of any enforcement of such summons is pending.

person for any internal revenue

tax or the liability at law or

in equity of any transferee or

: : . Title 26, United States Code, Section 7609

| fiduciary of any person in respect

: h) (2)

of any internal revenue tax, or boty

collecting any such liability, the = —... a proceeding under this section, and

. Secretary is authorized--...... appeals, take precedence on the

ae oe SS ee eS Uae Se |! 6 e ;

docket over all cases and shall be

assigned for hearing and decided

at the earliest practicable date.

Title 26, United States Code, Section 7609

(b) (1)

Notwithstanding any o*her law or rule

of law, any person who is entitled

to notice of a sumions under subsection

(a) shall have the right to intervene

| in any proceeding with respect to

‘| the enforcement of such summons

| under section 7604.

ee ee een

STATEMENT OF THE CASE ve

On June 21, 1978 the Internal Revenue

Service served an administrative summons

upon respondent Midlantic National Bank of

West Orange, N.J. for the bank records of

Jeanene Moenckmeier. Pursuant to 26 U.S.C.

§7609 Jeahene Moenckmeier requested the

bank not to comply with the summons. On

January 12, 1979 the United States of

America and Nelson H. Patnaude, Special

Agent of the IRS filed an action under

26 U.S.C.§7604 to compel’ compliance with

the summons. (R. 8-16) Intervenor-

petitioner Jeanene Moenckmeier filed a

pleading in intervention (R. 19+39)

together with supporting affidavits,

specifically alleging that the IRS

administrative summons was issued in bad

faith because

(1) the IRS summons was being used

to gather information for a grand jury

investigation of the taxpayer-intervenor

for alleged customs' violations related

to the importation of amygdalin ("laetrile")

in the Eastern District of New York;

(2) the bank records sought by the

IRS summons were already in the

possession of the government;

(3) the IRS has made an institutional

commitment to make a referral to the

Justice Department but has delayed "merely

... to gather additional evidence for

prosecution;"

(4) the IRS has used unlawful (or

lawful) electronic surveillance prior

to issuing the summons.

1/ "R" references are to the separately

bound record appendix submitted in Third Circuit.

Intervenor-petitioner made a timely motion

for an evidentiary hearing and discovery.

(R. 42)

At the Show Cause hearing on April 9,

1979 Jeanene Moenckmeier renewed her

request for an evidentiary hearing and

discovery. After a brief oral argument by

Counsel with no cross-examination permitted,

District Judge H. Curtis Meanor ordered

that the IRS summons be enforced (R. 5;

a-4) 2/, denied Jeanene Moenckmeier's

motion for an evidentiary hearing and

discovery and ordered the government to

submit a post-hearing affidavit (R. 18;

A-13) covering the allegations which

intervenor-petitioner had put in issue,

instead of granting an evidentiary hearing

and discovery. The post-hearing affidavit

was an improper substitute for an eviden-

tiary hearing and discovery, where the

taxpayer had put in issue allegations of

the complaint and raised proper affirmative

defenses. By ordering a post-hearing

affidavit, the District Judge acknowledged

that intervenor-petitioner had put in issue

allegations of the complaint.

Mr. Patnaude, the agent who had issued

the summons herein, was not present at the

hearing and could not be cross-examined.

Judge Meanor did not make the requisite

findings of fact and conclusions of law

required by Rule 52(a) of the Federal Rules

of Civil Procedure.

Intervenor-petitioner requested a

stay pending appeal from the district

court. Her motion was denied. (R.5,A-5) After

making a timely appeal to the U.S. Court

of Appeals for the Third Circuit (R. 4),

2/"A- "references are to the appendix

attached to the petition hereto.

ge LOL AP Le

intervenor-petitioner then made a motion

to the Third Circuit for a stay pending

appeal which that Court granted (A-6).

The Third Circuit ordered an expedited

appeal (A-6). Oral argument in the

Third Circuit was held on July 12, 1979

at which time petitioner Jeanene

Moenckmeier requested that Court to vacate the

order of the- district court and to remand

the case for an evidentiary hearing and

discovery.

On July 17, 1979, the U.S. Court of

Appeals for the Third Circuit affirmed

the judgment of the district court which

ordered the enforcement of the IRS summons

herein and denied Jeanene Moenckmeier's

motion for an evidentiary hearing and

discovery (A-4). A timely petition for

rehearing was denied on August 23, 1979

(A-3). Petitioner's motion for a stay

of the mandate until September 29, 1979

and then until final disposition of the

petition for writ of certiorari, provided

a petition for writ of certiorari is

filed in the Supreme Court by September

29, 1979, was granted by the Third Circuit

on August 30, 1979.

REASONS FOR GRANTING THE WRIT

I. IT IS INCONSISTENT WITH THE

PURPOSE OF 26 U.S.C.§7609 AND IT

IS A DENIAL OF DUE PROCESS TO DENY

A TAXPAYER AN EVIDENTIARY HEARING

AND DISCOVERY, AFTER HE HAS PUT IN

ISSUE ALLEGATIONS OF THE COMPLAINT

AND RAISED PROPER AFFIRMATIVE

DEFENSES.

The taxpayer who intervenes pursuant

to 26 U.S.C.§7609 at an enforcement pro-~

ceeding is entitled to a meaningful

hearing.

The Third Circuit and the Internal

Revenue Service in the proceedings below

have expressed their concern that if the

intervenor-taxpayer herein is granted

an evidentiary hearing and discovery it

will result in an endless number of

requests for evidentiary hearings and

a@iscovery by other taxpayers at enforce-

ment proceedings in the future; thereby

causing delays and the frustration of the

fair administration of the tax laws.

However, the Supreme Court in U.S. V.

LaSalle National Bank, 437 U.S.

(1978) expanded the need for evidentiary

hearings and discovery, in spite of the

same objection by the dissent in LaSalle,

supra, that the holding of the majority

would produce more discovery proceedings.

(Please see Reason ITI for Granting the

Writ, infra at p. 23).

