1

The Honorable Charles A. Shaw, United States District Judge for the Eastern

District of Missouri.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-1603

___________

Mary A. Robert, *

*

Plaintiff - Appellant, *

*

Siegel-Robert, *

* Appeal from the United States

Intervenor, * District Court for the Eastern

* District of Missouri.

v. * 

* 

United States of America, *

*

Defendant - Appellee. *

___________

Submitted: December 15, 2003

 Filed: April 29, 2004 

___________

Before MELLOY, McMILLIAN, and BOWMAN, Circuit Judges.

___________

MELLOY, Circuit Judge.

Mary A. Robert appeals the district court’s1

 adverse grant of summary

judgment in her action to quash four separate third-party IRS summonses. We agree

with Ms. Robert that the summonses issued as a result of improper ex parte
2

The United States District Court for the Eastern District of Missouri, in a

minority shareholders’ appraisal proceeding, discussed the history, operations, and

“fair value” of Siegel-Robert. See Swope v. Siegel-Robert, Inc., 74 F. Supp. 2d 876,

879-910 (E.D. Mo. 1999), aff’d in part and rev’d in part by 243 F.3d 486 (8th Cir.

2001). In our review of that opinion, we held it was not appropriate under Missouri

law, in the context of unwilling minority sellers’ appraisals, to discount the value of

shares due to a lack of marketability or due to minority shareholder status. Swope,

243 F.3d at 496-97. The issue before the court was the “fair value” of the minority

shares rather than the “fair market value,” which would have included market

considerations such as minority status and the lack of willing buyers. See id. at 493

(“Because ‘fair market value’ is irrelevant to the determination of fair value, market

forces, such as the availability of buyers for the stock, do not affect the ultimate

assessment of fair value in an appraisal proceeding.”). Because of this difference, we

determined that an IRS appraisal prepared for estate tax purposes was not relevant in

the context of that appraisal proceeding. See id. at 498 (“Regardless, appraisals for

estate tax purposes are not relevant to the determination of fair value pursuant to a

dissenters’ appraisal proceeding.”). We nevertheless refer the reader to the Swope

opinions because we do not set out the same detailed review of the corporation’s

history in this opinion.

-2-

communications between the IRS Appeals Office and Examination Division. See

Internal Revenue Service Restructuring and Reform Act (Restructuring Act) of 1998,

Pub. L. No. 105-206, 112 Stat. 68 (charging the Commissioner of Internal Revenue

with the duty to provide an independent Appeals Office and prohibit ex parte

communications that appear to compromise the independence of the Appeals Office);

Rev. Proc. 2000-43, 2000-2 C.B. 404 (setting forth guidelines for implementation of

the restriction on ex parte communications). We find, however, that in this case, the

ex parte communications do not prevent enforcement of the summonses. The

judgment of the district court is affirmed.

I. Facts

Ms. Robert, in her capacity as the trustee and income beneficiary of a marital

trust established by her late husband, owned approximately seven million shares out

of a total of twelve million outstanding shares of Siegel-Robert, Inc.2

 In 1998, she
-3-

transferred 1,800,000 shares from the trust to her children in exchange for promissory

notes structured as non-recourse debt. She secured the notes with Siegel-Robert stock

and established a mechanism to execute on the stock through a stock redemption

agreement between herself, Siegel-Robert, and her children. Ms. Robert claimed that

the promissory notes were worth as much as the transferred stock and characterized

the transfers as related party sales under I.R.C. § 267. Also, during 1998 and 1999,

she transferred 29,750 shares to her children and other relatives. She characterized

these additional transfers as gifts. 

Ms. Robert listed minority share values of $21.73 and $23.67 for the SiegelRobert stock on her 1998 and 1999 gift tax returns, respectively. Ms. Robert used a

private appraiser to arrive at these values. Although she maintains that her valuation

was accurate, she concedes that, if inaccurate, any resultant increase in valuation of

the transferred stock must be treated as a gift.

In 2000, the IRS began an audit of Ms. Robert’s 1998 and 1999 gift tax returns.

