PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RICHIE H. CONNER, 

Plaintiff-Appellant,

v.  No. 05-1051

UNITED STATES OF AMERICA,

Defendant-Appellee. 

Appeal from the United States District Court

for the Western District of Virginia, at Roanoke.

Samuel G. Wilson, District Judge.

(CA-03-834-7; CA-03-835-7; CA-04-37-7)

Argued: December 1, 2005

Decided: January 11, 2006

Before LUTTIG and MICHAEL, Circuit Judges,

and HAMILTON, Senior Circuit Judge.

Affirmed by published opinion. Senior Judge Hamilton wrote the

opinion, in which Judge Luttig and Judge Michael joined. 

COUNSEL

ARGUED: G. Nelson Mackey, Jr., BRUMBERG, MACKEY &

WALL, P.L.C., Roanoke, Virginia, for Appellant. Anthony Thomas

Sheehan, UNITED STATES DEPARTMENT OF JUSTICE, Tax

Division, Washington, D.C., for Appellee. ON BRIEF: Paul Anthony

Dull, Mark A. Black, BRUMBERG, MACKEY & WALL, P.L.C.,

Roanoke, Virginia, for Appellant. Eileen J. O’Connor, Assistant
Attorney General, Frank P. Cihlar, Tax Division, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C.; John L. Brownlee,

United States Attorney, OFFICE OF THE UNITED STATES

ATTORNEY, Roanoke, Virginia, for Appellee. 

OPINION

HAMILTON, Senior Circuit Judge:

Richie H. Conner (Conner), the subject of an ongoing criminal tax

investigation, appeals the district court’s order: (1) dismissing his

petitions to quash certain summonses issued by the Internal Revenue

Service (IRS) to two third-party record keepers; and (2) granting the

government’s cross motion for enforcement of such summonses. We

affirm.

I.

Since the early 1970s, Conner has owned and operated Shags Lumber Company, a sole proprietorship in the business of purchasing and

harvesting timber, pressing timber into wood products, and selling

those products. In June 1999, IRS Agent Michael Durland began a

civil audit of Conner’s 1996 and 1997 federal income tax returns. Following completion of those audits, the IRS assigned IRS Agent

Thomas Walker (Agent Walker) to audit Conner’s 1998 and 1999

federal income tax returns. Subsequently, in February 2002, Agent

Walker began to audit Conner’s 2000 and 2001 federal income tax

returns. 

Accountant Rudolph Nagy (Accountant Nagy) had prepared Conner’s 1996 through 2000 federal income tax returns and represented

Conner before the IRS during its civil audits of those returns. A different accountant, Lloyd Hartman (Accountant Hartman), had prepared Conner’s 2001 federal income tax return. As of March 2004,

Conner had not yet filed a federal income tax return for 2002. 

When Agent Walker received Conner’s civil audit file, it contained

few documents pertaining to tax years 1996 and 1997, because those

2 CONNER v. UNITED STATES
documents had been transmitted to the IRS’s Appeals Office. The file

did, however, contain Conner’s federal income tax returns and profit

and loss statements for 1998 and 1999, which documents Agent

Walker assumed came from Accountant Nagy, but did not know for

certain. Agent Walker then requested additional records from

Accountant Nagy, which he did not provide. 

Conner retained an attorney to represent him in the civil audit of

his federal income tax return for 2000. Agent Walker reviewed

records pertaining to Conner’s 2000 tax year at the attorney’s office,

copied those he needed, and authorized the return of the original

records to Conner. 

Agent Walker ultimately referred Conner’s case to the IRS’s Criminal Investigation Division for a tax fraud investigation with respect

to tax years 1996 through 2002. Special Agent Ross Pierson (Special

Agent Pierson) was assigned the case.1

Before Special Agent Pierson issued the third-party summonses at

issue in the present appeal, Special Agent Pierson reviewed the IRS’s

civil audit file on Conner and discussed the case with Agent Walker.

