Document: 489 U.S. 353 109 S.Ct. 1183 103 L.Ed.2d 388 UNITED STATES, Petitionerv.Philip George STUART, Sr., et al. No. 87-1064. Argued Dec. 5, 1988. Decided Feb. 28, 1989. Syllabus Articles XIX and XXI of the 1942 Convention Respecting Double Taxation (1942 Convention) between United States Canada require States, upon request consistent with revenue laws, to obtain convey information Canadian authorities assist them in determining a taxpayer's income tax liability. Respondent citizens residents maintained accounts bank States. In attempting ascertain their liability for certain years, Department National Revenue (Revenue Canada), pursuant XXI, requested Internal Service (IRS) provide pertinent records. After IRS Director Foreign Operations concluded that requests fell within Convention's scope it would be appropriate honor them, served on administrative summonses information, but, at respondents' request, refused comply. Respondents then petitioned Federal District Court quash summonses, c ntending because under 26 U.S.C. § 7602(c) may not issue summons further its investigation taxpayer when Justice referral possible criminal prosecution is effect Canada's respondents was "a investigation, preliminary stage," law proscribed use regarding American accounts. This argument rejected, ordered comply summonses. The Appeals reversed, holding before must determine has reached stage analogous by here affidavit submitted failed state such determination had been made respect respondents. Held: Neither nor domestic legislation requires attest order enforcement issued Convention. So long as satisfies requirements good faith set forth v. Powell, 379 48, 57-58, 85 248, 254-255, 13 112 conducted relevant legitimate purpose, sought already IRS' possession, statutorily required steps have followed—and complies applicable statutes, entitled summons, whether or directed towards law. Pp. 359-370. (a) Aside from Convention, conjunction 7602(c), narrows class purposes which an affidavits plainly satisfied supra. 359-361. (b) Section does not, terms, apply challenged this case, speaks only into violations forbidding issuance "if effect." Therefore, itself appear bar question. conclusion supported 7602(c)'s legislative history indicating Congress did intend make treaty contingent foreign investigation's having referral. concerns prompted enact particularly preventing encroaching rights potential defendants—are present issues most governments conducting investigations own laws. especially so where none countries, including Canada, whom treaties providing exchanges employ grand juries discovery procedures differ considerably among those countries. 361-365. (c) face do support able, law, gather Government once effect, position corresponding investigation. Those both refer but contain restriction claim. 7 02(c) limits says nothing about officials' decisions investigate countries' laws view outside elements outlined supra, constitute restriction, reasoning LaSalle Bank, 437 298, 98 2357, 57 221, whose principal codified favor position, since provision could curtail defendants country undermining rules diminishing jury's role. Moreover, purpose behind reduction evasion allowing signatories demand each other—counsels against interpreting provisions limit inquiry manner desire; Government's regular compliance authorities' without inquiring they weighs reading XXI; result urged contravene Congress' main reason laying down easily administrable test 7602(c). 365-370. 813 F.2d 243 (CA9 1987), reversed remanded. BRENNAN, J., delivered opinion Court, REHNQUIST, C.J., WHITE, MARSHALL, BLACKMUN, STEVENS, JJ., joined, all Part II-C O'CONNOR KENNEDY, joined. filed concurring part judgment, O'CONNOR, post, p. 370. SCALIA, 371. Lawrence G. Wallace, Washington, D.C., petitioner. Charles E. Peery, Seattle, Wash., BRENNAN Court. 1 Taxation, Mar. 4, 1942, 56 Stat. 1405-1406, T.S. 983, oblige question presented if first determines prosecution. We hold neither imposes precondition summons. meets statutory faith, we defined term (1964), required, toward 2 * are who Northwestern Commercial Bank Bellingham, Washington. 1980, 1981, 1982, Canada) asked January 1984 secure Convention.1 Operations—the "competent authority" Article them. App. 27-28. Specifically, he found "the reque ted possession authorities; correct [respondents] law; same type can obtained law." Id., 28. Thus, April 2, 1984, information. 