Ms. Robert cooperated and provided financial information. The IRS Estate Tax

Examiner assigned to Ms. Robert’s case, Paul Latt, disagreed with Ms. Robert’s

valuation and determined that an IRS appraisal was needed. IRS Financial Analyst

Ernest Gruenfeld conducted an appraisal and determined that the appropriate minority

share prices for the 1998 and 1999 transfers were $55.52 and $44.17, respectively.

Based on Mr. Gruenfeld’s appraisal and the number of shares that Ms. Robert

transferred, Mr. Latt determined that Ms. Robert owed the IRS a deficiency payment

of approximately $34 million regarding the 1998 transfers and $233,000 regarding

the 1999 transfers. Mr. Latt was aware of a one million share decrease in the number

of outstanding shares during 1998 but did not know what happened to those shares.

Mr. Latt did not incorporate this share decrease into his valuation and deficiency

determination as set out in his examination report. 
-4-

On March 2, 2001, Mr. Latt sent Ms. Robert a “thirty-day letter” to propose

these deficiencies. The letter was accompanied by Mr. Latt’s examination report and

Mr. Gruenfeld’s appraisal. The March 2, 2001 letter was not a statutory deficiency

notice.

On April 2, 2001, Ms. Robert replied with a letter of protest in which she set

forth arguments contesting the IRS findings and requested an appeals conference. On

May 18, 2001, the Appeals Office assigned IRS Appeals Officer Daniel Mannion to

handle Ms. Robert’s appeal. Mr. Mannion previously had worked on a gift tax case

that involved Ms. Robert’s deceased husband and a dispute over the value of SiegelRobert stock. In addition, Mr. Mannion was familiar with the opinions from this

court and the Eastern District of Missouri in which we approved a method for

determining the “fair value” of Siegel-Robert stock. See Swope v. Siegel-Robert,

Inc., 74 F. Supp. 2d 876, 879-910 (E.D. Mo. 1999), aff’d in part and rev’d in part by

243 F.3d 486 (8th Cir. 2001). 

Mr. Mannion claims that, on August 12, 2001, he conducted an initial review

of Ms. Robert’s file and determined that Mr. Gruenfeld’s appraisal was inadequate

because it did not follow the methodology set forth in the Swope case. “Shortly after”

this review, Mr. Mannion contacted Mr. Latt on an ex parte basis to tell Mr. Latt that

Mr. Gruenfeld’s appraisal was inadequate. In addition, Mr. Mannion sent Mr. Latt

a copy of Ms. Robert’s protest with instructions to forward the protest to Mr.

Gruenfeld for review so that Mr. Gruenfeld could revise the IRS appraisal. 

On September 10, 2001, Ms. Robert’s attorney called Mr. Mannion to request

a meeting. Mr. Mannion did not tell Ms. Robert’s attorney about the August ex parte

communications with Mr. Latt. Ms. Robert’s attorney stated that Mr. Mannion set a

meeting date for October 3, 2001, because Mr. Mannion claimed it would take

approximately three weeks to review Ms. Robert’s file.
-5-

At the October 3 meeting, two of Ms. Robert’s attorneys discussed the case

with Mr. Mannion and provided a written critique of Mr. Gruenfeld’s appraisal. Mr.

Mannion asked about the unaccounted-for one million share decrease in outstanding

Siegel-Robert stock during 1998. Ms. Robert’s attorneys stated that the marital trust

redeemed the one million shares of Siegel-Robert stock for cash so that the trust could

diversify its holdings. Mr. Mannion believed this redemption potentially raised a new

gift tax issue. In addition, he suggested that the IRS obtain an outside appraisal to

value the stock. Again, Mr. Mannion did not tell Ms. Robert’s attorneys about the

August ex parte communications with Mr. Latt, nor did he tell them of his intention

to conduct future ex parte communications with Mr. Latt. Mr. Mannion concluded

the meeting by telling Ms. Robert’s attorneys that he would contact them in January

of 2002 to discuss resolution of the protest.

