U.S. v. Kaiser, 04-1349.

• Decision Date: 10 February 2005
• Docket Number: No. 04-1349.,04-1349.
• Citation: 397 F.3d 641
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Philip A. KAISER; Douglas M. Mueller, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

397 F.3d 641

UNITED STATES of America, Plaintiff-Appellee, v. Philip A. KAISER; Douglas M. Mueller, Defendants-Appellants.

No. 04-1349.

United States Court of Appeals, Eighth Circuit.

Submitted: January 10, 2005.

Filed: February 10, 2005.

Michael A. Gross, argued, St. Louis, MO (David V. Capes, St. Louis, MO, on the brief), for Defendants-Appellants.

Gretchen M. Wolfinger, argued, Dept. of Justice, Washington, DC (Frank P. Cihlar, Dept. of Justice, Washington, DC, on the brief), for Plaintiff-Appellee.

Before LOKEN, Chief Judge, MORRIS SHEPPARD ARNOLD and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

Philip Kaiser and Douglas Mueller appeal from an order enforcing Internal Revenue Service (IRS) summonses seeking tax shelter information. They argue that the district court¹ erred in finding that the IRS had a legitimate purpose for its investigation and that the information sought was relevant to such a purpose. We affirm.

After investigating a charitable family limited partnership which two clients of Kaiser and Mueller had used to obtain significant deductions for charitable contributions, IRS Agent Cheryl Kiger concluded that the partnership was an abusive tax shelter. She sought approval from the IRS Lead Development Center for an investigation into whether Kaiser and Mueller were promoting or distributing abusive tax shelters, in violation of I.R.C. § 6700, and whether injunctive relief should be pursued under I.R.C. § 7408. The Center gave its approval on July 23, 2002 and the case was assigned to Agent Kiger, who first recorded work on the matter in late December. In the interim Kiger had completed her investigation of the two clients and issued a report proposing substantial adjustments to their tax liability. In January Mueller informed Agent Kiger that his clients would protest her report. Both Kaiser and Mueller had previously succeeded in obtaining reductions of adjustments proposed by Agent Kiger.

In February 2003 Agent Kiger sent letters notifying Kaiser and Mueller of her investigation. Kaiser requested a meeting with her, and Kiger and three other IRS officials met with appellants about the investigation on March 6, 2003. At the end of the meeting, Agent Kiger issued eight summonses to Kaiser and Mueller. The summonses requested information concerning a number of tax shelters described on a website they maintained, a site she had discovered during her earlier investigation of their clients. The summonses also sought information regarding the purchasers of these tax shelters.

Kaiser and Mueller appeared before Agent Kiger on March 17, 2003. Mueller produced a number of documents but refused to provide the IRS with any materials disclosing client identities, offering redacted versions in their place. IRS counsel thereafter referred the summonses to the Department of Justice, which petitioned the district court for their enforcement.

Applying the standard articulated in United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), the district court held that the government had established a prima facie case for enforcement of the summonses. The court concluded that they had been issued for the legitimate purpose of determining whether Kaiser and Mueller had unlawfully promoted abusive tax shelters; that information regarding...