3 At behest, accordance 7609(b)(2), Western Washington Only one claims us. contended was, words Operations, Magistrate held consolidated hearing rejected argument. Without addressing contention equivalent prosecution, that, even legal were assumed merit, carry burden showing advanced far. Pet. Cert. 31a. Upon considering Magistrate's report objections it, 25a-26a, 34a-35a. 4 Ninth Circuit stayed orders pending appeal, divided panel court reversed. (1987). like will enforced faith. stated described U.S., exhaustive; rather, light our subsequent decision 221 (1978), enactment what now 602(c), also referred case Finally, significantly litigation, ruled acts complying act seeking assistance, should judged standard conducts Hence, concluded, IRS. addition, said, "in establish prima facie affidavit, affirmative statement" acting yet stage; proof point rests initially rather than held, "can consult competent authority expected greater familiarity procedures." F.2d, 250. Court's Department. 5 granted certiorari, 485 1033, 108 1592, 99 907 (1988), resolve conflict Circuit's Second Manufacturers & Traders Trust Co., 703 47 (1983). reverse. II A. 6 claim show probable cause connection See id., 52-57, S.Ct., 252-254. instead need demonstrate issuing follows: "[The Commissioner] Commissioner's Code followed—in particular, 'Secretary his delegate,' after determined examination necessary notified writing 254-255. 8 Once showing, stated, unless abuse court's process. "Such take place," improper harass put pressure him settle collateral dispute, any other reflecting particular investigation." 58, 255. Bisceglia, 420 141, 146, 95 915, 918, 43 88 (1975). carries proving 9 Leaving aside cases Powell repeatedly reaffirmed. See, e.g., Tiffany Fine Arts, Inc. 469 310, 321, 105 725, 730, 83 678 (1985); Arthur Young 465 805, 813, n. 10, 104 1495, 1500, 79 826 (1984). oath authorities, might computation liabilities, He noted "[e]xchanged disclosed normal judicial process operative administration system requesting country," exchanged protested. Ibid. conformity statutes duly informed issuance. petitions quash, nowhere alleged trying some harassment acquisition bargaining power dispute. 18-20. Nor later prove Unless more stringent rule laid Powell. B 10 impose additional constraint investigations.2 By however, respondents, forbids effect" person means time decision, no regard respondents; indeed, agent records fulfill said her kind pending. 30. therefore here.3 11 supports conclusion. Prior enactment, recommended Department, circumvent requirement delaying recommendation based large finding "[n]othing 7602 suggests intended broaden Department's right litigation infringe role jury tool accusation." 312, 2365 (citations omitted). When essence apparently shared concern permitting encroach defendants. Report Senate Finance Committee way prosecution." S.Rep. 97-494, Vol. 1, 286 (1982), U.S.Code Cong. Admin.News pp. 781, 1032. 12 explanation embodied None civil-law countries juries, ceased them.4 treaties.5 pass If parallel expressly investigations, presumably offered extending sweep section beyond plain language. likely discussed appropriateness protections afforded subject here, doubtless considered problems posed application partners, difficulty progressed referral.6 hav us, anything suggesting requests, reference occasioned. see think says. C conceivable foundation provides assurance proceeded language itself. obliges furnish, laws." repeats clause almost verbatim, Commissioner supply "is America." contend 14 (1) 15 persuaded "The clear import controls 'application according obvious meaning effects inconsistent intent expectations signatories.' " Sumitomo Shoji America, Avagliano, 457 176, 180, 102 2374, 2377, 72 765 quoting Maximov 373 49, 54, 1054, 1057, 184 (1963). find there. effect; officials restriction. urge, jury. And suggested segment privilege, prevents partner embarked leading lend position. 16 (2) 17 Nontextual sources often us "giving Treaty parties," Sumitomo, 185, 2379, treaty's ratification operation, fail sustain Relations hearings prior mention exchange S.Exec.Rep. 3, 77th Cong., 2d Sess. (1942), Legislative History Tax Conventions (Committee Print compiled Staff Joint Taxation) 455 (1962) (Leg. Hist.) sole these during brief floor debate contained hint incorporate restrictions limitation 7602(c).7 President's message accompanying transmittal proposed Senate, S.Exec.Doc. B, reprinted Leg. Hist. 445, Proclamation signed, 475, 1399, similarly supporting Indeed, given generally "construe[d] . liberally give animates it" "[e]ven fairly admits two constructions, restricting, enlarging, claimed liberal interpretation preferred," Bacardi Corp. America Domenech, 311 150, 163, 61 219, 225, L.Ed. (1940) omitted), evident XXI—the desire. event, buttre ses claim.8 (3) 18 aids strengthen case. practice counts evidence proper interpretation, conduct evinces understanding agreement signed. Trans World Airlines, Franklin Mint Corp., 466 243, 259, 1776, 1786, 80 273 (1984); Factor Laubenheimer, 290 276, 294-295, 54 191, 196, 78 315 (1933). XXI. Similarly, "[a]lthough conclusive, attributed agencies charged negotiation great weight." 