On October 3, 2001, after meeting with Ms. Robert’s attorneys, Mr. Mannion

called Mr. Latt to tell him about the new information concerning the 1998 one million

share decrease and to let him know that Ms. Robert’s attorneys had submitted a

written critique of Mr. Gruenfeld’s appraisal. On October 4, 2001, Mr. Latt met with

Mr. Mannion and received a copy of the written critique. On October 15, 2001, Mr.

Mannion referred the new information regarding the one million share decrease to

Mr. Latt’s IRS Examination Supervisor, Chris Mezines, and suggested that this

decrease might involve the same bargain sale/gift issues already under examination.

On October 29, 2001, Mr. Latt sent a letter to Ms. Robert’s attorneys to ask for

information about the one million share decrease. Mr. Latt’s letter referred to the fact

that the Appeals Office requested that he gather information about the one million

share transfer. In December 2001, Mr. Latt sent Ms. Robert’s attorneys another letter

to explain that the IRS had retained a private appraiser and to request additional

financial information. In a follow-up call, Mr. Latt told Ms. Robert’s attorneys that

Mr. Mannion believed Mr. Gruenfeld’s initial appraisal was inadequate. Ms. Robert’s

attorneys challenged Mr. Latt’s authority because the Appeals Office had jurisdiction
-6-

over the case and Mr. Mannion had last told them that he would contact them in

January to resolve the case.

On January 11, 2002, Mr. Latt called Ms. Robert’s attorneys and left a

telephone message. Ms. Robert’s attorneys saved the recorded message and prepared

a transcript of the message. In the message, Mr. Latt made clear that Mr. Mannion

was still in charge of the case; the examination division was going to be “doing the

leg work” for Mr. Mannion to collect financial data and obtain a private party

appraisal; and Mr. Mannion had stated the “in house appraisal was not going to do

the job as far as the IRS was concerned.”

Ms. Robert’s attorneys then arranged a January 23, 2002 meeting with Mr.

Mannion and his supervisor, Chris Roth, to discuss the ex parte communications

between Mr. Mannion, Mr. Latt, and Mr. Mezines. At the January 23 meeting, Mr.

Mannion stated that, during the October 3, 2001 meeting, Ms. Robert successfully

refuted the valuation that Mr. Gruenfeld prepared for the IRS. On January 29, 2002,

Ms. Robert’s attorneys met again with Mr. Mannion and Mr. Roth. Mr. Latt, Mr.

Mezines, and IRS counsel were present for this meeting. Ms. Robert’s attorneys

suggested that, as a remedy for the ex parte communications, the IRS should either

assign a different appeals officer to review the record independently or issue a

statutory notice of deficiency. Mr. Roth stated that he would coordinate the IRS

response to these proposals. Several days later, Mr. Roth called Ms. Robert’s

attorneys and stated that instead of assigning a new appeals officer, the IRS would

assign a new examiner and start a new audit.

The IRS assigned a new examiner, John Crowe, to conduct the new audit. Mr.

Crowe requested the financial records necessary for a third-party appraisal of the

Siegel-Robert stock. He then issued the four summonses that are the subject of the

current action. Mr. Crowe directed these summonses to Siegel-Robert and its

president, vice-president, and treasurer. 
-7-

On March 14, 2002, Ms. Robert petitioned the district court to quash the

summonses. Ms. Robert argued that the summonses were issued as a direct result of

the ex parte communications, to prepare the case for litigation, and as a direct result

of Mr. Mannion’s failure to review the case independently and impartially. She

specifically argued that the summonses were issued in bad faith and that court

enforcement of the summonses would be an abuse of the court’s process. Ms. Robert

requested discovery and an evidentiary hearing.

On June 10, 2002, the government responded and simultaneously filed a

motion for summary judgment to seek enforcement of the summonses. The

government provided affidavits from Messrs. Mannion, Latt, Mezines, and Crowe.