If granting the taxpayer 4 meaning-

ful hearing results in delays and a

frustration of the administrative

processes of the Internal Revenue Service,

the solution is not to deny the taxpayer

his Fifth Amendment due process guarantees,

but to look to Congress to change the

statutes governing this area.

When Congress enacted 26 0.8.C.§76092/

providing for the intervention of a

taxpayer at an enforcement proceeding,

Congress intended that the hearing at

which the intervenor-taxpayer challenges

the enforcement of the Service's third

party summonses have a purpose and that

such a hearing be meaningful. The .

Supreme Court of the United States held

in Penns lvania v. U-S-,r 236 U.S. 351,356

(191 that Congress intends to do what

it does. Legislatures are presumed to

know the meaning of the words they choose.

ration of Florida

Allstate Mortgage Co

353 eer 642 (Fla. 1973);

v. Strasser,

Santa Clara County V- Hall, 100 Cal.Rptr.-

; State V- zornes, 475 P.2d 107

(Wash. 1970); City of Rushville v.-

Rushville Natural Gas, 59 N-E- 853,

855

Ind. 1891).

In Laing v- U.S-» 423 U.S. 161,183

(1976), the Supreme Court of the United

States based its limitations of the I.R.-S-

jeopardy assessment and its requirement

that hearing procedures by used, on the

hearing procedures. Intervenor=-

petitioner Jeanene Moenckemier asserts

that the legislative scheme set forth in

26 U.S-C.§7609 provides the opportunity

to challenge the propriety, legality

and consitutionality of an I.-R.S- summons

at a meaningful hearing which would

include an evidentiary hearing and discovery:

3/ Please see Appendix at A-15 for

text of Statutes Relied Upon.

This challenge should be meanin

not merely a charade to let ry rk

think the government is providing a hear-

ing. Congress intended that this §7604-

760% hearing have as a purpose something

more than the Internal Revenue Service's

writ of assistance." Congress enacted

26 U.S.C.§7609, giving the taxpayer 4

statutory right to intervene at an

enforcement proceeding, in order to give

the taxpayer a forum to protect his civil

rights and right to privacy from unreason™

able infringements by the use of IRS administra-

tive summonses, Please see Legislative

History to the "Tax Reform Act of 1976,"

House Report No. 94-658, 94th Cong., 24

Sess. p. 307, reprinted in [1976] U.S.

CODE CONG. & AD. NEWS 2897, 3203 for

intent of Congress regarding §7609.

A hearing which does not af

opportunity for a meaningful aittende

of an Internal Revenue Service summons

was not the purpose of Congress when it

enacted Section 7609. A statute must

be construed so as to avoid an absurd

conclusion. U.S.-V. Kirb

486-487 (1896). Bee hake. nee

Congress anticipated that the enact-

ment of 26 U.S.C. §7609 would cause delays

and therefore included provisions in that

section to safeguard against those delays

and any detrimental consequences from

those delays. In §7609(e) the statute of

limitations for the assessment and

collection of taxes and for criminal

proseces is tolled during the

pendency of the proceedings and a eals

under 26 U.S.C.§7609. $7209 (hj (2) also

provides that proceedings under 26 U.S.C.

§7609 shall take precedence over all other

cases. The legislative history of the

Tax Reform Act of 1976, P.L. 94-455 also

indicates that these provisions were

intended to protect against any delays

caused by a taxpayer's intervention.

"Tax Reform Act of 1976," P.L. 94-455,

H.R.REP. NO. 94-658, Ibid. at 309-310,

reprinted in [1976] U.S. CODE CONG. & AD.

NEW , 3205-3206.

These safeguards protect against

delays, but also act as penalties to the

taxpayer who decides to challenge an I.R.S.

summons at the investigatory stage rather

than at the trial level. It does not

follow that the taxpayer should be denied

a fair hearing in addition to the above

penalities when he chooses to challenge

an I.R.S. summons as an intervenor at the

investigatory stage pursuant to 26 U.S.C.

§7609, rather than at the trial level.

If Congress had intended further

safeguards against delays, such as limit-

ing the hearing to a summary proceeding

or limiting the application of the Federal

Rules of Civil Procedure, it would have

included those safeguards in the statute.

26 U.S.C.§7609 is very explicit as to

the application and procedure to be

followed. Additionally, the words

used in §7609(b) (1) regarding interven-

tion indicate that Congress intended

that the rights provided by this statute

would supersede any rule of law to the

contrary:

Nothwithstanding any other law or

rule Of law, any person who is

entitled to notice of a summons

under subsection (a) shall have

the right to intervene in any

proceeding with respect to the

enforcement of such summons under

section 7604

When Congress stated in the statute the

words "notwithstanding any other law or

rule of law" it probably was referring

to Donaldson v. U.S., 400 U.S. 517 (1971)

which Limited a taxpayer's right to inter-

vene in an enforcement proceeding and

which limited the application of the

Federal Rules of Civil Procedure in that

enforcement -proceeding, making the hearing

summary in nature and limiting discovery.

When the Supreme Court of the United

States in Donaldson supra endorsed summary

proceedings, it did not anticipate 26

U.S.C.§7609 wherein the taxpayer was

given a statutory right to intervene. It

would naturally follow that the Donaldson

rule no longer applies to enforcement

proceedings wherein the taxpayer inter-

venes. It also would follow that since

the taxpayer now has a right to intervene

in an enforcement proceeding, he also

has a right to a meaningful hearing.

In Donaldson, supra, the Supreme

Court could justify endorsing summary

proceedings for the enforcement of an

I.R.S. summons because the taxpayer had

an opportunity to fully challenge a

Summons at trial, as the Third Circuit

reasoned in U.S. v. Genser (Genser I),

582 F.2d 292 (3d cir. 1978) at 303:

Thus, the Donaldson Court, in its

effort to facilitate the investi-

gatory mandate of the IRS merely

postponed until trial the time at

which a taxpayer can demand adju-

dication of the propriety of a

third party summons.

~18/Several courts have perceived

that the Donaldson Court's recog-

nition that the taxpayer can

raise his claim of abuse of

process at trial was a signi-

ficant factor in its decision

to limit his opportunity to

raise those claims during the

investigatory stage (citations

omitted).

