U.S. v. Rue
| Decision Date | 01 June 1987 |
| Docket Number | 86-5353,Nos. 86-5222,s. 86-5222 |
| Parties | -5130, 87-1 USTC P 9346, 23 Fed. R. Evid. Serv. 521 UNITED STATES of America, and Tim R. Almquist, Agent of Internal Revenue Service, Appellees, v. Paul D. RUE, D.D.S., Appellant. UNITED STATES of America, and Tim R. Almquist, Revenue Agent of the Internal Revenue Service, Appellees, v. Paul D. RUE, D.D.S., Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Mark Arth, St. Paul, Minn., for appellant.
Steven W. Parks, Washington, D.C., for appellees.
Before McMILLIAN, FAGG, and BOWMAN, Circuit Judges.
In 86-5222, Dr. Paul D. Rue, a sole practitioner of dentistry, appeals from the District Court's 1 order and judgment enforcing an Internal Revenue Service (IRS) summons to produce certain records and documents pertaining to Dr. Rue's dentistry practice for purposes of an IRS civil tax audit. In 86-5353, Dr. Rue appeals from the District Court's subsequent order and judgment citing him for civil contempt for failure to comply with the court's enforcement order. Throughout the District Court proceedings (as well as on appeal), Dr. Rue has resisted the IRS summons by asserting a Fifth Amendment privilege against self-incrimination. Dr. Rue argues that the act of producing the documents would involve testimonial self-incrimination by conceding the existence of the documents, his possession or control of them, and their authenticity, and that under the reasoning of United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984), the District Court could not compel him to produce the documents. Dr. Rue also challenges the District Court's contempt order and the assessment of a fine, costs, and attorney's fees against him. We affirm.
Dr. Rue is a sole practitioner of dentistry in Northfield, Minnesota. On February 26 1985, the IRS began a civil investigation into the federal tax liability of Dr. Rue and his wife for the 1982 and 1983 tax years. On April 4, 1985, Revenue Agent Tim R. Almquist requested permission to examine all individual patient cards and records maintained by Dr. Rue. Dr. Rue refused to permit Almquist to examine those records, citing the patient-physician privilege. On May 1, 1985, David Lieser, Dr. Rue's accountant, permitted Almquist (and another IRS employee, Charles McDonnell) to examine in Dr. Rue's office a blank patient card. Almquist also was permitted to examine monthly and year-end statements of patient accounts received from Professional Systems of Iowa (PSI) for the 1982 and 1983 tax years, forms sent to PSI by Dr. Rue that contained individual patient treatment information and were used to prepare statements of patient charges and financial statements for the 1982 and 1983 tax years, and appointment books maintained by Dr. Rue for the 1982 and 1983 tax years.
On July 8, 1985, Almquist, pursuant to 26 U.S.C. Sec. 7602, served on Dr. Rue an IRS summons requesting him to appear at a local IRS office on July 22 and to produce for examination four categories of documents--the three categories of documents noted above that previously had been examined by Almquist as well as all individual patient records and cards maintained by Dr. Rue that show all services performed and charges incurred for the 1982 and 1983 tax years. Dr. Rue advised Almquist that same day that he would not be able to bring the patient cards and records to the IRS office because of their large number. On July 16, 1985, Dr. Rue, through his attorney, again refused to produce any of the summoned documents or records, asserting that he was under the impression that proposed adjustments for the 1982 tax year had previously been accepted and that the IRS audit for 1982 had been closed.
On September 4, 1985, the IRS filed a petition to enforce the summons pursuant to 26 U.S.C. Secs. 7402(b) and 7604(a). Dr. Rue moved to quash the IRS summons, asserting that compliance with the summons might incriminate him under the reasoning of United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984) (). The case was assigned to a magistrate for report and recommendation. The magistrate concluded that because Dr. Rue had acknowledged, at least implicitly, the existence and his possession of the individual patient cards and records, and voluntarily had permitted agent Almquist to examine the three other categories of documents and records, he had waived his Fifth Amendment privilege against self-incrimination.
