Opinion ID: 517676
Heading Depth: 1
Heading Rank: 4

Heading: the burden of compliance

Text: 41 Dayton emphasizes the difficulties it will encounter in locating and presenting the records sought by the summons. An affidavit by its director of income tax asserts (1) the payroll records are commingled with other payroll records of its Department Store Division and it will take one person four to six weeks, or possibly twice that, to segregate the records sought; (2) that the daily sales summaries are located on pallets and will require two weeks; and (3) the charge receipts are on microfiche at another location and intermingled with other charge receipts, so that it would take one person from three to nine months to segregate and make copies. One person's salary rate is $19.23 per hour, for a total ranging from $13,845 to $38,460. 42 The government offered, on the other hand, to do a lot of the leg work and there is provision for at least partial compensation (although Dayton deems it inadequate). 43 Dayton argues that the burden of its compliance is so great in proportion to any revenue the IRS may obtain (perhaps $500 as to each employee who underreported tips) that the summons is unreasonable and should not be enforced. Dayton concedes that 44 The Supreme Court has treated the Fourth Amendment protections available to corporations as being essentially whether the search is reasonable. Oklahoma Press Publishing Company v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946). 45 The cases, however, leave little room for the proposition that the burden of locating relevant documents is to be weighed against the possible recovery of revenue in determining whether the summoning of corporate documents under 26 U.S.C. Sec. 7602(2) is unreasonable. 46 Walling, itself, says that once it be determined that the investigation is for a lawfully authorized purpose and the documents sought are relevant to the inquiry, the requirement of reasonableness ... comes down to specification of the documents to be produced adequate, but not excessive, for the purpose of the relevant inquiry. 327 U.S. at 209, 66 S.Ct. at 506. Although 47 a governmental investigation into corporate matters may be of such sweeping nature and so unrelated to the matter properly under inquiry as to exceed the investigatory power ..., it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant. 48 United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 369, 94 L.Ed. 401 (1950). 49 This court has held [b]roadness alone is not sufficient justification to refuse enforcement of a subpoena so long as the material sought is relevant. Adams v. F.T.C., 296 F.2d 861, 867 (8th Cir.1961), cert. denied, 369 U.S. 864, 82 S.Ct. 1029, 8 L.Ed.2d 83 (1962), quoted with approval United States v. Giordano, 419 F.2d 564 569 (8th Cir.1969). 50 Although statements can be found that a district court may refuse to enforce a summons which is excessively burdensome, United States v. Davey, 543 F.2d 996, 1000 (2d Cir.1976), or out of proportion to the end sought, United States v. Harrington, 388 F.2d 520, 523 (2d Cir.1968), the only case cited by Dayton where enforcement was refused because of disproportion between the economic burden on the corporation summoned and the expected benefit to IRS was United States v. Third Northwestern Nat. Bank, 102 F.Supp. 879 (D.Minn.1952). The summons was directed to a bank. Compliance would require the bank to examine many thousands of items looking for one of thirteen names. One of the names was that of Brennan, the taxpayer who was the object of the investigation. Brennan had had one transaction with the bank, a loan on his car, and there had been a loan to one of the others. There was no account in any of the names and no other known transactions. The only theory upon which the IRS could hope to obtain information relevant to Brennan's tax liability was that Brennan may have used the other names as aliases or as agents or nominees. The court found no evidence to justify that suspicion. 51 Without considering the merits of the Third Northwestern rationale, the case is readily distinguishable on its facts. 52 The district court did not comment nor make a finding on Dayton's claim that the summons imposed an excessive or disproportionate burden, but evidently was unpersuaded. In our view the facts relied on by Dayton, mitigated by the government's offer of assistance and the compensation to which Dayton is entitled, do not compel a finding sustaining the claim.