The rationale in Donaldson for limit-

ing the challenge at the investigatory

stage no longer is applicable to an

enforcement proceeding wherein the tax-

payer intervenes by right pursuant to

26 U.S.C.§7609. If the taxpayer challenges

the summons at the investigatory stage and

the summons is nevertheless enforced; his

opportunity to challenge the summons at

trial no longer exists. To deny the tax-

payer the right to challenge the validity

of an IRS administrative summons at trial

without first giving the taxpayer an

Opportunity to fully challenge the summons

at an enforcement proceeding with the same

due process guarantees he would have at

trial would be a denial of due process.

The legislative history to the Tax

Reform Act of 1976, P.L. 94-455 (enacting

26 U.S.C.§7609) in H.R.Rep. No. 94-658 at

308, Ibid. 3204, states that:

- « »« where the noticee does not

request the third-party witness not

to comply at this stage, he would

still be permitted to assert such

defenses as may be available to him

with respect to any evidence obtained

pursuant to the summons in any later

court action in which the noticee

was directly involved (i.e., affec-

ting his tax liability or any crim-

inal charges which might be brought)

the same extent as may be permit-

ted under present law.

If Congress found it necessary to point

out that the taxpayer would still be

permitted to challenge the legality of an

IRS summons at a subsequent trial, if he

did not exercise his statutory right under

§7609 at the investigatory stage, then

conversely it would logically follow

that Congress intended that the taxpayer

would not be permitted to make that

challenge at the trial-level if he made

it at the investigatory stage pursuant

to §7609.

The Internal Revenue Service also

contends that the taxpayer's intervention

at an enforcement proceeding to challenge

an IRS summons precludes the later

challenge of the same summons in a motion

tO suppress at a subsequent trial, wherein

the fruits of the summons are introduced

into evidence. If the above contention

of the IRS is true, then the initial

hearing must be a fair hearing with all

of the due process guarantees which are

essential to safeguard accuracy and

completeness of evidence: opportunity

to be heard, cross-examination of wit-

nesses and discovery. Only then can

the taxpayer's intervention at the

investigatory stage be an adequate substi-

tute for a motion to suppress at the

trial level.

Congress could not have intended to

give the taxpayer a statutory right to

intervene in 26 U.S.C.§7609 whereby,

if the taxpayer exercised that right, he

would forever be precluded from receiving

a fair hearing with all the guarantees of

due process at any hearing, including the

One which he would have received had he

chosen to raise his challenge of the IRS

summons for the first time at trial.

Where the taxpayer, pursuant to

statutory right, challenges the purpose

of the IRS in issuing the summons, the

taxpayer is entitled to a meaningful

hearing to make that challenge under the

due process clause of the Fifth Amendment

to the U.S. Constitution.

Internvenor-Petitioner has not

received a fair hearing in the district

court. Petitioner was denied an eviden-

tiary hearing, denied discovery and

denied the opportunity to confront her

Opponents. Mr. Nelson H. Patnaude, the

Special Agent who initiated the

enforcement proceeding and submitted

affidavits in support thereof, was not

even present at the hearing. In fact,

when District Court Judge Meanor

expressed a desire to ask questions of

Mr. Patnaude regarding the investiga-

tion, he was unable to do so because

of Mr. Patnaude's absence. Intervenor-

petitioner put in issue allegations

of the complaint and raised proper

affirmative defenses and therefore

should have been granted an evidentiary

hearing and discovery. Instead, Judge

Meanor ordered a post hearing affidavit,

concerning the issues raised, to be

submitted as a substitute for an eviden-

tiary hearing and discovery. (A-13, infra)

Petitioner admits that the taxpayer

has a heavy burden to meet to prove that

the IRS summons was not issued in good

faith; however, there is a different

burden to be met by the taxpayer for the

taxpayer to be entitled to an evidentiary

ina. To be entitled to an eviden-

niacy Lantana the taxpayer must put in

issue allegations of the complaint and

raise proper affirmative defenses which

petitioner has done. U.S. V- McCarthy,

514 F.2d 368 (3d Cir. 1975).

II. THE DECISIONS OF THE THIRD

CIRCUIT ARE IN CONFLICT WITH THE

DECISIONS OF THE OTHER CIRCUITS

AS TO THE BURDEN WHICH MUST BE

MET BY THE TAXPAYER BEFORE A

TAXPAYER, WHO en an AN

ORCEMENT PROCEEDING, :

ENTITLED TO AN EVIDENTIARY HEAR-

ING AND DISCOVERY PRIOR TO THE

ENFORCEMENT OF AN IRS SUMMONS.

The First, Fifth, Seventh and Ninth

Circuits have established similar pro-

cedures for proceedings to judicially

enforce IRS administrative summonses

where the taxpayer challenges the purpose

and good faith of the IRS in issuing the

IRS. administrative summons.

The Fifth, Seventh and Ninth Circuits

have followed the procedure and rationale

set forth by the First Circuit in U.S. .¥>

Salter, 432 F.2d 697 (1970). Please see

the following cases for the specific .

procedures of the Courts of Appeal for the

Fifth, Seventh and Ninth Circuits. U.S.

v. Garrett, 571 F.2d 1323 (Sth Cir. 1978);

U.S. v. Wright Motor Co., Inc., 536 er

1050 (5th Cir. 1976); U.S. Vv. Turner, 48

F.2d 272 (7th Cir. 1973); U.S. _v- Church

of Scientolo of California, 520 F.2d

818 (9th Cir. 1975).

The First Circuit in U.S. v. Salter,

supra held that the taxpayer would not

be permitted discovery unless he could

produce "some evidence supporting respon-

dent's allegations." Ibid at 700.

Although conclusory allegations of

improper purpose were held to be insuffi-

cient to permit discovery by the taxpayer,

they were held to be sufficient to permit

a Limited evidentiary hearing to cross~

examine the IRS agent who issued the

Summons. The cross-examination would be

limited to the purpose of the summons and

investigation.