Notably, the file contained documents indicating that Conner had

directed Accountant Nagy to submit a set of federal income tax

returns for the years 1994 through 1997 as part of a bank loan application, which returns reflected substantially more income than was

reported on the returns Conner had filed with the IRS for the same

years. These discrepancies, inter alia, prompted Special Agent Pierson to issue summonses to Accountants Hartman and Nagy in order

that he (Special Agent Pierson) could compare records pertaining to

Conner held by the accountants with those in the IRS’s civil audit file

on Conner.

1At all relevant times, there was no United States Department of Justice referral in effect with respect to Conner. Accordingly, 26 U.S.C.

(IRC) § 7602(d)(1) has no application in this case. Id. ("No summons

may be issued under this title, and the Secretary may not begin any

action under section 7604 to enforce any summons, with respect to any

person if a Justice Department referral is in effect with respect to such

person."). 

CONNER v. UNITED STATES 3
Special Agent Pierson (accompanied by another IRS special agent

and Agent Walker) personally served a summons on Accountant

Hartman on December 3, 2003, and a summons on Accountant Nagy

on December 8, 2003. The summonses were virtually identical. The

first page directed the named accountant to appear at the IRS’s office

in Staunton, Virginia, before Special Agent Pierson on January 5,

2004, to produce the documents described on the second page relating

to Conner’s financial transactions for 1996 through 2002. The third

and fourth pages quoted extensively from Internal Revenue Code sections containing the rights of third parties who receive summonses for

taxpayer records. Rather than producing the summoned documents at

the IRS’s office in Staunton, Virginia on January 5, 2004, Accountants Hartman and Nagy turned over the summoned documents to

Special Agent Pierson on the day of service. 

Conner’s third petition to quash pertains to a second summons

served on Accountant Hartman. Believing that he had been tardy in

giving Conner notice of the first summons served on Accountant

Hartman, Special Agent Pierson served a second summons on

Accountant Hartman in early January 2004. Accountant Hartman did

not produce any documents in response to this second summons

because he had already complied with the first summons.2

Pursuant to IRC § 7609(h), Conner filed petitions in the United

States District Court for the Western District of Virginia to quash

each of the three third-party summonses. The district court consolidated the petitions and held an evidentiary hearing on December 10,

2004, in order to resolve factual disputes bearing on the questions of

whether the IRS issued the summonses in good faith and whether the

IRS currently possessed the records sought.3 Special Agent Pierson,

Agent Walker, Accountant Hartman, and Shag Lumber Company’s

office manager, Eunice Montgomery, testified at the evidentiary hearing. The district court also considered affidavits by Special Agent

2

In his opening appellate brief, Conner states that "[f]or purposes of

this appeal, [he] does not raise these notice issues." (Conner’s Opening

Br. at 3 n.2). 

3Conner requested prehearing discovery, which the district court

denied. 

4 CONNER v. UNITED STATES
Pierson, Accountant Hartman, and Accountant Nagy. Accountant

Nagy died before the evidentiary hearing. 

Following the evidentiary hearing, the district court made the following findings of fact in a Memorandum Opinion issued on December 17, 2004:

1) Pierson did not demand production of the documents on

the day of service; 

2) Each summons conspicuously noted its return date; 

3) Hartman produced the documents on the day of service

in order to avoid having to appear at the IRS office on the

summons return date; 

4) Pierson did not verbally inform Hartman and Nagy of

Conner’s right to petition to quash; however, he gave them

each a written explanation of Conner’s rights, and each had

an opportunity to read it before producing the records; 

5) Pierson questioned Hartman and Nagy about their relationship with Conner; however, he did not by that questioning, in effect, prematurely examine the records; 

6) Upon learning of Conner’s petitions to quash, Pierson

sealed the records in envelopes, and they have remained

sealed to this date; 

7) As of this date, neither Pierson nor any other IRS agent

has examined the sealed records; 

8) Conner has failed to demonstrate that the IRS already

possessed the records at the time Pierson served the summonses. 

(J.A. 463). 

