U.S. v. Kis, Nos. 80-1710

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtBefore SWYGERT; SWYGERT
Citation658 F.2d 526
Parties81-2 USTC P 9659 UNITED STATES of America and Special Agent Glenn J. Kulas, Petitioners- Appellees, v. John W. KIS, etc., et al., Respondents, v. George A. MEYERS, Intervenor-Appellant. UNITED STATES of America and Special Agent Richard E. Zagotta, Petitioners- Appellees, v. NELSEN STEEL & WIRE COMPANY, INC., etc., et al., Respondents-Appellants. UNITED STATES of America and Special Agent Joseph A. DeLeon, Petitioners- Appellants, Cross-Appellees, v. Jack SALKIN, etc., et al., Respondents-Appellees, Cross-Appellants, UNITED STATES of America and Special Agent Donald Olsen, Petitioners- Appellants, v. FIRST STATE BANK of CHICAGO, Respondent-Appellee, and Jack Salkin, Intervenor-Appellee, Cross-Appellant. UNITED STATES of America and Special Agent Leonard H. Lupa, Petitioners- Appellees, v. Donald L. ANDERSON and Harriet H. Anderson, Respondents-Appellants.
Decision Date17 November 1981
Docket Number80-1770,80-1996,80-1869,80-2164,80-1771,Nos. 80-1710,80-1796,80-1795

Page 526

658 F.2d 526
81-2 USTC P 9659
UNITED STATES of America and Special Agent Glenn J. Kulas,
Petitioners- Appellees,
v.
John W. KIS, etc., et al., Respondents,
v.
George A. MEYERS, Intervenor-Appellant.
UNITED STATES of America and Special Agent Richard E.
Zagotta, Petitioners- Appellees,
v.
NELSEN STEEL & WIRE COMPANY, INC., etc., et al.,
Respondents-Appellants.
UNITED STATES of America and Special Agent Joseph A. DeLeon,
Petitioners- Appellants, Cross-Appellees,
v.
Jack SALKIN, etc., et al., Respondents-Appellees, Cross-Appellants,
UNITED STATES of America and Special Agent Donald Olsen,
Petitioners- Appellants,
v.
FIRST STATE BANK of CHICAGO, Respondent-Appellee,
and
Jack Salkin, Intervenor-Appellee, Cross-Appellant.
UNITED STATES of America and Special Agent Leonard H. Lupa,
Petitioners- Appellees,
v.
Donald L. ANDERSON and Harriet H. Anderson, Respondents-Appellants.
Nos. 80-1710, 80-1996, 80-2164, 80-1770, 80-1771, 80-1795,
80-1796, 80-1869.
United States Court of Appeals,
Seventh Circuit.
Argued Jan. 23, 1981.
Decided Sept. 4, 1981.
Rehearing Denied Nov. 17, 1981.

Page 529

George A. Meyers, Racine, Wis., pro se.

James C. Murray, Jr., Bonita Stone, Katten, Muchin, Zavis, Pearl & Galler, for Nelsen Steel & Wire Co.

Daniel F. Ross, Atty., U. S. Dept. of Justice, Tax Div., Washington, D. C., for United States.

Before SWYGERT, Senior Circuit Judge, KUNZIG, * Judge and BAUER, Circuit Judge.

SWYGERT, Senior Circuit Judge.

These cases present appeals from Internal Revenue Service summons enforcement proceedings in several district courts. In three of the cases, the courts ordered enforcement of the summons. In the fourth, enforcement was denied. The wide disparity among these cases both in the final resolution and in the treatment of subsidiary issues such as the taxpayer's right to discovery indicates that we need to establish rules and procedures to be followed within our circuit. 1 Because these cases raise many issues in common regarding summons enforcement procedure, we treat them together in this one opinion as we consider the individual issues. We affirm the enforcement of the summonses in United States v. Kis, but we reverse for a limited remand the summons enforcement in United States v. Nelsen Steel & Wire Co.

Page 530

We reverse the denial of enforcement in United States v. Salkin, and we hold to be moot the appeal in United States v. Anderson.
I

The facts of these cases fit a similar pattern. The Internal Revenue Service in the course of a taxpayer investigation issues a summons for production of records to a close corporation controlled by the taxpayer or to a bank with which the taxpayer or the corporation has conducted business. 2 The taxpayer, pursuant to statutory authority, 3 instructs the recipient of the summons not to comply. The United States and the special agent conducting the investigation then institute the enforcement proceedings that are contested here. 4 Despite the similarities among these cases, we must relate the facts in each case to understand the particular issues involved.

