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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 20, 2003 Decided June 15, 2004
No. 03-5019
UNITED STATES OF AMERICA,
APPELLEE
v.
JUDICIAL WATCH, INC.,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 02ms00144)
David Barmak argued the cause and filed the briefs for
appellant.
Stuart D. Gibson, Attorney, U.S. Department of Justice,
argued the cause for appellee. On the brief were Roscoe C.
Howard, Jr., U.S. Attorney, and Frank P. Cihlar and Gret-
chen M. Wolfinger, Attorneys, U.S. Department of Justice.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Before: GINSBURG, Chief Judge, and EDWARDS and TATEL,
Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG.
GINSBURG, Chief Judge: The district court enforced a sum-
mons issued by the Internal Revenue Service that requires
Judicial Watch to produce certain documents for an audit.
Judicial Watch appeals, arguing the district court should have
either quashed the summons or afforded Judicial Watch
discovery and an evidentiary hearing on its claim the audit
was politically motivated. Judicial Watch also argues the
summons violates the First, Fourth, and Fifth Amendments
to the Constitution of the United States. For the reasons set
forth below, we affirm the order of the district court.
I. Background
Judicial Watch, a self-described ‘‘non-partisan, public inter-
est law firm that uses the courts to fight corruption in the
government and legal profession,’’ was founded by attorney
Larry Klayman in 1994. It is exempt from the income tax as
an educational organization pursuant to § 501(c)(3) of the
Internal Revenue Code, which applies to (among others):
Corporations, and any TTT foundation, organized and
operated exclusively for TTT educational purposes,
no part of the net earnings of which inures to the
benefit of any private shareholder or individual, no
substantial part of the activities of which is carrying
on propaganda, or otherwise attempting, to influence
legislation TTT and which does not participate in, or
intervene in (including the publishing or distributing
of statements), any political campaign on behalf of
(or in opposition to) any candidate for public office.
26 U.S.C. § 501(c)(3).
In 1997 the attention of the IRS was drawn to Judicial
Watch by a letter from a recipient of a Judicial Watch fund-
raising solicitation who questioned whether the organization
is entitled to its tax exemption. In December 1997 a commit-
tee of three IRS bureau chiefs reviewed information and
3
documents regarding Judicial Watch’s tax-exempt status and
approved an audit of its 1996 tax return. The IRS did not
notify Judicial Watch that it had been selected for an audit
until October 1998.
Judicial Watch’s principals immediately objected, both in
writing and in meetings with IRS officials, that the audit was
an attempt by the Clinton Administration and IRS Commis-
sioner Charles Rossotti to retaliate against the organization
for having sued the IRS on behalf of the Western Journalism
Center in mid–1998. Judicial Watch also claimed the Clinton
Administration and congressional Democrats had pressured
the IRS to audit Judicial Watch in retaliation for its having
alleged, in a report it sent to the Congress in September
1998, that President Clinton had committed a host of im-
peachable offenses.
The IRS brought Judicial Watch’s claims to the attention of
the Treasury Inspector General for Tax Administration (TIG-
TA), an independent investigative office within the Depart-
ment of the Treasury. The TIGTA twice investigated wheth-
er the IRS pursued the audit for political reasons. The first
report (September 1999) found the IRS ‘‘recommended TTT
select[ing Judicial Watch] for audit’’ in December 1997, that
is, before it had sued the IRS or filed its impeachment report,
and concluded ‘‘[n]o information was developed’’ to support
Judicial Watch’s claims. The second report (October 2000)
found ‘‘no evidence’’ to support Judicial Watch’s ‘‘allegation of
political intervention’’ during the audit process. A report by
the Staff of the Joint Congressional Committee on Taxation
covering the same period likewise found ‘‘no credible evi-
dence’’ that the IRS selected taxpayers for audits ‘‘based on
the views espoused by [an] organization[ ] or individuals
related to the organization.’’ Joint Committee on Taxation,
Report of Investigation of Allegations Relating to Internal
Revenue Service Handling of Tax-exempt Organization Mat-
ters (JCS–3–00), at 6–11, 17–18 (March 2000).
