429 U.S. 338 (1977), 75-235, G. M. Leasing Corp. v. United States
|Docket Nº:||No. 75-235|
|Citation:||429 U.S. 338, 97 S.Ct. 619, 50 L.Ed.2d 530|
|Party Name:||G. M. Leasing Corp. v. United States|
|Case Date:||January 12, 1977|
|Court:||United States Supreme Court|
Argued October 4, 1976
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
The Internal Revenue Service (IRS), having investigated the income tax liability of a taxpayer who was a fugitive from justice, determined deficiencies for two taxable years, and because of the taxpayer's failure to file proper returns and his fugitive status, made jeopardy assessments pursuant to § 6861(a) of the Internal Revenue Code of 1954. Petitioner corporation was determined to be the alter ego of the taxpayer. Thereafter, pursuant to a decision to levy upon and seize automobiles registered in petitioner's name in partial satisfaction of the assessments against the taxpayer, agents made warrantless seizures of several such automobiles from property in which petitioner had no interest. For the purpose of levying on other property subject to seizure, they also went to petitioner's office, a cottage-type building, and made a warrantless forced entry. Pending further information as to whether the cottage was an office or a residence, the agents made no initial seizures, but two days later they again entered the cottage without a warrant and seized books, records, and other property. Thereafter petitioner, claiming that it was not the taxpayer's alter ego, that the assessment was invalid, and that the seizures of the automobiles and the contents of the office violated the Fourth Amendment, instituted this suit, seeking return of the automobiles, suppression of evidence obtained from the seized documents, and damages from the IRS agents. The District Court entered judgment for petitioner, finding that the IRS agents had committed illegal searches and seizures in violation of the Fourth Amendment. The Court of Appeals for the most part reversed, ruling that the assessments were valid, that the evidence conclusively established that petitioner was the taxpayer's alter ego, and that the warrantless searches and seizures were not unconstitutional. Section 6331(a) of the 1954 Code authorizes the IRS to collect taxes "by levy upon all property and rights to property" belonging to a person who "neglects or refuses to pay" any tax, and § 6331(b) defines "levy" as including "the power of distraint and seizure by any means."
1. This Court granted certiorari limited to the Fourth Amendment issue, and thus accepts the Court of Appeals' determinations that the assessments and levies were valid and that petitioner was the taxpayer's
alter ego. Petitioner does not challenge any other aspect of probable cause to believe that the items seized were properly subject to seizure, and therefore the only question before the Court is whether warrants were required. P. 351.
2. The warrantless automobile seizures, which occurred in public streets, parking lots, or other open areas, involved no invasion of privacy and were not unconstitutional. [97 S.Ct. 622] Murray's Lessee v. Hoboken Land & Improv. Co., 18 How. 272. Pp. 351-352.
3. The warrantless entry into the privacy of petitioner's office violated the Fourth Amendment, since,
except in certain carefully defined classes of cases, a search of private property without proper consent is "unreasonable" unless it has been authorized by a valid search warrant.
Camara v. Municipal Court, 387 U.S. 523, 528-529. Pp. 352-359.
(a) Business premises are protected by the Fourth Amendment, and corporations have Fourth Amendment rights. The intrusion here was based not on the nature of petitioner's business, its license, or regulation of its activities, but on the ground that its assets were seizable to satisfy tax assessments, which does not justify depriving petitioner of its Fourth Amendment rights simply because it is a corporation. Pp. 353-354.
(b) Neither the history of the common law and the laws in several States prior to the adoption of the Bill of Rights nor the case law since that time justifies creation of a broad exception to the warrant requirement for intrusions in furtherance of tax enforcement. Pp. 354-356.
(c) Section 6331(b) must be read as authorizing only warrantless seizures, as opposed to warrantless searches. Pp. 356-358.
(d) This case does not fall under the "exigent circumstances" exception to the warrant requirement, as is clear from the agents' own delay in making the entry in which the records were seized. Pp. 358-359.
4. Of the various remedy issues raised by petitioner, only the issue of damages against the individual agents need be addressed under the limited grant of certiorari and in the present posture of the case. Petitioner has shown violation of its constitutional rights. Whether, as the Government contends, petitioner is not entitled to money damages if the agents acted in good faith should be considered by the courts below in the light of all the facts, including IRS procedures based upon Murray's Lessee, supra, the existence of proof of any injury to petitioner resulting from the entry and temporary seizure of books and records, and the immunity issue reserved in Bivens v. Six Unknown Fed. Narcotic Agents, 403 U.S. 388. Pp. 359-360.