In order to allow the taxpayer some

opportunity to substantiate his allega-

tions of improper purpose and bad faith,

the court in U.S. v. Salter, supra found

it necessary to permit the taxpayer, who

raises improper purpose in his answer,

at the minimum, a limited evidentiary

hearing to cross-examine the IRS agent,

who issued the summons, on the purpose

of the summons and investigation.

In establishing the procedure in

‘Salter, supra, the court approved the

suggestion offered by the government.

The general solution to the taxpayer's

need for discovery in summons enforce-

ment cases would be for the

district court to proceed

directly to a hearing at which,

if desired, the summonee could

examine the agent who issued

the summons, concerning his

purpose. The court could then,

by observation and, where

necessary, its own questioning

of the agent, make its own

determination of whether

exploration, as by discovery,

seemed to be in order. Ibid.

at 700.

The Court in Salter then went

on to give the test for permitting

discovery:

If at the end of the hearing

there remains a substantial

question in the court's mind

regarding the validity of the

government's purpose, it may

then grant discovery.

Salter found a double purpose in

requiring at least a limited evidentiary

hearing where the taxpayer asserts

improper purpose or bad faith: 1) to

permit the taxpayer at least some

opportunity to prove his allegations;

and 2) to “eliminate discovery in cases

which it is clear that the respondent

will not be able to prove his allega-

tions." Ibid. at 701.

In summary, the tests for permitting

-an evidentiary hearing and discovery in

the circuits which follow U.S. V.- Salter,

supra (First, Fifth, Seventh and Ninth)

are as follows:

1) the test for permitting an eviden-

tiary hearing is whether the taxpayer

or summonee has alleged improper purpose

or bad faith in his answer to the com-

plaint for enforcement of the summons.

2) the test for permitting discovery

is whether, after a limited evidentiary

hearing, permitting cross-examination

of the IRS agent issuing the summons,

"there remains 4 substantial question

in the court's mind regarding the valid-

ity of the government's purpose ...."

Ibid at 700.

Although the Third Circuit, at first

glance, appears to follow the same

procedure for enforcement proceedings as

above, the burden on the taxpayer in the

Third Circuit is much heavier.

U.S. v. McCarthy, supra at 372-373

sets forth the procedure in the Third

Circuit for enforcement proceedings.

Although the court in U.S. v.

McCarthy, supra at 373 states that an

evidentiary hearing is an “integral part

of the proceedings" the test for per-

mitting an evidentiary hearing is whether

the taxpayer “puts in issue allegations

of the complaint" and/or "raises proper

affirmative defenses." Ibid.

The burden which must be met by

the taxpayer in the Third Circuit for

an evidentiary hearing is similar to the

heavier burden in the other circuits

which must be met before discovery is

permitted. This heavier burden has the

effect of precluding the taxpayer from

even a limited opportunity of substantia-

ting his allegations of improper purpose

at an evidentiary hearing.

Elaborate procedures for permitting

discovery after an evidentiary hearing

which has raised issues which cannot

be resolved by the record, are set forth

in U.S. v. Genser (Genser I), 582 F.2d

292 (3d Cir. 1978) and U.S. v. Genser

(Genser II), 595 F.2d 146 (3d Cir. 1979).

Petitioner-intervenor Jeanene

Moenckmeier submits that she has met the

heavier burden in the Third Circuit for

an evidentiary hearing by putting in issue

allegations of the complaint and raising

affirmative defenses. The district

judge acknowledged, in effect, that

petitioner put in issue allegations of

the complaint by ordering a post-hearing

affidavit on the issue of whether the IRS

was using its investigation as a subter-

fuge for a criminal grand jury investiga-

tion of petitioner in the Eastern District

of New York. Judge Meanor could not

resolve the issue on the record before

him and cross-examination of witnesses

was not permitted, nor was it even possible

to cross-examine the IRS agent who issued

the summons because he was not even

present at the enforcement proceeding.

Petitioner submits, in the alternative,

that even if the court finds that she did

not meet the burden for an evidentiary

hearing in the Third Circuit, she has met

the burden in the other circuits, which

requires only allegations of improper

purpose or bad faith in her answer. There-

fore, the case should be remanded to the

district court for an evidentiary hearing

and if that evidentiary hearing raises

evidence of improper purpose or bad faith

on the part of the IRS, she should be

permitted discovery.

Failure to permit the taxpayer, who

asserts improper purpose or bad faith in

his answer, at least a limited evidentiary

hearing with the opportunity to cross-

examine the IRS agent issuing the summons

has necessitated a reversal in circuits

other than the Third Circuit: U.S. v

Salter, supra (lst Cir.); U.S. v Church

| lti—isCiCiCONwtNO

of Scientology, Supra (9th Cir.) and

U.S. Vv. Wright Motor Co. Inc., supra

(Sth Cir.). In U.S. v. Garrett, supra

at 1327, the Fifth Circuit stated that

if the district court had not permitted

at least cross-examination of the IRS

agents, it would have necessi

reversal. =e e

Failure of the district ¢

instant case to permit even a stakead =

evidentiary hearing to cross-examine

Mr. Patnaude, the IRS agent issuing the

Summons in the instant case,should also

hecessitate a reversal in this case.

__ in the interest of maintaining

uniformity of decisions in the Gv. &.

Courts of Appeals, the Supreme Court

Should exercise its Supervisory power

to determine the Proper test which

the taxpayer-intervenor must meet to

entitle him to an evidentiary hearing

and discovery, when he intervenes at

an enforcement Proceeding pursuant to

26 U.S.C.§7609. Petitioner submits

that this Court should adopt the test

of the First, Fifth Seventh i

Circuits. , : ees

III. THE DECISION OF THE THIRD

CIRCUIT TO AFFIRM THE DISTRICT

COURT IS INCONSISTENT WITH THE

DECISION OF THE SUPREME COURT IN

U.S. V. LASALLE. LASALLE EXPANDS

THE NEED FOR EVIDENTIARY HEARINGS

AND DISCOVERY BY ADDING TO THE

POWELL TEST OF GOOD FAITH THE

REQUIREMENT OF "INSTITUTIONAL

GOOD FAITH."

