U.S. v. Income Realty and Mortg., Inc., s. 78-2036

Decision Date26 November 1979
Docket Number78-2048,Nos. 78-2036,s. 78-2036
Citation612 F.2d 1224
Parties79-2 USTC P 9662 UNITED STATES of America and Nick DiFalco, Special Agent of the Internal Revenue Service, Petitioners-Appellees, v. INCOME REALTY AND MORTGAGE, INC. and William Riley, Respondents, and Donald U. West, Applicant-Intervenor-Appellant. UNITED STATES of America and Nick DiFalco, Special Agent of the Internal Revenue Service, Petitioners-Appellees, v. ARAPAHOE BANK AND TRUST and David F. Clark, Assistant Vice President, Respondents, and Donald U. West, Intervenor-Appellant. UNITED STATES of America and Nick DiFalco, Special Agent of the Internal Revenue Service, Petitioners-Appellees, v. Jullius GOEBEL, Security Officer, First National Bank of Denver Mastercharge, Respondent, and Donald U. West, Intervenor-Appellant. UNITED STATES of America and Nick DiFalco, Special Agent of the Internal Revenue Service, Petitioners-Appellees, v. Robert G. SHIVLOCK, Vice President, First Denver Mortgage Co., Respondent, and Donald U. West, Intervenor-Appellant. to 78-2050.
CourtU.S. Court of Appeals — Tenth Circuit

John A. Dudeck, Jr., Tax Div., Dept. of Justice, Washington, D. C. (M. Carr Ferguson, Asst. Atty. Gen., Gilbert E. Andrews and Charles E. Brookhart, Tax Div., Dept. of Justice, Washington, D. C., of counsel, Joseph F. Dolan, U. S. Atty., and Donald M. Hoerl, Asst. U. S. Atty., Denver, Colo., on the brief), for petitioners-appellees.

Roger P. Barrick, Boulder, Colo., for applicant-intervenor-appellant.

Before HOLLOWAY, McWILLIAMS and DOYLE, Circuit Judges.

McWILLIAMS, Circuit Judge.

Donald U. West, the taxpayer, appeals from the order of the trial court enforcing four Internal Revenue summonses. The four separate appeals have been consolidated in this Court and all will be treated in this opinion.

In 78-2048, 78-2049 and 78-2050 an IRS summons was issued to a financial institution to produce its business records concerning taxpayer's various accounts. These three financial institutions were deemed by the IRS to be third-party recordkeepers, and accordingly notice was given the taxpayer of the service of the summons as required by 26 U.S.C. § 7609(a). In each of these proceedings the taxpayer instructed the financial institution involved not to comply with the summons, and the taxpayer was thereafter allowed to intervene in the enforcement proceedings. Upon hearing, the taxpayer sought to have enforcement denied on the ground of harassment. The trial court, after an evidentiary hearing, found that the IRS was not guilty of harassment and ordered enforcement.

In 78-2036 an IRS summons issued to Income Realty and Mortgage Company, Inc. to produce taxpayer's employment application and resumee, IRS Forms W-2, W-4 and 1099, payroll ledger cards, and all cancelled checks paid to and on behalf of the taxpayer. In this regard, it was the IRS's belief that the taxpayer was, or had been, a salesman for Income Realty and that such being the case 26 U.S.C. § 7609 did not require notice to the taxpayer of the issuance of the summons. The taxpayer, however, learned of its issuance, and instructed Income Realty not to comply with the summons. Taxpayer thereafter sought to intervene in the enforcement proceeding as it related to Income Realty. Intervention was denied, and the trial court ordered enforcement of the summons. In No. 78-2036 taxpayer appeals from that particular order.

In ordering enforcement the trial court filed a detailed Memorandum Opinion which now appears as United States v. Shivlock, 459 F.Supp. 1383 (D.Colo.1978). We agree with the trial court that each of these four IRS summonses be enforced, and we generally subscribe to the trial court's analysis of the matter as set forth in its Memorandum Opinion.

As concerns the order which directs enforcement of the summons served on the three financial institutions, the record clearly indicates that each was issued for a legitimate purpose of obtaining needed information to determine taxpayer's civil tax liability; that any chance of criminal prosecution was incidental to the present purpose of the investigation; that the information sought was not then in possession of IRS; and that the administrative steps required by the Code had been followed. Based...

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