U.S. v. Berg, 80-1432
Decision Date | 08 December 1980 |
Docket Number | No. 80-1432,80-1432 |
Citation | 636 F.2d 203 |
Parties | 81-1 USTC P 9141 UNITED STATES of America and Olin P. Melaragno, as Revenue Agent of the Internal Revenue Service, Appellees, v. Loraine M. BERG, as Assistant Treasurer of Twin City Federal Savings & Loan Association, and Twin City Federal Savings & Loan Association, Phillip S. Fry, Individually and as Trustee of Fry Family Trust; Susan Fry; Lawyers Publishing Company; National Counsel to Eliminate Death Taxes; Law Book Store, Inc., an Ohio Corporation; Discount Quickprint, Inc., a Delaware Corporation; Tax Information Center; Family Health and Improvement Society; and Phillip S. Fry & Associates, Appellants. UNITED STATES of America and Olin P. Melaragno, as Revenue Agent of the Internal Revenue Service, Appellees, v. R. N. WHITE, as President of First National Bank of Coleraine, and First National Bank of Coleraine, Phillip S. Fry, Individually and as Trustee of Fry Family Trust; Susan Fry; Lawyers Publishing Company; National Counsel to Eliminate Death Taxes; Law Book Store, Inc., an Ohio Corporation; Discount Quickprint, Inc., a Delaware Corporation; Tax Information Center; Family Health and Improvement Society; and Phillip S. Fry & Associates, Appellants. |
Court | U.S. Court of Appeals — Eighth Circuit |
Kent B. Hanson, Minneapolis, Minn., for appellants, Phillip S. Fry, et al.
Before LAY, Chief Judge, HEANEY, Circuit Judge, and PORTER, * District Judge.
Taxpayers, Phillip and Susan Fry and eight entities, 1 appeal from two orders of the district court granting the government's petition for enforcement of two summonses issued to the respondent banking institutions by the Internal Revenue Service. After careful review of the entire file, counsel's briefs and oral argument, we determine that the orders of the district court should be affirmed.
The court below correctly determined that the government's burden was met upon the showing that the investigation was conducted for a legitimate purpose; that the information sought by the I.R.S. was not within the Commissioner's possession; and that the applicable procedural requirements were complied with. After the government made this showing, the burden shifted to the party opposing enforcement to demonstrate an abuse of process. See United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-255, 13 L.Ed.2d 112 (1964); United States v. Moon, 616 F.2d 1043, 1045-1046 (8th Cir. 1980). The determination of the trial court that the respondents and intervenors failed to make a sufficient showing is supported by the record. The district court properly found that the investigation was initiated in good faith and for a proper purpose.
We furthermore determine that the district court properly dismissed the intervenor's argument that the Family Health and Improvement Society is a religious organization cloaked with tax-exempt status. There is no evidence in the record that would tend to indicate that the FHIS has such tax-exempt status. We agree with the court below that the bare assertion by affidavit, without the production of any evidence at the hearing, is simply not sufficient to sustain the appellants' assertion that the FHIS is a religious organization. We further agree that the I.R.S. summons involved here demanded documents that were necessary for determining the tax liability of Phillip and Susan Fry; it did not demand the production of books of account of a religious organization. 2
The intervenors claim that the I.R.S. summonses must be quashed on the ground that the information that led to their issuance was obtained from improperly issued summonses served upon third-party record keepers. We agree with the court below that, on the basis of this record, the appellants cannot viably assert that the A. B. Dick Company or Lloyd's Companies are third-party record keepers. Section 7609 of the Internal Revenue Code demands that notice be sent to the person "identified in the description of the books and records contained in the summons as the person relating to whose business or transactions the books or records are kept." H.R.Rep.No.94-658, 94th Cong., 2d Sess. 307, reprinted in (1976) U.S.Code Cong. & Admin.News, pp. 2897, 3204. The statute contemplates that notice will be required when the person's records of his business transactions are kept by a third party. The third-party record keeper is a person who normally engages in "making or keeping the records...
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