State v. Beno, 79-1924

Decision Date19 September 1980
Docket NumberNo. 79-1924,79-1924
PartiesSTATE of Wisconsin, Plaintiff-Respondent, v. Sharon BENO, Defendant-Appellant.
CourtWisconsin Court of Appeals

Charles W. Giesen, Eisenberg, Giesen, Ewers & Hayes, S. C., Madison, on brief, for defendant-appellant.

Bronson C. La Follette, Atty. Gen., and Marguerite M. Moeller, Asst. Atty. Gen., on brief, for plaintiff-respondent.

Before GARTZKE, P. J., and BABLITCH and DYKMAN, JJ.

GARTZKE, Presiding Judge.

Defendant has appealed from the order of the circuit court which denied her motion to quash a subpoena issued to her by the Wisconsin Department of Revenue and granted the state's motion for a writ of attachment against her for contempt for failing to comply with the subpoena.

We reverse the order denying the motion to quash and remand the matter for further discovery by appellant as to the good faith use by the department of its subpoena. We therefore reverse the order which granted the motion for a writ of attachment.

The circuit court found after evidentiary hearings last held in August 1977 that the department began an audit in 1977 of the income tax returns of appellant and her husband. The audit was concluded and the matter was referred to the department's intelligence section. A special agent in that section caused a subpoena to be served upon appellant, requiring her to appear before the agent and to produce her bank statements, cancelled checks and deposit slips in her accounts with United Bank of Madison for 1975, 1976 and 1977. Appellant appeared at the time and place designated but refused to comply with the subpoena and did not testify at the evidentiary hearings.

The court, after looking to federal case law for guidance, rejected appellant's contention that the intelligence section's sole purpose is to collect information for criminal prosecutions. The court found that the involvement of the section does not indicate that the civil and criminal aspects of appellant's case have diverged, and that no decision to prosecute had yet been made in appellant's case. The court also found that the subpoena had not been issued to harass or to press her or her husband to settle a collateral dispute. The court therefore denied appellant's motion to quash the subpoena.

Appellant raises the following issues:

A. Has the department abandoned the pursuit of a civil tax determination?

B. Is the purpose of the subpoena to harass appellant and her husband?

C. Does enforcement of the subpoena violate appellant's right against self-incrimination?

1. Application Of Federal Case Law To Limitations On Use Of Administrative Subpoena

We must first determine whether the court erred in looking to federal case law for guidance with respect to the department's use of an administrative subpoena.

The power of the department to issue a subpoena through its special agent derives from secs. 71.11(20)(b), 73.04(3) and 885.01(4), Stats. 1 Those statutes do not expressly prohibit the department from using an administrative subpoena solely to collect evidence for a criminal prosecution.

Issuance of a subpoena depends, however, "upon the determination by the department, in the exercise of its prudent judgment, that it had a legitimate and relevant purpose in so doing." Neu's Supply Line v. Department of Taxation, 39 Wis.2d 584, 591, 159 N.W.2d 742, 746 (1968), citing United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964). That purpose is described in sec. 71.11(20)(b), Stats., as "ascertaining the correctness of any return or for the purpose of making a determination of the taxable income of any person ...." Prosecution for criminal liability is left to district attorneys and the attorney general. Secs. 71.11(44)(g) and (49). Because the department is not the prosecutor, the legislature intended that an investigation by the department must be for the purpose of making a determination as to the civil liability of a taxpayer. Accordingly, a subpoena issued by the department must be used for that purpose.

Investigation of a taxpayer by the department may produce evidence of criminal as well as civil liability. The department therefore may unavoidably perform a prosecutorial function when determining the civil liability of a taxpayer. Because the statutes creating and defining the department's subpoena powers do not specify conditions under which the purpose of determining the civil tax liability will be met, and because the statutes do not expressly limit the use of a subpoena to civil tax liabilities, the scope of the subpoena power is ambiguous. Where statutory language is ambiguous, the court may look to the legislative intent, which is to be found in the language of the statute in relation to its scope, history, context, subject matter and object to be accomplished. Wis. Environmental Decade v. Public Service Comm., 81 Wis.2d 344, 350, 260 N.W.2d 712, 715 (1978).

The investigative power of the department under sec. 71.11(20)(b), Stats., is similar to that conferred on Internal Revenue Service by 26 U.S.C. sec. 7602. 2 (See n. 1.) Criminal and civil elements under Wisconsin tax laws are intertwined because violation of either income tax law may result in criminal and civil liabilities. Neither the department nor Internal Revenue Service may prosecute taxpayers on its own but must refer criminal prosecution to another governmental agency. 3 The recommendation or report is subject to several layers of state and federal interdepartmental review. 4