184-185, 2379. Kolovrat Oregon, 366 187, 194, 81 922, 926, 218 (1961). construction repudiates confirms ask adopt. 7602(c): "[S]ummons proceedings summary nature limited." 285 (1982) 1031. way, disputes inevitably arise over thereby "spawn[ing] protracted meaningful results taxpayer." It seems unlikely welcomed ratified approved bill containing presently III 19 conclude explicated Accordingly, judgment remanded opinion. 20 ordered. 21 joins, judgment. 22 quite unnecessary resolution explore discuss led Taxation; for, unanimously agrees, text sufficient decide Treaty's manifest document I agree JUSTICE SCALIA reach, either direct implicit debates authoritative helpful intended. That reserved until confront yield answer For reasons, join 23 24 concur believe t xt completely dispositive respondent's agreement. agrees. ante, 365-366. Given resolves presented, there necessity looking discover 366, special avoid materials unnecessarily consults. 25 Of course, opposed giving parties." critical question, reliably predictably achieved credits, clear, contracting sovereigns' carefully framed solemnly expression intentions expectations, sets judges various jurisdictions ignore discern "genuine" contrary elsewhere. To it. One readily understand appeal making (which conclusive) indeed effectuate genuine shown elsewhere—just cases, pointing out statute happens sound social policy. But using every string one's bow fashion unfortunate implications. ("It wrong; besides, wouldn't work.") Here implication extrinsic contradicted govern. mistakenly earlier cites approach. "[t]he (1963)." quoted proposition fact Maximov, confronted appealing "intent expectations" signatories, responded immediate compelling fails petitioner's view, it." continued: "Moreover, inappropriate sanction deviation solemn when, indication signatories." (emphasis added). highlighted adverb is, indications intent. Our dictum separated last quotation context precisely opposite said. Regrettably, passage being lower courts general treaties." Rainbow Navigation, Navy, 686 F.Supp. 354, 359, (DC 1988). 27 Notwithstanding alludes, traditional agreement's best parties' Rocca Thompson, 223 317, 32 207, 453 (1912), granting consuls "to interven administration, liquidation estate deceased" administer property deceased, "objects purposes." separate expressed text, simply: 28 "[T]reaties careful consideration entered into, drawn persons express choose apt embody high parties. Had intention commit estates country, dying another, exclusively consul nation, very easy declared unmistakable terms." 332, 210. 29 governing principle interpretation. ambiguous extratextual materials. Air France Saks, 470 392, 400, 1338, 1342, 84 289 Nielsen Johnson, 279 47, 52, 49 223, 224, 73 607 (1929). 30 Even, regards preratification confirm unambiguous innocuous practice, object superfluous What distinctive refers. States' expectations," looks solely preceded treaty. Ante, 366-368, nn. 7-8. unprecedented. Even terms ambiguous, resort appropriate, unable single consulted debate, committee hearings, reports. me occasion pronouncing legitimacy materials, permissible suggest arguments Using bilateral contract corporations basis board directors thought meant authorizing chief executive officer sovereigns agreed to, legislature to. accurately, reasonably whatever reflect mutual (for example, negotiating history) unilateral understanding. declined merely reports, explicit condition adopted full President include ratification. said: 31 vested Constitution and, while proviso ever received approval President. cannot act, legislate President, House Representatives. There something, too, shocks conscience idea embodying arrangement Indian tribe, material unknown parties, kept background used exigencies p rticular New York Indians 170 23, 531, 536, 42 927 (1898). course unquestioned enforce treaties. may, form resolution, consent conditions. accepted become Bands Shoshone 324 335, 351-352, 65 690, 698, 89 985 (1945); Restatement (Third) Law 314 constitutionally decline ratify treaty, conditions impeachment. abrogate amend matter internal simply enacting legislation. La Abra Silver Mining Co. 175 423, 460, 168, 181, 44 (1899); Head Money Cases, 580, 599, 247, 254, 798 (1884). far cry say determined, reservation attached instance formal unmentioned ratification, sort accustomed 33 Institute's permit here. 314, Comment d (1987); 325, Reporter's Note 5. despite title work, regarded proposal change restatement existing doctrine, commentary refers court, employed practice. current version (or acknowledgment of) curiosity. An provided Proposed Official Draft Restatement, interest: "There virtually precise decisional matter, probably interpretative rule, 155, interpretations international agreements weight because, explained Section, wish creating disharmony meanings agreements." (Second) 154, b (ii) (Prop. Off. 1962). 