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United States Court of Appeals, Eighth Circuit
United States Court of Appeals, Eighth Circuit
2d 394
80-2 USTC P 9787
court on the basis that Federal Reserve notes are not legal tender and that only
dollars containing gold or a mixture of gold and silver are constitutionally
taxable; and (3) the issuance of the summonses was not in good faith. We
affirm and dissolve the stay pending appeal.
2
Finally, Taxpayer has also failed to overcome the government's prima facie
showing of good faith. Through the testimony of its agent, Bradley P. Whites,
at the show cause hearing, the IRS made a prima facie showing that (1) the
investigation was being conducted for a legitimate purpose; (2) the inquiry was
relevant to that purpose; (3) the information sought was not already in the
Commissioner's possession; and (4) the administrative steps required by the
Internal Revenue Code have been properly followed. United States v. LaSalle
National Bank, 437 U.S. 298, 313-14, 98 S.Ct. 2357, 2365-66, 57 L.Ed.2d 221
(1978).
Taxpayer asserts that the sole purpose of the investigation was criminal. In
support of this assertion, he points to the testimony of Special Agent Bradley P.
Whites that the investigation was conducted through the Criminal Investigation
Division of the IRS, and to a letter dated March 3, 1980, which he received
from the group manager of the Criminal Investigation Division notifying
Taxpayer that he was being investigated for possible criminal violations and for
a determination of his income tax liability for 1977-78. The letter also
reminded Taxpayer of his fifth amendment rights and warned him that any
information or documents that he may turn over to the IRS might be used
against him if a criminal proceeding would ever be undertaken.2 This evidence
only proves that a joint criminal and civil investigation was undertaken. It does
not prove bad faith, especially in the light of the additional testimony of Agent
Whites that the investigation was carried on in cooperation with the
Examination Division and that the IRS had not recommended a criminal
prosecution of Taxpayer to the Department of Justice. Noting the inseparability
of criminal and civil goals in an IRS investigation, the courts have been
extremely reluctant to find bad faith in the absence of a recommendation of a
criminal prosecution to the Department of Justice. See, e. g., United States v.
First National Bank of New Jersey, 616 F.2d 668, 671 (3d Cir. 1980). While
there might be some extraordinary circumstances with which a taxpayer might
prove bad faith in the absence of a recommendation to prosecute, Taxpayer has
failed to prove any such extraordinary circumstance. See United States v.
Garden State National Bank, 607 F.2d 61, 66-70 (3d Cir. 1979); United States
v. Genser, 595 F.2d 146 (3d Cir. 1979) (Genser II ).
5
We conclude that the district court properly ordered the summonses enforced.
The order of the district court enforcing the summonses is affirmed and the stay
pending appeal is dissolved.
The Honorable Fred J. Nichol, United States Senior District Judge for the
District of South Dakota