USCA1 Opinion
November 3, 1992 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-1636
ROGER SYLVESTRE,
Petitioner, Appellant,
v.
UNITED STATES OF AMERICA, ET AL.,
Respondents, Appellees.
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ERRATA SHEET
The cover sheet of the opinion of this court issued on
October 30, 1992 amended as follows:
Last line after the word "appellee" delete "." add ", United
States."
Page 3, line 9: change the word "citing" in parenthesis to
"quoting."
Page 3, line 3 of 4 of indented material: insert "," after
the word Sylvestre.
Page 8, line 1: insert "," after the word quash.
October 30, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
___________________
No. 92-1636
ROGER SYLVESTRE,
Petitioner, Appellant,
v.
UNITED STATES OF AMERICA, ET AL.,
Respondents, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge]
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Before
Breyer, Chief Judge,
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Torruella and Selya,
Circuit Judges.
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Roger Sylvestre on brief pro se.
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James A. Bruton, Acting Assistant Attorney General, Gary R.
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Allen, Charles E. Brookhart, S. Robert Lyons, Tax Division,
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Department of Justice, Lincoln C. Almond, United States Attorney,
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and Everett C. Sammartino, Senior Assistant United States
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Attorney, on brief for appellee, United States.
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Per Curiam. On April 14, 1992, the IRS issued and served
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a summons to each of 3 banks as third party recordkeepers,
seeking records of savings accounts, checking accounts, and the
like, pertaining to Roger Sylvestre. Pursuant to 26 U.S.C.
7609, Sylvestre is entitled to notice of a third party summons
and may petition to quash such a summons. Sylvestre was given
notice and did, in fact, seek to quash each of the 3 summonses.
The IRS objected to the petition to quash and sought enforcement
of the summonses. After a hearing, the district court denied the
petition to quash and granted enforcement of the summonses.
Sylvestre has appealed. We affirm.1
To obtain enforcement of a summons, the IRS
must show that the investigation will be
conducted pursuant to a legitimate
purpose, that the inquiry may be relevant
to the purpose, that the information
sought is not already within the
Commissioner's possession, and that the
administrative steps required by the Code
have been followed....
United States v. Powell, 379 U.S. 48, 57-58 (1964). In addition,
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enforcement of an IRS summons is precluded if a referral to the
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1. Shortly after the IRS issued a summons to each of the 3
banks, it also issued a 4th summons to the Home Insurance
Company, seeking records of financial transactions with or on
behalf of Sylvestre, including a list of payments and copies of
checks. The dates of service and notice and the date fixed for
examination of records for this later, 4th, summons, were
different from those relating to the earlier summonses. Although
Sylvestre sought to quash this summons in the district court, we
read his arguments on appeal, in particular his contention as to
statutorily inadequate notice, as directed to the 3 bank
summonses. Insofar as he may be challenging the order of
enforcement as to this 4th summons, however, we summarily reject
it and affirm the district court as to this summons as well.
Justice Department for criminal prosecution is in effect. United
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States v. LaSalle Nat'l Bank, 437 U.S. 298, 318 (1978).
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"'Assertions by affidavit of the investigating agent that
the requirements are satisfied are sufficient to make the prima
facie case.'" United States v. Lawn Builders of New England,
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Inc., 856 F.2d 388, 392 (1st Cir. 1988) (quoting Liberty
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Financial Services v. United States, 778 F.2d 1390, 1392 (9th
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Cir. 1985)). In this case, the IRS submitted an affidavit of
Revenue Agent Paul H. McGunagle. In it, McGunagle stated, inter
alia,
1. He is reviewing the possible income
tax liability of Sylvestre, who is
engaged in the occupation of chiropractic
physician.
2. A review of IRS records indicated no
federal tax returns were filed by
Sylvestre for 1985 through 1990.
3. During his review, he had learned
that certain accounts in Sylvestre's name
may or do exist in the 3 banks to which
summonses were issued.
4. Service and notice of the summonses
were made as required by law, including
notification to Sylvestre, and all
procedures required by the Internal
Revenue Code were followed with respect
to the summonses.
5. The bank records are relevant for
the purpose of reconstructing income
received and said records are not already
in the possession of the IRS.
6. No previous examination of the
records has taken place for the periods
under review and this matter has not been
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referred to the criminal tax division of
the Justice Department.
It is evident that these averments by the revenue agent
satisfy a prima facie case for the enforcement of these
summonses. A review for possible income tax liability is
certainly a legitimate purpose and records of financial
institutions are relevant to that purpose. These bank records
would not be expected to be already in the possession of the IRS.
And, the agent stated that the matter had not been referred to
the criminal division of the Justice Department and that all the
required administrative steps were followed.
Once a prima facie case for enforcement was made, it
became Sylvestre's burden to refute the elements of the prima
facie case or to present sufficient evidence that the court's
process, invoked to enforce these summonses, was abused - that
is, that the summonses had been issued for an improper purpose or
for any other purpose reflecting on the good faith of the
investigation. United States v. Powell, 379 U.S. at 58. We see
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no need for a lengthy discourse as to the merits, and our
corresponding rejection, of each of the numerous unsupported
grounds Sylvestre listed in his attempt to quash these summonses.
We address only Sylvestre's most potentially viable challenge -
his claim concerning the IRS' failure to comply with the notice
provisions of 7609(a)(1).
Section 7609(a)(1) provides that notice of a third party
summons shall be given to any person identified in the
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description of the records contained in the summons [in this
case, Sylvestre] within 3 days of the day on which service is
made, "but no later than the 23rd day before the day fixed in the
summons as the day upon which such records are to be examined."
The third party summonses were served on April 14, 1992 and
directed the banks to produce the records on May 8, 1992. The
IRS gave Sylvestre notice of these summonses on April 17, 1992.
Notice, therefore, was given to Sylvestre within 3 days of the
April 14th service on the banks,2 but 21, not 23, days before
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the (May 8th) day for examination of the records.
That the notice to Sylvestre fell two days short of the
statutory provision, however, does not, as Sylvestre would have
it, bar the enforcement of these summonses. As the Fifth Circuit
has stated, in affirming the enforcement of a third party summons
despite the premature disclosure of information about the records
sought,
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2. Sylvestre argues that the provision for notice within 3 days
of the service on the banks was also violated. The banks were
served on April 14th at 2:55 p.m. Notice was given to him on
April 17th at 4:00 p.m. Sylvestre says that 3 days means 72
hours, but that he was given notice 73 hours and 5 minutes after
service. The IRS responds that the statute does not require that
notice be given within 72 hours and there is no language
suggesting that notice be given by the 72nd hour on the third
day. The IRS contends that the statute permits notice to be
served at any time on the third day.
While we believe that the IRS has the better argument
here, we need not definitively resolve it. Even were we to
assume that the 3 day requirement was violated, for the same
reason that we conclude that the 23 day violation does not bar
enforcement of the summonses, so too would the argument
concerning the 3 day violation fail.
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[w]e, too, decline to elevate form over
substance and reject the suggestion that
every infringement of a requirement of
the Internal Revenue Code absolutely
precludes enforcement of an IRS summons.
Nothing in the language of the Code
itself mandates this sanction for
infringement. The correct approach for
determining whether to enforce a summons
requires the court to evaluate the
seriousness of the violation under all
the circumstances, including the
government's good faith and the degree of
harm imposed by the unlawful conduct.
United States v. Bank of Moulton, 614 F.2d 1063, 1066 (5th Cir.
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1980); see also United States v. Texas Heart Inst., 755 F.2d 469,
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478 (5th Cir. 1985) (where the taxpayer has received every
benefit of the administrative steps required by the Code and has
not shown any prejudice resulting from the failure to follow the
strictures of the notice requirement, such failure by the IRS is
harmless and enforcement of the summons is not barred), overruled
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in part on other grounds, United States v. Barrett, 837 F.2d 1341
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(5th Cir. 1988) (en banc) (per curiam), cert. denied, 492 U.S.
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926 (1989).
It is obvious that the purpose of notice, in advance of
the date fixed for examination of records, to one, like
Sylvestre, who is identified in the description of the records
summoned from a third party recordkeeper, is to allow Sylvestre
the opportunity to invoke his right to intervene and seek to
quash the summons before that examination. See 26 U.S.C.
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7609(b). In this case, although Sylvestre was given notice 21,
rather than 23, days before the day set for examination,
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nonetheless he was able to, and did, timely move to quash the
summonses. His objections to the summonses were heard before any
records were examined. In fact, the third party recordkeepers
have yet to comply with the summonses, so no records have been
examined to this day.
We find no reason to suspect bad faith in the two day
shortfall in notice. Sylvestre has not been harmed by the IRS'
failure to provide him with notice "no later than the 23rd day"
before the date set for the examination of summoned records. We
find neither error nor abuse of discretion in the district
court's refusal to quash these summonses. See Rivera v. Chase
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Manhattan Bank, No. 83 Civ. 1612, 1984 WL 195 (S.D.N.Y. Mar. 7,
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1984) (absent harm to petitioner, summonses, notices of which
were given to petitioner 22 and 18 days before the date set for
examination, would not be quashed); see also Holifield v. United
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States, 677 F. Supp. 996, 998 (E.D. Wis. 1987) (although summons
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required third party to produce records 11 days after service of
summons, in view of the fact that (a) the IRS later extended the
date for production, (b) the plaintiff was able to move to quash,
and (c) the records had not yet been produced, the plaintiff has
not been harmed and the summons would be enforced).
Sylvestre's complaints on appeal regarding the district
court's refusal to permit him discovery and its refusal to strike
Agent McGunagle's affidavit (and other claims merely listed in
his brief's statement of issues) do not rise to the level of
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appellate argument warranting consideration by this court.
United States v. Zannino, 895 F.2d 1, 17 (1st Cir.), cert.
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denied, 494 U.S. 1082 (1990). In any event, Sylvestre needed to
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do more than allege an improper purpose before discovery is
ordered in a summary enforcement proceeding. United States v.
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Salter, 432 F.2d 697, 698 (1st Cir. 1970). Rather, he needed to
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introduce some evidence supporting his allegations. Id. The
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arguments Sylvestre raised at the district court did not carry
his burden in this regard.3
The order of the district court denying the petition to
quash and granting the motion to enforce the summonses is
affirmed. In view of this ruling, the government's motion to
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strike the appellant's statement of issues is denied as moot.
Affirmed.
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3. Sylvestre claimed a need for "pre-hearing discovery." He
issued a subpoena to Agent McGunagle commanding his attendance at
a deposition. As Sylvestre did not request an evidentiary
hearing in the district court at which he could question Agent
McGunagle, we have no occasion to pass on whether Sylvestre's
showing sufficed to warrant such a preliminary evidentiary
hearing. Cf. United States v. Freedom Church, 613 F.2d 316, 323
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(1st Cir. 1979) (threshold requirements for an evidentiary
hearing were not met where, inter alia, petitioner presented no
evidence, only a legal argument, at the enforcement hearing and
did not ask permission to question the IRS agent).
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