Commodity Futures Trading Com'n v. Collins
| Citation | 997 F.2d 1230 |
| Decision Date | 07 July 1993 |
| Docket Number | No. 92-2917,92-2917 |
| Parties | -6392, 62 USLW 2059, 93-2 USTC P 50,410, 37 Fed. R. Evid. Serv. 285 COMMODITY FUTURES TRADING COMMISSION, Petitioner-Appellee, v. Thomas W. COLLINS, et al., Respondents-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Jay L. Witkin, Gregory S. Walters (argued), Joanne T. Medero, Commodity Futures Trading Com'n, Office of the Gen. Counsel, Washington, DC, Judith Goodie, Dennis M. Robb, Barbara A. Schmidt, Commodity Futures Trading Com'n, Chicago, IL, for petitioner-appellee.
John L. Hines, Jr., Thomas G. Gardiner, James B. Koch (argued), Gardiner, Koch & Hines, Chicago, IL, for Thomas W. Collins.
James B. Koch, Gardiner, Koch & Hines, Chicago, IL, for respondents-appellants.
Before POSNER and MANION, Circuit Judges, and WOOD, Jr., Senior Circuit Judge.
The Commodity Futures Trading Commission issued subpoenas directing the appellants, Thomas Collins and others, to produce copies of their federal income tax returns for the scrutiny of the Commission's staff, which is investigating the appellants for possible civil violations of the Commodity Exchange Act, 7 U.S.C. §§ 1 et seq. Among the suspected violations is the trading of commodities futures contracts other than on a commodities exchange. The staff believes that these trades were spurious, being intended to enable the appellants to reallocate losses to persons who would reap the maximum tax benefits from the losses. That in itself does not bother the staff, which is not an arm of the Internal Revenue Service; but the staff believes that the presence of tax motives is evidence of a likely violation of the rules that the Commodity Futures Trading Commission does enforce. The appellants resisted the production of their tax returns on the ground that it would force them to incriminate themselves because the returns contain information that might be evidence, or might lead to evidence, of felony violations of the Commodity Exchange Act. See 7 U.S.C. §§ 6b(a)(ii), 6c(a), 13(a)(2). The Commission replied that the tax returns are "required records," so compelling their disclosure would not violate the self-incrimination clause of the Fifth Amendment. The district court agreed and ordered the subpoenas to be obeyed by a specified date. The order, which has been stayed pending our disposition of the appeal, is appealable. It concludes the proceeding in the district court, and thus is final within the meaning of 28 U.S.C. § 1291, because the enforcement of the subpoena was the only relief sought by the Commission. Kemp v. Gay, 947 F.2d 1493, 1495-97 (D.C.Cir.1991); cf. University Life Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 848-49 (7th Cir.1983).
The appellants do not question that they were required to file federal income tax returns with the Internal Revenue Service. The Commission does not argue that it can obtain copies of the returns from the IRS. Section 6103 of the Internal Revenue Code forbids the IRS, with certain exceptions, to release tax returns to other government agencies. One of the exceptions is for disclosure to federal employees engaged in the preparation of a judicial or administrative proceeding pertaining to the enforcement of a "specifically designated Federal criminal statute." 26 U.S.C. § 6103(i)(1)(A)(i). But although the Commodity Exchange Act has, as we have noted, felony provisions, the Commission does not contend that the Act is "specifically designated" a federal criminal statute. Nor does it argue, on this or any other basis, that the Department of Justice, which does the federal government's criminal prosecuting, already has access to the appellants' tax returns.
The subpoenas ask the appellants to furnish the staff with copies of the returns that they retained for their own records. No statute or regulation requires a taxpayer to retain a copy of his tax returns. The law entitles the taxpayer or his designee to obtain a copy of his return (certified if he wants) from the IRS, 26 U.S.C. §§ 6103(c), (p)(2)(A). But the Commission does not claim to have--though it may have, Doe v. United States, 487 U.S. 201, 108 S.Ct. 2341, 101 L.Ed.2d 184 (1988)--the power to require any of the appellants who may not have retained copies of their returns to obtain them from the IRS. The law requires taxpayers to retain certain substantiating information. 26 U.S.C. § 6001; 26 C.F.R. § 1-6001-1. But not only does the Commission not seek any such back-up documentation from the appellants; it appears to concede that the Fifth Amendment would entitle the appellants to refuse to produce it, because it does not come within the required-record exception, not being related to a comprehensive scheme of public regulation of the taxpayer. United States v. Porter, 711 F.2d 1397, 1404-05 (7th Cir.1983).
At first blush it is difficult to see how copies that persons are not required by any law to make or keep could possibly be regarded as "required records." (But cf. In re Grand Jury, 680 F.2d 327, 336 n. 15 (3d Cir.1982) (dictum), affirmed on other grounds under the name of United States v. Doe, 465 U.S. 605, 607 n. 3, 104 S.Ct. 1237, 1239 n. 3, 79 L.Ed.2d 552 (1984).) The rationale of the required-records doctrine is that if an individual is under a duty to keep certain records and produce them on demand to the regulatory authority that has lawfully imposed the duty, he cannot complain, should that or some other governmental agency demand access to the records and the records contain incriminating matter, that if he complies he will be forced to testify against himself. The force will have been exerted not by the demand, but by the duty, assumed to be lawful because imposed as a necessary incident to a lawful regulatory scheme, to maintain the records and grant access to them. Shapiro v. United States, 335 U.S. 1, 32-33, 68 S.Ct. 1375, 1391-92, 92 L.Ed. 1787 (1948). So understood, the required-records doctrine is inapplicable to a case such as this in which the individual is not required to maintain a record but does so as a matter of convenience. Collins was required, it is true, to make the record and give it to the Internal Revenue Service; and section 6103 may (depending on the force of "specifically designated Federal criminal statute") have forbidden the IRS to hand over the record--Collins's tax returns--to the Commodity Futures Trading Commission. But the statute does not block access, through pretrial discovery or otherwise, to copies of tax returns in the possession of litigants; all it prevents is the IRS's sharing tax returns with other government agencies. St. Regis Paper Co. v. United States, 368 U.S. 208, 218-19, 82 S.Ct. 289, 295-96, 7 L.Ed.2d 240 (1961); Poulos v. Naas Foods, Inc., 959 F.2d 69, 74-75 (7th Cir.1992). The subpoena is directed not at the returns, which remain safely locked in the IRS's files, but at copies in the possession of the individual. Although not shielded from disclosure by the Internal Revenue Code, those copies also are not required records, and so the appellants' Fifth Amendment claim cannot be rebutted by reference to the required-records doctrine.
This does not end our inquiry. The doctrine only comes into play if, were it not for the doctrine, the government would be forcing a person to...
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