In re Wasserman

• Decision Date: 20 October 1961
• Docket Number: Misc. No. 32-61.
• Citation: 198 F. Supp. 564
• Parties: In the Matter of Jack WASSERMAN and David Carliner.
• Court: U.S. District Court — District of Columbia

198 F. Supp. 564

In the Matter of Jack WASSERMAN and David Carliner.

Misc. No. 32-61.

United States District Court District of Columbia.

October 20, 1961.

Joseph A. Lowther and Joseph M. Hannon, Asst. U. S. Attys., Washington, D. C., for the Government.

Charles R. Richey, Washington, D. C., for respondents.

HOLTZOFF, District Judge.

This is a proceeding brought by the Commissioner of Internal Revenue to require Jack Wasserman and David Carliner, who are members of this bar, to respond to an administrative summons in connection with the investigation of income tax returns of one Carlos Marcello and Vincent Marcello, who were clients of the two respondents in this proceeding. The information sought is the amount of fees paid by the two taxpayers to the respondents as their counsel for legal services, the dates of payments, and by or through whom the payments were made.

This proceeding is instituted under the provisions of 26 U.S.Code § 7602, which reads in part as follows:

"For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary or his delegate is authorized—

"(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;

"(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary or his delegate may deem proper, to appear before the Secretary or his delegate at a time and place named in the summons and 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; and

"(3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry."

In connection with discovering and investigating frauds on the revenue, the Secretary of the Treasury is given by this statute a wide authority to carry on investigations and to examine witnesses and records. It is claimed, however, that there is no showing that this investigation is necessary or that the information desired is relevant. In support of this contention, the respondents refer to 26 U.S.Code § 7605(b), which reads as follows:

"No taxpayer shall be subjected to unnecessary examination or investigations, and only one inspection of a taxpayer's books of account shall be made for each taxable year unless the taxpayer requests otherwise or unless the Secretary or his delegate, after investigation, notifies the taxpayer in writing that an additional inspection is necessary."

It would seem from the language of this statute that this provision is a matter of defense to the inquiry and that the burden is on the taxpayer or the witness, as the case may be, to show that the examination or investigation is unnecessary, and that one inspection of the taxpayer's books for each taxable year has already been made.

But irrespective of that and without relying on this interpretation of the statute, the application sets forth sufficiently both the necessity of the investigation and the necessity and relevancy of the information desired from these respondents. It is set forth that since February, 1961, the Commissioner of Internal Revenue has been investigating the tax liability of Carlos Marcello and Vincent Marcello covering the period 1956 through 1959, inclusive. The Government has filed, in connection with this proceeding, waivers signed by the two taxpayers waiving the statute of limitations back to the year 1956. It also appears that the respondents in this proceeding have declined to supply the information.

As to materiality of the information, that appears to be obvious. Payments made by the taxpayer are necessarily relevant to an investigation of the accuracy of his income tax returns for various...