To deny the taxpayer in the instant

case an evidentiary hearing and discovery,

when the taxpayer put in issue allegations

of the complaint and raised proper affirm-

ative defenses, is inconsistent with the

decision of this Court in U.S. v.

LaSalle National Bank, supra which

necessitates more discovery on the part

of the taxpayer, not less.

In LaSaile, supra the Supreme Court

added a new good faith requirement of

"institutional good faith" to the Powell

test of good faith 4/ which must be met

by the IRS -in order to establish a prima

facia case for enforcement. In LaSalle,

Supra the Supreme Court held that it is

the "institutional posture" of the IRS

4/ U.S. v. Powell, 379 U.S. 59 (1964)

at 255 outlines the so-called Powell test:

"He [the Commissioner] must show that the

investigation will be conducted pursuant

to a legitimate purpose, that the inquiry

may be relevant to the purpose, that

the information sought is not already

within the Commissioner's possession, and

that the administrative steps required by

the Code have been followed--"

which is dispositive of the good faith of

the IRS, rather than the subjective intent

of the individual IRS special agent.

LaSalle, supra at 315-316. The addition

of this new good faith requirement to the

Powell test of good faith requires that

the IRS must now plead "institutional

good faith" in order to make a prima

facia case.

LaSalle, supra at 317, described the

following situations as ones in which

"institutional good faith" of the

Internal Revenue Service would be lacking:

1. "... delay in submitting a

recommendation to the Justice Depart-

ment when there is an institutional

commitment to make the referral

and the Service merely would like

to gather additional evidence for

the prosecution. Such a delay

would be tantamount to the use of

the summons authority after the

recommendation and would permit the

Government to expand its criminal

discovery rights."

2. "Similarly, the good-faith

standard will not permit the IRS to

become an information gathering

agency for other departments, includ-

ing the Department of Justice,

. regardl¢ss of the status of criminal

cases. ~" (footnote omitted)

In addition to other allegations

and defenses, in intervenor-petitioner's

pleading, intervenor-petitioner in the

case herein alleged "institutional bad

faith" in her Pleading in Intervention

TAU athe te Se A a AS esa a lt Sie LE)

ery ko

onl caren tnsser ating tele ten. ste

(R.21 418), supported by affidavits.

(Pleading, R. 19-26; Also Transcript at

R. 81,82,83,87,101).

The Internal Revenue Service did not

plead "institutional good faith" in their

complaint, nor did the affidavits

Submitted by Special Agent Nelson H.

Patnaude adequately deny the "institutional

bad faith" alleged by intervenor-appellant:

1. " No recommendation for prose-

cution of the taxpayer for the years

and tax returns under investigation

has been made to the United States

Department of Justice." (R. 12,46;

Also A-9 , infra)

2. “I have not made a recommendation

for criminal prosecution in this case.

(R.17,9%3; A- ll, infra)

3. " The subject summons was not

issued at the request of anyone from

the Office of the United States

Attorney." (R.17,44; A-ll, infra)

4. “I have not delayed any recommen-

dation at the request of my superiors

solely to further a criminal prose-

cution". (R.17,%5; A-12,infra)

5. "The subject summons was not

. issued at the request of any employee

of the Department of Justice (to

include any employee of any United

States Attorney), nor was it issued

at the request of any employee of

the United States Customs Service."

(R.18,%3; A-13 ,infra).

The subjective intent of Special

Agent Nelson H. Patnaude does not control

on the issue of “institutional good faith."

It is the subjective intent of the Internal

Revenue Service as an institution (Regional

Counsel, Assistant Regional Commissioner

for Intelligence and Criminal Tax Division

of the Office of General Counsel) which

is dispositive of the "institutional good

faith". LaSalle, supra at 315-316. The

above statements of Nelson H. Patnaude in

his affidavits are not dispositive of the

"institutional good faith" of the IRS

and therefore the IRS has not established

a prima facia case for the enforcement of

the summons herein. An evidentiary

hearing with discovery should be ordered

in this case to determine the subjective

intent of the IRS as an institution.

The dissent in LaSalle, supra at

320 expressed a concern that the holding

in LaSalle which added "institutional

good faith" to the Powell test of good

faith would "produce but endless discovery

proceedings...." Although the majority

knew that their decision in LaSalle

would require an expanded need for

discovery, this did not deter the majority

from adding "institutional good faith"

to the Powell test.

The Third Circuit has misinterpreted

the meaning of U.S. v. LaSalle, supra in

denying petitioner an evidentiary hearing

and discovery.

CONCLUSION

For the foregoing reasons a writ of

certiorari should issue to review the

Judgment Order of the United States Court

of Appeals for the Third Circuit, entered

July 17, 1979.

Respectfully submitted,

Jeanene Moenckmeier

Petitioner Pro Se

1545 Ninth Avenue

San Diego, Calif.92101

714/239-4887

CERTIFICATE OF SERVICE

I hereby certify that on this 27th

day of September 1979 four copies of the

Petition for Writ of Certiorari herein

were mailed by me, postage prepaid to

the Solicitor General, Department of

Justice, Washington, D.C. 20530.

Vnetnchrrete’

eanene Moenckmeier

(COPY)

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

NO. 79-1472

UNITED STATES OF AMERICA and

NELSON H. PATNAUDE, Special Agent,

Internal Revenue Service.

MIDLANTIC NATIONAL BANK and

BRIAN WAIVER

Jeanene and Ernst O. Moenckmeier,

Intervenors

Jeanene Moenckmeier, Appellant

On Appeal from the United States

District Court for the District of

New Jersey.

C.A. No. 79-0158

Argued July 12, 1979

Before: ADAMS, ROSENN and HIGGINBOTHAM,

Circuit Judges.

JUDGMENT ORDER

After consideration of all contentions

raised by appellant, it is

ADJUDGED AND ORDERED that the judgment

of the district court be and is hereby

affirmed.

Each side to bear its own costs.

