Court Opinion

ID: 8898757
Source: CourtListenerOpinion
Date Created: 2022-11-27 00:37:07.724196+00
Date Added: 2024-06-11T17:07:40.905707
License: Public Domain

ROSENN, Circuit Judge
(concurring and dissenting).
I concur in the partial affirmance of the judgment of the district court and in the remand on the issue of reimbursement to the banks. I would, however, also affirm that portion of the judgment of the district court which denied enforcement of the summons as it related to safe deposit box entry records.
The Government conceded at oral argument before this court that the information which it could derive from those entry records constitutes potential rebuttal evidence only. It was unable to specify how the records might establish civil liability. In its brief to this court, the Government asserted:
When faced with a reconstruction of income based on the net worth method, a favorite defense of the taxpayer is the so-called “cash hoard” defense. Under this defense, the claim is made that the apparent increase in net worth came not from taxable income received during the tax year but rather from undeposited cash which the taxpayer had on hand at the beginning of the year at issue.
Entry records to a safe deposit box, according to the Government, might tend to indicate whether withdrawals from a bank account were in fact deposited in the box and a “cash hoard” accumulated in any one year. The entry records might therefore aid the IRS in refuting a taxpayer’s defense on this ground. Special Agent Beerman and Chief Sullivan of the IRS Intelligence Division for the Pittsburgh District testified to the same effect in the district court.1
Among the purposes for which a section 76022 summons may issue, I find none which even arguably encompasses the accumulation of rebuttal evidence against a hypothetical taxpayer defense. As I see no *939other civil purpose to be served by information in entry records to a safe deposit box, I would affirm the district court’s refusal to enforce the summons to that extent.
Although I agree that the remainder of the summons should be enforced, I believe the majority did not sufficiently acknowledge the argument of the taxpayers and the banks that the summons was not issued in “good faith” as required by the Donaldson decision. This court in United States v. McCarthy, supra, 514 F.2d at 375, stated that the good faith of IRS agents was brought into question upon a showing that they “had no intention of pursuing any civil remedies.” The seeds of doubt were thus sown by Special Agent Beerman’s initial testimony, noted by the majority at footnote 7, that “[t]he prime function of the investigation is to determine if [a] criminal violation has occurred.”
Despite Beerman’s original statements, he later testified that the investigation had both a civil and a criminal purpose. The district court also found this investigation typical of IRS investigations involving the possibility of civil remedies in addition to criminal sanctions.
The court concluded that the taxpayers and the banks had failed to sustain their burden of proof that the IRS contemplated purely criminal penalties in the instant case. I too am persuaded that the investigation was mounted to uncover civil liability as well as criminal violations and that the summons was therefore issued in “good faith” within the meaning given that term in United States v. McCarthy.
Finally, I would amplify the guidelines set forth by the majority pertaining to reimbursement to banks for the costs of complying with the IRS summons. The majority instructs the district court to exclude any amount which the banks “may reasonably be expected to bear as a cost of doing business.” More specifically, I believe reimbursement should be available only for reasonable overtime or additional clerical help and machine costs incurred as a result of compliance with the summons. The IRS should not be required to contribute to the banks’ overhead, depreciation, or other normal operating costs. The burden of proving expenses over and above cost of doing business which would be normally incurred regardless of the summons should be placed squarely on the banks.
For the foregoing reasons, I concur in Parts I, II, and IV of the majority opinion and dissent from Part III.

. Beerman testified:
[I]t would help corroborate if there were allegations that he was withdrawing large amounts of cash and depositing them in the box.
Sullivan also testified as follows:
Number one would be if there were an allegation or we were looking for a cash hoard. If our investigation of the taxpayer’s account discloses a stream of cash deposits, we would put that together with the safe deposit box, that he entered the safe deposit box the day before he made cash deposits each and every time. It may indicate that his income is from a cash hoard which might not currently be a taxable income.
This vague testimony seems to indicate that the records of entry to the safe deposit box were not to be used affirmatively to reconstruct the taxpayer’s net income or to determine tax liability.

. 26 U.S.C. § 7602 (1971) authorizes the issuance of a summons:
[f]or the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax . . . or collecting any such liability