In April 2000 the IRS notified Judicial Watch it was
proceeding with the audit, and over the next two years
expanded the audit to cover tax years 1996–2000 and to
4
require additional documents. According to the IRS, the
audit now addresses whether Judicial Watch: (1) provides a
private benefit either to Larry Klayman or to his law firm,
Larry Klayman and Associates; (2) is entitled to tax-exempt
status either as a private foundation or as a public interest
law firm; and (3) earns unrelated business income for which
it must pay taxes.
Late in 2000 the IRS agreed to delay the audit until
President Clinton left office, in exchange for which Judicial
Watch waived any potential statute of limitations defense. In
January 2001 the IRS informed Judicial Watch ‘‘the audit is
now continuing’’ and asked Judicial Watch to produce certain
documents. Judicial Watch again protested, however, and
the IRS again delayed the audit. In August 2001 the IRS
notified Judicial Watch it was examining the corporation’s tax
returns and again requested documents.
In September Judicial Watch sued the IRS in the United
States District Court for the District of Maryland, seeking
damages for constitutional violations allegedly committed by
the IRS in pursuing the audit and an injunction barring the
IRS from conducting the audit. See Judicial Watch, Inc. v.
Rossotti, 217 F. Supp. 2d 618 (D. Md. 2002), aff’d, 317 F.3d
401 (4th Cir. 2003). The IRS then served Judicial Watch
with a summons pursuant to 26 U.S.C. § 7602(a)(2), which
authorizes the Service ‘‘to summon the person liable for tax
TTT to produce such books, papers, records, or other data, and
to give such testimony, under oath, as may be relevant or
material to such inquiry.’’ Judicial Watch moved to enjoin or
to stay enforcement of the summons, but the district court
denied the motion and dismissed the case. See Rossotti, 217
F. Supp. 2d at 623–27 (injunctive relief barred by the Anti–
Injunction Act, damages barred by defendants’ qualified im-
munity).
In March 2002 the IRS repaired to the United States
District Court for the District of Columbia to enforce its
summons. The district court ordered the IRS to provide for
the court’s review in camera ‘‘all documents relating to its
motivation and purpose’’ for the audit. After a hearing at
5
which it heard arguments regarding the purpose and the
scope of the audit, and the necessity, if any, of further
discovery, the district court ordered the IRS to produce
additional documents and certain affidavits for in camera
review.
In December 2002 the district court enforced the summons
with a modification; the original request for all of Judicial
Watch’s internal and external correspondence was narrowed
to reach only correspondence that is not privileged, is rele-
vant to the audit, and is described with reasonable particulari-
ty.* See United States v. Judicial Watch, Inc., 266 F. Supp.
2d 1, 23 (D.D.C. 2002). The district court concluded ‘‘there is
no evidence of political vindictiveness or a retaliatory motive,
respondent’s constitutional challenges are without merit, and
the summons [as modified] is not so overbroad as to be
unlawful.’’ Id. at 5.
II. Analysis
Judicial Watch presents four arguments on appeal: (1) The
audit lacks a legitimate tax-related purpose. (2) Judicial
Watch is entitled to discovery and to an evidentiary hearing
regarding the alleged retaliatory purpose of the audit. (3)
The summons is overbroad. (4) The summons violates the
first, fourth, and fifth amendment rights of Judicial Watch or
of its supporters.
* As modified ¶ 15 of the summons requests ‘‘all minutes of
meetings of the Judicial Watch Board of Directors and any other
internal committees,’’ ¶ 15(a), as well as ‘‘all internal written corre-
spondence for the calendar years 1994 [to] 2000’’ pertaining to: ‘‘(1)
the financial and business relationship between Judicial Watch and
all related entities and individuals TTT; (2) the process by which
Judicial Watch selects cases for litigation; (3) fund raising activities;
(4) compensation of attorneys who do work for Judicial Watch; (5)
advocacy on legislative matters; and (6) the exempt function [that
is, educational] activities carried on by Judicial Watch.’’ ¶ 15(b).
The IRS also modified ¶ 23 of the summons to request ‘‘all outgoing
and incoming correspondence for the calendar years 1994 [to] 2000’’
pertaining to the same subjects identified in ¶ 15(b), with the
exception of fund raising activities.