BY THE COURT,

/3/ Arlin M. Adams

Circuit Judge

ATTEST:

/s/ Thomas F. Quinn

Thomas F. Quinn, Clerk

DATED: July 17,1979.

(COPY)

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 79-1472

UNITED STATES OF AMERICA, et al.

¥.

MIDLANTIC NATIONAL BANK, et al.

Jeanene Moenckmeier, Appellant

(C.A. NO. 79-0158)

SUR PETITION FOR REHEARING

Present: SEITZ, Chief Judge, ALDISERT,

ADAMS, GIBBONS, ROSENN, HUNTER, WEIS,

GARTH, and HIGGINBOTHAM,Circuit Judges.

. The petition for rehearing filed

In the above entitled case having been

submitted to the judges who participated

in the decision of this court and to all

the other available circuit judges of

the circuit in regular a ¢ive service,

and no judge who concurred in the decision

having asked for rehearing, and a majority

of the circuit judges of the circuit in

regular active service not having voted

for rehearing by the court in banc,

the petition for rehearing is denied.

By the Court,

Dated: /s/ Arlin M. Adams

August 23, 1979 ~ SLECHLe Juage

A-3

ELC :ke (COPY)

78 4998

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA : HON. H.CURTIS

and NELSON H. PATNAUDE, MEANOR

Special Agent, :

Internal Revenue Service, Civil Action

3 No. 79-158

Petitioners,

Vv.

: ORDER

MIDLANTIC NATIONAL BANK,

Respondent. ORIGINAL FILED

: APR 11 1979

Angelo W.Lacascio,

Clerk

This matter having been opened to

the Court ty Robert J. Del Tufo, United

States Attorney for the District of

New Jersey and this Court having read

and considered the pleadings filed herein

and having heard oral argument; and good

cause therefor having been shown,

IT IS on this 1l day of April, 1979,

ORDERED

(1) That the respondent appear in

person before Nelson H. Patnaude, Special

Agent, at 10:00 A.M. on the 20th day of

April, 1979 at 970 Broad Street, Room

1404, Newark, New Jersey;

(2) That at the time of the appear-

ance as directed above, respondent testify

A-4

and produce all documents, papers, records

and information as more fully set forth

in the IRS summons which is attached to

the Petition; and

(3) That a copy of this Order may be

deemed good and sufficient service; and

(4) That intervenor Jeanene

Moenckmeier's request for a stay pending

appeal is denied.

/s/ H. Curtis Meanor

H. CURTIS MEANOR, JUDGE

UNITED STATES DISTRICT COURT

(COPY)

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 79-1472 April 16,1979

UNITED ST7.UES OF AMERICA and NELSON H.

PATNAUDE,Special Agent, Internal Revenue

Service

_ Vs.

MIDLANTIC NATIONAL BANK and BRIAN WAIVER

Jeanene Moenckmeier and Ernst O.

Moenckmeier, Intervenors

Jeanene Moenckmeier, intervenor, Appellant

(D.C. Civil No. 79-158}

Present: ADAMS,GIBBONS and WEISS,Circuit

Judges.

1. Appellant's motion for a stay of the

execution of the Internal Revenue Service

summons of June 21, 1978, ordered by

Honorable H. Curtis Meanor, Judge for the

District of New Jersey, to be enforced

on April 20, 1979, pending appeal, and

Exhibits to appellant's motion,

in the above-entitled case,

Respectfully

ZsZ T.E._Quinn. _ _

enc. Clerk.

£m

The foregoing Motion is/are granted and

the parties are directed to abide by the

following briefing schedule:

1. Appellant to hand-file and hand-serve

its brief and the appendix not later than

May 2, 1979.

A-6

2. Appellee to hand-file and hand-serve

its brief not later than May 16, 1979,

3. Reply brief, if any, for appellant

is to be hand-filed and hand-served not

later than May 23, 1979.

This case is to be listed for disposition

on the merits during the week of July

9, 1979.

By the Court,

/s/ Arlin M. Adams

Judge

. Dated: April 18, 1979.

2 sil

(COPY) EXHIBIT A

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW JERSEY.

UNITED STATES OF AMERICA and )

NELSON H. PATNAUDE,Special Agent )

of the Internal Revenue Service, )

Petitioners, —_—

)Action

Vv. )No.

MIDLANTIC NATIONAL BANK,

— ~— i

Respondent.

AFFIDAVIT

STATE OF NEW JERSEY )

COUNTY OF ESSEX )

NELSON H. PATNAUDE, petitioner herein,

being first duly sworn, deposes and says:

1. I ama duly commissioned Special

Agent of the Internal Revenue Service

and I perform my duties under the

District Director of Internal Revenue,

Newark,New Jersey.

2. In my capacity as a Special Agent,

I am conducting an investigation for the

purpose of ascertaining the correct-

ness of the tax returns of Jeanene

Moenckmeier for the taxable years

1975-1976.

_. .3- Pursuant to that investigation

and in accordance with 26 U.S.C. §§7602

and 7603, on June 21, 1978, I served

an Internal Revenue Service Summons,

a copy of which is attached hereto as

Exhibit A, upon the respondent, by

FROST LES POT Rs eS aoe te kL

personally handing an attested copy

thereof to Mr. Brian Waiver, Senior

Accountant.

4. The said summons directed the

appearance of the respondent before

an official of the Internal Revenue

Service to give testimony and to produce

books, papers, records, or other data,

as set forth in such summons.

5. The summoned items and testimony

are believed to be relevant to the

investigation, and the information sought

is not already in the possession of the

petitioners.

6. No recommendation for prosecution

of the taxpayer for the years and tax

returns under investigation has been

made to the United States Department

of Justice.

7. A notice of the summons,

together with a copy of the summons, was

sent by certified mail on June 21, 1978,

tor Jeanene Moenckmeier

1545 Ninth Avenue |

San Diego, California 92101

8. Ralph Fucetola III, Esq.,

who represents the taxpayer, gave notice

to the respondent not to comply with the

summons by letter dated June 27,1978.

A copy of this letter, which is attached

hereto as Exhibit C, was sent to me.