Where Wisconsin and federal statutes are similar in language and operation and where there are no Wisconsin cases in point, appellate courts of this state have looked to federal decisions for aid in determining the intent of our statutes. Grams v. Boss, 97 Wis.2d 332, 346, 294 N.W.2d 473, 480 (1980) (mini-Sherman Act); Wis. Environmental Decade, Inc. v. DNR, 94 Wis.2d 263, 279, 288 N.W.2d 168, 176 (Ct.App.1979) (Wisconsin Environmental Policy Act); Joint School v. Wisconsin Rapids Ed. Asso., 70 Wis.2d 292, 306-07, 234 N.W.2d 289, 298 (1975) (Little Norris-LaGuardia Act); State ex rel. Pflanz v. County Court, 36 Wis.2d 550, 557, 153 N.W.2d 559, 563 (1967) (probable cause statute, sec. 968.01, Stats.). This approach has been followed in the area of taxation. In re Estate of Kersten, 71 Wis.2d 757, 762-63, 239 N.W.2d 86, 89-90 (1976) (inheritance tax); Department of Taxation v. Siegman, 24 Wis.2d 92, 97, 128 N.W.2d 658, 661 (1964) (income tax); Department of Taxation v. La Crosse, 11 Wis.2d 345, 349-50, 105 N.W.2d 800, 803 (1960) (income tax exemption).

We conclude it is appropriate to look to federal case law for guidance in construing sec. 71.11(20)(b), Stats.

It is also desirable that the department have investigative power similar to that of Internal Revenue Service. That desirability is relevant to the legislative intent because sec. 71.11(44)(c)4, Stats., 5 authorizes the exchange of certain tax information between the two revenue agencies. If the Wisconsin requirements to enforce a department subpoena were more or less strict than those to enforce an Internal Revenue Service subpoena, an uneven exchange could result which might interfere with the future flow of information between the agencies and adversely affect revenue collection in this state. 6

United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), held that an Internal Revenue summons (similar in function to an administrative subpoena) must be used in good faith and that the elements of a good faith exercise are as follows:

(The Service) must show that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the 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 .... (A) court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation. 379 U.S. at 57-58, 85 S.Ct. at 254-255 (footnote omitted).

United States v. LaSalle National Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978), held that statutory authority to issue an Internal Revenue Service summons solely to aid criminal investigation does not exist but noted that "criminal and civil elements are inherently intertwined" in enforcement of federal income tax laws. 437 U.S. at 309, 98 S.Ct. at 2363. LaSalle concluded:

(S)everal requirements emerge for the enforcement of an IRS summons. First, the summons must be issued before the Service recommends to the Department of Justice that a criminal prosecution, which reasonably would relate to the subject matter of the summons, be undertaken. Second, the Service at all times must use the summons authority in good faith pursuit of the congressionally authorized purposes of § 7602 (of the Internal Revenue Code of 1954, 26 U.S.C. sec. 7602). This second prerequisite requires the Service to meet the Powell standards of good faith. It also requires that the Service not abandon in an institutional sense, ... the pursuit of civil tax determination or collection. 437 U.S. at 318, 98 S.Ct. at 2368.

We conclude that a subpoena issued by the department pursuant to secs. 71.11(20)(b), 73.04(1) and (3) and 885.01(4), Stats., is enforceable if it meets the criteria set forth in Powell, 379 U.S. at 57-58, 85 S.Ct. at 254-255, and LaSalle, 437 U.S. at 318, 98 S.Ct. at 2368.

2. Abandonment Not Shown

Appellant argues that the LaSalle requirements have not been met because the department has abandoned pursuit of a civil tax liability. Appellant contends that, contrary to the finding of the circuit court, the intelligence section's...

To continue reading

Request your trial
30 cases
  • Watertown Public Library v. Labor & Industry Review Com'n
    • United States
    • Wisconsin Court of Appeals
    • April 2, 1987
    ...313.The library's brief declaration in this case is no more an argument than the statement in Dumas. See also State v. Beno, 99 Wis.2d 77, 91, 298 N.W.2d 405, 413 (Ct. App. 1980) (where grounds are merely broadly stated, courts are 'not required to decide [their] validity').5 We note, too, ......
  • State v. Beno
    • United States
    • Wisconsin Supreme Court
    • January 4, 1984
    ...facts of the case are not disputed and are set forth in two previously published court of appeals decisions: State v. Beno, 99 Wis.2d 77, 298 N.W.2d 405 (Ct.App.1980) (Beno I ), and State v. Beno, 110 Wis.2d 40, 327 N.W.2d 712 (Ct.App.1982) (Beno II Briefly stated, the significant facts on ......
  • Friendship Village of Greater Milwaukee, Inc. v. City of Milwaukee, 92-1895
    • United States
    • Wisconsin Court of Appeals
    • December 21, 1993
    ...a benevolent association. In the absence of state precedent, we may look to federal decisions for guidance. See State v. Beno, 99 Wis.2d 77, 84, 298 N.W.2d 405, 410 (Ct.App.1980). When considering whether property is used for the inurement or benefit of private individuals in the tax exempt......
  • State v. Collins
    • United States
    • Rhode Island Supreme Court
    • May 24, 1988
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT