# Petition for Writ of Certiorari — Barrett v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1624%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1989 - **Citation:** 492 U.S. 926 ## Text NO. IN THE Supreme Court of the Tnited States OCTOBER TERM, 1987 BERNARD M. BARRETT, JR., M.D., AS PRESIDENT OF PLASTIC AND RECONSTRUCTIVE SURGEONS, P.A., Petitioner Vv. UNITED STATES OF AMERICA and MICHAEL O. HANSON, SPECIAL AGENT OF THE INTERNAL REVENUE SERVICE, Respondents PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT EDWARD D. URQUHART URQUHART & HASSELL 1800 West Loop South Suite 1500 Houston, Texas 77027 (713) 961-3505 Counsel of Record for Petitioner SILVIA T. HASSELL CHARLES J. ESCHER URQUHART & HASSELL Counsel for Petitioner April 15, 1988 Alpha Law Brief Co., Inc. — 8748 Westpark — Houston, Texas 77063 — 789-2000 I QUESTION PRESENTED l. Do federal district courts have the jurisdictional authority to condition enforcement of I.R.S. sum- monses to prevent the I.R.S. from utilizing a sum- mons or the information procured by it to make illegal disclosures of “return information” in viola- tion of I.R.C. (26 U.S.C.) § 6103? 1. The caption of this case contains the names of all parties to this proceeding. Petitioner Plastic and Reconstructive Surgeons, P.A., has no parent companies, subsidiaries, or affiliates to list pursuant to Rule 28.1. II TABLE OF CONTENTS QUESTION PRESEN TES 6 5. + - W 11 12 12 20 III TABLE OF CONTENTS (Continued) lI. The Fifth Circuit’s Decision is in Direct Conflict With Two Ninth Circuit Cases Which Uphold the Jurisdictional Authority of Federal District Courts to Conditionally Enforce I.R.S. Summonses Iil. The Fifth Circuit’s Decision Thwarts the Bro: Concern and Determination by Congress that Con- fidential “Return Information’ Not Be Disclosed Except Under Strictly Limited Circumstances CONCLUSION APPENDIX (See “Index of Appendix” at A-1 Dh V1 IV TABLE OF AUTHORITIES UNITED STATES CONSTITUTION Page Amendment IV ......-ccecccccccccsccccsccescssscrses 3 Amendment V .....ccccccccssseccvesssessessscessvces 3 STATUTES Internal Revenue Code (26 U.S.C.) LAOS ee Cl eae aces ee eee ee A enaee eee passim ES GIDEA) 22 Donaldson v. United States, 400 U.S. 517, 91 S. Ct. 534 OSNOE So cick iis bau owkantavaeueecunanawaenterty 20, 22, 24 F.T.C. v. Gibson Products of San Antonio, Inc., 569 F.2d 900 (5th Cir. 1978) ........ cee cee cee ccc cence cceces 11 Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983 (1972) ...17, 18, 23 Glidden Company v. Zdanok, 370 U.S. 530, 82 S. Ct. 1459 (FOBT) ons cave cnasasivcesnsanacdennwetanese esas 20 Greene v. McElroy, 360 U.S. 474, 79 S. Ct. 1400 (1959) .. 18 Keyishian v. Board of Regents, 385 U.S. 589, 87 S. Ct. 67S CIGGT) «onc ccc nmanenccareeeerensncesssescons 16 Murphy v. Hunt, 455 U.S. 478, 102 S. Ct. 1181 (1982) .. 11 V TABLE OF AUTHORITIES (Continued) CASES Page Newman v. State of Alabama, 503 F.2d 1320 (5th Cir. 1974) reh’e denied, 506 F.2d 1056, cert. denied, 421 U.S. 948, OS SS. Ch. EGR EAGT vc oka eae cake tenes ee 19, 20 Reisman v. Caplin, 375 U.S. 440, 84 S. Ct. 508 (1964) passim Shelton v. Tucker, 364 U.S. 479, 81 S. Ct. 247 (1960) 16 Smith v. Grimm, 534 F.2d 1346 (9th Cir. 1976), cert denied, 429 U.S. 980, 97 S. Ct. 493 (1976) .......... 20 Stanley v. Illinois, 405 U.S. 645, 92 S. Ct. 1208 (1972) ... 23 Stern v. United States Gypsum, Inc., 547 F.2d 1329 (7th Cir 1977). cert. denied, 434 U.S. 975, 98 S. Ct. 533 OU ge cache sc bi een nee tin based eer ieee nee en 20 Tierney v. Schweiker, 718 F.2d 449 (D.C. Cir. 1983) ..... 22 United States v. Arthur Young & Co., 465 U.S. 805, 104 S Ce TORS LEGBGD vs ces nd veewde cas eceseseuras 12,20, 22, 24 United States v. Author Services, Inc., 804 F.2d 1520 (9th Cir. 1986), reh’g denied (unpublished) Nos. 85-6194, 85-6195 (9th Cir. Feb. 26, 1987), modified 811 F.2d 1264 oS a ee rrr eae rrr rr i United States v. Barrett, 787 F.2d 958 (Sth Cir.), with- drawn, 804 F.2d 1376 (5th Cir. 1986), reh’g en banc granted 812 F.2d 936 (Sth Cir. 1987), 837 F.2d 1341 (i foe SOR Cet ORCS. aks esate meer edenwedasens ‘ited States v. Bisceglia, 420 U.S. 141, 95 S. Ct. 915 Of) errr ree rr errr rrr rrr er rey errr yes e ‘nited States v. Euge, 444 U.S. 707, 100 S. Ct. 874 (1980) 'nited States v. Powell, 379 U.S. 48, 85 S. Ct. 248 (1964) ‘nited States v. Robel, 389 U.S. 258, 88 S. Ct. 419 (1967) 'nited States v. Ruggeiro, 425 F.2d 1069 (9th Cir. 1970), cert. denied, 401 U.S. 922, 91 S. Ct. 863 (1971) ...... 'nited States v. Storer Broadcasting Company, 351 USS. SOF. Fe. 4. JGS CEPR? crews eee or caw en eee Inited States v. Texas Heart Institute, ie a gaan a tel aa oe eae ae mee 'nited States v. Vetco, In 691 F.2d 1281 (9th Cir.), cert. denied. 454 U.S. 1098, 102 S. Ct. 671 (1981) .... 'nited States v. Zolin, 809 F.2d 1411 (9th Cir.), reh’g en banc granted, 832 F.2d 127 (9th Cir. 1987), order cranting reh’g en banc vacated, Nos. 85-6065, 85-6105, slip op. at 3647 (9th Cir. March 28, 1988) oo o~ ~ co o~ ~ passim passim 20, 22 a0) 4 2U, £264 pas ni 18 25 70) pas s7m 25 27,28 i IN THE Supreme Court of the Mnited States OCTOBER TERM, 1987 BERNARD M. BARRETT, JR., M.D., AS PRESIDENT OF PLASTIC AND RECONSTRUCTIVE SURGEONS, P.A.., Petitioner v. UNITED STATES OF AMERICA and MICHAEL O. HANSON, SPECIAL AGENT GF THE INTERNAL REVENUE SERVICE, Respondents PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Petitioner respectfully prays that a writ of certiorari issue to review the split decision of the United States Court of Appeals for the Fifth Circuit sitting en banc in this matter (Fifth Circuit No. 85-2054) and entered on February 24, 1988, which, as more fully discussed herein, is in direct conflict with prior decisions of the United States Supreme Court and two recent cases from the United States Court of Appeals for the Ninth Circuit. OPINIONS BELOW Fifth Circuit Opinions The February 24, 1988, en banc opinion of the Fifth Circuit is reported at 837 F.2d 1341 (Sth Cir. 1988) (“Barrett III’) and appears in the appendix hereto at A-3. 2 It includes the majority per curiam decision, a concurring in part and dissenting in part opinion by Judges John R. Brown, Henry A. Politz, Sam D. Johnson, and Jerre S. Williams, and a separate dissenting opinion by Judges Alvin B. Rubin and E. Grady Jolly. The Fifth Circuit order granting a rehearing en banc is reported at 812 F.2d 936 (Sth Cir. 1987) and appears in the appendix hereto at A-42. The prior Fifth Circuit panel decision of December 3, 1986, withdrawn by reason of the en banc rehearing, is reported at 804 F.2d 1376 (Sth Cir. 1986) (“Barrett I’) and appears in the appendix hereto at A-44. It includes a per curiam opinion, a concurring opinion by the late Judge Robert M. Hill and Judge Thomas M. Reavley, and a separate concurring opinion by Judge John R. Brown. Another prior Fifth Circuit panel decision in this case, entered on April 16, 1986, withdrawn by reason of granting Dr. Barrett's petition for rehearing, is reported at 787 F.2d 958 (Sth Cir. 1986) (“Barrett I’) and appears in the appendix hereto at A-57. It includes a majority opinion and a separate concurring in part and dissenting in part opinion by Judge John R. Brown. District Court Rulings Tke Findings of Fact and Conclusions of Law and Final Judgment entered by the United States District Court for the Southern District of Texas on December 10, 1984, are not reported and appear in the appendix hereto at A-73. The district court’s Memorandum and Order of December 19, 1984, denying a motion for stay of execution of judgment appears in the appendix hereto at A-79. The district court’s Memorandum and Order of January 4, 1985, denying a motion to reconsider its order denying stay appears in the appendix hereto at A-81. The district court’s Memorandum and Order of 3 January 10, 1985, denying a motion for new trial appears in the appendix hereto at A-84. Companion Cases The companion case of United States v. Texas Heart Institute, reported at 755 F.2d 469 (Sth Cir. 1985), appears in the appendix hereto at A-86. The unreported district court decision in Texas Heart on remand appears in the appendix hereto at A-114. The companion case of Barrett v. United States, re- ported at 795 F.2d 446 (Sth Cir. 1986), appears in the appendix hereto at A-118. JURISDICTION The en banc judgment of the Fifth Circuit sought to be reviewed was entered on February 24, 1988, and tne mandate of that judgment has been stayed until April 17, 1988, pending the filing of this petition. Jurisdiction to review the judgment in question by writ of certiorari is conferred on this Court by 28 U.S.C. § 1254(1). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED U.S. Constitution, Amendment IV (Appendix A-131) U.S. Constitution, Amendment V (Appendix A-131) Internal Revenue Code Sections: 26 U.S.C. § 6103(a) 26 U.S.C. § 6103(b)(2)(A) 26 U.S.C. § 6103(k) (6) (Appendix A-132) (Appendix A-133) (Appendix A-i38) 26 U.S.C. § 7213 (Appendix A-138) 26 U.S.C. § 7402 (Appendix A-142) 26 U.S.C. § 7431 (Appendix A-143) 26 U.S.C. § 7602 (Appendix A-146) 26 U.S.C. § 7604 (Appendix A-149) 4 STATEMENT OF THE CASE The Taxpayer’s Business Bernard M. Barrett, Jr., M.D., petitioner herein, is a plastic and reconstructive surgeon who has practiced in the Texas Medical Center in Houston, Texas since com- pleting his education and training in 1975. He incor- porated his medical practice in 1978 into a professional association named Plastic and Reconstructive Surgeons, P.A. (3-R. 55). The nature of the plastic and reconstruc- tive surgery and treatment performed by Dr. Barrett causes most of his patients to demand absolute con- fidentiality with regard to their treatment or surgery and Dr. Barrett promises such confidentiality to his patients (3-R. 42-43). Administrative Activity of the Internal Revenue Service The I.R.S. civil audit examination which began in July of 1979 covered Dr. Barrett’s personal tax returns for 1976, 1977 and 1978 and his corporate tax return for the fiscal year ended March 31, 1979. Dr. Barrett cooperated fully in the civil audit examination and pro- vided the examining revenue agents with complete access to all of his business records (3-R. 11-12, 15, 33-34, 43, 47; 4-R. 75). After certain factual events which are dis- puted but not necessary for this petition, Revenue Agent Helen Curtis-Brown referred the case to the Criminal Investigation Division of the Internal Revenue Service on February 17, 1981 (4-R. 8). After the referral to the Criminal Investigation Divi- sion, Dr. Barrett’s case was first assigned to Special Agent George Robson and then reassigned to Special Agent 5 Michael O. Hanson in December of 1981 (2-R. 27-28, 64). Beginning in June of 1982, Special Agent Hanson began a massive summoning of records and interviewing of third-parties. Special Agent Hanson served summonses on every financial institution from Florida to California with which Dr. Barrett, his wife or children had done business or had accounts, including some _ institutions with which Dr. Barrett and his family had never done business (3-R. 48-49). Special Agent Hanson also con- tacted individuals with whom Dr. Barrett had never done business (3-R. 48-49). Dr. Barrett never once attempted to stop such summoned or contacted third-parties from providing information to the Internal Revenue Service (3-R. 48). The Hospital Summonses and the Related Case of U.S. v. Texas Heart Institute, 755 F.2d 469 (5th Cir. 1985) However, also in June and July of 1982, Special Agent Hanson summoned sixteen (16) hospitals for the names and addresses of patients Dr. Barrett had admitted to such hospitals for the five year period of 1976 through 1980. Dr. Barrett learned from administrators and legal counsel for such hospitals that Special Agent Hanson was attempting to obtain the names and addresses of his patients from their medical records divisions (4-R. 58). Special Agent Hanson had also issued the summons in- volved in the instant case to Dr. Barrett on June 17, 1982, requesting that he produce records that had previously been examined and to add thereto all of his records for the subsequent years of 1979 and 1980 (1-R. 130-138). Because of concern for the confidentiality rights of the patients, Dr. Barrett’s attorneys and attorneys for four (4) hospitals where Dr. Barrett primarily practices de- 6 cided not to comply with the summonses in order to contest the validity of Special Agent Hanson’s summonses and proposed actions in summons enforcement proceed- ings in federal district court (4-R. 58-59). Prior to seeking enforcement of the four (4) hospital summonses or the summons for Dr. Barrett’s records in this case, Special Agent Hanson, on March 11, 1983, mailed approximately three-hundred fifty (350) identical letters to patients whose names and addresses he obtained from the other hospitals that did comply with their sum- monses (2-R. 42, 43, 59). The letters disciosed that Dr. Barrett was under criminal investigation by the Internal Revenue Service and requested various forms of evidence of payments to Dr. Barrett (1-R. 8, Exhibit 1(D) (copy of letter); 2-R. 42). Special Agent Hanson’s mailing of the approximate three hundred fifty (350) letters was the first step in his plan to mail such letters to one- hundred percent (100%) of Dr. Barrett’s patients for the five year period of 1976 through 1980, the entire first five years of Dr. Barrett’s private practice (2-R. 39- 40). The government first chose to seek enforcement of only the summonses to the four (4) hospitals that had decided not to comply with their summonses rather than con- solidate Dr. Barrett’s summons matter with the hospital summons proceedings. The petitions to enforce the four (4) hospital summonses were not filed until June 21, 1983, almost one year after they were issued, and Dr. Barrett was allowed to intervene. These proceedings re- sulted in the Fifth Circuit decision in United States v. Texas Heart Institute, 755 F.2d 469 (Sth Cir. 1985); Appendix, A-86, infra. 7 At the original district court hearing in Texas Heart on December 2, 1983, before U.S. District Judge Norman W. Black, Special Agent Hanson testified that prior to the mailings he knew the letters would possibly cause Dr. Barrett’s patients “embarrassment, humiliation, or distress” or to be “upset” (2-R. 50, 69). Special Agent Hanson also testified that he could understand the patients being “upset” but he was not aware of how that would harm Dr. Barrett’s medical practice and that he would mail further letters to patients admitted to the respondent hosptials “irrespective of the harm it would do to Dr. Barrett’s medical practice” (2-R. 69). Revenue Agent Curtis-Brown later testified in the instant case that Dr. Barrett’s records reflected all of his income “in one form or another,” even if some was not reported on the tax returns (4-R. 82, 104). The district court in Texas Heart denied enforcement of the hospital summonses. The Fifth Circuit reversed on March 21, 1985, but remanded the case to the district court to determine if Special Agent Hanson’s desire to continue the mass mailings disclosing that Dr. Barrett was under “criminal investigation” would (1) be a dis- closure of information within the definition of “return information” in section 6103(b)(2)(A), and (2), if so, whether the I.R.S. is authorized to disclose such informa- tion under section 6103(k)(6).’ Texas Heart, 755 F.2d at 482; Appendix, A-112, infra. Most pertinent to this petition for certiorari, the Fifth Circuit further stated that “(t]his Court reiterates that even if the past disclosure [Agent Hanson’s prior mailing] was improper, the district court has discretion to condition enforcement of the sum- 1. All references herein are to sections of the Internal Revenue Code, 26 U.S.C. aie | 8 mons by requiring that the I.R.S. agree to desist from further unlawful disclosures.” Id. (emphasis added). On remand in Texas Heart Judge Black held that Special Agent Hanson’s prior letters were “irresponsible,” and that they did disclose “return information” by dis- closing Dr. Barrett was under criminal investigation. See unreported decision of Texas Heart on remand. Appendix A-114, 115-117, infra. Dr. Barrett’s Civil Damage Action Resulting in the Related Case of Barrett v. United States, 795 F.2d 446 (5th Cir. 1986) In November of 1983, Dr. Barrett filed a civil damage action against the government under section 7431 pri- marily as a result of Special Agent Hanson’s 350 letters to his patients unnecessarily disclosing the “return infor- mation” that he was under criminal investigation. This action resulted in the Fifth Circuit decision of Barrett v. United States, 795 F.2d 446 (Sth Cir. 1986); Ap- pendix, A-118, infra, which reversed a summary judgment for the government and remanded the case for trial. Therein, the Fifth Circuit held there were genuine issues of fact of (1) whether the information sought by Special Agent Hanson’s letters was “otherwise reasonably avail- able” within the meaning of section 6103(k)(6) (ie., from bank records and Dr. Barrett’s records) and, (2) if the letters had to be sent at all, whether the “disclosure of return information that the taxpayer was under in- vestigation, particularly criminal investigation, was ‘neces- sary,” as required by section 6103(k)(6). Barrett v. United States, 795 F.2d at 450-451; Appendix, A-127- 128, infra. The damage action is pending trial on remand in the district court at the date of this petition. 9 The Instant Summons Proceeding Against Dr. Barrett Resulting in the En Banc Decision Sought to be Reviewed After Judge Black originally denied enforcement of the four (4) hospital summonses in Texas Heart, and a year and one-half after the summons to Dr. Barrett was issued, the government filed the petition to enforce the summons to him under section 7402(b). At the ensuing enforce- ment proceedings before U.S. District Judge James DeAnda on March 12, 1984, Special Agent Hanson testi- fied that he could perform his job without continuing the mass mailings to Dr. Barrett’s patients, i.e., that his contact with Dr. Barrett’s patients could be “on a more selective basis” because he could use Dr. Barrett’s records and bank records (microfilm copies of deposited patient checks referred to as “transit items”) to “cross-reference” patient names and payments to determine if it was neces- sary to contact any particular patients (4-R. 28-29). However, at the continued proceeding on March 19, 1984, Special Agent Hanson evidenced his intent to continue the mass mailings by inconsistently, and incorrectly (1-R. 8,. Exhibit 1(C)), testifying that banks destroy such “transit items” after two years (5-R. 11). It is also pertinent to note here that subsequently, at the July 26, 1985, hearing on remand in Texas Heart, Special Agent Hanson further evidenced his intent to continue the mass mailings (Texas Heart on remand, Appendix A-117, infra). At the March 12, 1984, hearing in the instant summons case, Judge DeAnda commented preliminarily that he “would certainly put some very stringent limitations on any future patient contact” by the I.R.S. (4-R. 117). However, in his December 10, 1984, Findings of Fact and Conclusions of Law and Final Judgment, Judge 3 10 DeAnda enforced the summons entirely without putting any limitations on future patient contact (1-R. 67-72; Appendix A-73-78, infra). Judge DeAnda’s findings and conclusions were based on the incorrect perception that the factual issue was whether the I.R.S. was going to disclose Dr. Barrett’s business records to his patients, as opposed to the issue of the mass disclosure to the patients that Dr. Barrett was under “criminal investiga- tion” (1-R. 6-7, 70; Appendix A-75, 82-83, infra). On appeal, the Fifth Circuit issued the conflicting panel decisions of April 16, 1986, at 787 F.2d 958 (“Barrett I’); Appendix, A-57, infra, and December 3, 1986, at 804 F.2d 1376 (“Barrett IT’); Appendix A-44, infra. Barrett I affirmed the unconditional enforcement of the summons and Barrett I] remanded the case to the district court under the law of Texas Heart for consideration of “whether enforcement of the I.R.S. summons should be conditioned in order to protect Barrett against unneces- sary disclosure of the [return information] that he is under criminal investigation.” Barrett II, 804 F.2d at 1379; Appendix A-49, infra. (Also on this issue, see the separate concurring opinion of Fifth Circuit Judge John R. Brown, Barrett II, 804 F.2d at 1380-81, Appendix A-53-56, infra, and his prior panel dissenting opinion, Barrett I, 787 F.2d at 962-965; Appendix A-64-72, infra.) In the February 24, 1988, en banc decision, the Fifth Circuit considered the issue presented in this petition and, sua sponte, whether the appeal was moot.’ Regarding the 2. Barrett III, 837 F.2d at 1345-48; Appendix A-10-18, infra. Judges Brown, Politz, Johnson and Williams expressly concurred with the majority that the case was not moot. Barrett II], 837 F.2d at 1351-52; Appendix A-26, infra. Dr. Barrett cited the following authority in his supplemental brief, requested by the court, contend- ing the case was not moot, which required the Fifth Circuit’s ruling moe ee 11 issue presented in this petition, the Fifth Circuit majority opinion specifically held that federal district courts do not have the power to conditionally enforce I.R.S. summonses to protect confidentiality rights of taxpayers under section 6103 and expressly overruled its prior Texas Heart hold- ing to the contrary. Barrett III, 837 F.2d at 1350-51; Appendix A-21-26, infra. It is the latter holding from which Fifth Circuit Judge John R. Brown “vigorously” dissented and was joined by Fifth Circuit Judges Henry A. Politz, Sam D. Johnson, and Jerre S. Williams. Barrett III, 837 F.2d at 1351-1358; Appendix A-26-40, infra. REASONS FOR GRANTING THE WRIT There are three reasons why this case warrants the plenary consideration of the United States Supreme Court. First with regard to conflicts with prior decisions of this Court, the Fifth Circuit’s majority opinion improvidently rejects this Court’s direction in United States v. Powell, 379 U.S. 48, 85 S. Ct. 248 (1964), that federal district courts have the power and obligation to prevent an abuse of their process with respect to an I.R.S. summons. It further denies the judicial remedy of “complete protec- tion” afforded summoned taxpayers by this Court’s land- mark holding in Reisman v. Caplin, 375 U.S. 440, 84 S. Ct. 508 (1964). The Fifth Circuit’s majority opinion that the case was not moot: Murphy v. Hunt, 455 U.S. 478, 481, 102 S. Ct. 1181, 1183 (1982) (and cases cited therein); F.7.C. v. Gibson Products of San Antonio, Inc., 569 F.2d 900, 903 (Sth Cir. 1978) (Brown, C.J.); Atlantic Richfield Company v. F.T.C., 546 F.2d 646, 648-50 (Sth Cir. 1977) (“Due process remedy” of Reisman v. Caplin, 375 U.S. 440 (1964) applied to prevent mootness after compliance with subpoena because order could be entered to prevent future disclosures); accord, Anheuser-Busch, Inc. v. F.T.C., 359 F.2d 487 (8th Cir. 1966) (provisions of I.R.C. construed in Reisman held in pari materia with Federal Trade Commission Act) (Blackmun, J.). 12 also misapplies this Court’s prior decision in United States v. Arthur Young & Co., 465 U.S. 805, 104 S. Ct. 1495 (1984) (and the other prior decisions of this Court dis- cussed therein) by its holding that the confidentiality statutes of the Tax Reform Act of 1976 do not constitute the “sort of unambiguous directions from Congress” which authorize a district court to place restrictions on a summons. Second, the Fifth Circuit’s majority opinion is in direct conflict with two Ninth Circuit cases which uphold, under the authority of Powell, the jurisdictional authority of federal district courts to conditionally enforce I.R.S. summonses to protect section 6103 confidentiality rights of taxpayers. Uniform application of the federal statutes governing the summons power of the Internal Revenue Service in relation to the confidentiality rights of taxpayers, combined with the uniform exercise of fed- eral court jurisdiction over such matters, are appropriately substantial results this Court would obtain by resolving the direct conflict between the two circuit courts of appeal. Third, the Fifth Circuit’s majority opinion thwarts the broad concern and determination of Congress that con- fidential “return information” not be disclosed except under strictly limited circumstances. I. The Fifth Circuit’s Decision Rejects this Court’s Landmark Holdings in United States v. Powell and Reisman v. Caplin and Misapplies this Court’s Prior Decision in United States v. Arthur Young © Co. a. The Fifth Circuit’s Rejection of Powell and Reisman. In United States v. Powell this Court very clearly held that even after the government shows it meets the often 13 quoted four-pronged criteria of Powell for enforcement of an I.R.S. summons, such showing: does not make meaningless the adversary hearing to which the taxpayer is entitled before enforcement is ordered. At the hearing he “may challenge the summons on any appropriate ground,” Reisman vy. Caplin, 375 U.S. 440, at 449, 84 S. Ct. at 513. Nor does our reading of the statutes mean that under no circumstances may the court inquire into the underlying reasons for the examination. /t is the court’s process which is invoked to enforce the ad- ministrative summons and a court may not permit its process to be abused. Powell, 379 U.S. at 58, 85 S. Ct. at 255 (footnotes omitted) (emphasis added). With regard to the holding of the Fifth Circuit majority: that the United States District Court in the exer- cise of its residual, equitable discretion, may not, and has no power to, condition enforcement of the summons to prevent the disclosure of return infor- mation by the I.R.S. in utilizing the summons (or information procured by it), Barrett III, 837 F.2d at 1352; Appendix A-26-27, infra, Judge Brown correctly demonstrates that such holding: rejects the Supreme Court’s emphasis in Powell that in the application for enforcement of an I.R.S. sum- mons, ‘it is the court’s process which is invoked to enforce the administrative summons and a court may not permit its process to be abused.’ Id. The Fifth Circuit’s decision erroneously constrains dis- trict courts from preventing an abuse of their process be- cause it adopts the government’s position that district courts are powerless to do anything but miake an all or 14 nothing ruling when presented with a petition to enforce an I.R.S. summons, i.e., “[t]he district court does not have the power to conditionally enforce the summons . [t]here is no middle ground . . . the only issue that a district court can decide is whether to enforce the sum- mons.” Barrett Ill, 837 F.2d at 1350, 1351, Appendix A-22, 25, infra. In the context of this case, Judge Brown below and Dr. Barrett here contend the Fifth Circuit’s decision improperly allows the process of the district court to be abused because “the result of the court’s opinion . . . is that the district court is required not only to enforce a summons without any statutory necessity but to stand idly by while the I.R.S. subjects a taxpayer to the ridicule and humiliation of being labeled as a criminal tax evader in the eyes of his fellows . . . with no criminal charge yet filed much less tried.” Barrett III, 837 F.2d at 1357; Appendix A-38, infra. Furthermore, the expressly admitted result of the Fifth Circuit’s holding is that a district court cannot prevent the I.R.S. from using an illegal means to conduct its investigation. Specifically, the existence of a subsequent civil damage action under section 7431 and a criminal prosecution of government agents under section 7213 for illegal dis- closures are given as reasons for the holding that district courts do not have the power to prevent illegal disclosures. Barrett II], 837 F.2d at 1350; Appendix A-21, infra. The Fifth Circuit’s rejection of the important require- ment of Powell that a district court “may not permit its process to be abused” is also clear in light of this Court’s prior decision in Reisman. Therein, this Court held that taxpayers may not initiate an action in federal district court to contest an administrative summons, but their “adequate remedy at law,” according to the comprehensive procedures of the Internal Revenue Code, is to await VSS 15 an action initiated by the government to enforce its summons under section 7402(b). Reisman, 375 U.S. at 443, 445-46, 84 S. Ct. at 510, 512. In demonstrating that such a remedy is “adequate,” this Court further observed that both the “parties summoned” and those affected by production of the summoned information may “challenge the summons by asserting their constitutional or other claims.” 375 U.S. at 445, 84 S. Ct. at 511. This Court further observed therein that “[a]ny enforcement action under [section 7402(b)] would be an adversary proceeding affording a judicial determination of the chal- lenges to the summons and giving complete protection to the [parties summoned].” 