The District Court, in a memorandum and order dated March 21, 1986, affirmed the magistrate's recommendation to enforce the IRS summons. The District Court, using reasoning different from that used by the magistrate, applied the analysis set forth in Fisher v. United States, 425 U.S. 391, 410-413, 96 S.Ct. 1569, 1580-1582, 48 L.Ed.2d 39 (1976), and United States v. Doe, 465 U.S. at 612-614, 104 S.Ct. at 1242-1243, and held that the act of producing the documents would not involve testimonial self-incrimination since the existence of the documents, their possession by Dr. Rue, and their authenticity were already established and within the knowledge of the IRS. The District Court entered an order enforcing the IRS summons and ordering Dr. Rue to comply therewith. Judgment was entered on May 21, 1986. Dr. Rue timely filed notice of appeal.
Dr. Rue unsuccessfully sought from the District Court and this Court a stay of the enforcement order pending appeal. After Dr. Rue failed to comply with the District Court's enforcement order, the District Court issued an order to show cause why Dr. Rue should not be held in contempt. At the hearing Dr. Rue stipulated that he was not in compliance with the court's enforcement order, but offered no evidence that he was then presently unable to comply with it. The District Court therefore cited Dr. Rue for civil contempt. The court also imposed a daily fine of $100, conditioned on Dr. Rue's continued noncompliance with the court's enforcement order, and ordered that Dr. Rue reimburse the government $519.07 for expenses and attorney's fees incurred in the contempt proceeding. Dr. Rue timely filed notice of appeal from the contempt order. Thereafter, on October 6, this Court granted Dr. Rue's motion for stay of the District Court's judgment of contempt pending appeal and ordered the two appeals consolidated for submission to the Court.
In 86-5222 Dr. Rue contends that enforcement of the IRS summons (and compelling his compliance therewith) would violate his Fifth Amendment privilege against self-incrimination, in that the act of producing the summoned documents would acknowledge the existence of the documents, his possession of them, and their authenticity. 2 Because Dr. Rue does not challenge the District Court's finding that the Government established a prima facie case for enforcement of the IRS summons, 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. Lask, 703 F.2d 293, 297 (8th Cir.), cert. denied, 464 U.S. 829, 104 S.Ct. 104, 78 L.Ed.2d 107 (1983), the only issue before us is the applicability of the doctrine to the facts and circumstances of this case. 3
In United States v. Doe, the Supreme Court addressed the issue whether, and to what extent, the Fifth Amendment privilege against compelled self-incrimination applies to the business records of a sole proprietorship. 465 U.S. at 606, 104 S.Ct. at 1239. In Doe, a grand jury served five subpoenas on the owner of several sole proprietorships demanding the production of various business records of each of his companies. The owner challenged the subpoenas by asserting a Fifth Amendment privilege against self-incrimination.
In holding that the contents of a sole proprietor's business and tax records are not privileged, id. at 612, 104 S.Ct. at 1242, the Court, relying on its decision in Fisher, noted that "the Fifth Amendment protects the person asserting the privilege only from compelled self-incrimination" and that "[w]here the preparation of business records is voluntary, no compulsion is present." Id. at 610, 104 S.Ct. at 1241. The sole proprietor in Doe did not contend that he prepared the documents involuntarily or that the subpoenas would force him to restate, repeat, or affirm the truth of their contents. Thus, the contents of those records were not privileged. Likewise, Dr. Rue does not contend that he prepared the documents in question involuntarily or that the summons would force him to restate, repeat, or affirm the truth of their contents. Therefore, to the extent that Dr. Rue asserts a Fifth Amendment privilege in the contents of the documents and records demanded in the IRS summons, we reject his claim.
In both Doe and Fisher, the Supreme Court observed that even though the contents of a particular document are not privileged, the act of producing the document may be. Doe, 465 U.S. at 612, 104 S.Ct. at 1242; Fisher, 425 U.S. at 410, 96 S.Ct. at 1580. In terms of this case, the question is whether enforcement of the IRS summons would compel Dr. Rue to perform an act having testimonial aspects and an incriminating effect. Doe, 465 U.S. at 612, 104 S.Ct. at 1242. The Court explained that
[c]ompliance with the [IRS summons] tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer. It also would indicate the taxpayer's belief that the papers are those described in the subpoena. The elements of compulsion are clearly present, but the more difficult issues are whether the tacit averments of the taxpayer are both "testimonial" and "incriminating" for purposes of applying the Fifth Amendment. These questions perhaps do not lend themselves to categorical answers; their resolution may instead depend on the facts and circumstances of particular cases....
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