good morning your honor my name is kathleen packenham and i'm here today to speak on behalf of family crow and escrow collateral i'll refer to them today as the taxpayers in this matter i have fifteen minutes for argument this morning and with the court's permission i'll reserve three minutes and i'll keep my eye on the clock in will try to help thank you i appreciate all the help this is an appeal from decision of the united states district court for the district of idaho in which the court denied our motion for to allow for an evidentiary hearing the evidence you're hearing is simply for the purpose of determining whether or not we should be entitled to take some discovery into the irises purpose for issuing the summons at issue and what's the standard for getting that evidence free hearing your honor the standard is well established cases go back nearly forty years at this point the burden on the taxpayer in that situation is to come forward with specific facts an evidence that leads to a plausible inference of bad faith by the government or an improper purpose in issuing the summons the court here errored because it failed to apply that standard which is most recently  set forth in united states versus clarke and because we did come forward with those specific facts and evidence that would lead to a plausible inference of improper purpose yes your honor what's in that gets lost in the briefing here is that what the dispute is actually over as i understand it is about a summons to assert party that's correct for a specific information yes so why is it that we are not focusing on whether that information that's being requested in that summons and is goes to the question of investigating mr crowe as opposed to somebody else and there's all this emphasis on what happened in the discussions between mr croes lawyers and the i r s lawyers before this summons was issued about whether they said that of what relevance is that i mean the question is whether this summit is asking was asking for information that would go to mr crow's potential liabilities and i would but appreciate that discussion because it's not in either brief really firstly your honor thank you for the opportunity to address that question the issue here is whether or not the summons was issued for a proper purpose and the fundamentally is was the summons issued in order to investigate mr crow or was it issued to investigate rd parties and if it was not issued if there really was no audit of mr crow or dismiss are you saying if that w issued was to investigate rd parties was to identify who the counter parties were that is bad faith is stated quite clearly in the supreme court's decision to fany fine arts versus united states for example one of the things in banking records for escrow collateral corporation including but not limited to a check up is where true as for confirmation and a positive id that certainly sounds in the investigation of crow collateral so i think there's two points there one is that the government has to come forward with a primus asha case of to whether or not the sum should be inforced we agree that they did so here because the agent's declaration goes to all four prongs of the pal decision but two of the separate prongs in pow are relevance and another one is whether or not there is proper purpose so it is conflating relevance and proper purpose because what the court's question really is saying is if there were a legitimate honor so that we came forward with kind of five categories of specific facts and to be clear the standard is that we come forward with specific facts not just a bald assertion hey you're not audit ing us we did come forward with specific facts and the question really is what inference can be drawn from those facts could one inference that would be plausible that can be drawn from those facts is that there really is not an examination of mr crow so to your question your honor what is it that they did or that they didn't do that would lead to that what we think is a plausible inference to be drawn from those facts st we cite five specific conversations with an internal revenue agent in which the only thing that he focused on in any of those conversations that was not primarily mr croes own whether he brought his own income properly for taxes and was whether he was promoting a tax scheme which therefore required knowing what he was saying to other people and what those other people and all those other people were in order to talk to them and see what he advised them so this is fact right and an inference that could be drawn from the intense focus on counterpart for that's why i went to the summons because it may be it seems pretty obvious the reason they weren't asking mr crow for anything else was because they were going to get it from the horse's mouth basically from their control going to get the documents or they want to get the documents that specifically answer those questions when the from somebody that they regard as reliable as a mr prout so why do they need to get it from mr crow well that's an inference that you're drawing from that so for example in a situation like this one where the government is conducting if they were conducting a true promoter audit they start with the alleged promoter because they are the person that is the person or entity that has access doing is going to the source well the summons is going to pioneer title which is a rd party which uses a paper to get some pieces of paper from from the rd party but it's not just the focus the entire focus on the list of names it's other factors as well it's the fact that they the government has never asked for essential information to conduct the audit it says it's conducting that would only be in the hands of mr crow for example only lay out a number of examples in the brief but for example you have to determine mr croes personal income the government never asked him for that did you or your telling the i r s in order to conduct this in good faith you need to do your investigation in a certain order that we would prefer that you do i wish i could say that your honor but that's not the case we the taxpayer does not have the authority to compel the government to what i'm saying is when you look at the cumulative set of facts an inference that can be drawn from that cumulative set of