6
A. Tax-related Purpose
Judicial Watch argues the district court should not have
enforced the summons because the audit lacks any legitimate
tax-related purpose. According to the taxpayer, the district
court ‘‘ignore[d] the wealth of competent evidence presented
by Judicial Watch of an improper, political and retaliatory
motive for the audit and summons.’’
We review the district court’s ‘‘determination of whether
the factual conditions for enforcement of a summons have
been met for clear error.’’ United States v. Ins. Consultants
of Knox, Inc., 187 F.3d 755, 759 (7th Cir. 1999); see Mazurek
v. United States, 271 F.3d 226, 229 (5th Cir. 2001); Spell v.
United States, 907 F.2d 36, 39 (4th Cir. 1990). For the court
to enforce the summons the Government must have estab-
lished a prima facie case by showing: (1) ‘‘the investigation
will be conducted pursuant to a legitimate purpose’’; (2) ‘‘the
inquiry may be relevant to the purpose’’; (3) ‘‘the information
sought is not already within the [IRS’s] possession’’; and (4)
in issuing the summons ‘‘the administrative steps required by
the [tax] Code have been followed’’ by the IRS. United
States v. Powell, 379 U.S. 48, 57–58 (1964). This initial
burden, however, ‘‘is a slight one, for the statute must be read
broadly in order to ensure that the enforcement powers of the
IRS are not unduly restricted.’’ United States v. Kis, 658
F.2d 526, 536 (7th Cir. 1981); see Alphin v. United States,
809 F.2d 236, 238 (4th Cir. 1987) (burden ‘‘is fairly slight
because this is a summary proceeding’’).
The district court properly concluded that declarations in
which the IRS agents and officials responsible for the audit
attest to each of the four elements of the prima facie case
discharged the slight burden placed upon the IRS. See Kis,
658 F.2d at 536 (‘‘No more than [such affidavits are] neces-
sary to make the prima facie case’’). It then fell to Judicial
Watch to ‘‘disprove the actual existence of a valid civil tax
determination or collection purpose’’ by showing the enforce-
ment of the summons would be an abuse of the court’s
process. United States v. LaSalle Nat’l Bank, 437 U.S. 298,
316 (1978). The court’s process would be abused ‘‘if the
7
summons [was] issued for an improper purpose, such as to
harass the taxpayer.’’ Powell, 379 U.S. at 58.
Judicial Watch argues the timing of the audit, coming
shortly after Judicial Watch had sued the IRS and immedi-
ately after Judicial Watch had issued its report on impeach-
ment, demonstrates the retaliatory motive behind the audit.
This post hoc, ergo propter hoc argument would be fallacious
even if it were consistent with that. The IRS decided to
audit Judicial Watch in December 1997, six months before
Judicial Watch filed suit against the IRS and nine months
before it accused President Clinton of impeachable offenses.
Judicial Watch also argues the political motivation for the
audit is shown by two statements an IRS agent made to the
taxpayer’s counsel early in 2000, both of which Judicial Watch
characterizes as ‘‘warnings’’ that the organization was still on
the Service’s ‘‘radar screen.’’ Judicial Watch portrays these
statements as menacing solely because each ‘‘followed shortly
after important developments in Judicial Watch corruption
litigation against the Clinton Administration.’’ The timing
point does not deserve a further response. There is nothing
nefarious, moreover, about a notice to counsel that a matter is
still pending; such notice is ordinarily a courtesy to the
taxpayer and is in no event suggestive of an abuse of govern-
ment power.
Judicial Watch next argues the comments of several IRS
agents evidence an improper retaliatory motive. According
to the taxpayer, one agent said the audit was a ‘‘hot potato,’’
and another rhetorically asked, ‘‘What do you expect when
you sue the President?’’ Such expressions of opinion by front
line revenue agents are of no moment. If there was an
improper motive for initiating the audit, then that motive has
to have been harbored by a person or persons with authority
to initiate it. Two independent investigations by the TIGTA
turned up no evidence that the Clinton Administration or any
political appointee at the IRS used the audit process to
retaliate against Judicial Watch. More important, Judicial
Watch proffers no evidence they did.
