United States v. Fox

• Decision Date: 04 November 1982
• Docket Number: No. M-18-304.,M-18-304.
• Citation: 549 F. Supp. 1362
• Parties: UNITED STATES of America and Mary Jane Sciascia, Revenue Agent, Petitioners, v. Dr. Martin FOX, Respondent.
• Court: U.S. District Court — Southern District of New York

549 F. Supp. 1362

UNITED STATES of America and Mary Jane Sciascia, Revenue Agent, Petitioners, v. Dr. Martin FOX, Respondent.

No. M-18-304.

United States District Court, S.D. New York.

November 4, 1982.

John S. Martin, Jr., U.S. Atty., S.D.N.Y., New York City, for petitioners; Stephen A. Dvorkin, New York City, of counsel.

Caplin & Drysdale, Washington, D.C., Stillman, Friedman & Shaw, New York City, for respondent; Richard E. Timbie, Scott D. Michel, Washington, D.C., Denise G. Shekerjian, New York City, of counsel.

SOFAER, District Judge:

The government has petitioned the Court to enforce an Internal Revenue Service (IRS) summons served on the respondent, Dr. Martin Fox. 26 U.S.C. §§ 7402(b), 7604(a). The summons called upon Fox to appear before an IRS Revenue Agent and produce the following:

1. All books and records, invoices, statements and other documents pertaining to the operation of the sole proprietorship of Dr. Martin Fox for the period January 1, 1979 to December 31, 1979.

2. All savings account passbooks, brokerage account statements, 1099s, checking account statements, deposit slips, and cancelled checks for the taxpayers Martin and Tamar Fox.

3. All evidence verifying contributions claimed as a deduction on Schedule A of the 1979 tax return of the taxpayers Martin and Tamar Fox.

Fox appeared before a Revenue Agent on February 11, 1982, the date specified in the summons. He failed, however, to produce any of the documents called for by the summons, and also refused to answer any questions asked by the IRS Agent. Fox asserts that his refusal to cooperate with the IRS is justified by his fifth amendment privilege against self-incrimination.

The Second Circuit has recognized that "even a routine tax investigation is a situation in which answers to questions by an IRS Agent might tend to incriminate, and thus Fifth Amendment rights apply to such answers." United States v. O'Henry's Filmworks, Inc., 598 F.2d 313, 317 (2d Cir. 1979). See also Kastigar v. United States, 406 U.S. 441, 444-45, 92 S.Ct. 1653, 1656, 32 L.Ed.2d 212 (1972). A blanket assertion of the privilege against self-incrimination, however, is generally an unacceptable method of invoking the privilege before a District Court. In re Grand Jury Empanelled March 19, 1980, 680 F.2d 327, 336-37 (3rd Cir.1982); United States v. Davis, 636 F.2d 1028, 1044 n. 20 (5th Cir.1981); United States v. Hodgson, 492 F.2d 1175, 1177 (10th Cir.1974). Rather, it is incumbent on the witness to make a detailed showing as to why the production of particular documents would constitute compelled, self-incriminatory testimony under the fifth amendment. "The witness is not exonerated from answering merely because he declares that in so doing he would incriminate himself — his say-so does not of itself establish that hazard of incrimination. It is for the court to say whether his silence is justified...." Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). Counsel for Dr. Fox has offered to make the in camera showing required. See In re Katz, 623 F.2d 122, 126-27 (2d Cir.1980) (remanding for determination of privilege through in camera inspection of subpoenaed documents). Before proceeding with an examination concerning self-incrimination, however, the documents sought should first be determined at least potentially protected by the privilege, in that their compelled production would somehow involve testimonial communication.

The taxpayer advances two theories to support his assertion that production of the documents called for by the summons would implicate the privilege. First, he maintains that under Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886) the fifth amendment directly protects against the compelled production of an individual's business records. Second, he urges that under Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976) the act of producing the documents summoned by the IRS would constitute incriminating testimony as to the authenticity, existence, and location of the documents. Neither of these grounds, however, is even potentially available if the summoned records are "required" by law. The required-records doctrine is therefore an issue that the parties to this proceeding must address.

