USCA1 Opinion

July 14, 1992

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
--------

No. 92-1012
RAYMOND H. COPP, JR.,
Petitioner, Appellant,
v.
UNITED STATES OF AMERICA,
Respondent, Appellee.
------ERRATA SHEET

The opinion of this Court issued

follows:

on July 14, 1992, is amended

On page 2 remove the hyphen from the word "authorized."

On page 4 remove the hyphen
"investigation", "potential."
On page
"disproving."

remove

the

hyphen

from the
from

the

words
words

"interrelate

"overturne

On page 7 remove the hyphen from the word "conditionally."

July 14, 1992

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 92-1012
RAYMOND H. COPP, JR.,
Petitioner, Appellant,
v.
UNITED STATES OF AMERICA,
Respondent, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. A. David Mazzone, U.S. District Judge]
___________________
____________________
Before

Cyr, Circuit Judge,

_____________
Roney,* Senior Circuit Judge,
____________________
and Pieras,** District Judge.
______________
____________________

Alfred D. Ellis with whom Loren Rosenzweig and Cherwin & Glick
_______________
_________________
_______________
were on brief for appellant.
Sally J. Schornstheimer, Attorney, Tax Division, Department
________________________
Justice, with whom James A. Bruton, Acting Assistant Attorney Gener
_______________
Gary R. Allen, Charles
E. Brookhart, Attorneys, Tax Divisi
_______________
_______________________
Department of Justice, and Wayne A. Budd, United States Attorney, w
_____________
on brief for appellee.
____________________
____________________
_____________________
* Of the Eleventh Circuit, sitting by designation.
** Of the District of Puerto Rico, sitting by designation.

PIERAS,

District Judge.
______________

This appeal

stems from

the issuance
Revenue

of an

administrative summons by

Service in

the

income tax liability

years

course of

investigation into

of appellant Raymond

1985 through 1989.

the Internal

H. Copp for

U.S.C.

which the IRS issued

7602, directed Goldman

recordholder,
documents.

to

the

The district court granted an IRS

motion for summary enforcement of the summons.

The summons,

the

appear,

pursuant to 26

Sachs & Co., a

give

Appellant filed

We affirm.

testimony

third-party
and

a motion to quash

produce

the summons,

contending primarily that it was improperly served after the

IRS had
criminal

referred the matter

investigation.

appellant's
for

district

contention and granted

filed

by

investigation, that
that

The

summary enforcement.

affidavit

to the Justice

IRS

court

found, based on an

agent

directing

no criminal referral had

the summons was

rejected

the Government's motion

Judge Mazzone
the

Department for

issued in good faith

the

been made and

to make a civil

determination of Copp's federal income tax liability.

Prior to its

amendment in 1982, 26 U.S.C.

authorized the IRS to issue

summonses "[f]or the purpose of

ascertaining the correctness of

where none has

7602

any return, making a return

been made, determining the

2

liability of any

persons for any

internal revenue tax . . .

any such liability."

In United States v.
_____________

Bank, 437 U.S. 298 (1978),

____
limits of this

, or collecting
LaSalle National
________________

the Supreme Court considered the

authorization.

The

Congress created a tax enforcement

Court noted that

since

system with interrelated

criminal and civil elements, in enacting Section 7602 it did

not

intend

that

the

IRS's

subpoena

power

in

given

investigation be limited merely because of the presence of a

criminal
that

purpose.

the

IRS's

investigations
pursuit

of

purposes.

Id. at 310-11.
___
subpoena

in which

all
___

of

it

power

not

had abandoned

extend

to

the good

faith

authorized

civil

summonee

could

an IRS summons

if he

its congressionally

result,

effectively block

after

LaSalle
_______

the enforcement of

could show

that it

was issued

which

IRS had

abandoned the

determination or
its

did

437 U.S. at 316-17.

As

the

The Court held, however,

holding, the

collection.

during an investigation
pursuit

of a

in

civil tax

In setting forth the reach of

LaSalle Court

found that

an abandonment

_______
clearly occurs (and a

summons may not be issued)

after the

IRS refers an investigation to the Department of Justice for

criminal prosecution.

Id. at 311.
___

In addition, aware of a

potential for abuse where the IRS delays its referral to the
3

Justice

Department

subsequent

in

also

occurs

institutional sense"

where

abandoned its

determination

investigation for
On this

to

criminal prosecution,

abandonment

liability

order

and

is

gather

evidence

the Court

found

the

pursuit of a
instead

seeks to

which

he

contends

incorrectly found

was overturned by the

"in

conducting

the

an

civil tax
its

Id. at 316.
___

invoke this "sole

purpose" defense,

that an

has

"solely criminal purposes."

appeal, Copp

Section 7602.