375 U.S. at 446, 84 S. Ct. at 512 (emphasis added). Therefore, the ref- erence in Powell to the culminating language in Reisman that a taxpayer “may challenge the summons on any appropriate ground” with the emphasis in Powell that a district court “may not permit its process to be abused” determines that federal district courts have the jurisdictional power and are required to provide “complete protection” of a respondent taxpayer’s substantive rights, including section 6103 rights. Anheuser-Busch, Inc. v. F.T.C., 359 F.2d 487, 489-90 (8th Cir. 1966) (Black- mun, J.); Atlantic Richfield Co. v. F.T.C., 546 F.2d 646, 648-650 (5th Cir. 1977). The Fifth Circvit’s majority opinion in this case diminishes the power of federal dis- trict courts to provide the “complete protection” of sub- stantive rights intended by Powell and Reisman and diminishes the power of federal district courts intended by Congress in section 7402(a) as recognized by the Ninth Circuit in United States v. Author Services, Inc., 804 F.2d 1520, 1525 (9th Cir. 1986). As Judge Brown’s dissent argues, allowing district courts the power of conditional enforcement does not imperil the streamlined procedure of Powell because of 16 the nature of determinations the district court still must make under the four-pronged criteria of Powell. Barrett II, 837 F.2d at 1356-57; Appendix A-37-38, infra. In his original dissent in Barrett 1, Judge Brown explained that “[t]he determination of whether there exists a legiti- mate investigative purpose for the summons is certainly not far removed from the determination of whether the practices flowing from its enforcement are an unnecessary invasion of privacy or threaten injury to a taxpayer’s reputation.” Barrett I, 787 F.2d at 964; Appendix A-70, infra. In this regard, this Court has often held that “even though the governmental purpose be legitimate and sub- stantial, that purpose cannot be pursued by means that broadly stifle fundamental personal liberties when the end can be more narrowly achieved.” Shelton v. Tucker, 364 U.S. 479, 488, 81 S. Ct. 247, 252 (1960); Keyishian v. Board of Regents, 385 U.S. 589, 602, 87 S. Ct. 675, 683 (1967). The Fifth Circuit’s decision is inconsistent with such long established principle which can and is required to be observed within the streamlined procedure of Powell as demonstrated by Judge Brown below. Additionally, with regard to the task of the district court in making the required determinations under Powell, the Fifth Cir- cuit’s majority opinion simply holds that “if good faith and a legitimate purpose are found to exist, the summons should be enforced. If they are not present, enforcement should be denied . . . there is no middle ground .. .” Barrett III, 837 F.2d at 1350; Appendix A-22, infra. Such holding, however, fails to acknowledge the second, third and fourth criteria of Powell the district court must determine, which are: “that the inquiry may be rele- vant to the purpose, that the information sought is not already within the I.R.S.’s possession, and that the administrative steps required by the Code have been OO 17 followed.” Powell, 379 U.S. at 57-58, 85 S. Ct. at 255. The required determination under the third criteria “that information sought is not already in the government’s pos- session” is similar in nature to the restrictive requirement under section 6103(k)(6) that the disclosure of return information is only permissible to the extent “necessary” to obtain information “not otherwise reasonably avail- able.” Furthermore, section 6103 is within Subtitle F of the Internal Revenue Code, entitled “Procedure and Ad- ministration,” which contains the “administrative steps required by the Code” referred to in the fourth criteria of Powell. Certainly the streamlined procedure under all four criteria of Powell would not be imperiled by a deter- mination that it is illegal under section 6103 to disclose to all of a taxpayer’s customers that he or she is under criminal investigation. The “adequate” judicial remedy of “complete protec- tion” required to be afforded taxpayers in a government initiated summons enforcement proceeding via the exer- cise of a district court’s jurisdictional authority called for and mandated by Powell and Reisman (and the “compre- hensive procedures of the Internal Revenue Code” dis- cussed therein) is the kind of “prior hearing” this Court has held many times to be constitutionally required prior to the deprivation of significant rights, i.e., a predepriva- tion due process of law remedy. E.g., Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983 (1972) (and cases cited therein). Also, see application of Reisman in Anheuser- Busch, Inc. v. F.T.C., 359 F.2d at 489-90 and in Atlantic Richfield Co. v. F.T.C., 546 F.2d at 648-50. The Fifth Circuit’s decision improperly denies taxpayers whose rec- ords are summoned adequate due process of law protec- tion with regard to their section 6103 rights, which Con- gress considered to be fundamentally important as demon- i8 strated in the pertinent legislative history of the Tax Reform Act of 1976 cited by Judge Brown. Barrett III, 837 F.2d at 1352-58; Appendix A-27-40, infra. Further- more, this Court has expressly held that the right to follow a chosen profession or engage in specific private employ- ment free from unreasonable governmental interference comes within the “liberty” and “property” concepts of the due process clause of the fifth amendment. Greene v. McElroy, 360 U.S. 474, 492, 79 S. Ct. 1400, 1411 (1959); United States v. Robel, 389 U.S. 258, 270, 88 S. Ct. 419, 427 (1967) (Brennan, J., concurring). As Judge Brown so ably explains, the mass disclosures of the “damning” return information to Dr. Barrett’s patients that he is under an I.R.S. criminal investigation affccts the goodwill of his medical practice and his capacity to practice his chosen profession, i.e., a property interest and a liberty interest. Barrett I, 787 F.2d at 964-65, Appendix A-69-72, infra; Barrett III, 837 F.2d at 1357, Appendix A-38-39, infra. The obvious legislative purpose of the confidentiality rule of section 6103 was to prevent the I.R.S., prior to any judicial adjudication, from dam- aging such “property” and “liberty” interests of taxpayers by restricting the manner in which it is allowed to conduct an investigation, such as the requirement of section 6103 (k)(6) that an investigative disclosure of “return infor- mation” be “necessary” in order to obtain information that is “not otherwise reasonably available.” 837 F.2d at 1356-57; Appendix A-36, infra. As in Fuentes v. Shevin, the existence of a subsequent damage action in this case (section 7431) does not provide the requisite due process of law protection of such important section 6103 rights afforded by the exerise of a district court’s jurisdictional power described in and required by Powell and Reisman. 19 The Fifth Circuit’s refusal in footnote 2 of its majority opinion, Barrett IIT, 837 F.2d at 1343-44, Appendix A-7, infra, to consider the due process issue neglects the fact that Dr. Barrett specifically did assert Powell and Reisman as authority for the district court’s protection of his sub- stantive section 6103 rights and constitutional right to privacy in his “original answer . . . , motion for new trial and in the motion for stay of execution of judgment,” as recognized by Judge Brown (1-R. 110-111, 115-119, 57-59, 48-56, 10-12); Barrett III, 837 F.2d at 1352; Appendix A-26, infra. The Fifth Circuit’s position fails to recognize the jurisdictional nature of the judicial pro- tection afforded and required by Powell and Reisman, which necessarily includes the taxpayer’s right to the “adequate” due process of law remedy and “complete protection” this Court discussed in such cases. Therefore, while footnote 2 of the majority opinion correctly character- izes Dr. Barrett’s due process argument as “purely a legal issue,” it incorrectly fails to recognize that it was and is a jurisdictional argument derived from the very aspects of Powell and Reisman which the Fifth Circuit rejected as au- thority for the district court’s power to protect section 6103 rights. It is fundamental error for the Fifth Circuit to reject Powell and Reisman as authority for conditional enforce- ment to protect section 6103 rights, while expressly refusing to consider the essential due process aspects of the very same case law authority it rejects. Anheuser-Busch, Inc. v. F.T.C., 359 F.2d at 489-90; Atlantic Richfield Co. v. F.T.C., 546 F.2d at 648-50. As a further result, the posi- tion taken in footnote 2 ignores the long established prin- ciple that jurisdictional issues can always be considered, even sua sponte, whether or not raised below. Newman v. State of Alabama, 503 F.2d 1320, 1325 (Sth Cir. 1974), reh’g denied, 506 F.2d 1056, cert. denied, 421 U.S. 948, iia ie 20 95 S. Ct. 1680 (1975) (“since . . . issue is jurisdictional, we are required to consider it, despite the failure of the parties to introduce it at any previous stage in the litiga- tion.” Id.): Glidden Company v. Zdanok, 370 U.S. 530, 535-37, 82 S. Ct. 1459, 1464-66 (1962); United States v. Storer Broadcasting Company, 351 U.S. 192, 76 S. Ct. 763 (1956). Also, see Smith v. Grimm, 534 F.2d 1346, 1349 (9th Cir. 1976), cert. denied, 429 U.S. 980, 97 S. Ci. 493 (1976); Stern v. United States Gypsum, Inc., 547 F.2d 1329, 1333-34 (7th Cir. 1977), cert. denied, 434 U.S. 975, 98 S. Ct. 533 (1977). For the above reasons, Judge Brown is correct in his position that the Fifth Circuit has rejected this Court’s holding in Powell. The Fifth Circuit’s decision is also in conflict with this Court’s holding in Reisman providing for an “adequate” judicial remedy with “complete pro- tection” for the taxpayer summoned. b. The Fifth Circuit’s Misapplication of Arthur Young & Co. This Court has consistently held that restrictions upon the I.R.S. summons power should be avoided “ ‘absent unambiguous directions from Congress’”. United States v. Arthur Young & Co., 465 U.S. 805, 816, 104 S. Ct. 1495, 1502 (1984) (quoting United States v. Bisceglia, 420 U.S. 141, 150, 95 S. Ct. 915, 921 (1975) ); United States v. Euge, 444 U.S. 707, 715, 100 S. Ct. 874, 880 (1980). Also, see Donaldson v. United States, 400 U.S. 517, 535, 91 S. Ct. 534, 544 (1971). Judge Brown’s stated position in his opinions below is that Congress’ enactment of a “stringent code of confidentiality” in the Tax Reform Act of 1976 constitutes such “unambiguous directions from Congress,” which expressly provide that “I.R.S. investiga- tive powers do not include the power for unnecessary in- i 21 vasions of privacy or injuries of a taxpayer’s reputation.” Barrett II, 804 F.2d at 1381; Appendix A-54, infra; Barrett Ill, 837 F.2d at 1357; Appendix A-40, infra. Throughout the legislative history of section 6103 refer- enced in Judge Brown’s dissent, it is apparent Congress intended “return information” to be entitled to the con- stitutional guarantee of privacy, including the right to privacy in the fourth amendment, e.g., “. . . the committee decided that the information that the American citizen is compelled by our tax laws to disclose to the Internal Revenue Service was entitled to essentially the same degree of privacy as those private papers maintained in his home.” Barrett III, 837 F.2d at 1355, footnote 17; Appendix A-33-34, infra (emphasis in the original). Cer- tainly, the high degree of privacy protection Congress intended for “return information” would cover the I.R.S.’s use of a taxpayer's records to mass circularize disclosures to ali of his customers that he is under an administrative criminal investigation. Notwithstanding the express word- ing of the confidentiality statutes of the Tax Reform Act of 1976, including sections 6103(b)(2)(A) and 6103 (k)(6), and their extensive legislative history, the Fifth Circuit’s majority opinion refused to acknowledge that such statutes constitute the appropriate type of “unambigu- ous directions from Congress” that would allow a district court to conditionally enforce a summons to uphold such directions. Barrett III, 837 F.2d at 1348-50; Appendix A-19-22, infra. Instead, the majority opinion interprets this Court’s requirement of “unambiguous directions from Congress” as requiring, in effect, a specific procedural statute precisely directing a district court to protect sec- tion 6103 confidentiality rights of taxpayers in summons proceedings. 7d. To the contrary, and as only one of many seen iaeiiiaiiaieei | 22 examples, in United States v. Euge, Mr. Justice Rehnquist stated on this point that summons authority: should be upheld absent express statutory prohibi- tion or substantial countervailing policies. The au- thority claimed here is necessary for the effective exercise of the Service’s enforcement and responsi- bilities; it is entirely consistent with the statutory language; and it is not in derogation of any constitu- tional rights or countervailing policies enunciated by Congress. 444 U.S. 707, 711, 100 S. Ct. 874, 878 (1980) (emphasis added). It is clear that this Court in Euge, Arthur Young & Company, Bisceglia, and Donaldson searched for wheth- er the enforcement of the summonses would be incon- sistent with any substantive constitutional rights or sub- stantive statutory rights enunciated by Congress. This Court’s recent decision in Church of Scientology v. I.R.S.., A. , 108 S. Ct. 271 (1987), holding that sec- tion 6103 takes precedence over the Freedom of Informa- q tion Act, certainly supports Judge Brown’s position that the I.R.S. has no power to disclose “return information” except under strictly limited circumstances and that section 6103 is the appropriate type of “unambiguous direction from Congress” contemplated by this Court. The District of Columbia Circuit has also recognized Congress’ limita- tion in section 6103 on the power of the I.R.S. by holding that taxpayers had standing under section 6103 to obtain a declaratory judgment preventing future violations of section 6103. Tierney v. Schweiker, 718 F.2d 449, 452- 54 (D.C. Cir. 1983). The Fifth Circuit’s majority opin- ion, therefore, too narrowly construes this Court’s require- ment of “unambiguous directions from Congress” as re- quiring a specific procedural statute precisely directing a district court to protect rights under section 6103 in a 23 summons proceeding. Further in this regard, the Fifth Circuit’s decision totally ignores the direction from Con- gress in section 7402(a) that district courts do have jurisdictional authority to issue such “judgments and decrees as may be necessary or appropriate for the en- forcement of the internal revenue laws,” as was recog- nized by the Ninth Circuit in Author Services, 804 F.2d at 1525. The Fifth Circuit’s reasoning for its narrow construction of this Court’s prior decisions requiring “unambiguous directions from Congress” is that allowing conditional enforcement would “burden the ‘summary’ nature of summons enforcement proceedings” and that the civil damage remedy of section 7431 and the felony provision of section 7213 were intended to be sufficient to deter unnecessary disclosures of confidential return information. Barrett III, 837 F.2d at 1349-50; Appendix A-19-21, infra. Such reasoning, however, ignores this Court’s often stated principle of constitutional law that a subsequent post-deprivation damage action does not provide adequate due process of law. Fuentes v. Shevin, 407 U.S. 67, 82, 92 S. Ct. 1983, 1995 (1972) (“ ‘This Court has