U.S. v. Saunders, Nos. 91-35012

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Before TANG, O'SCANNLAIN and RYMER; TANG
• Citation: 951 F.2d 1065
• Parties: -331, 92-1 USTC P 50,055 UNITED STATES of America; Charles L. Gresham, Revenue Officer of the Internal Revenue Service, Petitioners-Appellees, v. David O. SAUNDERS and Sharon Saunders, Respondents-Appellants.
• Docket Number: Nos. 91-35012,91-35170
• Decision Date: 04 November 1991

Page 1065

951 F.2d 1065 69 A.F.T.R.2d 92-331, 92-1 USTC P 50,055 UNITED STATES of America; Charles L. Gresham, Revenue
Officer of the Internal Revenue Service,
Petitioners-Appellees,
v.
David O. SAUNDERS and Sharon Saunders, Respondents-Appellants. Nos. 91-35012, 91-35170. United States Court of Appeals,
Ninth Circuit. Submitted Nov. 4, 1991. ^*
Decided Dec. 13, 1991.

Page 1066

David O. Saunders III and Sharon Saunders, in pro per.

Gary R. Allen, Tax Div., Dept. of Justice, Washington, D.C., for petitioners-appellees.

Appeal from the United States District Court for the District of Oregon.

Before TANG, O'SCANNLAIN and RYMER, Circuit Judges.

TANG, Circuit Judge:

In March 1990, the Internal Revenue Service served summonses on David and Sharon Saunders to appear and produce records for tax years 1981 through 1988. 26 U.S.C. § 7602. Although the Saunders appeared as directed, they refused to turn over the documents and records requested in the summonses. The IRS then filed an action in federal district court to enforce the summonses. 26 U.S.C. § 7604(b). In December 1990, the district court denied the Saunders' motion to dismiss and issued an order enforcing the summonses. The Saunders appeal. We affirm.

1. Standard of Review

The district court's decision to enforce the IRS summonses will be reversed only for clear error. See United States v. Abrahams, 905 F.2d 1276, 1280 (9th Cir.1990). To the extent the district court predicated its judgment on issues of statutory construction, we review de novo. See Saratoga Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., 879 F.2d 689, 691 (9th Cir.1989). We also review de novo the question of the district court's jurisdiction. Owner-Operators Indep. Drivers Ass'n v. Skinner, 931 F.2d 582, 584 (9th Cir.1991).

2. OMB Number

The Saunders argue first that the summonses were invalid because they lacked an Office of Management and Budget ("OMB") control number. Consequently, the Saunders continue, section 3512 of the Paperwork Reduction Act, 44 U.S.C. §§ 3501 to 3520, relieves them of the obligation to respond to the summonses. Section 3512 reads:

Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to maintain or provide information to any agency if the information collection request involved was made after December 31, 1981, and does not display a current control number assigned by the Director, or fails to state that such request is not subject to this chapter.

The district court appropriately rejected the Saunders' argument. The Paperwork Reduction Act specifically excepts from section 3512's requirements "the collection of information ... during the conduct of ... an administrative action or investigation involving an agency against

Page 1067

specific individuals or entities." 44 U.S.C. § 3518(c)(1)(B); see also 5 C.F.R. § 1320.3(c). An IRS investigation of a taxpayer's failure to file her or his income tax return constitutes "an agency action against specific individuals." Consequently, the summonses were valid even absent either an OMB number or a statement that the document request is not subject to the requirements of section 3512. See Lonsdale v. United States, 919 F.2d 1440, 1444-45 (10th Cir.1990) ("We agree with those courts that have relied upon [44 U.S.C.] section 3518(c)(1)(B)(ii) to hold that the Paperwork Reduction Act is inapplicable to 'information collection request' forms issued during an investigation against an individual to determine his or her tax liability."); Neumann v. United States, No. M89-50028, 1990 WL 209631, at * 1, 1990 U.S.Dist. LEXIS 8312, at * 2-3 (W.D.Mich. June 20, 1990); United States v. National Commodity & Barter Ass'n, 90-1 U.S. Tax Cas. (CCH) p 50,284, at 83,998, 1990 WL 85905 (D.Colo.1990) ("[T]he statute excepts IRS summonses from the provision[s] of 3512."); Van Sant v. United States, 90-1 U.S. Tax Cas. (CCH) p 50,179, at 83,651-52, 1990 WL 21279 (D.Colo.1990) (same), aff'd, 1990 WL 265081 (10th Cir. Aug. 2, 1990); United States v. Particle Data, Inc., 634 F.Supp. 272, 275 (N.D.Ill.1986) ("IRS issued the Summonses pursuant to its investigation of Berg, a 'specific individual[ ].' ").

3. IRS Authority to Issue and Enforce Summonses

The Saunders also contend that the IRS lacks the authority to issue and enforce its request for records and documents pertaining to the tax years in issue.

We find no merit to this argument. Section 7602(a) of 26 U.S.C. expressly empowers the IRS to issue a summons for "books, papers, records, or other data" relevant to "determining the liability of any person for any internal revenue tax." Our cases have repeatedly recognized this authority. See, e.g., Harris v. United States, 758 F.2d 456, 457 (9th Cir.1985).

When taxpayers fail to comply with a summons, the plain language of 26 U.S.C. § 7604(b) authorizes the IRS to seek enforcement of the summons in...