IRS

for

criminal

district

court

1982 amendments to

The LaSalle Court stated that taxpayers seeking to

_______
avail themselves of the

sole criminal purpose defense "bear

the burden to disprove the actual existence of a valid civil

tax
Id.
___

determination or
As

a result,

vitality, Copp
case

the

IRS

determination.

collection
even

has the
is
The

if

purpose by

the

defense has

burden of

not

continuing

disproving that in

pursuing

first

the Service."

hurdle

valid

which

this

civil

tax

appellant

must

therefore clear is the district court's finding that the IRS

has not abandoned the pursuit of Copp's civil tax liability.
___
Copp

must show

that

this finding

was clearly

erroneous.

See, e.g., Hintze v. IRS, 879 F.2d 121, 125 (4th Cir. 1989),
___ ____ ______
___
reh'd denied en banc,
_____________________

1989 U.S.

App. LEXIS

13075; United
______

States v. Claes, 747 F.2d 491, 495 (8th Cir. 1984).

We find

______

_____

that this burden has

not been met.

In

seeking enforcement

of an administrative summons, the IRS must meet the standard

of good faith set forth in United States v. Powell, 379 U.S.
_____________
______
48 (1964).

It "must

show that the

investigation will

be

conducted pursuant to a legitimate purpose, that the inquiry

may be relevant to that 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."

Id. at 57-58.
___

affidavit

In this case, the

signed by Revenue Agent Ernest Van Loan which was

uncontroverted and established each

district

court relied

"there is
good

IRS filed an

on

this affidavit

no criminal referral,

faith

to

make

of these elements.

in finding

the summons was

correct

The
that

issued in

determination

of

the

petitioner's federal income tax liabilities, if any, for the

taxable years

under investigation, and all

of the required

procedures of the Internal Revenue Code have been followed."

Implicit in the district
in

issuing its

seeking
under

court's ruling was a

summons to

information solely
LaSalle, the
_______

Goldman Sachs
for a

IRS is entitled

finding that

the IRS

criminal purpose.
to enforcement

was not
Even
of its

summons

where determination

least one of its purposes.

Copp's

effort

of civil

tax liability

is at

Accord 437 U.S. at 310-11.

______
to

establish

that

the

court's ruling was clearly erroneous is limited.

district
He alleges

that several facts -- including the alleged expansion of the

audit to include tax
of the IRS

years outside of 1988 and

to conditionally accept

additional documents -purpose

on the

part

a portion of

constitute evidence of
of the

IRS.

the refusal

He

requested
an improper

has not,

however,

demonstrated how these facts, none of which are inconsistent

with

a civil audit, suggest an improper purpose.

Copp also

relies on the fact that in a related case before Judge Stahl

in

the

District

of

New

allegations made by Copp in

New Hampshire
court concluded

Hampshire,

based

similar

response to summonses issued in

against other third-party

that sufficient

recordkeepers, the

showing had been

Copp to pursue a sole criminal purpose defense.

directed the IRS agent

on

made for

Judge Stahl

to appear at an evidentiary

hearing

at which Copp would

the agent
Judge

regarding his purposes in

Stahl's

appeal,

be afforded the opportunity

ruling is

however.

not

And the

issuing the summonses.

before
fact

to examine

that

this Court
Judge

on

this

Stahl in

separate

proceeding

has

allowed

Copp to

proceed

to

an

evidentiary hearing on this claim does not establish that

Judge

Mazzone's

finding

in

this

case

was

clearly

erroneous.1
The district court order of summary enforcement of
the summons is therefore affirmed.
________
So ordered.

____________________
1 Copp also contends that Judge Mazzone erred in enforcing
the IRS summons without conducting an evidentiary hearing.
In order to proceed to an evidentiary hearing to question
the propriety of an IRS summons, a taxpayer must make a
sufficient threshold showing that there was an improper
purpose behind an IRS summons. United States v. Salter, 432
_____________
______
F.2d 697 (1st Cir. 1970).
To make this show-ing, the
taxpayer must do more than allege an improper purpose; he
must introduce evidence to support his allegations.
Id.
___
District court decisions to enforce a summons without a
hearing are review-able under the abuse of discretion
standard. Accord Tiffany Fine Arts, Inc. v. United States,
______ _______________________
_____________
469 U.S. 310, 324 n.7 (1985); Hintze, supra, 879 F.2d at
______ _____
126; United States v. Samuels, Kramer & Co., 712 F.2d 1342,
_____________
_____________________
1345 (9th Cir. 1983). Appellant again relies primarily on
Judge Stahl's conclusion that the allegations made by Copp
were sufficient to proceed to an evidentiary hearing.
As
with his substantive claim, the fact that Judge Stahl
reached a contrary conclusion does not yield an abuse of
discretion on the part of Judge Mazzone.
7