Ms. Robert claims that, through these affidavits, the IRS disclosed numerous

previously undisclosed ex parte communications. In particular, Ms. Robert and her

attorneys claim that prior to receipt of the government’s motion and the

accompanying affidavits, they knew only of the October 3, 2001 discussion between

Messrs. Mannion and Latt. Ms. Robert claims she learned of the following allegedly

improper ex parte communications only through the government’s affidavits: the

August 13, 2001 discussion between Messrs. Mannion and Latt; an August 13, 2001

discussion between Messrs. Latt and Gruenfeld; the October 4 meeting between

Messrs. Latt and Mannion; an October 4, 2001 discussion between Messrs. Latt and

Mezines; the October 15, 2001 discussion between Messrs. Mannion and Mezines;

and discussions on an unknown date between an examiner and personnel at the

private appraisal firm that the IRS hired in late 2001.

On July 2, 2002, Ms. Robert filed a motion under Fed. R. Civ. P. 56(f) to strike

the government’s motion for summary judgment or, in the alternative, for an

extension of time that would allow for a period of discovery. On November 14, 2002,

the district court denied Ms. Robert’s motion, denied her request for discovery and

an evidentiary hearing, and ordered her to respond to the government’s outstanding

motion for summary judgment. On January 9, 2003, the district court granted the
-8-

government’s motion, finding that “petitioner has cited no cases for the proposition

that violation of the IRS’s internal regulation against ex parte communications by an

appeals officer invalidates any subsequently-issued summons for information.”

Finally, the district court found that the facts suggested neither that enforcement of

the summonses would be an abuse of the court’s process nor that the ex parte

communications suggested bad faith by the IRS.

II. Standard of Review

We review under a de novo standard the district court’s summary enforcement

of, and refusal to quash, an IRS summons. E.g., United States v. Scherping, 187 F.3d

796, 800 (8th Cir. 1999) (summary judgment standard); Crystal v. United States, 172

F.3d 1141, 1145 (9th Cir. 1999) (summary summons enforcement standard). We

review the district court’s denial or limitation of discovery in an action to enforce or

quash an IRS summons for abuse of discretion. United States v. Lask, 703 F.2d 293,

300 (8th Cir. 1983); Mazurek v. United States, 271 F.3d 226, 234 (5th Cir. 2001).

III. Violation of the Restriction on Ex Parte Communications

As an initial matter, we may dispense with the IRS argument that the ex parte

communications were permissible and not in violation of the Restructuring Act and

Rev. Proc. 2000-43. Congress passed the Restructuring Act to ensure that “taxpayers

would have adequate protections when the agency exercised its powers in an

improper fashion.” National Commission on Restructuring the Internal Revenue

Service, Report of the National Commission on Restructuring the Internal Revenue

Service, A Vision for a New IRS, at 8 (June 25, 1997). One method Congress chose

to provide these protections was to direct the Commissioner of Internal Revenue to

enhance the independence of the IRS Appeals Office by restricting certain types of

ex parte communication between the Appeals Office and other areas of the IRS.

Congress mandated, among other things, that:
-9-

The Commissioner of the Internal Revenue shall develop and implement

a plan to reorganize the Internal Revenue Service. The plan shall . . . (4)

ensure an independent appeals function within the Internal Revenue

Service, including the prohibition in the plan of ex parte

communications between appeals officers and other Internal Revenue

Service employees to the extent that such communications appear to

compromise the independence of the appeals officers.

Restructuring Act § 1001(a). 

In Revenue Procedure 2000-43, promulgated under the Restructuring Act, the

IRS set forth its own position regarding which communications appear to compromise

the independence of the appeals officer. The IRS distinguished between “ministerial,

administrative, and procedural matters,” on the one hand, and substantive matters, on

the other. Id. § 3. As to the former, the IRS does not consider ex parte

communications to be prohibited under the Restructuring Act. The IRS provided

examples of communications considered to be permissible: questions regarding

whether certain information was requested and received; questions regarding whether

a document referred to in the work papers but not found in the file is available;

questions to clarify illegible documents; questions about case controls on the IRS’s

management information systems; and questions regarding tax calculations that are

purely mathematical in nature. Id. § 3, at Q&A 5. As clearly demonstrated through

this list, the IRS itself set forth a limited view of communications that would be

considered ministerial and that could occur on an ex parte basis between the Appeals

Office and other Divisions.