not... embraced the general proposition that a wrong may be done if it can be undone,” quoting Stanley v. Illinois, 405 U.S. 645, 647, 92 S. Ct. 1208, 1210 (1972)). The Fifth Circuit’s reliance on the existence of the felony provision of section 7213 as a reason for concluding the district court is without jurisdiction in this matter is also misplaced; such section means it is “unlawful” for I.R.S. employees to make unauthorized disclosures of return information, as expressly stated in section 7213(a)(1). This unwarranted reliance by the Fifth Circuit underscores the effect of its ruling as being that the I.R.S. may conduct ae 24 its investigation by illegal means and a federal district court has no power to prevent such unlawfulness even while the parties are before the court. This Court’s comment in Donaldson regarding the “summary” nature of a summons enforcement proceeding was in the context of denying a taxpayer a mandatory right to intervene in a summons proceeding for records in which the taxpayer could show no significant interest or privilege. Donaldson, 400 U.S. at 529-30, 91 S. Ct. at 541-42. Contrary to the Fifth Circuit’s reasoning below, this Court in Donaldson held that the permissive intervention rules of the Federal Rules of Civil Procedure noted in Powell were “not intended to impair a summary enforcement proceeding so long as the rights of the party summoned are protected and an adversary hearing, if requested, is made available.” Jd. at 529, 91 S. Ct. at 541 (emphasis added). Therefore, regardless of the summary nature of a summons enforcement proceeding, according to Donaldson, it is supposed to afford taxpayers whose records are summoned due process protection of their substantive rights with regard to the government’s use of such records. Because it is clear the Fifth Circuit’s decision below has diminished the power of district courts to prevent abuse of their process and to protect taxpayers’ rights in summons enforcement proceedings as intended by this Court in Powell and Reisman and because it misapplies this Court’s decision in Arthur Young & Co., et al, this Court should grant certiorari to review this matter even if no direct conflict existed with the Ninth Circuit as hereinafter described. 25 II. The Fifth Circuit’s Decision is in Direct Conflict With Two Ninth Circuit Cases Which Uphold the Jurisdictional Authority of Federal District Courts to Conditionally Enforce I.R.S. Summonses. The Fifth Circuit decision below is in direct conflict with United States v. Auther Services, Inc., 804 F.2d 1520 (9th Cir. 1986), reh’g denied (unpublished) Nos. 85-6194, 85-6195 (9th Cir. Feb. 26, 1987), modified 811 F.2d 1264 (9th Cir. 1987), and United States v. Zolin, 809 F.2d 1411 (9th Cir.), reh’g en banc granted 832 F.2d 127 (9th Cir. 1987), order granting reh’g en banc vacated, Nos. 85-6065, 85-6105, slip op. at 3647 (9th Cir. March 28, 1988). Both Ninth Circuit cases specifically hold that district courts do have the authority to conditionally enforce a summons to prevent I.R.S. violations of section 6103. In Author Services, the Ninth Circuit specifically cited this Court’s decision in Powell that a district court has “the authority and obligation to prevent future abuses of its process” as support for its conditional enforcement of a summons to protect the section 6103 rights involved therein. Author Services, 804 F.2d at 1525. Furthermore, the Ninth Circuit rea- soned and stated that “[t]he terms of an enforcement order rest within the discretion of the district court, United States v. Vetco, Inc., 691 F.2d 1281, 1291 (9th Cir.), cert. denied, 454 U.S. 1098, 102 S. Ct. 671, 70 L.Ed.2d 639 (1981), and its discretion is ‘considerable.’ United States v. Ruggeiro, 425 F.2d 1069, 1071 (9th Cir. 1970), cert. denied, 401 U.S. 922, 91 S. Ct. 863, 27 L.Ed.2d 826 (1971).” Jd. The Ninth Circuit also cited the statutory authority it relied upon and reasoned that “district courts have broad authority, under 26 U.S.C. re 26 § 7402(a) (1982), to issue any orders or decrees as may be necessary or appropriate for enforcement of the internal revenue laws.” Jd. Additionally, the Ninth Circuit cited Fifth Circuit Judge John R. Brown’s dissenting opinion in Barrett I and agreed with Judge Brown that the Texas Heart rule allowing conditional enforcement was “sound.” Id. Finally, the Ninth Circuit reasoned that the district court’s restriction on the enforcement order was “a wise exercise of control, serving the interests of judicial economy in a case in which continuing litigation between the Church and the Government is inevitable.” Author Services, 804 F.2d at 1526. Notwithstanding the above reasoning of the Ninth Cir- cuit, footnote 11 of the Fifth Circuit majority opinion erroneously states that the Ninth Circuit in Author Services simply relied on the prior decision in Texas Heart and “(njo further reasoning was provided.” Barrett III, 837 F.2d at 1351 fn 11; Appendix A-25, infra. Contrary to such discounting by the Fifth Circuit of the holding in Author Services, the Ninth Circuit in Author Services clearly weighed the conflicting arguments and made an indepen- dent decision in favor of the existence of jurisdictional power in district courts to conditionally enforce I.R.S. summonses. The Fifth Circuit’s majority opinion below totally failed to address the statutory provision relied on by the Ninth Circuit, section 7402(a) of the Internal Revenue Code, which is entitled “Jurisdiction of District Courts” and grants district courts the power “to issue any orders or decrees as may be necessary or appropriate for 3. On March 3, 1987, the Ninth Circuit modified its decision in Author Services to replace its cite to Barrett J] with the citation to Barrett II and again stated “We believe the Texas Heart rule to be sound and applicable to the facts of this case.” Author Services, 811 F.2d at 1264. 27 enforcement of the internal revenue laws” (emphasis added). The Ninth Circuit obviously recognized that the confidentiality rights of taxpayers under section 6103 of the Internal Revenue Code is as much a part of the “internal revenue laws” as the Code provisions granting affirmative administrative powers to the I.R.S. The Fifth Circuit’s majority opinion, however, held that “[t]here is no statutory authority, nor Supreme Court authority, to allow the district court to make any consideration except whether to enforce or not to enforce the summons. The district court does not have the power to conditionally enforce the summons.” Barrett III, 837 F.2d at 1350; Appendix A-22, infra. The Fifth Circuit’s express holding that there is no statutory nor Supreme Court authority granting jurisdiction to district courts for conditional enforcement, and its failure to even address the Ninth Circuit’s citation in Author Services of both section 7402 (a) and Powell as constituting such authority, under- scores the irreconcilable conflict between the two circuits, further justifying the exercise of this Court’s discretional jurisdiction to resolve such conflict. In Zolin, the Ninth Circuit again independently ad- dressed the district court’s restriction on the I.R.S.’s dis- closure of the documents summoned and held that it was “an appropriate exercise of the district court’s discretion: It is the court’s process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. Powell, 379 U.S. at 58, 85 S. Ct. at 255.” Zolin, 809 F.2d at 1416-1417. The Ninth Circuit then specifically held, contrary to the Fifth Circuit below, that “[a] district court may, when appropriate, condition enforcement of a summons on the I.R.S.’s agreeing to abide by disclosure restrictions,” citing Author Services and Texas Heart. Id. at 1417. On March 28, 1988, 28 the Ninth Circuit ruled that its prior order granting en banc review should be vacated as improvidently granted. Zolin, slip op. at 3647 (9th Cir. March 28, 1988). As a result, the Ninth Circuit has let stand its rulings in Zolin and Author Services that disti-ct courts do have the power to conditionally enforce I.R.S. sum- monses to protect section 6103 rights. To allow the above-described conflict between the Fifth and Ninth Circuits to go unresolved will allow federal tax- payers in the Ninth Circuit to be entitled to a predisclosure (i.e., predeprivation) remedy regarding their confidenti- ality rights over information procured by a summons, while federal taxpayers in the Fifth Circuit are relegated to an action for damages after the fact. Such a degree of inconsistency in the application of the particular in- ternal revenue laws involved and the inconsistency in the exercise of federal court jurisdiction over such application presents a substantially important need for this Court’s resolution of the conflict. Hi. The Fifth Circuit’s Decision Thwarts the Broad Concern and Determination By Congress That Con- fidential “Return Information” Not Be Disclosed Ex- cept Under Strictly Limited Circumstances. The pertinent provisions of the Tax Reform Act of 1976 and the underlying legislative history demonstrating the breadth of congressional concern to prevent abuse of privacy rights of taxpayers are fully presented by Fifth Circuit Judge John R. Brown in his dissent below. 837 F.2d at 1351-1358; Appendix A-26-40, infra. It does not appear necessary, therefore, to repeat in this petition the detail of what Judge Brown has so eloquently presented. Judge Brown is correct that the Fifth Circuit’s decision Ee ee ee ee — owe ce = 29 thwarts the concern and direction of Congress that “return information” not be disclosed except under the strictly limited circumstances listed in section 6103. It is emphasized that the Fifth Circuit’s decision, in effect, takes the position that even if the I.R.S.’s proposed disclos- ures would constitute felony criminal acts under section 7213 and would subject the public treasury to any degree of damages under section 7431, federal district courts still have no power to prevent such crimes nor protect the government’s treasury from being depleted. The amount of minimum liquidated damages under secton 7431 of $1,000 per disclosure alone can result in substantial damages. For example, Agent Hanson mailed at least three-hundred fifty (350) separate letters to Dr. Barrett's patients thereby exposing the public treasury to a mini- mum of $350,000.00 in damages and he proposes to mail more letters. The public importance of this case is, there- fore, further demonstrated by the unwise willingness of the Fifth Circuit’s majority opinion to allow the public trea- sury to be unnecessarily depleted when federal district courts could protect the treasury by merely preventing “an abuse of their process” and protecting the taxpayer’s substantive rights under section 6103. Furthermore, as Judge Brown urged in Barrett IT, 804 F.2d at 1381; Appen- dix A-55, infra, and as the Ninth Circuit noted in Author Services, 804 F.2d at 1526, the interests of judicial re- sources and economy are better served by allowing the district court to make a conditional enforcement order rather than generating entirely separate lawsuits for damages after the fact. Congress did not intend the public treasury and the resources of district courts to be un- necessarily depleted when it could be prevented by a dis- trict court entering an order appropriately enforcing the internal revenue laws, including section 6103. 30 CONCLUSION For the reasons stated above, petitioner respectfully prays that this petition be granted and that the Fifth Circuit’s decision be reversed. Respectfully submitted, EDWARD D. URQUHART URQUHART & HASSELL 1800 West Loop South | Suite 1500 j Houston, Texas 77027 (713) 961-3505 Counsel of Record for Petitioner f SILVIA T. HASSELL CHARLES J. ESCHER URQUHART & HASSELL | Counsel for Petitioner April 15, 1988 APPENDIX A-| INDEX OF APPENDIX Page I. OPINiONS BELOW FIFTH CircuIT DECISIONS BELOW United States v. Barrett, 837 F.2d 1341 (5th Cir. 1988) (en bane decision, “Barrett III’) A-3 United States v. Barrett, 812 F.2d 936 (Sth Cir. 1987) (order granting rehearing en banc) A-42 United States v. Barrett, 804 F.2d 1376 (5th Cir. 1986) (Barrett IT) A-44 United States v. Barrett, 787 F.2d 958 (Sth Cir. 1986) (Barrett I) A-57 DisTRICT COURT RULINGS BELOW United States v. Barrett, Civil Action No. 84- 1170 (S.D. Tex. December 10, 1984) (un- reported ): Findings of Fact and Conclusions of Law A-73 Final Judgment A-78 Memorandum and Order Denying Stay of Execution of Judgment A-79 Memorandum and Order Denying Motion to Reconsider Order Denying Stay A-81 Memorandum and Order Denying Motion for New Trial A-84 COMPANION CASES United States v. Texas Heart Institute, 755 F.2d 469 (Sth Cir. 1985) A-86 United States v. Texas Heart Institute, Civil Ac- tion No. H-83-205 (S.D. Tex. July 26, 1985) (unreported, on remand from Fifth Circuit) A-114 Barrett v. United States, 795 F.2d 446 (Sth Cir. 1986) A-118 A-2 INDEX OF APPENDIX (Continued) Il. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED United States Constitution Fourth Amendment Fifth Amendment Internal Revenue Code (26 U.S.C.): Section 6103(a) Section 6103(b) (2) (A) Section | »é > > > PP PP PP PP iP A-3 APPENDIX UNITED STATES of America and Michael O. Hanson, Special Agent of the Internal Revenue Service, Plaintiffs-Appellees, V. Bernard M. BARRETT, Jr., as President of Plastic and Reconstructive Surgeons, P.A., Houston, Texas, Defendant-Appellant. No. 85-2054. United States Court of Appeals, Fifth Circuit. Feb. 24, 1988. United States brought action to enforce Internal Reve- nue Service summons. The United States District Court for the Southern District of Texas, James DeAnda, J., entered enforcement order, and taxpayer appealed. The Court of Appeals, 804 F.2d 1376, affirmed and remanded. On rehearing, the Court of Appeals held that: (1) issue of whether district court could conditionally enforce IRS summons order so as to prevent violations cf disclosure section of code was not moot, and (2) district court could not conditionally enforce order. Summons order affirmed. John R. Brown, Circuit Judge, filed opinion concurring in part and dissenting in part in which Politz, Johnson and Jerre S. Williams, Circuit Judges, joined. Alvin B. Rubin, Circuit Judge, filed a dissenting opinion in which E. Grady Jolly, Circuit Judge, joined. A-4 Edward D. Urquhart, Charles J. [Escher], Silvia T. Has- sel, Urquhart & Hassell, Houston, Tex., for defendant- appellant. Henry K. Oncken, U.S. Atty., James R. Gough, Asst. U.S. Atty., Houston, Tex., William A. Whitledge, Glenn L. Archer, Jr., Asst. Atty. Gen., Tax Div., Michael L. Paup, Chief, U.S. Dept. of Justice, Charles E. Brookhart, Washington, D.C., for plaintiffs-appellees. Appeal from the United States District Court for the Southern District of Texas. Before CLARK, Chief Judge, BROWN, GEE, RUB- IN. REAVLEY, POLITZ, CAROLYN DINEEN KING,* JOHNSON, WILLIAMS, GARWOOD, JOLLY, HIG- GINBOTHAM., DAVIS, and JONES, Circuit Judges.