United States v. Kis

In July 1978, the Criminal Investigation Division of the Internal Revenue Service in Milwaukee opened a formal investigation to determine the correct income tax liabilities of George A. Meyers, who had filed documents designated as "protest-type returns" for the years 1975, 1976, and 1977. Special Agent Glenn J. Kulas, who was assigned to the investigation, issued summonses to officers of several banks with whom Meyers had conducted business. Meyers, pursuant to section 7609 of the Internal Revenue Code of 1954, 26 U.S.C. § 7609 (1976), directed the officers, respondents in these cases, not to comply with the summonses, and the United States and Special Agent Kulas instituted enforcement proceedings in the Eastern District of Wisconsin on March 6, 1979.

In petitions seeking enforcement, the Government asserted that Kulas was conducting an investigation for the purpose of establishing Meyers's correct income tax liabilities for the years in question and that the testimony and information sought are necessary for that purpose; that the information sought is not in the possession of the Internal Revenue Service; and that all administrative steps required by the IRS for the issuance of summonses have been taken. 5 Following an order to show cause why the summonses should not be enforced, Meyers filed a responsive pleading that denied the assertions made in the Government's petition. He also alleged, among other things, that the investigation violated his Fifth Amendment rights and that its purpose was "to gain information so as to prosecute (him) criminally." Meyers also filed five pages of interrogatories, which the Government moved to quash.

A magistrate conducted a hearing on the petition on January 11, 1980, at which the Government presented testimony that, among other things, the investigation was in its initial stages; there were no records on which to proceed without the information requested in the summons; and that no decision had yet been reached whether to prosecute Meyers criminally. The testimony also revealed that all "protest-type returns" are not prosecuted, and that a revenue agent was assisting Kulas in the investigation. Meyers was able to cross-examine all the Government witnesses at the hearing. The magistrate found that the Government had "made a sufficient showing under United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), and that the taxpayer (had) not met his burden under United States v. LaSalle National Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978)," since a valid civil purpose existed to the investigation and there was no institutional commitment by the IRS to prosecute Meyers as a "tax protester."

Page 531

The magistrate also quashed the interrogatories served by Meyers, since he had been able to ask many of the same questions at the hearing. The district court, on April 30, 1980, adopted the magistrate's findings of fact and conclusions of law and ordered the respondent bank officers to comply with the summonses. Meyers appeals from this order.

United States v. Nelsen Steel & Wire Co.

This proceeding arises from an investigation begun in June, 1976, of the tax liabilities of Nelsen Steel & Wire Co., Daniel B. Nelsen, Sr., Daniel B. Nelsen, Jr., and Clifford D. Nelsen. Although the investigation originally concerned only the years 1974 and 1975, upon advice of the IRS agent in charge, the Government expanded its scope to include 1971 to 1973. 6 On May 13, 1977, the Government issued the contested summonses, which included the years 1971-1975. When the summonses were not complied with, the Government filed these enforcement actions in the Northern District of Illinois on November 30, 1977. The proceedings then followed the same course as the Kis case. Show cause orders were issued, and the individual taxpayers and their spouses were allowed to intervene. Instead of holding an immediate evidentiary hearing as in Kis and most other enforcement actions, the district court allowed the taxpayers and respondents discovery of certain documents and the ability to depose three IRS agents involved in the investigation. These depositions were completed by August, 1979. The taxpayers then requested further discovery, which the district court denied on February 28, 1980. Following briefing by both parties, the district court ordered enforcement of the summonses on June 11, 1980. Taxpayers appeal from this order.

United States v. Anderson

This investigation of the income tax liabilities of Donald L. and Harriet H. Anderson for the years 1973 to 1975 led to a recommendation in February, 1978 of a criminal prosecution, as well as the assertion of civil fraud penalties and adjustments to their tax liabilities. IRS Regional Counsel, however, rejected the recommendation and urged further investigation. The case then was reassigned to Special Agent Leonard H. Lupa, who in June, 1978, issued summonses to the Andersons to obtain handwriting and handprinting exemplars. 7 They were considered to be necessary in order to determine who had made certain entries in the taxpayers' business records for the years in question.

