United States v. Braswell, 77-28-CIV-8.

• Decision Date: 20 July 1977
• Docket Number: No. 77-28-CIV-8.,77-28-CIV-8.
• Citation: 436 F. Supp. 669
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: UNITED STATES of America and Special Agent Reid L. Hill, Jr., Petitioners, v. Isaac K. BRASWELL and Marcus A. Garriss, Respondents.

436 F. Supp. 669

UNITED STATES of America and Special Agent Reid L. Hill, Jr., Petitioners, v. Isaac K. BRASWELL and Marcus A. Garriss, Respondents.

No. 77-28-CIV-8.

United States District Court, E. D. North Carolina, Wilson Division.

July 20, 1977.

Samuel T. Currin, U. S. Atty., Raleigh, N. C., for petitioners.

Cary Whitaker, Roanoke Rapids, N. C., for respondents.

MEMORANDUM OF DECISION

DUPREE, District Judge.

This matter is before the court on a petition filed May 18, 1977, pursuant to 26 U.S.C. §§ 7402(b) and 7604(a), seeking the enforcement of an Internal Revenue Service summons. At the behest of Special Agent Reid L. Hill, Jr., the summons in question was issued on October 13, 1976, and promptly served on Isaac K. Braswell, a preparer of federal income tax returns in Roanoke Rapids, North Carolina. Hill was investigating the income tax liability of Dr. Marcus A. Garriss for the four tax years, 1971-1974; and it happened that Braswell was known to possess copies of Dr. Garriss' federal income tax returns for the earlier years, 1961-1969.¹ The summons — which Braswell has chosen to resist — was returnable on October 27, 1976, and required him essentially to produce the aforementioned retained copies of Garriss' tax returns, including all attached schedules.

To justify his continued non-compliance, Braswell avers that (1) he was merely the custodian of the subject records, which in fact belonged to Garriss; (2) the summons was part of a "fishing expedition," whose sole purpose was to gain evidence to aid the criminal prosecution of Garriss for income tax evasion; (3) the request of the IRS was vexatious since it already has or should have the information solicited; and (4) the subject records have since been surrendered to Dr. Garriss due to the IRS's six-month delay in bringing this enforcement action.

Also, since the petition was filed, Dr. Garriss himself has moved to intervene. It appearing that the intervenor substantially repeats the defenses of Braswell — with the important difference that he has invoked the Fifth Amendment privilege against self-incrimination, the motion to intervene is allowed.

A show-cause hearing was held on June 21, 1977. For the reasons stated below, the court has concluded to enforce the original documentary summons against both respondents.

I.

The show-cause hearing demonstrated that the IRS has satisfactorily complied with the established criteria for issuing a Section 7602 summons. 26 U.S.C. § 7602. See United States v. Powell, 379 U.S. 48, 52-58, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964).

The uncontradicted testimony of Special Agent Hill was that the earlier returns were germane to his investigation because Garriss had obligated himself under the installment method of accounting to pay taxes in the years under investigation based on a transaction first reported in the earlier years. See 26 U.S.C. § 453. Hill stated further that Braswell had voluntarily allowed him to examine the earlier returns, whereupon he noticed an apparent discrepancy between the basis listed for the property in the earlier and later returns. Also, he noted among the returns the presence of figures which pertained to the actual cost of certain land (as well as of subsequent improvements thereon) which had been sold during the years under investigation. The summons, with exemplary particularity, indicates precisely the material the IRS seeks, and it is clearly relevant to the lawfully authorized duty of the IRS to monitor Dr. Garriss' civil liability under our self-reporting tax system. 26 U.S.C. §§ 6001, 7602 and 7801(a); cf. Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 208-209, 66 S.Ct. 494, 90 L.Ed. 614 (1946).

It is immaterial that civil liability for deficiencies in some of the years nominally "under investigation" (not to mention each of the earlier years) would appear time-barred by the general three-year statute of limitations, since proof of fraud opens up an otherwise closed civil file. And under our basic system of honest self-reporting fraud is necessarily an omnipresent possibility, with the result that probable cause to suspect it need not be proven to justify a subpoena which deals with documents relevant to "closed" years.² United States v. Powell, supra, 379 U.S. at 52-53, 85 S.Ct. 248.

Nor is the legitimate civil purpose which underlies this summons negated by the possibility that the investigation will eventuate in criminal prosecution for fraud. So long as fraud constitutes a basis for imposing civil liability as to "closed" tax years, an IRS summons will enjoy — at least prior to any actual recommendation by the service of criminal prosecution — the presumption of a valid non-criminal purpose. Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1970); cf. Reisman v. Caplin, 375 U.S. 440, 449, 84 S.Ct. 508, 11 L.Ed.2d 459 (1963).