** PER CURIAM: The question presented in this appeal is whether a district court can conditionally enforce an Internal Reve- nue Service (IRS) summons to ensure that the IRS will not violate the nondisclosure of return information pro- visions contained in 26 U.S.C. § 6103 while it conducts a tax investigation. We answer this question in the nega- tive. i The facts giving rise to the present controversy, as set forth in the panel opinion on rehearing in United States * Formerly Carolyn Dineen Randall. ** Due to his deah on October 19, 1987, Judge Hill did not participate in this decision. Judge Jerry E. Smith was not a member of the court when this case was submitted to the court en banc and did not participate in this decision. ™ = A-5 v. Barrett, 804 F.2d 1376 (Sth Cir. 1986) (Barrett II), are as follows: [Dr. Bernard M. Barrett, Jr.] is the president of an incorporated medical practice specializing in plastic and reconstructive surgery. In 1979 the IRS began an audit of Barrett’s personal and corporate income tax returns for the years 1976, 1977, and 1978. When the initial investigation uncovered a $100,000 discrepancy between Barrett’s books and his bank records, the IRS transferred the case from its civil to its criminal division. Agent Michael O. Hanson, to whom the case was transferred, determined that it would be necessary to inquire of Barrett’s patients the amount each had payed for Barrett’s services. To this end, Agent Hanson sent two sets of summonses calling for patient’s records, one to the hospitals where Barrett practiced and one to Barrett himself. All but four of the hospitals complied with the summonses pro- viding a total of 350 patients’ names. [Barrett has also complied with the summons.] Agent Hanson then sent a letter to each patient advising that Bar- rett was being investigated by the Criminal Investi- gation Division of the IRS and requesting documenta- tion of fees paid to Barrett. Barrett II, 804 F.2d at 1377.2 In United States v. Texas Heart Institute, 755 F.2d 469 (Sth Cir. 1985), the district court refused to enforce the summonses issued to the hospitals. A panel of this court reversed that decision and remanded the case to 1. The panel opinions in this case [United States v. Barrett, 787 F.2d 958 (5th Cir. 1986) and United States v. Barrett, 804 F.2d 1376 (Sth Cir. 1986)] were vacated by the court’s action granting rehearing en banc without express provision, 812 F.2d 936. See Internal Operating Procedures following Local Rule 35. ———— A-6 the district court for a determination of whether the mailing of the letters to Barrett’s patients would be a violation of 26 U.S.C. § 6103, and, if so, whether en- forcement should be conditioned upon requiring the IRS to desist from further unlawful disclosures. 755 F.2d at 482. In the initial panel opinion in this case, United States v. Barrett, 787 F.2d 958 (Sth Cir. 1986) (Barrett 1), this court upheld the district court’s decision to enforce unconditionally the summons issued to Dr. Barrett. The court also limited the scope of Texas Heart, refusing to hold that a violation of section 6103 was grounds to deny enforcement of, or to conditionally enforce, the summons. Judge Brown dissented, arguing that the court had im- plicitly overruled Texas Heart. Dr. Barrett subsequently filed a petition for rehearing. The court responded by withdrawing its earlier opinion, affirming the enforcement of the summons, but also remanding the case to the dis- trict court for it to follow Texas Heart and inquire whether section 6103 was being violated; if so, then the court was to conditionally enforce the summons to prevent the IRS from making disclosures in violation of section 6103. The government petitioned for a rehearing of that decision. This court granted the request, agreeing to rehear the case en banc. In this appeal the government contends that the hold- ing in Texas Heart that a district court has the authority to enter conditional summons enforcement orders to pre- vent a violation of section 6103 should be overruled. The government also contends that the district court’s order unconditionally enforcing the summons in this case is correct and should be affirmed. Barrett responds that district courts hearing an IRS summons enforcement pro- A-7 ceeding have long been held to have the power to modify a summons to prevent a violation of law by IRS officials or to protect the rights of a taxpayer. Thus, it is argued that district courts should be allowed to consider section 6103 in deciding whether to conditionally enforce the summons.” Therefore, we must examine the validity of the rule established in Texas Heart that in a summons enforcement proceeding a district court can consider whether a section 6103 violation may occur, and, if it does so find, determine whether to conditionally enforce the summons. The first issue we must address is whether the case before us is moot. Before we examine that issue, however, we briefly discuss the relevant background necessary to decide the mootness issue. II. This case involves the construction of a number of Internal Revenue Code (the Code) pyovisions. First, sec- tion 6103(a)* establishes a general rule that tax returns 2. Barrett also argues that the fifth amendment Due Process Clause requires that a predisclosure remedy needs to be provided in this case. This issue, however, is being raised for the first time on appeal, and this court will only consider an issue raised for the first time on appeal if the issue is purely a legal issue and if con- sideration is necessary to avoid a miscarriage of justice. /n re Goff, 812 F.2d 931, 933 (Sth Cir. 1987). “We will not allow a party to raise an issue for the first time on appeal merely because the party thinks that he or she might prevail if given the opportunity to try the case again on a different theory.” Jd. While this may be purely a legal issue, we do not believe a miscarriage of justice will result in this case from our declining to address it. Although there is some evidence that the government may contact Barrett’s patients, and that if it does, that it may do so in a way that will violate section 6103; it may also be the case that the government will not contact them. Moreover, even if there is a violation, Barrett has an adequate remedy at law under 26 U.S.C. § 7213 where he can sue for damages. 3. All references in the text are to sections of the Code under 46 USL. ) A-8 and tax return information are confidential and may not be disclosed by officers and employees of the United States.* If a government official violates the nondisclosure provisions of section 6103(a), he is subject to criminal prosecution under section 7213(a)(1). This section makes it unlawful to disclose any return or return in- formation except as authorized by the Code. A willful violation is punishable by a fine up to $5,000, or im- prisonment of up to a period of 5 years, or both. 26 U.S.C. § 7213(a)(1). Moreover, if return information is impermissibly disclosed, section 7431 provides the aggrieved person with a civil remedy. The person can bring a cause of action against the United States, and can recover damages of a minimum amount of $1,000 for each unauthorized disclosure. Id. § 7431(c). The other relevant provisions of the Code are those relating to the IRS’s power to seek information relevant to a tax investigation. The IRS is authorized by section 7602(a) to issue a summons to compel any person having possession of books of account, papers, or other data to produce such materials when needed by the IRS to determine the correctness of a tax return or otherwise to determine the tax liability of an individual. If the 4. The government concedes that the proposed mailings to Bar- rett’s patients contain “return information” as defined in 26 U.S.C. § 6103(b)(2). There are various exceptions, however, to this general rule of nondisclosure of return information. See 26 U.S.C. § 6103 (c)-(0). One such exception, for example, allows an IRS officer or employee to “disclose return information to the extent that such disclosure is necessary in obtaining information, which is not other- wise reasonably available.” 26 U.S.C. § 6103(k)(6). Whether the return information in this case comes within the section 6103(k) (6) exception is not at issue here. Rather, that inquiry is one that the district court would be required to make under Texas Heart in deter- mining whether to conditionally enforce the summons. See Texas Heart, 755 F.2d at 482. A-9 person does not comply with the summons, the IRS can file a petition for enforcement with the district court. 26 U.S.C. § 7604. [1] In United States v. Powell, 379 U.S. 48, 85 S. Ct. 248, 13 L.Ed.2d 112 (1964), the Supreme Court set forth four criteria that the IRS must establish in order to have a summons enforced: (1) The IRS agent must show that the investigation will be conducted pursuant to a legitimate pur- pose; (2) that the inquiry may be relevant to the purpose; (3) that the information sought is not already with- in the IRS’s possession; and (4) that the administrative steps required by the Code have been followed. Powell, 379 U.S. at 57-58, 85 S. Ct. at 255. The Court also instructed that a court could inquire into the under- lying reasons for the examination and that it should not permit its process to be abused. Id. at 58, 85 S. Ct. at 255. “Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation.” Id. The government bears the intial burden of proving that the four Powell requirements have been satisfied. Texas Heart, 755 F.2d at 474. Once the government makes the required Powell showing, the burden then shifts to the party resisting the summons to challenge the summons on any appropriate ground. Powell, 379 U.S. at 58, 85 S. Ct. at 255 (quoting Reisman v. Caplin, 375 U.S. 440, A-10 449, 84 S. Ct. 508, 513, 11 L.Ed.2d 459 (1964)). These grounds include that the IRS has failed to meet one of the four Powell requirements, or that the enforce- ment of the summons would abuse the court’s process. III. Before we reach the merits in this appeal, we must address the preliminary issue of whether the case before us is moot. Although neither party has raised the moot- ness issue, this court is required to do so sua sponte, because this issue implicates the article III requirement that there be a live case or controversy.° Donovan v. Air Transport District Lodge No. 146, 754 F.2d 621, 624 (Sth Cir. 1985). The mootness concern is based upon the fact that Dr. Barrett ultimately complied with the summons after he was unable to obiain a stay of the district court’s summons enforcement order. This court has often held that an appeal from an order enforcing a summons becomes moot once the taxpayer complies with the summons. See United States v. Sherlock, 756 F.2d 1145, 1146 (Sth Cir. 1985); United States v. Sweet, 655 F.2d 54, 55 (5th Cir. 1981); United States v. First American Bank, 649 F.2d 288, 289 (Sth Cir. 1981): United States v. First State Bank of Clute, 626 F.2d 1227, 1227 (Sth Cir. 1980), cert. denied, 452 U.S. 908, 101 S. Ct. 3037, 69 L.Ed.2d 410 (1981); United States v. Carpenter, 425 F.2d 264, 264-65 (Sth Cir. 1970); Baldridge v. United States, 406 F.2d 526, 527 (Sth Cir. 1969): Grathwohl v. United States, 401 F.2d 166, 167 (5th Cir. 1968); Lawhon v. United States, 390 F.2d 663. 663 (Sth Cir. 1968). 5. Having done so, we requested the parties to supplement their briefs by addressing the mootness issue, which they have done. A-11 Thus, in Sherlock we held that since Sherlock com- plied with the summons, his appeal was moot. Sherlock’s argument that the government continued to benefit from the material did not persuade the court otherwise. 756 F.2d at 1146. In First American Bank this court also held that compliance with a summary enforcement order mooted an appeal from that order. The appellants argued that the issues were not moot because, if their contentions that the district court erred in determining that the sum- monses had a valid civil investigative purpose and that the IRS agent violated the automatic stay provision of Fed. R. Civ. P. 62(a) were correct, the IRS could not use the documents so obtained in any future civil or criminal proceeding. The court disagreed, stating that, “The possibility that evidence must be suppressed in a future proceeding, however, is not enough to prevent mootness in this case.” 649 F.2d at 289. In Carpenter this court, without elaboration, held that the appeal of a summons enforcement order that had been complied with was moot. 425 F.2d at 265. Likewise, in Baldridge the appellants had complied with the summons, so the court held the case to be moot. The court also disagreed that a question of substantial public interest should allow the case to prevent its mootness, or again that the court should hear the appeal to determine whether the records would be admissible in a subsequent criminal or civii trial. 406 F.2d at 527. In Grathwohl this court stated that since the appellant had appeared and complied with the summons, there was no relief that she could obtain on appeal and the case was moot. 401 F.2d at 167. Finally, in Lawhon we held that there were no issues to decide because the records and books that were the subject of the order to produce had been produced. Thus, the court dismissed the appeal for mootness. 390 F.2d A-12 at 663. On motion for reconsideration, the court stated, in what has become an often quoted passage: This motion, in effect, seeks to have this court give an advisory opinion as to the admissibility in evi- dence of the records or their product in the event of a subsequent criminal trial. Such event may not occur. This court passes no judgment on the ques- tion whether, if the mooted records are used in a subsequent prosecution of the taxpayers, if there be one, their introduction would be forbidden as vio- lating the constitutional rights of the defendants. Id. at 663. Although none of the above authority provide much analysis, apparently the common denominator in each is that once an individual complies with a summons en- forcement order, that person is precluded from appealing any issues that attack the validity of the district court’s decision to enforce the summons. Even an attack on the enforcement of a summons based on the fact that in- formation obtained by the summons may be used im- properly in a subsequent civil or criminal proceeding is not enough to prevent the case from being moot. Many other circuits have also held that compliance with an IRS summons moots an appeal of the validity of the summons enforcement order.