At least some of the communications in the present case did not involve merely

ministerial, administrative, and procedural matters, but rather, involved the substance

of Ms. Robert’s appeal. Accordingly, under the Restructuring Act and the IRS’s own

procedures, at least some of the communications in the present case should not have

taken place on an ex parte basis. Mr. Mannion should not have expressed his
-10-

opinions regarding the sufficiency of Mr. Gruenfeld’s appraisal to Messrs. Latt and

Mezines on an ex parte basis. In addition, he should not have shared with the

Examination Division the written critique and additional information that Ms.

Robert’s attorneys provided without including Ms. Robert’s attorneys in the

communications. Finally, he should not have recommended to Mr. Mezines that the

Examination Division hire an outside appraiser to value the Siegel-Robert stock. At

a minimum, these communications appeared to compromise Mr. Mannion’s

independence.

The ex parte communications are made more troubling by the fact that the IRS

delayed disclosure of at least some of these communications until this matter reached

the stage of litigation. Further, even on appeal to this court, the IRS did not willingly

concede the improper nature of its ex parte communications. If anything, this denial

by the IRS suggests an institutional failure to embrace the ex parte restrictions and

militates against our enforcement of the summonses. 

Nevertheless, as explained below, we will enforce the summonses in this case

because Congress did not specifically legislate a limitation on the IRS summons

power as a remedy for violation of the ex parte restrictions; the IRS did proscribe an

administrative remedy to address violations of the ex parte restrictions; the Supreme

Court has cautioned that we should be slow to erect barriers to enforcement of IRS

summonses; and, we discern no improper purpose or bad faith behind issuance of the

IRS summonses nor nexus between the improper communications and any improper

purpose for the investigation.

IV. Validity of the Summonses

The Supreme Court made clear in United States v. Powell, 379 U.S. 48 (1964),

that a court should not enforce an IRS summons if enforcement will result in abuse

of the court’s process. The Court stated:
-11-

It is the court’s process which is invoked to enforce the administrative

summons and a court may not permit its process to be abused. 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.

Id. at 58 (footnote omitted). The above listing is not an exhaustive inventory of the

potential “improper purposes” that might reflect on the good faith of an investigation

and prevent enforcement of a summons. See id. (stating that taxpayer “‘may

challenge the summons on any appropriate ground’” (quoting Reisman v. Caplin, 375

U.S. 440, 449 (1964))). Rather, courts may consider new situations as they arise to

determine whether the enforcement of a summons would further an improper purpose,

reflect on the good faith of the IRS, or result in an abuse of the court’s process. See

United States v. LaSalle Nat’l Bank, 437 U.S. 298, 318 n.20 (1978) (“These

requirements are not intended to be exclusive. Future cases may well reveal the need

to prevent other forms of agency abuse of congressional authority and judicial

process.”). 

In Powell, the Court also set forth a mode of analysis to determine the good

faith of the IRS for the purpose of enforcing an IRS summons. “[The IRS] must show

[1] that the investigation will be conducted pursuant to a legitimate purpose, [2] that

the inquiry may be relevant to that purpose, [3] that the information sought is not

already within the [IRS]’s possession, and [4] that the administrative steps required

by the Code have been followed . . . .” 379 U.S. at 57-58. If the IRS makes this

showing, the challenger is afforded the opportunity to rebut the IRS showing as to

one or more of the requirements “or to demonstrate that judicial enforcement of the

summons would otherwise constitute an abuse of the court’s process.” United States

v. Claes, 747 F.2d 491, 494 (8th Cir. 1984); see also Lask, 703 F.2d at 297. The

Supreme Court has stated that courts should be slow to erect barriers to enforcement

of IRS summonses where the summonses are being used to further the IRS mission

of effectively investigating taxpayer liabilities. United States v. Euge, 444 U.S. 707,
-12-