9. Respondent has not to this date

complied with the summons.

10. I make this Affidavit in support

of a petition for judicial enforcement

of the summons.

A-9

/s/ Nelson H. Patnaude

Nelson H. Patnaude

Sworn to before me this

19th day of December , 1978.

/s/ Diane M. Peter

Diane M. Peter

Notary Public

My Commission Expires

November 21, 1982.

(Exhibits omitted)

A-10

(COPY)

ELC :rpb

79 1298

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA,:

and NELSON H. PATNAUDE, Honorable H.

Special Agent, Internal : Curtis Meanor

Revenue Service, |

: Civil Action

Petitioners, No. 79-158

: SUPPLEMENTAL

MIDLANTIC NATIONAL BANK AFFIDAVIT

and BRIAN WAIVER,

Respondents.

STATE OF NEW JERSEY :___

COUNTY OF ESSEX ; SS:

NELSON H. PATNAUDE, being duly sworn

according to law deposes and says:

1. I ama Special Agent employed

by the Internal Revenue Service, Criminal

Investigation Division, Newark, New Jersey,

and have been so employed since 1961.

2. I have submitted an Affidavit

in this case and I incorporate the

contents thereof by reference.

3. I have not made a recommendation

for criminal prosecution in this case.

4. The subject summons was not

issued at the request of anyone from the

Office of the United States Attorney.

A-11l

5. I have not delayed any recommen-

dation at the request of my superiors

solely to further a criminal prosecution.

6. Since my involvement with the

Criminal Investigation Division's investi-

gation relating to Jeanene Moenckmeier,

I have had no knowledged of any wire taps

having been used in these investigations.

/s/ Nelson H. Patnaude

° U

Special Agent

Sworn and subscribed to .

before me this 15th day

of March, 1979

/3/ anaes amer ta J. Lowe-Pagliaroli

ANGELAMARIA J. LOWE-PAGLIAROLI

A Notary Public of New Jersey

My Commission Expires June 29, 1980

A-12

(COPY)

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA,: Judge Meanor

and NELSON H. PATNAUDE,

Special Agent, Internal : Civil Action

Revenue Service, No. 79-158

Petitioners,

: SUPPLEMENTAL

Vv. AFFIDAVIT

MIDLANTIC NATIONAL BANK

and BRIAN WAIVER,

ORIGINAL

Respondents. : FILED

APR 11 1979

STATE OF NEW JERSEY: __ Angelo W.

COUNTY OF ESSEX , 58: Lacascio ,Clerk

NELSON H. PATNAUDE, being duly sworn

according to law deposes and says:

1. I ama Special Agent employed

by the Internal Revenue Service, Criminal

Investigation Division, Newark, New

Jersey and have been so employed since 1961.

2. I have submitted two prior

affidavits in this case and I encorporate

the contents thereof by reference.

3. The subject summons was not

issued at the request of any employee of

the Department of Justice (to include any

employee of any United States Attorney),

nor was it issued at the request of any

employee of the United States Customs

Service.

[cont'd on next page]

A-13

EE,

(Affidavit continued)

/s/ Nelson H. Patnaude

NELSON H. PATNAUDE

Sworn and subscribed to before

me this 10th day of April, 1979.

/s/ Angelamaria J. Lowe-Pagliaroli

Angelamaria J..Lowe-Pagliaroli

A Notary Public of New Jersey

My Commission expires June 29, 1980.

A-14

STATUTES RELIED UPON

(full text)

Title 26, United States Code, Section 7604

Enforcement of summons

(a) Jurisdiction of district court.--If any

person 1s summoned under the internal revenue

laws to appear, to testify, or to produce

books, papers, records, or other data, the

United States district court for the dis-

trict in which such person resides or is

found shall have jurisdiction by appropriate

process to compel such attendance, testimony,

or production of books, papers, records,

or other data.

(b) Enforcement.--Whenever any person

summoned under section 6420(e) (2), 6421(£) (2),

6424 (da) (2) ,6427(£) (2) or 7602 neglects or refuses to

obey such summons, or to produce books,

papers, records, or other data, or to give

testimony, as required, the Secretary

may apply to the judge of the district

court or to a United States commissioner

for the district within which the person

so summoned resides or is.found for an

attachment against him as for a contempt.

It shall be the duty of the judge or

commissioner to hear the application, and,

if satisfactory proof is made, to issue an

attachment, directed to some proper officer,

for the arrest of such person, and upon

his being brought before him to proceed to

a hearing of the case; and upon such hearing

the judge or the United States commissioner

shall have power to make such order as’ he

shall deem proper, not inconsistent with

A-15

the law for the punishment of contempts,

to enforce obedience to the requirements

of the summons and to punish such person

for his default or disobedience.

(1) Authority to issue orders, processes,

and judgments.--

(2) Penalties.--For penalties applicable

to violation of section 6420(e) (2) ,6421(f) (2),

6424(d) (2), 6427(£) (2), or 7602, see section 7210.

Title 26, United States Code, Section 7609

Special procedures for third-party summonses

(a) Notice--

(1) In general.--If--

(A) any summons described in subsection

third-party recordkeeper, and

(B) the summons requires the production

of any portion of records made or kept

of the business transactions or affairs

of any person (other than the person

summoned) who is identified in the descrip-

tion of the records contained in the summons,

then notice of the summons shall be given

to any person so identified within 3 days

of the day on which such service is made,

but no later than the 14th day before

the day fixed in the summons as the day

upon which such records are to be

examined. Such notice shall be accom-

panied by a copy of the summons wich

has been served and shall contain

directions for staying compliance with

the summons under subsection (b) (2).

(2) Sufficiency of notice.-- Such notice

shall be SaFFislent if, on or before

such third day, such notice is served

in the manner provided in section 7603.

(relating to service of summons) upon

the person entitled to notice, or is

A-16

mailed by certified or registered

mail to the last known address of such

person, or, in the absence of a last

known address, is left with the person

summoned. If such notice is mailed,

it shall be sufficient if mailed to the

last known address of the person entitled

to notice or, in the case of notice to

the Secretary under section 6903 of the

existence of a fiduciary relationship,

to the last known address of the fidu-

Ciary of such person, even if such

person or fiduciary is then deceased,

under a legal disability, or no longer

in existence.