*° The basis for these 6. First Circuit: United States v. Arthur Andersen & Co., 623 F.2d 720 (1st Cir.), cert. denied, 449 U.S. 1021, 101 S. Ct. 588, 66 L.Ed.2d 483 (1980); United States v. Lyons, 442 F.2d 1144 (lst Cir. 1971). Second Circuit: United States v. Deak-Perera Intern. Banking Corp., 610 F.2d 89 (2d Cir. 1979). Third Circuit: Vesco v. SEC, 462 F.2d 1350 (3d Cir. 1972) (analogous SEC subpoena case). Fourth Circuit: Kurshan v. Riley, 484 F.2d 952 (4th Cir. 1973). Sixth Circuit: United States v. Patmon, 630 F.2d 458 (6th Cir. 1980). Seventh Circuit: United States v. Kis, 658 F.2d 526, 532-33 (7th Cir. 1981), cert. denied, 455 U.S. 1018, 102 S. Ct. 1712, A-13 decisions, whether implicit or explicit, is the proposition that “federal courts are without power to decide questions that cannot affect the rights of litigants in [the] case before them.” North Carolina vy. Rice, 404 U.S. 244, 246, 92 S. Ct. 402, 404, 30 L.Ed.2d 413 (1971). Thus, once an individual complies with a summons enforce- ment order and produces the documents, a successful challenge to the enforcement order could afford no relief; the information has already been provided and thus this court would be powerless to provide relief that would affect the rights of the litigants. Based on this precedent, the government contends that since the IRS has been supplied with all the information it sought pursuant to the summons, the case should be dismissed as moot. In determining whether this contro- versy is moot, it is necessary to keep in mind the single issue that has been presented to the court: whether a district court can conditionally enforce a summons in order to prevent the government from violating section 6103. [2] To decide whether this issue can survive a moot- ness challenge, it is helpful to first examine both the holding in Texas Heart that forms the basis of the gov- ernment’s contention and our opinion in Barrett JJ. In Texas Heart this court was faced with the issue of whether the district court correctly declined to enforce summonses 72 L.Ed.2d 135 (1982). Eighth Circuit: United States v. Orlowski, 808 F.2d 1283, 1287 (8th Cir. 1986); United States v. Olson, 604 F.2d 29, 31 (8th Cir. 1979); United States v. First National Bank of Sturgis, S.D., 587 F.2d 909, 910 (8th Cir. 1978); Barney v. United States, 568 F.2d 116 (8th Cir. 1978); Ninth Circuit: SEC v. Laird, 598 F.2d 1162 (9th Cir. 1979) (analogous SEC subpoena case). But see Gluck v. United States, 771 F.2d 750, 753-54 (3d Cir. 1985). a A-14 issued to four hospitals. We reviewed the issue under the four part test established in Powell. The portions of Texas Heart revelant to this appeal are the court’s analy- sis of the “legitimate purpose” prong of the Powell test and the “abuse of process” inquiry that a court should also make. The court in Texas Heart found that the IRS did have a legitimate purpose, 755 F.2d at 479, but then addressed Dr. Barrett’s contentions that the IRS lacked a legitimate purpose because of alleged violations of section 6103. Id. The court pointed out that an improper disclosure of section 6103 information was relevant only to the extent that it would demonstrate either an abuse of process or a lack of legitimate purpose, id., but con- cluded that if there were any improper disclosures, they did not demonstrate either bad faith or an improper purpose. Jd. The court went on to note, however, that: This Court does not hold that unlawful disclosures of returns or return information by the IRS can never be sufficient evidence of lack of a legitimate purpose for the investigation such that IRS sum- monses should not be enforced. Rather, this Court holds that in this case, even accepting as true that improper disclosures occurred, any alleged improper disclosures do not rise to the level necessary to demonstrate bad faith in the issuance of the sum- monses or lack of a legitimate purpose tor the investigation. Id. at 481 (emphasis in original). Even though the im- proper disclosures did not reflect a sufficient degree of bad faith or lack of legitimate purpose to deny enforce- ment of the summons in their entirety, the court held that the district court nevertheless could require the IRS A-15 to abide by section 6103 before it would order enforce- ment of the summonses. /d. Thus, this language allows a summoned individual to raise the issue of a section 6103 violation to attempt to defeat the enforcement of the summons. If a violation does not rise to a sufficient level to defeat the enforce- ment of the summons, though, it nevertheless can still cause the enforcement of the summons to be conditioned. This remedy forms part of the basis of the government’s contention that Texas Heart incorrectly estabilshed that a district court can conditionally enforce a summons. The government’s objection to Texas Heart is also based on the court’s discussion dealing with the abuse of process inquiry a court must make. While the court found no abuse of process to such a degree that it would be necessary to deny enforcemént of the summons, the court did note that it still could be an abuse of process to allow enforcement of summonses when the IRS con- ceded that it would continue to disclose information in violation of section 6103. 7d. at 482. The court did not point out in that discussion, however, whether a violation of section 6103 would be sufficient to completely deny enforcement of the summons. From the prior discussion relating to “legitimacy of purpose,” however, it appears that enforcement could be completely denied if an abuse of process was established. See id. at 479, 481. Neverthe- less, the court clearly held that if an abuse of process were found, the district court would have the discretion to condition enforcement of the summonses by requiring that the IRS agree to desist from further violations of section 6103. 7d, at 482. The court in Texas Heart then established the inquiry the district court would be required A-16 to make prior to conditioning the enforcement of the summons: (1) determine whether the described information falls under the definition of returns or return information in section 6103, and (2) if so, the district court must further determine whether the IRS is authorized to disclose the information under section 6103(k)(6). Id. at 482. The court stated in Barrett I] that in Barrett I it mis- gauged the scope of the holding in Texas Heart. See Barrett II, 804 F.2d at 1377. The concern, however, was not with whether the summons was properly enforced by the district court.’ Rather, the single issue resolved by the opinion in Barrett 1] was whether a summons could be conditionally enforced: [W]e find that our mandate in Texas Heart requires the district court to consider whether enforcement of the IRS summons should be conditioned in order to protect Barrett against unnecessary disclosure of the fact that he is under criminal investigation. We affirm the order of the district court enforcing the IRS summons: we remand for the district court to determine whether the summons should be condi- tionally eniorced. Id. at 1379. In compliance with Texas Heart, the opinion in Barrett II decided to remand the case, not for the 7. In fact, in Barrett I] we expressly held that Dr. Barrett’s claim that the district court improperly enforced the summons based upon an erroneous finding that the IRS possessed a legitimate in- vestigatory purpose was moot because he complied with the summons. Id. at 1377-78. a A-17 purpose of having the district court delve into the propriety of enforcement, but instead to determine whether the district court should condition the enforcement of the summons to protect Dr. Barrett from a violation of section 6103. We have consistently treated the issues of (1) whether the enforcement order was properly ren- dered and (2) whether an enforcement order can be conditionally enforced as distinct issues on appeal. With this same distinction in mind we now consider whether the issue in this appeal is moot. Barrett I] would have remanded the case to the district court for it to determine whether the summons should be conditionally enforced based on Texas Heart. See Barrett II, 804 F.2d at 1379. Since Dr. Barrett has complied with the sum- mons, Judge Rubin’s dissent argues that the enforcement proceeding is over and we can consider no aspects of that proceeding, including whether Texas Heart requires that the summons should be conditionally enforced. How- ever, we do not agree that such a result is mandated. We recognize that in Texas Heart the enforcement order had not been complied with by the four hospitals, and, in fact, the district court had refused to enforce the summonses, so the controversy was still alive in all respects. But, the court reversed the district court and ordered that the summonses be enforced. Even though the enforcement issue had been decided, the court still held that the district court retained the authority to determine whether section 6103 was being violated, and, if so, to condition enforce- ment to avoid the violation. Thus, that same issue that we held was alive and must be considered by the district court in Texas Heart is likewise the sole justiciable issue in the present case. A-18 Moreover, the conditional enforcement issue does not attack the validity of the district court’s order to enforce the summons. Thus cases such as Sherlock do not control here. Those cases prevent a party from appealing the validity of an enforcement order after the party had complied with the enforcement order by having furnished the IRS with the sought after material. The issue here does not address the validity of the enforcement order. Instead, it addresses whether the district court after a decision to enforce a summons can attach conditions on the government’s use of the information obtained under the summons. The district court in Barrett IJ did not decide whether there was a violation of section 6103, and, if so, whether to condition enforcement of the sum- mons on the government’s compliance with that section. If we were to hold that Texas Heart was correct and the district court should have made such an inquiry, we could then provide relief to Dr. Barrett by remanding the case to the district court for such consideration. We point out that the IRS had not yet contacted Dr. Barrett’s patients and section 6103 information has not yet been disclosed.° Thus, if we were to remand this cause to the district court, it could prevent the IRS from violating this section. This is the relief Dr. Barrett desires. Accordingly, we conclude that the conditional enforce- ment issue presented in this appeal is not moot, and we, therefore, decide whether a district court can condition- aily enforce a summons order so as to prevent violations of section 6103.° 8. The government informed the court of this fact at oral argu- ment. 9. We point out that the issue of whether a district court can consider whether a violation of section 6103 is an independent ground A-19 7. [3, 4] We begin by noting two important considera- tions in summons enforcement proceedings. First, we point out that these proceedings are intended to be sum- mary in nature. The sole purpose of the enforcement pro- ceedings is to ensure that the IRS has issued the summons for a proper purpose and in good faith. See Powell, 379 U.S. at 57-58, 85 S. Ct. at 255. Also, this is only an investigative stage; no guilt or liability on the part of the taxpayer is established. The enforcement proceeding should be concluded expeditiously so that the actual in- vestigation can be continued with the goal of reaching the final determination of whether there will be any civil or criminal liability for the taxpayer. We also recognize that the Supreme Court has con- sistently declined to circumscribe the breadth of the sum- mons authority that Congress intended to grant the IRS, “ ‘absent unambiguous directions from Congress.’ ” United to deny enforcement of a summons is not before this court. However, to contrast the situation that is before us in the present case, we point out that if it were before us this issue would be moot. This question relates to what factors a district court can consider in mzking its initial determination of whether to enforce a summons in its entirety. That is, for example, could the district court have completely denied enforcement of the summons in Barrett because the government was suggesting that it would violate section 6103? This court cannot, however, consider any factors relating to whether the district court’s order enforcing the summons was proper once the taxpayer has complied with the summons. Cf. Sherlock, 756 F.2d at 1146. Since this contention is one that directly relates to the district court’s decision of whether to enforce the summons in its entirety, we could not decide its propriety. As noted above in footnote 7, the opinion in Barrett II held that the issue of whether the district court properly ordered enforcement of the summons was moot based on the fact that Dr. Barrett complied with the summons. See Barrett I], 804 F.2d at 1377-78. Thus, we would have no jurisdiction to decide whether the district court should consider section 6103 in deciding whether to enforce a summons. | A-20 States v. Arthur Young & Co., 465 U.S. 805, 816, 104 S. Ct. 1495, 1502, 79 L.Ed.2d 826 (1984) (quoting United States v. Bisceglia, 420 U.S. 141, 150, 95 S. Ct. 915, 921, 43 L.Ed.2d 88 (1975)); United States v. Euge, 444 U.S. 707, 715, 100 S. Ct. 874, 880, 63 L.Ed.2d 141 (1980). For example, in Powell the Supreme Court re- fused to read into section 7605(b), which prohibits “unnecessary examination[s],” a requirement that enforce- ments of summonses be founded on probable cause. The Court reasoned that “[a}]lthough a more stringent inter- pretation is possible . . . we reject such an interpretation because it might seriously hamper the Commissioner in carrying out investigations he *# aks warranted. . . .” 379 U.S. at 53-54, 85 S. Ct. at 253, quoted in Euge, 444 U.S. at 715, 100 S. Ct. at 880. Similarly, in Donaldson v. United States, 400 U.S. 517, 91 S. Ct. 534, 27 L.Ed.2d 580 (1971), the Court de- clined to limit the summons authority to cases where no criminal prosecution was contemplated. “Any other hold- ing,” said the Court, “would thwart and defeat the ap- propriate investigatory powers that the Congress has placed in ‘the Secretary or his delegate.” 400 U.S. at 533, 91 S. Ct. at 544. Again, in Bisceglia the Court, finding no discernible contrary purpose by Congress, up- held the IRS’s authority under section 7602 to issue a “John Doe” summons to a bank to determine the identity of unknown individuals who might be liable for unpaid taxes. The Court again broadly construed the IRS’s sum- monsing authority in Euge to permit it to compel the execution of handwriting samples. A contrary result, reasoned the Court, would “stultify enforcement of federal law.” 444 U.S. at 715, 100 S. Ct. at 880 (quoting Don- aldson, 400 U.S. at 536, 91 S. Ct. at 545). Finally, in ee A-21 Arthur Young & Co., the Court declined to accord a privilege to an auditor’s tax accrual workpapers. “We are unable,” wrote the Court, “to discern the sort of unambiguous directions from Congress that would justify a judicially created work-product immunity for tax accrual workpapers summoned under § 7602.” 