711 (1980) (“[T]his Court has consistently construed congressional intent to require

that if the summons authority claimed is necessary for the effective performance of

congressionally imposed responsibilities to enforce the tax Code, that authority

should be upheld absent express statutory prohibition or substantial countervailing

policies.”). Accordingly, the burden on the IRS to make a prima facie showing as to

the Powell good faith requirements is slight, and the burden on the challenger to rebut

the IRS showing as to one or more of these requirements “or to demonstrate that

judicial enforcement of the summons would otherwise constitute an abuse of the

court’s process” is great. Claes, 747 F.2d at 494 (“That burden is a heavy one. The

party must show either that the IRS is acting in bad faith or that the IRS has

abandoned any civil purpose in the investigation.”).

Ms. Robert’s challenge focuses generally on the good faith and abuse of

process concerns expressed in Powell. She argues that the general prohibition on

abuse of the court’s process is sufficiently broad to permit the court to quash a

summons based on an underlying violation of a law or rule by the IRS. See In re

Spencer, 123 B.R. 858, 862 (Bankr. N.D. Cal. 1991) (stating that if issuance of a

summons is in violation of a bankruptcy stay, the court “should quash the Summons

unless good cause exists for declining to do so”). But see Mimick v. United States,

952 F.2d 230, 232 (8th Cir. 1991); United States v. Gilbert C. Swanson Found., Inc.,

772 F.2d 440, 441 (8th Cir. 1985) (refusing to hold that a rule violation mandated the

quashing of a summons and instead adopting an approach that “‘requires the court to

evaluate the seriousness of the violation under all the circumstances including the

government’s good faith and the degree of harm imposed by the unlawful conduct’”

(quoting United States v. Payne, 648 F.2d 361, 363 (5th Cir. 1981))). To the extent

that Ms. Robert’s challenge fits into the framework set forth in Powell, she focuses

on the “proper purpose” requirement. In particular, she argues that the IRS “violated

the rule [against certain ex parte communications] for the improper purpose of trying

to improve its litigating position.” 
-13-

In Gilbert C. Swanson Foundation, we stated, “We take very seriously the

statutory and administrative regulations that govern the issuance of IRS summonses.

They are an essential check on the discretion of an agency with broad investigatory

powers over all American citizens.” 772 F.2d at 441. Our approach, however, was

not to adopt a per se rule and hold unenforceable all summonses that involve a

violation of a rule or law. Id. Rather, we adopted the position of the Fifth Circuit to

hold that the enforceability of a summons that the IRS issued through a violation of

a law or rule depends upon all of the circumstances surrounding the summons,

including the seriousness of the violation, the government’s good faith, and the harm,

if any, caused by the violation. See id. (adopting the Fifth Circuit’s method as set

forth in Payne, 648 F.2d at 363). 

Applying this test, we find that the violation in the present case was serious.

The ex parte communications violated the spirit of the Restructuring Act and its

congressional mandate to the Commissioner, not just the letter of Revenue Procedure

2000-43. Accordingly, the violation was not merely a violation of a non-binding,

internal IRS guideline.

Congress, however, delegated to the Commissioner the responsibility for

reorganizing the IRS and ensuring compliance with the restriction on ex parte

communications. Congress did not legislate a specific remedy for violation of the

restriction, and we generally will not fashion a remedy where Congress creates a right

but fails to create an accompanying remedy. See United States v. James Daniel Good

Real Property, 510 U.S. 43, 63 (1993). In James Daniel Good Real Property, the

Court said:

We have long recognized that “many statutory requisitions intended for

the guide of officers in the conduct of business devolved upon them 

. . . do not limit their power or render its exercise in disregard of the

requisitions ineffectual.” French v. Edwards, 80 U.S. (13 Wall.) 506,

511(1872). We have held that if a statute does not specify a

consequence for noncompliance with statutory timing provisions, the
-14-

federal courts will not in the ordinary course impose their own coercive

sanction.

Id. (alteration in original). 