Based on these findings, the district court denied Conner’s petitions

to quash and granted the government’s motion to enforce the sumCONNER v. UNITED STATES 5
monses. This timely appeal followed. Pursuant to motion by Conner,

the district court stayed the effect of its final order pending appeal. 

II.

When an interested party challenges enforcement of an IRS summons, under United States v. Powell, 379 U.S. 48 (1965), the initial

burden rests with the government to establish a prima facie showing

of good faith in issuing the summons, requiring proof that the IRS has

satisfied the following four elements: (1) the investigation is being

conducted for a legitimate purpose; (2) the inquiry is relevant to that

purpose; (3) the information sought is not already in the possession

of the IRS; and (4) the administrative steps required by the Internal

Revenue Code have been followed. United States v. Stuart, 489 U.S.

353, 359-60 (1989); Powell, 379 U.S. at 57-58; Alphin v. United

States, 809 F.2d 236, 238 (4th Cir. 1987). The burden on the government to produce a prima facie showing of good faith in issuing the

summons is "slight or minimal." Mazurek v. United States, 271 F.3d

226, 230 (5th Cir. 2001) (internal quotation marks omitted). Indeed,

the government need only present "an affidavit of an agent involved

in the investigation averring the Powell good faith elements" in order

to establish a prima facie case for enforcement of a civil summons.

Alphin, 809 F.2d at 238.

Once the IRS has made such a showing . . . it is entitled to

an enforcement order unless the taxpayer can show that the

IRS is attempting to abuse the court’s process. Such an

abuse would take place . . . if the summons had been issued

for an improper purpose, such as to harass the taxpayer or

to put pressure on him to settle a collateral dispute, or for

any other purpose reflecting on the good faith of the particular investigation. The taxpayer carries the burden of proving

an abuse of the court’s process. 

Stuart, 489 U.S. 353 at 360 (internal quotation marks and citations

omitted). 

We review the district court’s factual findings underlying its

enforcement order for clear error, Hintze v. Internal Revenue Service,

879 F.2d 121, 125 (4th Cir. 1989), overruled on other grounds,

6 CONNER v. UNITED STATES
Church of Scientology of California v. United States, 506 U.S. 9, 15-

17 (1992), and its legal rulings de novo, see, e.g., Hillman v. Internal

Revenue Service, 263 F.3d 338, 340 (4th Cir. 2001). We review the

district court’s denial of Conner’s request for discovery for abuse of

discretion. Hintze, 879 F.2d at 126. 

III.

On appeal, Conner does not take issue with the district court’s

holding that the government carried its minimal burden of establishing a prima facie case of good faith under Powell for enforcement of

the three summonses at issue by submitting Special Agent Pierson’s

affidavit averring the Powell good faith elements. Powell, 379 U.S.

at 57-58. Neither does Conner take issue on appeal with the district

court’s factual findings with respect to Powell’s first and second

prongs (i.e., (1) that the IRS issued the summonses for a legitimate

purpose, and (2) that the material sought was relevant to that purpose). 

Rather, Conner’s appellate challenges are limited to the district

court’s findings with respect to Powell’s third and fourth prongs. We

address each in turn. 

A.

With respect to Powell’s third prong, the district court found that

"Conner has failed to demonstrate that the IRS already possessed the

records at the time [Special Agent] Pierson served the summonses."

(J.A. 463). Conner disputes this finding. Alternatively, Conner seeks

to excuse himself from the burden of proving Powell’s third prong on

two grounds: (1) that Special Agent Pierson’s failure to tender inventory receipts for the records he took left him with no reasonable

method for determining whether the IRS already possessed the

records at the time he served the summonses; and (2) the district court

erred in denying his request for discovery. 

None of Conner’s arguments warrant reversal of the district court’s

enforcement order. Powell’s third prong focuses upon whether the

IRS already possessed the records sought in the challenged summonCONNER v. UNITED STATES 7
ses. Notably, the Fourth Circuit has held in applying this prong that,

when the government has grounds to suspect alteration of a taxpayer’s

financial records, it has the right to obtain the same records from different sources for comparison purposes. United States v. Daffin, 653

F.2d 121, 124 (4th Cir. 1981). 