facts is that mr the government is not really conducting an examination of mr crowe to be fair could a alternative inference also be drawn from those facts to say that well yes they're conducting an examination maybe not in the most sensible way maybe not in the way that you taxpayer would say that they should be conducting that examination but you could say that there might be an examination going on here you know if i were mr crow and the charge that was being investigated brought with the charge was that i'm promoting false tax benefits and promoting an abusive also understand exactly where they are as wants to talk to those people because the charges are the suspicion is that he's promoting abusive tax treatment in cooperation with those people well your honor again that goes to the question of whether or not the names of those people would be relevant if there were an examination of mr crow release but those just things up because if if they're not only relevant but central to the notion that they were seeking central information to mr croes checks liability but really didn't care about mr crow it becomes more and more implausible well so the question also is what's the i just want to also make sure that i've got on the table really the categories of information that the that we say lead to the inference the other thing is that mr crow repeatedly offered additional information to the government offered to meet with the government offered to get technical of information to mr crow when the agent said all i want is the list of names the rd is the fact that the government has not requested fundamental information that would be absolutely critical for it to conduct inquiry they could except that this is been going on since two thousand and fifteen and since i'd like to know what but more specifically what documents you're talking about they're not covered by th would be sent home something that they don't want so for example for purposes of determining whether or not there's liability under section six thousand seven hundred dollars which is one of the provisions you would need to understand the transaction itself you would need to understand the fees that the material advisor received and you would need to understand whether or not this was a listed transaction if you get just person and banking records for escrow collateral including  not limited to check copies wire transfer confirmation deposit and i'm sorry could inference and find something out about that no because what pioneer title is the escrow agent for the loan not with respect to the installment sale and that is the transaction that argue for escrow collateral corporations they must have something to do with the trend underlying transaction and all escrow records for a scroll collateral corporation affiliates that seems to have to do with the underlying attract action at all settlement statements for a transactions transaction by escrow collateral and its affiliates those all sound like they have throughout the to do with the transaction some of them do touch on the transaction but there are other categories of information that would need to be obtained by the asking him for these names and this is now there are a way of getting the names that he's refusing to provide that means that your affirmative cases it was bad faith but so just one point your honor and i see that i'm almost out of time and i burned through my robot also can i just want to end on one point which is if we are right and if hypothetically assume for purposes of this argument that we're right that there really is no investigation of mr crowe what is it that you would expect to see the government doing and i would submit that it's exactly what we've seen here which is it is an exclusive emphasis on the names of the counter parties that it has been years with no contacts or request for information to mr crow it is not requesting the fundamental documents that the government would need to conduct its investigation it's exactly what we would see here and the bar for student for a plausible inference of bad faith is quite low and so we think we have standard the government apply yes your honor and so it's the standard both the government and the lower court applied the standards set forth in clarke and in decisions by the th circuit is that the talks player has to come forward with specific facts raising a would ok but the standard that they applied is that it must be the most plausible inference or the only inference that can be drawn from the evidence and that's just simply not the case ok thank you thank you and we've taken you over time despite your best of verse to some some time we will make sure you get a chance to respond thank you your honor i appreciate it good morning and may please the court may name is nora bringer and i represent the united states in this appeal the issues are mating on appeal are quite narrow the petitioners agree that the government medics burden to establish a prima facia case under the power factors also agree that the i r s is not required to declare whether the summons has a sole purpose of investigating mr crowe or a dual purpose of investigating both mr crowe and his clients the petitioners finally agree that the client list at the center of their bad  allegations would be relevant to a legitimate investigation of mr crow so the only issue remaining is petitioners contention that the district court abused its discretion and declining to hold an evidentiary hearing here the discretionary to the district court as said how exactly that hearing goes the typically in evidence you're hearing it is an opportunity for taxpayers challenging a summons to examine the i r s agent who issued the s typically what what occurred we asked him why didn't you ask us for this kind of information or something like that i would assume so that's maybe a question more more well put to the other side but that would be my guess yes it's awfully late in the process from this question to be relevant but your honor that's a fair question made evident you're hearing in a proceeding of this type is typically fairly short usually less than a day much less than a day and i understand the government might want to stand on principle or one should go down the path are going to stay on the path of this could have been resolved even