(3) Third-party recordkeeper defined.--

For purposes of this subsection, the term

"third-party recordkeeper" means--

(A) any mutual savings bank, coopera-

tive bank, domestic building and loan

association, or other savings institu-

tion chartered and supervised as a

Savings and loan or similar associa-

tion under Federal or State law, any

bank (as defined in section 581), or

any credit union (within the meaning

of section 501(c) (14) (A));

(B) any consumer reporting agency

(as defined under section 603(d) of

the Fair Credit Reporting Act (15

U.S.C. 168la(f£)));

through the use of credit cards or

similar devices;

(D) any broker (as defined in section

3(a) (4) of the Securities Exchange

Act of 1934 (15 U.S.C. 78c(a) (4)));

(E) any attorney; and

(F) any accountant.

(4) Exceptions.--Paragraph (1) shall not

apply to any summons--

A-17

(A) served on the person with respect

to whose liability the summons is

issued, or any officer or employee of

such person,

(B) to determine whether or not records

of the business transactions or affairs

of an identified person have been made

or kept, or

(5) Nature of summons. Any summons to

which this subsection applies (and any

summons in'aid of collection described

in subsection (c) (2) (B)) shall identify

the taxpayer to whom the summons

relates or the other information as

will enable the person summoned to

locate the records required under the

summons. ‘

(b) Right to intervene; right to stay

compliance.--

(1) Intervention.--Notwithstanding any

other law or rule of law, any person who

is entitled to notice of a summons

under subsection (a) shall have the

right to intervene in any proceeding

with respect to the enforcement of

such summons under section 7604.

(2) Right to stay compliance.--

Nothwithstan g any other law or rule

of law, any person who is entitled to

notice of a summons under subsection (a)

shall have the right to stay compliance

with the summons if, not later than

the 14th day after the day such notice

is given in the manner provided in sub-

section (a) (2)--

(A) notice in writing is given to the

person summoned not to comply with —

the summons, and

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(B) a copy of such notice not to

comply with the summons is mailed

by registered or certified mail

to such person and to such office

as the Secretary may direct in

the notice referred to in subsection

(a) (1).

(1) In general.-- Except as provided

in paragraph (2), a summons is described

in this subsection if it is issued under

paragraph (2) of section 7602 or under

section 6420(e) (2), 6421(£) (2), 6424 (d) (2),

or 6427(e) (2) and requires the production

of records.

(2) Exceptions.-- A summons shall not

be treated as described in this sub-

section if--

(A) it is solely to determine the

identity of any person having a

numbered account (or similar arrange-

ment) with a bank or other institu-

tion described in subsection (a) (3) (A),

(i) the liability of any person

against whom an assessment has

been made or judgment rendered, or

(ii) the liability at law or in

equity of any transferee or

fiduciary of any person referred

to in clause (i).

(3) Records; certain related testimony.--

For purposes of this section--

(A) the term "records" includes books,

papers, or other data, and

(B) a summons requiring the giving of

testimony relating to records shall

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be treated as a summons requiring

the production of such records.

(ad) Restriction of examination of records.

--No examination of any records required

to be produced under a summons as to which

notice is required under subsection (a)

may be made--

(1) before the expiration of the 14-day

‘period allowed for the notice not to

comply under subsection (b) (2), or

(2) when the requirements of subsection

(b) (2) have been met, except in accor-

dance with an order issued by a court of

_ competent jurisdiction authorizing

examination of such records or with the

consent of the person staying compliance.

(e) Suspension of statute of limitations.--

if any person takes any action as provided

in subsection (b) and such person is the

person with respect to whose liability

the summons is issued (or is the agent,

nominee, or other person acting under the

direction or control of such person), then

the running of any period of limitations

under section 6501 (relating to the assess-

ment and collection of tax) or under section

6531 (relating to criminal prosecutions)

with respect to such person shall be sus-

pended for the period during which a

proceeding, and appeals therein, with re-

spect to the enforcment of such summons is

pending.

(f) Additional requirement in the case of

a John Doe summons.--Any summons described

in subsection (c) which does not identify

the person with respect to whose liability

the summons is issued may be served only

after a court proceeding in which the

Secretary establishes that--

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(1) the summons relates to the investi-

gation of a particular person or

ascertainable group or class of persons,

(2) there is a reasonable basis for be-

lieving that such person or group or

class of persons may fail or may have

failed to comply with any provision of

any internal revenue law, ana

(3) the information sought to be obtained

from the examination of the records (and

the identity of the person or persons

with respect to whose liability the

summons is issued) is not readily

available from other sources.

(g) Special exception for certain summonses.

--In the case of any summons described in

subsection (c), the provisions of subsection

(a) (1) and (b) shall not apply if, upon

petition by the Secretary, the court de-

termines, on the basis of the facts and

circumstances alleged, that there is

reasonable cause to believe the giving of

notice may lead to attempts to conceal,

destroy, or alter records relevant to the

examination, to prevent the communication

of information from other persons through

intimidation, bribery, or collusion, or to

flee to avoid prosecution, testifying, or

production of records.

(h) Jurisdiction of district court.--

(L1) The United States district court for

the-district within which the person to

be summoned resides or is found shall

have jurisdiction to hear and determine

proceedings brought under subsections

(£) or (g). The determinations

required to be made under subsections

(f) and (g) shall be made ex parte and

shall be made solely upon the petition

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and supporting affidavits. An order

denying the petition shall be deemed a

final order which may be appealed.

2} Except as to cases the court

considers of greater importance, a

proceeding brought for the enforcement

of any summons, or a proceeding under

this section, and appeals, take prece-

dence on the docket over all cases

and shall be assigned for hearing and

decided at the earliest practicable

date.

Added Pub.L. 94-455, Title XII, §1205(a),

Oct. 4, 1976, 90 Stat. 1699.

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.