Nor has the IRS vexatiously sought information which it already has. See 26 U.S.C. § 7605(b). The undisputed fact is that the IRS has only enough space to store tax returns for seven years, after which period they are routinely destroyed.

II.

The case of Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886), is the cornerstone of Dr. Garriss' Fifth Amendment claim of privilege. In Boyd the court reasoned that the Fourth and Fifth Amendments, being in pari materia, are to be read together — and concluded that the "seizure" and the "subpoena" of a man's private papers³ to be used in evidence against him are equally impermissible since neither is substantially different from compelling him to be a "witness against himself." U.S.Const. Amd. V. Thereafter, although a Fourth Amendment-based rule was used to exclude evidence acquired as a result of a procedurally-invalid search and seizure, see Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652 (1914), and Harris v. United States, 331 U.S. 145, 154, 67 S.Ct. 1098, 91 L.Ed. 1399 (1947), the Fifth Amendment was often invoked on the authority of Boyd to exclude seized personal items based on their characterization as being of merely "evidential" value. Gouled v. United States, 255 U.S. 298, 306, 41 S.Ct. 261, 65 L.Ed. 647 (1921); Agnello v. United States, 269 U.S. 20, 33-34, 46 S.Ct. 4, 70 L.Ed. 145 (1925). See Footnote 3, supra.

Thus the major theme of Boyd is recognized to be the protection of the individual's right to have an inviolable "private enclave," see, e. g., Bellis v. United States, 417 U.S. 85, 91, 94 S.Ct. 2179, 40 L.Ed.2d. 678 (1974), and Couch v. United States, 409 U.S. 322, 335, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973), where personalty of all kinds might be safely stowed since it could never be tapped as a source of "mere evidence" against the proprietor — not even if the evidence (as in Boyd) were purely physical, containing no testimonial admissions. Suffice it to say, this "mere evidence" rule — and along with it much of the logical support for the Boyd rule against compelling the production of private papers — has been wholly abrogated by the Supreme Court, so that now even items which contain incriminating testimonial revelations, authored by their owners and possessors, are subject to a properly authorized search and seizure. Andresen v. Maryland, 427 U.S. 463, 96 S.Ct. 2737, 49 L.Ed.2d 627 (1976). See also Warden v. Hayden, 387 U.S. 294, 87 S.Ct. 1642, 18 L.Ed.2d 782 (1967).

Furthermore, in Fisher v. United States, 425 U.S. 391, 400-401, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), the court disclaimed any implication in Boyd and subsequent cases that the Fifth Amendment enjoys a special role as "a general protector of privacy." That job belongs to the Fourth Amendment, which, as the court noted, involves a reasonableness doctrine, so that if a state's reason to believe incriminating evidence exists becomes sufficiently great, an invasion of privacy will be permitted. Id. at 400, 96 S.Ct. 1569. Thus there can be no general (or blanket) Fifth Amendment rule against compelling the production of private papers. See The Supreme Court, 1975 Term, 90 Harv.L.Rev. 1, 76-78 (1976). Rather, as the Fisher case establishes, the specific, limited concern of the Fifth Amendment is with the personal compulsion of evidence which is both testimonial and incriminating. With these three criteria in mind, we turn our attention to the facts of the case.

A. Personal Compulsion.

It is stated in Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548 (1972), that the privilege against self-incrimination by definition attaches to the individual — and not to incriminating information in the hands of third parties: "a party is privileged from producing the evidence but not from its production." Id. at 328, 93 S.Ct. at 616 (quoting from Johnson v. United States, 228 U.S. 457, 458, 33 S.Ct. 572, 57 L.Ed. 919 (1913)). The original summons here, directed as it was to Mr. Braswell, would have involved no enforced communication of any kind from Dr. Garriss; consequently, it is not felt that Braswell's subsequent surrender of the papers to Garriss should be allowed to effect its mutually-intended and mala fide purpose, which was to enable Garriss to enlarge his Fifth Amendment privilege by reaching out and "appropriating property that would tell his story." Matter of Harris, 221 U.S. 274, 279-280, 31 S.Ct. 557, 558, 55 L.Ed. 732 (1911) (Holmes, J.). "The rights and obligations of the parties became fixed when the summons was served . . .." Couch v. United States, supra, 409 U.S. at 329, n. 9, 93 S.Ct. at 616.

Garriss contends further, however, that Braswell was merely the custodian of the papers in an attempt to characterize this as one of those exceptional instances, referred to in Couch, "where constructive possession is so clear or the relinquishment of possession is so temporary and insignificant as to leave the personal compulsions upon the accused substantially intact." Id. at 333, 93 S.Ct. at 618. See Fisher v. United States, supra, 425 U.S....