The Andersons refused to comply with the summonses on July 7, 1978, and the Government petitioned for enforcement in the Southern District of Illinois on February 1, 1979. After a hearing, the district court denied enforcement because, although the summonses were issued in good faith, the Government lacked the authority to compel the production of handwriting exemplars. While the Government's appeal from that order was pending, the United States Supreme Court held, in United States v. Euge, 444 U.S. 707, 100 S.Ct. 874, 63 L.Ed.2d 141 (1980), that handwriting exemplars could be obtained under section 7602. Following a remand by this court, the district court ordered enforcement on June 2, 1980. The district court, this court, and the Supreme Court all denied stays of enforcement of the district court's order, so the Andersons appeared before Special Agent Lupa on August 21, 1980, and complied with the summonses. The Government subsequently moved to dismiss this appeal as moot. The motion was argued along with the Andersons' appeal on the merits.

United States v. Salkin

In the course of an investigation into the income tax liabilities of Jack Salkin, summonses

Page 532

for various books and records were issued to him in his capacities as president of two close corporations and also to First State Bank of Chicago, with which he had conducted business. Salkin failed to comply with his summonses and intervened to prevent compliance by the bank, and the Government began enforcement proceedings in the Northern District of Illinois in December, 1978. Salkin denied the allegations in the Government's petitions, but he failed to allege any specific facts in rebuttal. He then filed notices of depositions of the...

To continue reading

Request your trial
142 practice notes
  • Gluck v. U.S., Nos. 84-5323
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • August 28, 1985
    ...with an IRS summons during the pendency of an appeal, have uniformly held that compliance moots the appeal. See United States v. Kis, 658 F.2d 526, 532-35 (7th Cir.1981) (compliance with IRS summons moots appeal challenging its enforceability since court is unable to grant any relief and su......
  • United States v. Chen, Civil Action No. 12–10973–WGY.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 3, 2013
    ...of some wrongful conduct by the Government.”United States v. Millman, 765 F.2d 27, 29 (2d Cir.1985) (quoting United States v. Kis, 658 F.2d 526, 540 (7th Cir.1981)).1. The IRS Has Satisfied Its Prima Facie Burden The IRS has satisfied its prima facie burden in relation to its administrative......
  • United States v. Zadeh, No. 15–10195.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 21, 2016
    ...its prima facie case by the affidavit of an agent involved in the investigation averring each ... element.”); United States v. Kis, 658 F.2d 526, 536 (7th Cir.1981) (“The government ordinarily proves [the required] elements by affidavits of the agents involved in the investigation. No more ......
  • Standing Akimbo, LLC v. United States, No. 19-1049
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • April 7, 2020
    ...not unduly restricted." United States v. Balanced Fin. Mgmt., Inc. , 769 F.2d 1440, 1443 (10th Cir. 1985) (citing United States v. Kis , 658 F.2d 526, 536 (7th Cir. 1981) ). The IRS generally meets this burden with an affidavit of the agent who issued the summons. See id. (quoting United St......
  • Request a trial to view additional results
142 cases
  • Gluck v. U.S., Nos. 84-5323
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • August 28, 1985
    ...with an IRS summons during the pendency of an appeal, have uniformly held that compliance moots the appeal. See United States v. Kis, 658 F.2d 526, 532-35 (7th Cir.1981) (compliance with IRS summons moots appeal challenging its enforceability since court is unable to grant any relief and su......
  • United States v. Chen, Civil Action No. 12–10973–WGY.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 3, 2013
    ...of some wrongful conduct by the Government.”United States v. Millman, 765 F.2d 27, 29 (2d Cir.1985) (quoting United States v. Kis, 658 F.2d 526, 540 (7th Cir.1981)).1. The IRS Has Satisfied Its Prima Facie Burden The IRS has satisfied its prima facie burden in relation to its administrative......
  • United States v. Zadeh, No. 15–10195.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 21, 2016
    ...its prima facie case by the affidavit of an agent involved in the investigation averring each ... element.”); United States v. Kis, 658 F.2d 526, 536 (7th Cir.1981) (“The government ordinarily proves [the required] elements by affidavits of the agents involved in the investigation. No more ......
  • Standing Akimbo, LLC v. United States, No. 19-1049
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • April 7, 2020
    ...not unduly restricted." United States v. Balanced Fin. Mgmt., Inc. , 769 F.2d 1440, 1443 (10th Cir. 1985) (citing United States v. Kis , 658 F.2d 526, 536 (7th Cir. 1981) ). The IRS generally meets this burden with an affidavit of the agent who issued the summons. See id. (quoting United St......
  • 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