Opinion ID: 490532
Heading Depth: 2
Heading Rank: 1

Heading: The Institutional Posture Test.

Text: 14 The Supreme Court has dealt with the question of the enforceability of IRS summonses mainly in the context of distinguishing between a criminal and a civil investigation. At one time, the Internal Revenue Code allowed IRS summonses to be enforced only when the purpose of the investigation was to determine potential civil tax liability; courts then uniformly held that 26 U.S.C. Sec. 7602 did not authorize the issuance of an IRS summons for the improper purpose of obtaining evidence for use in a criminal prosecution, Reisman v. Caplin, 375 U.S. 440, 449, 84 S.Ct. 508, 513, 11 L.Ed.2d 459 (1964); see also LaSalle National Bank, 437 U.S. at 316, 98 S.Ct. at 2367; Donaldson v. United States, 400 U.S. 517, 532-33, 91 S.Ct. 534, 543-44, 27 L.Ed.2d 580 (1971). In 1982, however, congress amended Sec. 7602 to permit the issuance of a summons for the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws. 26 U.S.C. Sec. 7602(b) (emphasis added). Thus, the precise question addressed in Reisman, Donaldson, and LaSalle National Bank is no longer a live one. Very much alive, and central to this case, however, is the broader question of what standard to apply in deciding whether an IRS summons has been issued for some other improper purpose. 15 In LaSalle National Bank, the Supreme Court dealt with a claim that the motive of a single IRS agent, to pursue a criminal investigation of the taxpayer, was so important in the issuance of the summons that, in effect, it became the purpose of the IRS itself, thus rendering (at that time) the summons unenforceable under Reisman and the then-in-force Sec. 7602. LaSalle National Bank, 437 U.S. at 303, 98 S.Ct. at 2360. The Supreme Court there decided that the line between enforceable and unenforceable summonses should not be draw[n]    on the basis of the agent's personal intent. Id. at 316, 98 S.Ct. at 2367. The Court went on to note, the inquiry into the criminal enforcement objectives of the agent would delay summons enforcement proceedings while parties clash over, and judges grapple with, the thought processes of each investigator. Id. 16 From the broad language of LaSalle National Bank, the government urges that to obtain enforcement it need only show there existed a single valid purpose underlying the summons. Indeed, since LaSalle National Bank clearly places on the taxpayer the burden of disproving a legitimate purpose for the summons, 437 U.S. at 316, 98 S.Ct. at 2367, the IRS would have us go still further, and hold that so long as Millman cannot affirmatively show the absence of even a single legitimate tax collection purpose, its summons must be enforced. 17 We do not read LaSalle National Bank or the institutional posture test so broadly. The Supreme Court did place upon taxpayers who challenge a summons the onerous burden of proving the absence of a valid IRS motive, but its language in so doing is instructive: 18 [T]hose opposing enforcement    do bear the burden to disprove the actual existence of a valid    purpose by the Service. After all, the purpose of the good-faith inquiry is to determine whether the agency is honestly pursuing the goals of Sec. 7602 by issuing the summons. 19 Id. (emphasis added). 20 By using the terms actual existence, good-faith inquiry, and honestly pursuing, the Supreme Court indicated that the IRS must do more than mechanically recite, in case after case, that it believes the taxpayer may owe taxes to the treasury. Such a standard would be meaningless, particularly since the taxpayer would have the virtually impossible burden of disproving that there was such a purpose. In the final analysis, while Millman must show the absence of a valid purpose underlying the summons, and must do so by reference to the IRS's institutional posture, his burden can be met by showing bad faith on the part of the IRS, even if the IRS can point to a purported tax-collection purpose. 21 Although LaSalle National Bank can be read to render the motive of the individual agent irrelevant in the civil-criminal context presented there, that motive is not meaningless in the inquiry into potential IRS harassment involved here. As the Supreme Court noted in LaSalle National Bank, We recognize, of course, that examination of agent motive may be necessary to evaluate the good-faith factors of [United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964) ], for example, to consider whether a summons was issued to harass the taxpayer. LaSalle National Bank, 437 U.S. at 316 n. 17, 98 S.Ct. at 2367 n. 17. 22 Thus, we conclude that the institutional posture test is the appropriate standard for determining whether a summons is issued merely to harass the taxpayer, that the motive of an agent involved in an investigation is a relevant factor in determining that institutional posture, as are the particular facts of each investigation and each taxpayer's situation, and that while the institutional posture test is applicable to a claim such as Millman's, how that posture, and the good faith of the IRS, are determined is a matter for case-by-case adjudication. 23