I. The Required Records Doctrine

Business records required to be kept by state or federal law are unprotected by the fifth amendment privilege. Shapiro v. United States, 335 U.S. 1, 33, 68 S.Ct. 1375, 1392, 92 L.Ed. 1787 (1948). Such documents are treated in the same manner as corporate or partnership records. The privilege against self-incrimination may not be asserted as to their contents or as to the testimonial aspects of producing them. See In re Grand Jury Empanelled March 19, 1980, 680 F.2d 327, 336 n. 15 (3rd Cir.1982); In re Grand Jury, 601 F.2d 162, 170-71 (5th Cir.1979). The extent to which taxpayer records required by law should be considered "required records" under Shapiro is uncertain. Compare In re Daniels, 140 F.Supp. 322, 325 n. 2 (S.D.N.Y.1956) (taxpayer records are not "required records") with Beard v. United States, 222 F.2d 84, 93-94 (4th Cir.1955) (taxpayer records are "required records"), cert. denied, 350 U.S. 846, 76 S.Ct. 80, 100 L.Ed. 754 (1955); Falsone v. United States, 205 F.2d 734, 739 (5th Cir.) (same), cert. denied, 346 U.S. 864, 74 S.Ct. 103, 98 L.Ed. 375 (1953). See Mertens Law of Fed. Income Tax § 55A.21 at 126-28. See also Marchetti v. United States, 390 U.S. 39, 55-57, 88 S.Ct. 697, 706-707, 19 L.Ed.2d 889 (1968). The government, assuming it wishes to raise this issue, cf. Stuart v. United States, 416 F.2d 459, 462 n. 2 (5th Cir.1969) (government has avoided raising "required-records" issue in cases involving taxpayers' records), should identify all arguably relevant statutes, regulations, and authorities. See, e.g., Mertens, supra, § 55.28. It should apply the relevant authorities separately to each category of records sought. Thus, for example, a distinction may exist between records necessary to explain specific deductions claimed on a return, and those that might be useful in a general review of the taxpayer's return.

II. Protection of Testimonial Records

Boyd v. United States, supra, held that the fifth amendment protects citizens against the compelled production of private business records. 116 U.S. at 634-35, 6 S.Ct. at 534. Boyd's interpretation of the fifth amendment apparently assumed that by producing documents an individual testifies to their contents. In Fisher v. United States, supra, however, the Court emphasized that "the Fifth Amendment does not independently proscribe the compelled production of every sort of incriminating evidence but applies only when the accused is compelled to make a testimonial communication that is incriminating." 425 U.S. at 408, 96 S.Ct. at 1579. Thus, so long as an individual is not compelled by the government to create a particular document, the compelled production of the document, even if authored by the individual, does not involve compelled testimony as to the contents of the document. 425 U.S. at 410 & n. 11, 96 S.Ct. at 1580 & n. 11. Instead of directly protecting the contents of documents, Fisher concluded that the fifth amendment protects against the compelled production of documents only insofar as the act of production may amount to incriminating testimony as to the authenticity, existence, or possession of the documents. 425 U.S. at 410-13, 96 S.Ct. at 1580-82.

Fisher, however, involved papers prepared by a taxpayer's accountant, not by the taxpayer himself. The Fisher Court ended its opinion by specifically reserving the question whether Boyd continues to afford direct protection against the production of a taxpayer's own records. 425 U.S. at 414, 96 S.Ct. at 1582. At least three Circuit Courts have addressed this question after Fisher. The Third and Fifth Circuits have concluded that Boyd continues directly to protect an individual's tax and business records. In re Grand Jury Impaneled March 19, 1980, 680 F.2d 327, 333-34 (3rd Cir.1982); United States v. Davis, 636 F.2d 1028, 1042-43 (5th Cir.1981). The First Circuit has held that such records are protected only insofar as the act of producing them constitutes incriminating testimony. In re Grand Jury Proceedings, 626 F.2d 1051, 1054-55 (1st Cir.1980).

The Second Circuit has not directly ruled on this question. In United States v. Beattie, 541 F.2d 329 (2d Cir.1976) the Court concluded that after Fisher a taxpayer could not assert his fifth amendment privilege with respect to letters written to him by his accountant. Relying on Fisher's production-as-testimony rationale, however, the Court held that a taxpayer could assert the privilege as to letters he wrote to his accountant, because by producing those letters "the taxpayer would be authenticating them as fully as if he were producing his retained copies." 541 F.2d at 331. In re Grand Jury Duces Tecum, 657 F.2d 5 (2d Cir.1981) held that the fifth amendment protects against the compelled production of pocket diaries and desk calendars if examination reveals them to be personal documents as opposed to corporate records. The Government had asserted that under Fisher production of documents never amounts to testimony as to contents and that therefore the diaries and calendars could not be protected by the fifth amendment. In a footnote, the Court disposed of this argument by citing Beattie without clarifying the extent to which the Court was still relying on the authentication rationale of the earlier opinion. 657 F.2d at 8 n. 1.

On remand, this Court concluded that the desk calendars were corporate documents unprotected by the fifth amendment. In re Grand Jury Subpoena Duces Tecum, 522 F.Supp. 977, 983 (S.D.N.Y.1981). The desk calendars were of a variety not "ordinarily used to record thoughts, impressions, or descriptions of events," and mandating their production was...