34 ourselves approach reduces hitherto treaties, commits step 35 hardly escaped attention recently considerable dispute Executive. Post, 19, 1988, A11, col. (discussing disagreement importance accorded Anti-Ballistic Missile advice ratification); 17, A17, (same); 6, A1, (same). (and, am aware, only) federal relying mat rials Columbia, successive phases controversy, May, 354 November, 699 339 (1988). representations binding F.Supp., 357-358, 17.* second conceded "authoritative Executive branch concerning gives constitutional fully accepts bound statements." 343 (quoting Defendants' Reply Brief Opposition Plaintiff's Cross-Motion Summary Judgment 2.). latest taken correct, Solicitor General. less assuming understandings product advice-and-consent relevance. odd, least, reports argued, General benefit views subject, reach centuries construction. part: "ARTICLE "With prevention fiscal evasion, undertakes furnish State, succeeding disposal State assessment taxes relates. furnished paragraph Article, ordinary directly States." "1. Minister deems cooperation Commissioner, bearing Title reads: "(c) No "(1) Limitation "No title, Secretary begin action 7604 person. "(2) "For subsection— "(A) "A if— "(i) Attorney of, offense connected "(ii) 6103(h)(3)(B) disclosure return (within 6103(b)) relating "(B) Termination shall cease when— notifies Secretary, writing, that— "(I) prosecute "(II) authorize offense, "(III) discontinue final disposition proceeding pertaining ins ituted person, "(iii) subparagraph (A)(ii). "(3) Taxable etc., treated separately subsection, taxable period (or, period, event) imposed chapter separately." individual government him. address effect. Criminal Amendment Act, 1985, ch. §§ 113-115, Revised Statutes 27, 113-115 (Supp. 1985). McKibbon Queen, [1984] S.C.R. 131, 137-157, D.L.R.4th 20-35 (1984) (recounting Canada). Other common-law eliminated well. Saywell Attorney-General, [1982] N.Z.L.R. 97, 100-105 (H.C.) consequences presentation indictment abolition Zealand, England, Australia). As September 30, force conventions ranging Poland Japan. Fogarasi, Gordon, Venuti, Renfroe, Current Status Treaties, Mgmt. Int'l J. 507, 509 Not distinguish civil prosecutions offenses Swiss Cantons, fraud—the severe offense—is prosecuted courts, agency investigates prosecutes offenses. Meier, Banking Secrecy International Law. 16, (1973). acute investigations. Although centered attorneys-general, just falls province similarity appears stop there." Scheim Cantillon, Ross, Stuart States: Standards Summons Matters, 479, 482 routinely gathers turning 482-484, available manuals "that amenable presentation, degree continues point." 482. Cantillon Ross conclude: "It [Revenue Canada] adopts institutional posture tilted well referral." difficult least Contrary SCALIA's suggestion, 377, relied brief, 29, 11, intergovernmental came following colloquy: "Mr. TAFT "In words, citizen deposit evade taxation, convention internal-revenue GEORGE. Senator Ohio points out." Cong.Rec. 4714 (1942). reliance Senate's improper. Scalia acknowledges, recent counsels (1987) ("indication ascribed relevant"); Reporters' ("A account (i) debates, ."). Consultation eminently reasonable. Pace Scalia, reviewing akin "determining 374. occur closed doors, earshot seal. Both public statements. They bear resemblance private deliberations board's sign Insofar analogy apt, better comparison meeting minutes papers corporation's invited peruse. hornbook parties party know different other, party." Contracts 201(2)(b) (1981). Farnsworth, 487-488 (1982). A history, interpretive guide 374, worse indicator meaning, rarely record decides grant withhold consent. new States-Canada Income became effective August involved issued. 1986-2 Cum.Bull. 258. XXVII closely resembles Yet supplementary protocols dependent status Committee, Hearing Treaties Relations, 97th 1st Sess., 1-115 (1981), technical 275, 294, perfunctory 130 19504-19509, 19512-19513 (1984), silent point. ratifying think, left behind, accomplished end own. testimony—reproduced ABM Interpretation Resolution, 100-164, (1987)—by reporter Law, Professor Louis Henkin. self-exertion, speak, restates. qualifier needed go (and today) do.

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