8
Judicial Watch does proffer two pages of notes written by
James Carville, a political advisor to President Clinton, and
letters and e-mails from members of the public that were
forwarded to the IRS by the White House and by Democrats
in the Congress. None of these communications, however,
suggests the ‘‘[i]mproper political pressure’’ Judicial Watch
claims. The Carville notes do not so much as mention the
IRS, an audit, or Judicial Watch; although they do suggest
Democrats should make known ‘‘how right-wing foundations
TTT provide funding for much of the Republican attack ‘ma-
chine,’ ’’ they primarily suggest establishing a ‘‘clearinghouse
for information which exposes the motives and methods be-
hind Republican partisan attacks.’’ The letters and e-mails
forwarded by the White House and by Members of Congress
‘‘simply evidence constituent service, which our political sys-
tem accepts and even applauds.’’ Rossotti, 317 F.3d at 406
n.2. Those forwarding the inquiries asked only that ‘‘appro-
priate action’’ be taken; they made no demand upon the IRS
either to audit Judicial Watch or to rescind its tax exemption.
Finally, Judicial Watch argues that even if the initiation of
the audit was legitimate, the later decisions of the IRS to
reinstate and to expand the audit were made solely ‘‘to punish
Judicial Watch for its advocacy and anti-corruption activities.’’
There simply are no facts, however, to support this assertion.
We agree with the district court, therefore: Judicial Watch
failed to show enforcing the summons would be an abuse of
the court’s process.
B. Discovery and an Evidentiary Hearing
Judicial Watch next claims it is entitled to discovery and to
an evidentiary hearing regarding the IRS’s motive for the
audit because it has ‘‘develop[ed] facts from which a court
might infer a possibility of some wrongful conduct by the
Government.’’ Kis, 658 F.2d at 540. In response the IRS,
quoting SEC v. McGoff, 647 F.2d 185, 194 (D.C. Cir. 1981),
characterizes Judicial Watch’s allegations as no more than
‘‘diffuse speculations [that] do not establish the exceptional
circumstances necessary to take this case out of the general
rule’’ against discovery when resisting enforcement of an
9
administrative summons. We review the district court’s deci-
sion to deny Judicial Watch discovery and an evidentiary
hearing only for an abuse of discretion. See United States v.
Gertner, 65 F.3d 963, 969 (1st Cir. 1995) (decision ‘‘to with-
hold an evidentiary hearing in a summons enforcement pro-
ceeding’’ reversible ‘‘only if the appellant demonstrates an
abuse of the trial court’s substantial discretion’’); Brune v.
IRS, 861 F.2d 1284, 1288 (D.C. Cir. 1988) (district court’s
‘‘decision to allow or deny discovery is reviewable only for
abuse of discretion’’).
In this circuit discovery regarding the motivation for an
audit is permitted only when the movant has shown ‘‘extraor-
dinary circumstances,’’ McGoff, 647 F.2d at 193, that take him
out of ‘‘the class of the ordinary taxpayer, whose efforts at
seeking discovery would, if allowed universally, obviously be
too burdensome’’ to the IRS. United States v. Fensterwald,
553 F.2d 231, 231–32 (D.C. Cir. 1977); see United States v.
Exxon Corp., 628 F.2d 70, 77 n.7 (D.C. Cir. 1980). Judicial
Watch has not established such ‘‘extraordinary circum-
stances.’’ Indeed, as we saw in Part II. A. above, it has not
established anything out of the ordinary about the motivation
of the IRS.
Judicial Watch urges us to follow the Seventh Circuit in
requiring that it establish only the ‘‘possibility’’ of an improp-
er motive before it may obtain further discovery. But that
would not avail it. What Judicial Watch calls the ‘‘possibility
standard,’’ the Seventh Circuit has explained, ‘‘is significantly
more stringent than [the standard that must be met by] a
party opposing a motion for summary judgment,’’ Kis, 658
F.2d at 543; that is, Judicial Watch would have to have
evidence sufficient to raise a genuine issue of fact material to
whether the audit is an act of political retaliation. Again as
we have seen, Judicial Watch has proffered no evidence of
that sort.