Because the government had already produced Special Agent Pierson’s affidavit disavowing possession of the documents sought in the

summonses at issue, Conner bore the burden of proving otherwise. In

this regard, Conner offered, as the district court described, "[t]he nondescript testimony of [his] office manager . . . ." (J.A. 465). He also

offered Accountant Nagy’s affidavit stating:

8. That as part of my representation of Mr. Conner in such

audits and examinations, I have previously provided the

Internal Revenue Service, specifically, Revenue Agents,

Michael Durland and Tom Walker, with all of the information concerning his income tax returns, and his books and

records in my files. 

(J.A. 347). Conner also points out on appeal that Special Agent Pierson and Agent Walker both testified that the IRS had some federal

income tax returns for Conner in its civil audit file for the same years

that it sought federal income tax returns from Accountant Nagy. 

Having reviewed the entire record, we hold the district court’s finding in favor of the government with respect to Powell’s third prong

is not clearly erroneous. First, having reviewed the testimony of Conner’s office manager, Eunice Montgomery, we agree with the district

court that it was "nondescript" on the topic of which records she may

have given the IRS, and further agree that her testimony was insufficient to carry Conner’s burden of proof with respect to Powell’s third

prong. (J.A. 465). As for the district court’s crediting of both Special

Agent Pierson’s testimony at the evidentiary hearing regarding the

records in possession of the IRS and his sworn written statements on

the subject in his affidavit over the directly opposing statements made

by Accountant Nagy in his affidavit, we cannot review such a credibility finding on appeal. Daffin, 653 F.2d at 124 (district court’s credibility determination regarding witness who gave live testimony during

8 CONNER v. UNITED STATES
evidentiary hearing in IRS summons enforcement proceeding "is

unassailable on appeal"). 

Moreover, the record also establishes that the government was entitled to the records sought in the summonses in order to compare them

to whatever records the government already possessed, the sources of

which were unknown. In his affidavit, Special Agent Pierson stated

that he became suspicious that Conner had engaged in some income

tax evasion practices when he learned that Conner had filed one set

of federal income tax returns for the years 1994 through 1997 with

the IRS, but had submitted, through Accountant Nagy, a different set

of returns, reporting substantially more income (i.e., higher gross

receipts), to a bank in an effort to secure a loan. The record also contains, as an exhibit to Special Agent Pierson’s affidavit, a chart comparing the federal income tax return information for 1994 through

1997. Under these suspicious circumstances, the government was

entitled to obtain Conner’s financial records and income tax returns

from Accountants Hartman and Nagy in order to compare them with

records already in the IRS’s civil audit file on Conner or records they

may obtain from other sources. Daffin, 653 F.2d at 124. For this reason, Conner was in no way prejudiced in carrying his burden of proving Powell’s third prong by Special Agent Pierson’s failure to tender

inventory receipts for the records he took.4

Finally, given the district court’s abundant discretion in deciding

whether to grant a taxpayer prehearing discovery in a summons

enforcement proceeding, Conner has failed to show that the district

court abused its discretion in failing to grant him prehearing discovery. The case law is clear that prehearing discovery in summons

enforcement proceedings is only granted where the taxpayer has made

a preliminary demonstration of abuse of process, which preliminary

demonstration Conner failed to make. Hintze, 879 F.2d at 127 ("court

should not allow discovery at this stage unless the taxpayer makes a

preliminary demonstration of abuse"); Tax Liabilities of John Does v.

United States, 866 F.2d 1015, 1019 (8th Cir. 1989) ("The taxpayer

4Notably, the district court found Special Agent Pierson’s failure to

inventory the records taken from Accountants Hartman and Nagy to be

consistent with his good faith in that "he did not inventory the documents

because he would have had to review them to do so." (J.A. 464 n.2). 

CONNER v. UNITED STATES 9
must make a substantial preliminary showing of abuse of the court’s

process before even limited discovery need be ordered [in an IRS

summons enforcement proceeding]."); United States v. Southern

Tanks, Inc., 619 F.2d 54, 56 (10th Cir. 1980) ("As a general rule, discovery is available in summons enforcement proceedings only in

extraordinary situations."). 