Exercising its delegated authority under the Restructuring Act, the IRS

provided that violations of the ex parte restriction would be addressed “in accordance

with existing administrative and personnel processes.” Rev. Proc. 2000-43, § 3, at

Q&A 28. Accordingly, an alternate remedy exists for the IRS to address the present

violations. The presence of this alternate means to address the violations suggests

that it is not necessary to quash the current summonses.

Looking at the broader question of good faith, we find nothing to suggest that

the communications and the resultant summonses were motivated by any goal other

than the accurate determination of Ms. Robert’s tax liability. While the fact of the ex

parte communications and the failure to timely disclose these communications is

improper and troublesome, there are no parallel criminal proceedings for which the

summonses might serve as improper discovery tools, there is no allegation of an

ulterior motive on the part of Mr. Mannion or any of the Examination Division

personnel, and there are no allegations that the IRS is attempting to coerce Ms. Robert

to settle some other, collateral matter. In short, there is nothing to suggest any

purpose to issuance of the summonses other than a desire to accurately appraise the

Siegel-Robert stock and accurately determine Ms. Robert’s tax liability. 

Ms. Robert’s entire argument regarding good faith and improper purpose

hinges on her interpretation of the Appeals Office’s role subsequent to passage of the

Restructuring Act. While it is undisputed that the Appeals Office served a role as a

dispute resolution body prior to the Restructuring Act, Ms. Robert characterizes the

Appeals Office today as a limited appellate review body that may only affirm or

reverse the IRS position that is presented for review. Ms. Robert, therefore, argues

that any action by the Appeals Office that might change the IRS position from that
-15-

expressed in the thirty-day letter is a wrongful attempt by the Appeals Office to

engage in partisanship and enhance the IRS position in future litigation.

Consequently, to accept Ms. Robert’s bad faith argument, we would be required to

view the Appeals Office as limited in its authority to either (1) adopt the IRS position

as set forth in the thirty day letter or (2) adopt the taxpayer’s position for the tax years

under investigation, even if an Appeals Officer comes to believe that neither position

accurately reflects the taxpayer’s liability.

We disagree with this characterization of the role of the Appeals Office. The

Restructuring Act is concerned with the independence of the Appeals Office and ex

parte communications. See Restructuring Act § 1000(a)(4). The Restructuring Act

contains no prohibition on the referral of a matter from the Appeals Office back to the

Examination Division if the matter appears to have reached the Appeals Office

prematurely or if new, material evidence is disclosed to the Appeals Office. See Rev.

Proc. 2000-43 § 3:

Q-7 Does the prohibition on ex parte communications change the

criteria for premature referrals? 

A-7 As a general rule, there is no change to current criteria or

procedures. In essence, [the Restructuring Act] reinforces the

instructions in Section 8.2.1.2 of the Internal Revenue Manual

(IRM) and reaffirms Appeals’ role as the settlement arm of the

Service. If a case is not ready for Appeals consideration, Appeals

may return it for further development or for other reasons

described in IRM 8.2.1.2.

The Restructuring Act simply instructs that such referrals should not occur on an ex

parte basis.

The history of the Restructuring Act, as set forth by the IRS in Rev. Proc.

2000-43, demonstrates that the Appeals Office maintains its role as the settlement arm

of the IRS and is not as limited in its power as Ms. Robert suggests. In particular, the
-16-

legislative history reveals that Congress rejected a more far-reaching overhaul of the

Appeals Office when it passed the Restructuring Act.

S. Rep. No. 1669, 105th Cong., 2nd Sess., § 304(a) (Feb. 24, 1998),

would have established an independent Office of Appeals in the Internal

Revenue Service, the head of which was to be appointed by and report

directly to the Oversight Board. Further, this proposal would have

barred Appeals from considering issues not “raised” by the originating

function and prohibited “any communication” with the originating

function unless the taxpayer or taxpayer’s representative had an

opportunity to be present. 