In any event, the district court did not merely, as Judicial
Watch states in bold type and italics, ‘‘refus[e] it all discov-
ery and an evidentiary hearing.’’ Rather, the district court
itself required the IRS to produce affidavits, see Fensterwald,
553 F.2d at 232–33 (holding ‘‘the District Judge should allow
10
some measure of discovery, preferably by specific interroga-
tories TTT or perhaps by an overall affidavit made by a TTT
responsible and knowledgeable official as to all relevant de-
tails of how taxpayer TTT was selected for this audit’’); the
court also required the IRS to produce ‘‘all documents relat-
ing to its motivation and purpose’’ for the audit — which
came to more than 1,000 pages — and it held a hearing at
which it heard arguments regarding the materials produced.
Although Judicial Watch was not allowed to propound its own
requests for further discovery, the decision whether to permit
party-directed discovery is within the sound discretion of the
district court. See id. at 233 (requiring only ‘‘discovery
procedures deemed appropriate by the district court’’). Nor
is Judicial Watch entitled to an evidentiary hearing at which
to cross-examine the various IRS agents and officials who
submitted sworn declarations at the request of the court. ‘‘If
the taxpayer cannot develop even the evidence necessary to
[suggest an audit was improper], then an evidentiary hearing
would be a waste of judicial time and resources.’’ Kis, 658
F.2d at 540. In sum, the district court did not abuse its
discretion in denying Judicial Watch further discovery and
another hearing.
C. Scope of the Summons
Judicial Watch also argues the summons, even as modified,
is excessive and overbroad because of the number of years
covered and the number of documents sought. Drawing upon
the declaration of former IRS Commissioner Donald Alexan-
der, Judicial Watch claims ‘‘the scope of the documents and
information requested is unheard of and cannot be explained
by any legitimate tax enforcement objective.’’ The IRS ar-
gues in response that the modified summons is not overbroad
because it ‘‘clearly advised Judicial Watch what was required
of it’’ and sought documents that ‘‘clearly shed light on the
various issues under investigation’’ in the audit. We review
for abuse of discretion the district court’s determination the
summons was not overbroad. See Rogers Transp., Inc. v.
Stern, 763 F.2d 165, 167 n.2 (3d Cir. 1985); United States v.
Malnik, 489 F.2d 682, 686 n.4 (5th Cir. 1974); United States
v. Ruggiero, 425 F.2d 1069, 1071 (9th Cir. 1970) (per curiam).
11
Although the IRS seeks records spanning a number of
years and regarding a number of subjects, see p. 5 n.* above,
the summons is not overbroad. Section 7602 grants ‘‘broad
and expansive’’ authority to the IRS to summon documents
from taxpayers, United States v. Bichara, 826 F.2d 1037, 1039
(11th Cir. 1987), provided the documents ‘‘may be relevant or
material’’ to the inquiry of the IRS, United States v. Arthur
Young & Co., 465 U.S. 805, 814 (1985) (use of ‘‘ ‘may be’
reflects Congress’s express intention to allow the IRS to
obtain items of even potential relevance to an ongoing investi-
gation’’) (emphasis in original). The relevance threshold is ‘‘a
low one,’’ and the Government need show only ‘‘that inspec-
tion of the desired records ‘might throw light’ upon the
correctness of the taxpayer’s return and liabilities.’’ Kis, 658
F.2d at 537 (quoting United States v. Turner, 480 F.2d 272,
279 (7th Cir. 1973)). Here, each type of document sought
‘‘throw[s] light’’ upon whether Judicial Watch is entitled to its
tax-exemption. In particular, the documents are relevant to
whether Judicial Watch: is entitled to tax-exempt status
either as a private foundation or as a public interest law firm;
provides a private benefit either to Larry Klayman or to his
law firm; or earns unrelated business income upon which it
must pay taxes — either from its relationship with Larry
Klayman and Associates or from its sale of merchandise over
the internet.
That the records sought are ‘‘extensive is not material’’ so
long as the records are relevant to the matters at issue in the
audit. United States v. Luther, 481 F.2d 429, 433 (9th Cir.