In sum, we find no reversible error with respect to Powell’s third

prong. 

B.

Conner argues the district court’s finding in favor of the government with respect to Powell’s fourth prong is clearly erroneous. Conner’s argument is without merit. 

Powell’s fourth prong asks whether the IRS followed the administrative steps required by the IRC with regard to the summonses at

issue. In challenge to the district court’s finding with respect to Powell’s fourth prong, Conner asserts that by accepting the records from

Accountants Hartman and Nagy prior to expiration of the twentythree days in which he, the affected taxpayer, could seek to quash the

third-party summonses, Special Agent Pierson did not follow IRC

§ 7609(d)(1) nor Internal Revenue Manual §§ 25.5.3.4(2)(B) and

25.5.6.2(1)(C). 

Again, Conner has failed to establish a case for reversal. IRC

§ 7609(d)(1) provides that "[n]o examination of any records required

to be produced under a [third-party] summons as to which notice is

required under subsection (a) may be made—(1) before the close of

the 23rd day after the day notice with respect to the summons is given

[the subject taxpayer]." 26 U.S.C. § 7609(d)(1) (emphasis added).

Conner argues that Special Agent Pierson’s physical acceptance of

the records from Accountants Hartman and Nagy violated IRC

§ 7609(d)(1). Conner’s argument is without merit. IRC § 7609(d)(1)

plainly prohibits premature examination of the records at issue, not

physical acceptance. Moreover, Conner does not challenge as clearly

erroneous either the district court’s finding that Special Agent Pierson

sealed the records as soon as he learned of Conner’s petitions to quash

10 CONNER v. UNITED STATES
or the district court’s finding that, as of the date of the district court’s

final order, no IRS agent had examined the records. 

Conner’s argument with respect to the Internal Revenue Manual is

also without merit. Internal Revenue Manual §§ 25.5.3.4(2)(B) and

25.5.6.2(1)(C) both direct IRS agents not to physically accept records

in response to a third-party summons prior to expiration of the

twenty-three day period in which the affected taxpayer can seek to

quash the summons. The record is undisputed that Special Agent Pierson physically accepted the records from Accountants Hartman and

Nagy on the day of service. Thus, Special Agent Pierson violated

these two Internal Revenue Manual Sections. 

This does not, however, carry the day for Conner on appeal. While

violations of the Internal Revenue Manual are relevant to the bad faith

inquiry presented in this case, they do not constitute proof by themselves of the IRS’s bad faith in issuing the challenged summonses.

Groder v. United States, 816 F.2d 139, 142 (4th Cir. 1987) (IRS’s

violation of its own regulations is not proof by itself of bad faith on

part of IRS in a tax investigation) ("A Manual violation may be relevant to this showing [of bad faith] but it is not conclusive."). 

Furthermore, Special Agent Pierson, who had only worked for the

IRS for two and one half years at the time of the evidentiary hearing,

explained during his testimony that although he did not know if he

had ever received training regarding the Internal Revenue Manual

sections at issue, he accepted the records from Accountants Hartman

and Nagy on the day he served the summonses because:

through my training that I received from the IRS, we were

taught that you could accept the records. But, you could not

examine the records until after the expiration date of the

requirements as far as the noticee having to file a petition.

(J.A. 422). This testimony, implicitly credited by the district court,

sufficiently neutralized any potential inference of bad faith from Special Agent Pierson’s physical acceptance of the records from Accountants Hartman and Nagy prior to the expiration of the twenty-three

day waiting period as provided in the Internal Revenue Manual. 

CONNER v. UNITED STATES 11
In sum, Conner has failed to show the district court’s finding with

respect to Powell’s fourth prong is clearly erroneous.

IV.

In conclusion, we affirm the district court’s order denying Conner’s

petitions to quash the summonses at issue and granting the government’s cross motion for enforcement. 

AFFIRMED

12 CONNER v. UNITED STATES