465 U.S. at 816, 104 S. Ct. at 1502. [5] Thus, the Court has refused to impose limitations upon the IRS’s summons authority unless it found explicit Congressional directives to do so. We believe that this judicial constraint used to avoid limiting the IRS’s sum- mons authority applies equally in this case and a court should not conditionally enforce a summons. If a court were to do so, it would then potentially have to become involved in the proceeding again at a later date to ensure compliance with the conditions it imposed. There is no evidence of a Congressional intent to burden the “sum- mary” nature of summons enforcement proceedings by allowing the district court to conditionally enforce a summons. In fact, it appears that the intent of Congress was definitely not to burden the summary nature of the en- forcement proceedings with such an inquiry. Rather than enact a statute authorizing the district court to condi- tionally enforce a summons to prevent the government from violating section 6103, Congress instead enacted civil remedies that allow an individual to bring suit against the United States and provided for criminal prosecution of the disclosing parties. These remedies clearly are intended to deter unnecessary disclosures of confidential information. In a summons enforcement proceeding, the district court’s only task is to determine whether the summons A-22 should or should not be enforced. This inquiry is limited to ensuring that the government has complied with the four Powell criteria, and that its process is not being abused. Powell, 379 U.S. at 57-58, 85 S. Ct. at 255. There is no statutory authority, nor congressional in- dication that existing statutes supply the authority, nor Supreme Court authority, to ailow the district court to make any consideration except whether to enforce or not to enforce the summons. The district court does not have the power to conditionally enforce the summons. If good faith and a legitimate purpose are found to exist, the summons should be enforced. If they are not present, enforcement should be denied. There is no middle ground because to create that remedy would unduly hamper the investigative efforts of the IRS. Dr. Barrett contends, however, that numerous decisions of this circuit provide district courts with the authority to condition a summons to protect the rights of taxpayers. While some of this authority may, arguably, support this view, most of it clearly does not, and we decline to adopt his position. The case that appears to most directly sup- port Dr. Barrett’s contention is Dunn vy. Ross, 356 F.2d 664 (Sth Cir. 1966). In Dunn, the court held that a summons under section 7602 could require the produc- tion of records for years that were time-barred from in- vestigation so long as the material from those years was relevant for the years that were under investigation that were not time-barred. Jd. at 666. In support for his posi- tion that a summons should be conditionally enforced when necessary Dr. Barrett relies on the following lan- guage in Dunn: Our decision, therefore, should not be construed as a blanket endorsement of summonses under 7602 A-23 requiring the production of a vast amount of books and papers, many of which might be totally ir- relevant and the production of which would cause great hardship to the persons at whom such sum- monses are directed. The District Court has broad discretion in the protection of the taxpayer and of third parties against oppressive procedures by work- ing out appropriate limitations on which records are subject to investigation and the best location for such inspection for all concerned. Id. at 667 (citation omitted). One reading of the second sentence from this passage could support the view that a district court has discretion in deciding how or to what extent to enforce a summons, i.e., conditional enforce- ment. However, another reading of this language is that the district court has broad discretion in protecting tax- payers only by determining whether the sought after in- formation is relevant. The relevancy inquiry is one of the Powell inquiries, and it only pertains to whether the summons should be enforced in its entirety. To the extent that Dunn can be read otherwise, to endorse the district court’s ability to conditionally enforce a summons, it is overruled. Our decision in Venn vy. United States, 400 F.2d 207 (5th Cir. 1968), is also cited by Dr. Barrett as support for his position. He argues that in Venn this court af- firmed the conditional enforcement of a summons to prevent improper use of the summoned information. We do not read Venn so broadly. Venn dealt with the issue of whether an unrelated criminal prosecution of a third party would prevent enforcement of a summons, when the taxpayer had materials relating to that third party's tax liability. 7d. at 209. The court held it would not. Additionally, there was an issue of whether all the ma- A-24 terial sought was relevant to the taxpayer’s investigation. Id. We concluded that the government had not made such a showing. Thus, the issue in Venn that Dr. Barrett attempts to rely on as support for his position is one that deals with the scope of the enforcement order, i.e., what amount of information would the government be provided. This inquiry is also in the nature of asking whether the material is relevant. The case did not address the issue presented before us of whether conditions would be imposed on the government’s use of the information once it was received. Venn, therefore, does not support Dr. Barrett. Another decision, United States v. Roundtree, 420 F.2d 845 (Sth Cir. 1969), is also cited by Dr. Barrett as support for his position. He quotes the following language from the opinion which reads: “Furthermore, courts may limit the invasions of privacy through the individual scrutiny to which a summons is subject for its enforcement through the standards enumerated in Powell of legitimate purpose, proper proceedure, relevance, and refusal to allow abuse of the courts’ process,” id. at 851, as support for the conditional enforcement inquiry we ordered in Barrett I]. We do not believe this language supports that conclusion. The issue in Roundtree was whether a summons should be enforced, and what pro- cedures were available to the taxpayer to assist him in attacking the summons. The court was not faced with the issue of whether to conditionally enforce the sum- mons. Moreover, the language quoted by Dr. Barrett does not address the conditional enforcement of the summons, but rather it relates to the enforcement of the summons in its entirety.’° 10. Dr. Barrett has also cited S.E.C. v. ESM Government Se- curities, Inc., 645 F.2d 310 (Sth Cir. 1981), United States v. Wright A-25 In sum, we do not believe that the cases cited by Dr. Barrett give rise to a conclusion that a district court can conditionally enforce a summons.”? V. We hold that in a summons enforcement proceeding the only issue that the district court can decide is whether to enforce the summons. The court cannot conditionally enforce that order. Therefore, we OVERRULE the hold- ing in Texas Heart that a district court should determine whether section 6103 was violated, and, if so, to condi- tion enforcement on compliance with that section. The issue presented today does not call for us to decide whether a court’s enforcement order may impose condi- tions respecting the time, place, manner, form or circum- Motor Company, 536 F.2d 1090 (Sth Cir. 1976), United States v. Newman, 441 F.2d 165 (5th Cir. 1971), Mason v. Pulliam, 557 F.2d 426 (Sth Cir. 1977), Linn v. Chivatero, 714 F.2d 1278 (Sth Cir. 1983), United States v. Wyatt, 637 F.2d 293 (Sth Cir. 1981), and United States v. Davis, 636 F.2d 1028 (Sth Cir.), cert. denied, 454 U.S. 862, 102 S. Ct. 320, 70 L.Ed.2d 162 (1981), as support for the proposition that a district court can conditionally enforce a sum- mons. We have reviewed these cases and do not agree that they mandate Dr. Barrett’s position. 11. The Ninth Circuit has also confronted the issue of conditional enforcement. In United States v. Author Service[s], Inc., 804 F.2d 1520 (9th Cir. 1986), the court relied on our decision in Texas Heart. No further reasoning was provided. Jd. at 1525 (“Courts routinely modify summonses to protect taxpayers’ interests. See, e.g., Dunn v. Ross, 356 F.2d 664, 667 (5th Cir. 1966). This power has been construed to give a court the authority to condition enforcement of a summons on an IRS agreement to cease improper disclosures. Texas Heart Institute, 755 F.2d at 481.”) Recently, in United States v. Zolin, 809 F.2d 1411 (9th Cir. 1987), the Ninth Circuit simply followed its prior decision in Author Services, based on Texas Heart. Id. at 1417 (“A district court may, when appropriate, condition en- forcement of a summons on the IRS’ agreeing to abide by disclosure restrictions. Author Services, 804 F.2d at 1525 (citing United States v. Texas Heart Institute, 755 F.2d 469, 481 (Sth Cir. 1985))”). A-26 stances in which some or all of what is sought by the subpoena will be furnished, or possibly other conditions precedent to the government’s receipt, pursuant to the subpoena, of what it seeks thereby. The summons order in Barrett I] is AFFIRMED in its entirety. JOHN R. BROWN, Circuit Judge, with whom PO- LITZ, JOHNSON, and WILLIAMS, join concurring in part and dissenting in part: I. Case is Very Much Alive It is Not Moot I concur in the court’s decision that the case is not moot. To the court’s discussion in Part III, I would point out that the issue was specifically raised in the original answer of Dr. Barrett, in his motion for new trial, and in the motion for stay of execution of judgment. Like- wise, the parties considered it a very hotly contested issue | in their respective briefs leading to Barrett I, United | States v. Barrett, 787 F.2d 958 (Sth Cir. 1986); and | later, Barrett II], United States v. Barrett, 804 F.2d 1376 | (5th Cir. 1986).” II. The Court's Decision is Faulty But I dissent vigorously to the Court’s overruling of Texas Heart and the holding of the majority that the United States District Court in the exercise of its residual, 1. As does the court, see its n. 9, I find it unnecessary to deter- mine whether a violation of § 6103 is an independent ground to deny enforcement of summons. I therefore neither agree nor disagree with what is stated or intimated in a. 9. a | A-27 equitable discretion, may not, and has no power to, con- dition enforcement of the summons to prevent the dis- closure of return information by the IRS in utilizing the summons (or information procured by it). This result both rejects the Supreme Court’s emphasis in Powell’ that in the application for enforcement of an IRS summons, “it is the court’s process which is invoked to enforce the administrative summons and a court may not permit its process to be abused.” 379 U.S. at 58, 85 S. Ct. at 255, 13 L.Ed.2d at 120. And, even worse, the majority opinion thwarts the congressional determination that tax return information is confidential and may not, except under strictly limited circumstances, be disclosed. Enter the Tax Reform Act of 1976 We should not forget that tiie Tax Reform Act of 1976 brought about revolutionary changes, not the least of which was the positive declaration that returns and re- turn information are confidentiai.* Likewise, the Act de- fines “return or return information” in the broadest way.* 2. United States v. Powell, 379 U.S. 48, 85 S. Ct. 248, 13 L Ed. 2d 112 (1964). 3. Asa general rule: Returns and return information sha!l be confidential, and except as authorized by this titlke—(1) no officer or employee of the United States . . . shail disclose any return or return information obtained by him in any manner or in connection with his service as such an officer or employee... . 26 U.S.C. § 6103(a). 4. (b) Definitions. For the purpose of this section— (1) Return.—The term “return” means any tax or information return, declaration of estimated tax... (2) Return Information.—The term “return information” means (A) a taxpayer’s identity, the nature, source, or emount of his income, payments, receipts, deductions, exemptions, credits, The term “disclosure” is equally broad, meaning “the making known to any person in any manner whatever a return or return information.” § 6103(b)(8). That Congress specifically had in mind disclosures in the course of investigation of taxpayer’s liability, civil or criminal, is reflected by § 6103(k)(6): | ner eens Ployees for investigative purposes.—An internal re- | venue officer or employee may, in connection with | his official duties relating to any audit, collection | activity, or civil or criminal tax investigation or any | other offense under the internal revenue laws, dis- close return information to the extent that such dis- closure is necessary in obtaining information, which | (6) Disclosure by Internal Revenue officers and em- is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected or with respect to the enforcement of any other provision of this title. Such disclosure shall be made only in such situations and under such conditions as the Secretary may prescribe by regulation. (Emphasis added) assets, liabilities, net worth, tax liability, tax withheld, de- ficiencies, Overassessments, or tax payments, whether the tax- payer's return was, is being, or will be examined or subject to other investigation or processing, or any other data received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the deter- mination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or oiher imposition, or offense, and (B) any part of any written determination or any background file documents relating to such written determination (as such terms are defined in section 6110(b)) which is not open to public inspection under section 6110, but such term does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particuler taxpayer. 26 U.S.C. § 6103(b). (Emphasis added). A-29 This was the clear congressional intent reflected by the Senate Report’ and in the strictly limited disclosure pro- visions.° 5. The Senate Report broadly defined the term return informa- tion: to include the following data pertaining to a taxpayer: his iden- tity, the nature, source or amount of his income. payments, re- ceipts, deductions, exemptions, credits, assets, liabilities. net worth, tax liability, tax withheld, deficiencies, overassessments and tax payments. It also includes any particular of any data, received by, recorded by, prepared by, furnished to, or collected by the IRS with respect to a return filed by the taxpayer or with respect to the determination of the existence. or possible existence, of liability (including the amount of liability) for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense provided for under the code. Senate Report No. 94-938 Tax Reform Act of 1976 (hereinafter cited as “S. Rep.”), reprinted in Internal Revenue Cumulative Bulletin 1976-3 (hereinafter cited as “Bulletin”). S. Rep. p. 318, U.S. Code Cong. & Admin. News 1976, pp. 2897, 3748, Bulletin. p. 356. (Em- phasis added). Of special importance are the words which immediately followed the above: Information as to whether a taxpayer’s return was, is being. or will be examined or are subject to other investigation or process- ing is also to be considered return information. S. Rep. p. 319, U.S. Code Cong. & Admin. News 1976. p. 3748, 2C*7 Bulletin, p. 357. 6. The intent to strictly limit disclosure is reflected by the Senate Report: IRS officials and employees would be permitted, if no reasonable alternative exists, to make limited disclosures of return informa- tion in connection with an audit or investigtion to the extent necessary in arriving at a correct determination of tax. liability for tax, or the amount to be collected, or otherwise in the en- forcement of any provisions in the Code. S. Rep. pp. 341-42, U.S. Code Cong. & Admin. News 1976, p. 377, sulletin, pp. 379-80. The report continues: In certain instances, it may be necessary for IRS personnel, in obtaining information with respect to a taxpayer from a third party, to disclose the fact that the request for information is in connection with an audit or other tax investigation of the taxpayer. In rare and extraordinary cases, it may also be nece A-30 Revealing Criminal Investigation a Disclosure of Return Information Although Texas Heart, in calling for a remand, spoke in terms of whether the revelation in the prior patient mailings that Dr. Barrett was under criminal investiga- tion was a disclosure of return information’ and in our several concurring and dissenting opinions in Barrett 1 and Barrett IJ, we continued that approach, it is now clear beyond any question that this revelation was return information." The Breadth of Congressional Concern Before trying to analyze whether the IRS and Agent Hanson have mgt either of the requirements of § 6103 that the disclosuite be (i) authorized’ and (ii) necessary “in obtaining information which is not otherwise reason- ably available’’® it is essential to see the apprehended widespread evils with which Congress was dealing. Ini- tially, there is the recognition by Congress that this was sary for IRS personnel in obtaining information from a third party to disclose additional return information, such as the manner in which the taxpayer treated on his return a transaction with a third party. Disclosures under this provision are to be made only in situations and under conditions specified in the regulations. ... S. Rep. p. 342, U.S. Code Cong. & Admin. News 1976, p. 377, Bulle- tin, p. 380. (Emphasis added). 7. See Judge Hill’s original majority opinion, Barrett J, 787 F.2d 958 at 960, n. 2 which states: It is conceded by the government that the proposed mailings to Barrett’s patients contain “return information.” 8. See, e.g., my dissenting opinion Barrett 1, 787 F.2d 958 at 963; and majority opinion Barrett J], 804 F.2d 1376 at 1378. 9. Seen. 3, supra. 10. See § 6103(k)(6), supra, p. 6. A-31 the first comprehensive review of the whole subject in over 40 years.” Next, of importance, was the Congressional goal in reviewing the Internal Revenue Code (IRC) to give taxpayers greater and greater protection. Congress was aware ot the complaints of literally millions of taxpayers concerning abuses in the administration of the IRC.’’ One of the problems to be resolved was the fact that the IRS probably has more information about more people than any other agency in the country.** More than that, 11. The Senate Report states: The statutory rules governing the disclosure of tax information have not been reviewed by the Congress for 40 years. Since that time a number of rules allowing disclosure of tax infcrmation to other government agencies have been established by execu- tive order and regulation. S. Rep. p. 317, U.S. Code Cong. & Admin. News 1976, p. 3746, Bulletin, p. 355. 12. “A fourth goal of the committee amendment is to improve the administration of the tax laws bureau to strengthen taxpayers’ rights and to make tax collection more efficient. The amendment makes long overdue changes in these areas.” (Emphasis supplied). S. Rep. p. 3, U.S. Code Cong. & Admin. News 1976, p. 3440, Bulle- tin, p. 59. See also S. Rep. p. 7, Bulletin, p. 63. In the Summary of the Administrative Provisions, the report stated: 2. It provides definitive rules generally maintaining the con- fidentiality of tax returns. (Title IX). S. Rep. p. 6, U.S. Code Cong. & Admin. News 1976, p. 3443, Bulle- tin, p. 62. The Report further indicates: The most significant administrative provisions are those which strengthen taxpayers’ rights. The committee amendment provides definitive rules relating to the confidentiality of tax returns, an area where there has been much abuse in the past. It strictly limits disclosure of information from tax returns. S. Rep. p. 19, U.S. Code Cong. & Admin. News 1976, p. 3455, Bulle- tin, p. 75. 13. The Report further stated: It has been stated that the IRS probably has more information about more people than any other agency in this country. Con- A-32 Congress expressed the specific intention to discontinue pricr practices or regulations. Only those regulations specifically interpreting § 6103 have any validity.” The extent to which Congress deliberately intended to constrict disclosure of these matters relating to the most intimate economic, financial and social facts concerning Americans—nearly all of whom are taxpayers—is crys- talized by the Congressional restrictions imposed on others in the government who, statutorily at least, have had almost unlimited access to information through the disclosure of return information. From the Top to the Bottom the President Being First First, there were limitations on Presidential access to return information. Not only was the availability of such information carefully circumscribed, but the request for sequently, almost every other agency that has a need for infor- mation about U.S. citizens, therefore, logically seeks it from the IRS. However, in many cases the Congress has not specifically considered whether the agencies which have access to tax in- formation should have that access. S. Rep. pp. 316-17, U.S. Code Cong. & Admin. News 1976, p. 3746, Bulletin, pp. 354-55. 14. The Report further stated: _ The committee amendment provides that as the general rule returns and return information are to be confidential and not subject to disclosure except as further provided in the section. Only those regulations now in effect and subsequently promul- gated by the Secretary which interpret a specific provision of Section 6103 are to continue to have force and effect after the effective date of this amendment. Consequently, those regulations promulgated under Presidential authority prior to the effective date of the amendment which do not interpret any specific pro- vision of this section are no longer tc have any force and effect after the effective date of this amendment. S. Rep. p. 318, U.S. Code Cong. & Admin. News 1976, p. 3749, Bulletin, p. 356. A-33 disclosure called for a written request, signed by the President personally. Section 6103(g).’° The President, with all of his other manifold duties, is also required to file an annual report with the Joint Committee on the Internal Revenue, showing in detail the persons involved and the reasons the President required return information. S.Rep., p. 323, Bulletin, p. 361. Likewise, there are severe restrictions on persons to whom the information may be delivered and how it may be used. Likewise, stringent restrictions were placed on the dis- closure of tax return infomation to the Department of Justice. See § 6103(h)(2).** With respect to non-tax civil or criminal cases, the Department of Justice must seek a court order. 26 U.S.C. § 6103(i)(1).77 15. The Senate Report states: Under the committee amendment upon the written request of the President, signed by him personally, disclosure of return and return information is to be made to the President and/or to certain named employees of the White House Office. S. Rep. p. 322, U.S. Code Cong. & Admin. News 1976, p. 3752, Bulletin, p. 360. 16. The Report further stated: The committee recognizes the need of the Justice Department to continued access to tax returns and return information in carrying out its statutory responsibility in the civil and criminal tax areas. While the committee decided to maintain the present rules pertaining to the disclosure of returns and return informa- tion of the taxpayer whose civil and criminal tax liability is at issue, restrictions were imposed in certain instances at the pre- trial and trial levels with respect to the use of third party returns where, after comparing the minimal benefits derived from the standpoint of tax administration to the potential abuse of privacy, the committee concluded that the particular dis- closure involved was unwarranted. S. Rep. pp. 324-25, U.S. Code Cong. & Admin. News 1976, p. 3754, Bulletin, pp. 362-3. (Emphasis added). 17. The Senate Report states: The committee decided that the information that the American citizen is compelled by our tax laws to disclose to the Internal Revenue Service was entitled to essentially the same degree of A-34 All to be Reported to Congress More than that, to assure public review of all discre- tionary disclosures, there is a stringent requirement, not only on the President, but on the IRS itself to report to Congress all applications for disclosure and acticns taken. 26 U.S.C. § 6103(g)."* privacy as those private papers maintained in his home. Present law and practice does not afford him that protection—the Justice Department and other Federal agencies, as a practical matter, being able to obtain that information for non tax purposes almost at their sole discretion. The committee decided, therefore, that the Justice Department . should be required to obtain court approval for the inspec- tion of a taxpayer’s return or return information. S. Rep., p. 328, U.S. Ccde Cong. & Admin. News 1976, pp. 3757, 3758, Bulletin, p. 366. The committee decided that, although it is necessary to permit the disclosure of Federal returns and return information to other Federal and State agencies in certain situations for purposes other than the administration of the Federal tax laws, no such disclosure should be made unless the recipient agency complies with the comprehensive system of administrative, technical, and physical safeguards designed to protect the confidentiality of the returns and return information and to make certain that they are not used for purposes other than the purposes for which they were disclosed. S. Rep., p. 344, U.S. Code Cong. & Admin. News 1976, p. 3774, Bulletin, p. 382. 18. The Report further stated: Because the use of returns and return information for purposes other than tax administration has resulted in serious abuses of the rights of taxpayers in the past, and because the potential for abuse necessarily exists in any situation in which returns and return information are disclosed by the IRS to other Federal agencies and the States for purposes other than the administra- tion of the Federal tax laws, the committee believes that it is necessary for Congress to review very closely the use of returns and return information and the extent to which taxpayer privacy is being protected. In order to permit that review, the committee decided to require that the IRS make certain comprehensive annual reports to the Joint Committee as to the use of returns and return information. S. Rep., pp. 345-46, U.S. Code Cong. & Admin. News 1976, p. 3775, Bulletin, pp. 383-84. A-35 Congress Increases Criminal and Civil Sanctions And to all of these stringent requirements the Congress concluded that the current penalties ($1,000 fine, not exceeding one year in confinement) were too lenient. See S.Rep., p. 347, Bulletin, p. 385. “The committee decided that the present provisions designed to enforce the rules against the improper use or disclosure of returns and return information are inadequate. The committee decided that the criminal penalties for an [un]authorized’’ disclosure should be increased and that the situations to which they apply should be broadened to cover all situa- tions in which returns and return information are treated as confidential.” S.Rep., p. 347, U.S.Code Cong. & Admin. News 1976, p. 3777, Bulletin, p. 385. The committee also decided to establish a civil remedy for any taxpayer damaged by an unlawful disclosure of returns or return information. The cause of action would extend to any disclosure of return or return information which is made in violation of section 6103. “[A person who willfully or negligently discloses] would be liable... . for actual damages. . . . Punitive damages would also be authorized . . . [where disclosure is willful or a result of gross negligence]. . . . The amendment provides that these damages would, in no event, be less than liquidated dam- ages of $1,000 for each disclosure.” S.Rep., p. 348, U.S. Code Cong. & Admin. News 1976, p. 3778, Bulletin, p. 386. 19. From the context of the total quotation it is evident that unauthorized disclosure was meant. A-36 Disclosure of Criminal Investigation Not Necessary With this stringent code of confidentiality, excused only by similarly stringent exemptions, we come then finally to whether the disclosure of criminal investigation was “necessary in obtaining information,’ which would “not otherwise [be] available.” See section 6103(k) (6). I would add to the cumulative literature of Barrett I, II, and /I/, only that to this day there has been no state- ment, either from on high in the Solicitor’s office or the Department of Justice, or on the lower rungs of the IRS field agents, concerning why it was reasonably necessary to inform the patient interviewees that Dr. Barrett was under criminal investigation. All that the IRS could con- ceivably want from the inquiry was (i) the amount which the doctor charged the patient for the reconstructive plastic surgery, (iia) the amount that the patient paid, (jib) whether paid in cash or check, and (11) the amount, if any, paid by an [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1624%3A1. Public record. Not legal advice.