1973); see Spell, 907 F.2d at 39 (rejecting taxpayer’s claim
summons posed ‘‘burden of significant proportions’’ where
summoned records were relevant to ‘‘legitimate purpose of
determining the correctness of his tax returns’’). Therefore,
the district court did not abuse its discretion in holding the
summons was not overbroad.
D. Constitutional Challenges
Finally, Judicial Watch argues the audit, the summons, or
both violate the First, Fourth, and Fifth Amendments. None
of these constitutional claims is meritorious.
12
1. First Amendment
Judicial Watch argues the audit and the summons violate
the First Amendment for two reasons, the first of which is
that the IRS initiated the audit in retaliation for Judicial
Watch’s exercise of its first amendment rights of speech and
of association. As we have seen, however, Judicial Watch has
failed to establish the factual predicate for this argument.
The second argument is that enforcement of the IRS’s
request for the names of all donors who contributed more
than $3,000 to Judicial Watch will chill the exercise of its
supporters’ and potential donors’ first amendment rights
because they will reasonably fear the IRS will audit them
individually, for which proposition it cites United States v.
Church of World Peace, 775 F.2d 265, 266–67 (10th Cir. 1985)
(denying IRS request for names of persons married by
church on ground of chill to first amendment right of religious
freedom). Judicial Watch, however, proffers no evidence
remotely like the unchallenged affidavits the taxpayer submit-
ted in Church of World Peace. In that case, it was undisput-
ed that each ‘‘member known to the IRS has had his or her
income tax return audited, and that the additional names are
requested [by the IRS] for that purpose.’’ Id. at 266. Al-
though Mr. Klayman claims ‘‘[s]upporters who are potential
donors frequently ask TTT whether they will be audited if
they make a donation,’’ a general fear of the IRS is insuffi-
cient to establish that speech will be chilled. See United
States v. Northcutt, 680 F.2d 54, 56 (8th Cir. 1982) (‘‘general-
ized dread, undoubtedly shared by many taxpayers, of investi-
gation by the IRS’’ held insufficient to establish first amend-
ment violation). Nor is it significant, without more, that
‘‘several’’ Judicial Watch ‘‘clients, donors, and others sympa-
thetic to its mission’’ have been audited. For all the evidence
in the record, that could be fewer audits than one would
expect among the same number of taxpayers chosen at ran-
dom. Therefore, unlike the taxpayer in Church of World
Peace, Judicial Watch has not produced sufficient evidence to
support its allegation that enforcement of the summons will
chill its members’ speech.
13
2. Fourth Amendment
Judicial Watch’s fourth amendment claim is based upon its
argument the summons is excessive and overbroad. A sum-
mons is not overbroad for the purpose of the Fourth Amend-
ment ban on ‘‘unreasonable searches and seizures’’ if the
inquiry is ‘‘within the authority of the agency, the demand is
not too indefinite[,] and the information sought is reasonably
relevant.’’ United States v. Morton Salt Co., 338 U.S. 632,
652–53 (1950); see Oklahoma Press Pub. Co. v. Walling, 327
U.S. 186, 209 (1946). As stated in Part II. C., the summons
seeks documents ‘‘reasonably relevant’’ to the audit and is
neither overbroad nor excessive to the investigation of Judi-
cial Watch’s tax-exempt status. Furthermore, there is no
dispute the summons, as modified, described the requested
documents ‘‘with sufficient particularity’’ to enable Judicial
Watch to comply. United States v. Linsteadt, 724 F.2d 480,
483 (5th Cir. 1984). Therefore, Judicial Watch’s fourth
amendment claim must fail.
3. Fifth Amendment
Finally, Judicial Watch contends the IRS is violating its
fifth amendment rights to equal protection and due process
by ‘‘selectively prosecuting’’ it ‘‘on constitutionally impermis-
sible grounds,’’ namely, ‘‘retaliation for protected speech.’’
These claims, too, depend upon the IRS having a retaliatory
motive for the audit, which Judicial Watch has failed to
establish.
III. Conclusion
For the foregoing reasons, the order of the district court is
Affirmed.