514 F.2d 935, affirmed in part, reversed in part, and remanded.
BLACKMUN, J., delivered the opinion for a unanimous Court. BURGER, C.J., filed a concurring opinion, post, p. 361.
BLACKMUN, J., lead opinion
MR. JUSTICE BLACKMUN delivered the opinion of the Court.
We granted certiorari in this case, 423 U.S. 1031 (1975), limited to the Fourth Amendment issue arising in the context of seizures of property in partial satisfaction of income tax assessments.1
Petitioner G. M. Leasing Corp. is a Utah corporation organized in April 1972; among its stated business purposes is the leasing of automobiles. George I. Norman, Jr., although apparently not an incorporator, officer, or director of petitioner, was its general manager.
In 1971, Norman was tried and convicted in the United States District Court for the District of Colorado on two counts of aiding and abetting a misapplication of funds from a federally insured bank, in violation of 18 U.S.C. § § 2 and 656. He was sentenced to two concurrent two-year terms of imprisonment. On appeal, [97 S.Ct. 623] his conviction was affirmed. United States v. Cooper, 464 F.2d 648, 651-652 (CA10 1972). This Court denied certiorari. 409 U.S. 1107 (1973).
Norman and his wife, on November 15, 1971,2 filed a joint income tax Form 1040 for the calendar year 1970 on which, apart from their names, address, social security numbers, occupations, and dependents, they indicated only that their tax for that year, "[e]stimated," was $280,000. The sum of $289,800 was transmitted when the form was filed, and was placed by the Internal Revenue Service in a suspense account for future credit. Apart from the naked figure of estimated tax, the return contained no information as to income or deductions. App 94.
The Normans also sought and were granted an extension of time within which to file their return for the calendar year 1971. A check for $405,125 was given to the Service on April 15, 1972, for application on their 1971 tax. This check evidently was dishonored. Although further extensions of time were granted, neither of the Normans ever filed a 1971 return.
In October, 1972, after Norman's conviction was affirmed by the Tenth Circuit, the Service assigned the Norman account for 1970 and 1971 to Agent P. J. Clayton for investigation. Mr. Clayton, however, took no immediate action. Id. at 66; Tr. of Oral Arg. 24-25.
In March, 1973, after Norman's petition for a writ of certiorari had been denied, and after his petition for rehearing had also been denied, 410 U.S. 959 (1973), he surrendered to the United States Marshal for the serving of his sentence. By a ruse, however, he immediately disappeared. Tr. of Oral Arg. 6. Norman thereupon became a fugitive from justice; he was still one at the time of the oral argument. App. 15; Brief for Petitioners 5; Tr. of Oral Arg. 5-6.
Upon Norman's becoming a fugitive, the Service activated its investigation. On March 19, it determined deficiencies in Norman's income tax liability for 1970 and 1971 in the
amounts of $406,99.34 and $545,310.59, respectively.3 App. 95. These were based solely on information from third parties concerning the amount of stock sales Norman made through various brokerage houses. Id. at 30, 67.4 Because of Norman's failure to file appropriate returns and because of his fugitive status, collection of the taxes as so determined was regarded by the Service as in jeopardy; the deficiencies, therefore, were assessed forthwith pursuant to the authority granted by § 6861(a) of the Internal Revenue Code of 1954, 26 U.S.C. § 6861(a).5
[97 S.Ct. 624] The following day, revenue agents called at the Norman residence in Salt Lake City to endeavor to collect the taxes.
Mrs. Norman answered the door. The agents informed her of the jeopardy assessments and demanded payment. No payment was forthcoming, and Mrs. Norman suggested that the agents get in touch with her attorney. App. 56. Thereafter, pursuant to their authority under § 6331 of the Code, the agents filed notice of tax liens with the Salt Lake County Recorder's Office and levied on a bank account of Norman. App. 95, 58.
While the agents were at the Norman residence, they observed automobiles parked in the driveway. Later, upon checking with the Utah Motor Vehicle Division, they learned that these vehicles were registered in the name of petitioner or in the name of another corporation owned by Norman, and that no automobile was registered in Norman's name or in that of his wife. Id. at 774. They also learned that petitioner had no license to conduct business within Salt Lake County and had no telephone listing. Id. at...
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