if the government had the right to resist just put him on the stand and be done with it well no your honor that the petitioners are challenging two other rd party summonses that the i r s has issued in this case and that case is pending in the district of idaho we mentioned in the footnote in one of our n the government asked for and she said something like this right just sick or applied the standard that it has to be the most plausible inference as opposed to just an inference how do you respond to that contention you're out of the district that's your position no your honor the government asked the district court to apply the standard from clarke and that is indeed what the district court did and pages thirty one and thirty two of the excerpts of record the magistrate judges reported recommendation discussing whether to recommend a holding a hearing the magistrate concluded quote the petitioners have not plausibly raised an inference of bad faith that would entitle them to an evidentiary hearing under clarke and that no specific allegations plausibly raise an inference of bad faith perhaps more importantly an excerpt of record page twelve the district court and its order adopting the report recommendation wrote the following the court finds petitioners have failed to present sufficient evidence plausibly raising an inference of improper purpose the and the report that it was more persuaded on this record this is page thirty of the excerpts of record would you say please what each thirty of the excerpts of record so they rely on this statement in the magistrate's report that it was more persuaded on this record that the summons is a legitimate dual purpose summons under tiffany fine arts such that the john doe summons procedures and section seven thousand six hundred and nine f do not apply so the district court statement on which the petitioners rely with respect to the standard had to do with the district we're discussing whether this was a john doe summons or not a john doe summons when the district court was analyzing whether to hold a hearing it clearly apply it's quite common and iris investigations of course that the i r s will receive information about rd parties and trying to determine the liabilities of the person named in the summ one other point that i'd like to touch on is the petitioners rely heavily on a statement from a revenue agent in london in the spring of two thousand and seventeen that all he wanted from mr crow was a spreadsheet with the names and details of clients now coming out of that statement the petitioners asked the district court to infer that age in london was offering to drop all of the records requests given to mr crowe in exchange for the client list and the district  declined to make that inference but the petitioners asked for another inference which is that the investigation of mr crow would disappear if he just turned over a client list they just recorded didn't make either inference but even if it had to the extent that any bad faith could be inferred from agent london statement the question is whether the bad faith is institutional on the part of the i r s here the timeline strongly supports the i r s is pursuit of an investigation of mr crow were engaged in the summons litigation let me ask this question which goes a little beyond in front of us but not very far beyond the primary evidence offered by your adversary who just  hearing is to submit evidence credible evidence of credible evidence must acquit on the lie so so typically what happens as happened here is that the parties submit written declarations to the district court and that the standard that comes down from clarke requires the court to make a judgment call about whether that evidence raises a possible inference of bad faith here that they're as is not in fact conducting the investigation that it says that it is pathetic could somebody lie in a declaration under penalty of perjury and convince the district court that those facts are credible the evidence is credible and they're going to have an insurer hearing out of that yes hypothetical that could happen but i want to return to the idea that it's not just a question of whether a single i r s agent may have bad face the question is really whether the i r s is an institution has bad face and so there would need to be more evidence to suggest that the thank you your honor say appreciate the additional time allotted to address a few of the points that were raised by ms bringer st and specifically there was no finding by the lower court that the declaration submitted by mr crow or any other witness were anything other than credible the other thing which they want to have by officers might observe that's right and you would expect if someone were lying that they would allow aberrate and provide a case else and it turns out he never said that seconds and then you say well you could infer that but he didn't say that and then you further say that you can infer therefore from that he said that wasn't said that he faith in this in against the i r s finds him or herself in which is the real information about the institutional prerogatives and decision making is within the hands of the i r s we can only tell the court about what we observe from the think i guess i'm a party of one here but that's why i keep coming back to the actual subpoena because in fact they did ask for a lot more than that in this peanuts so in the you draw that inference so the summons to pioneer titles does ask for a list of information but look at the summons itself what does it say on the face of it it identifies a single document which is a settlement statement it says pull that out and put that on top for us so that we can easily access that information and that is the information with the counterparty names your honor i'm out of my additional time may just make one brief point before i sit down thank you and that's a united states versus stuckey the court has recognized that the taxpayer in this position is quote we recognize the anomaly of placing a burden of proof on the taxpayer in the denying him access to what may be the information needed to meet that burden we have asked for a limited evidence here a hearing of the agents who said issued the summons escrow collateral corporation versus united states no submitters with decision