Rev. Proc. 2000-43 § 2. As enacted, the Restructuring Act only prohibits those ex

parte communications that “appear to compromise the independence of the appeals

officers.” Restructuring Act § 1000(a)(4). It does not prohibit the Appeals Office

from examining new issues or returning a case for further examination. Further, it

does not bar all ex parte communications. The IRS, in its regulation, concluded:

When the evolution of § 1000(a)(4) . . . is considered in light of

Appeals['] longstanding methods of operation, it can be fairly concluded

that Appeals must be accorded a significant degree of independence

from other IRS components, and should be mindful to avoid ex parte

communications with other IRS functions that might appear to

compromise that independence. The statutory provision cannot,

however, be interpreted as mandating a major redesign of the

fundamental processes Appeals has traditionally followed to carry out

its dispute resolution mission.

Rev. Proc. 2000-43 § 2. The IRS, then, concluded that even after Congress passed

the Restructuring Act, the Appeals Office was to remain “a flexible administrative

settlement authority” rather than a rigidly constrained appellate review organization

limited to affirming or rejecting proposed deficiencies. Id. Rev. Proc. 2000-43

proceeds to make clear the IRS position that the Appeals Office retains the ability to

“(a) return[] cases that are not ready for Appeals consideration, (b) rais[e] certain new
-17-

issues, and (c) seek[] review and comments from the originating IRS function with

respect to new information or evidence furnished by the taxpayer or representative.”

Id. We agree. 

Because we find nothing improper in the fact of the referral of Ms. Robert’s

case for further development–only in the ex parte nature of this referral–we find no

evidence to suggest an improper purpose behind the summonses or bad faith in

issuance of the summonses. Because referral of the case for further development was

not improper, we cannot find that the present violations of the ex parte restriction

caused any harm to Ms. Robert. Accordingly, under Gilbert C. Swanson Foundation,

we do not find it necessary to quash the summonses.

V. Discovery

We next address Ms. Robert’s arguments concerning the district court’s denial

of discovery. Discovery is not necessary in every summons action, and, in fact, the

summary nature of proceedings on an IRS summons militate against expansive

discovery. See United States v. Stuart, 489 U.S. 353, 369 (1989) (“‘[S]ummons

enforcement proceedings should be summary in nature and discovery should be

limited.’” (quoting S. Rep. No. 97-494, Vol. 1, p. 285 (1982))). However, in many

cases, some discovery is appropriate and should be allowed. See United States v. Kis,

658 F.2d 526, 540 (7th Cir. 1981) (“[W]e do not want to put the taxpayer in the

anomalous position of having to allege specific facts when he has no means to gather

that information through discovery . . . .”); United States v. Cortese, 614 F.2d 914,

921 n.12 (3d Cir. 1980) (“[I]n almost every case, the information needed to

demonstrate an improper motive on the part of the Service is in the hands of the

government. Normally, the taxpayer’s only access to such information is through

limited basic discovery carefully tailored to the purposes of the inquiry. Accordingly,

such discovery should be provided.”). To strike a balance between the summary

nature of summons proceedings and the relative disadvantage taxpayers face

regarding access to information, we have held that discovery in a summary summons
-18-

proceeding is appropriate where a taxpayer makes a substantial preliminary showing

that enforcement of a summons would result in an abuse of the court’s process. Tax

Liabs. v. United States, 866 F.2d 1015, 1019 (8th Cir. 1989). 

Ms. Robert made a substantial, in fact conclusive, showing that the IRS

conducted improper ex parte communications. She made no showing, however, that

the resultant summonses were issued for an illegitimate purpose that would reflect on

the good faith of the IRS or cause our enforcement to be an abuse of process. Ms.

Robert argued that discovery was necessary because she did not know the contents

of the ex parte communications and did not even know of many of the

communications until the government filed its motion for summary judgment. In the

affidavits, however, the government disclosed both known and unknown

communications, none of which suggests a motive other than a desire to accurately

value Siegel-Robert stock. Because Ms. Robert failed to make the requisite showing

and demonstrate that discovery would likely lead to useful, relevant evidence, the

district court did not abuse its discretion. 

The judgment of the district court is affirmed.

______________________________