Court Opinion

ID: 8939941
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:50:58.871411+00
Date Added: 2024-06-11T17:09:42.824450
License: Public Domain

JOHN R. BROWN, Circuit Judge,
concurring in part and dissenting in part.
I concur in the Court’s holding that the District Court correctly ordered enforcement of the IRS summons. I dissent from the opinion of the majority in its failure to require the District Court to consider whether the IRS letters to Dr. Barrett’s patients could permissibly refer to the fact that the physician was under “criminal investigation.”

In a Nutshell

In my view, the decision of the majority is deficient in two respects. First, the panel purports to displace the holding of Texas Heart with “a new rule [that] henceforth a taxpayer’s sole remedy for unlawful violations of § 6103(a) shall be the civil provisions set forth in § 7431.” Second, and more importantly, the majority reaches an unsound result. I cannot believe that a District Court is required to stand idly by while its processes are unnecessarily used to inflict damage upon a taxpayer’s reputation.
Conditional enforcement of an IRS summons provides an easy and efficacious means of avoiding that result, and because the majority fails to apply and enforce the holding and the mandate of Texas Heart in that regard, I must dissent.

The Mandate in Texas Heart

In 1979, the IRS commenced an investigation of the personal and corporate tax returns of Dr. Barrett. That investigation culminated in the issuance of two summonses: one to Dr. Barrett, and one to each of the hospitals at which he practiced medicine. Each summons demanded the production of patient records in order to identify the patients of Dr. Barrett so that the IRS could compare payments made by patients and insurers with income actually reported by the physician. By obtaining patient names through the mechanism of the summons, the IRS could use that information to contact each patient directly, by mail, in order to obtain information pertinent to their transactions with Dr. Barrett. Over 350 of Dr. Barrett’s patients — identified through the hospitals’ response to the summons — eventually received a letter from the IRS, written on the letterhead of the agency’s Criminal Investigation Division, which began with the following sentence “the above named individual [Dr. Barrett] is currently under investigation by the Criminal Investigation Division of the Internal Revenue Service.”
Four hospitals did not comply with the summons. On June 21, 1983, the IRS filed a petition for enforcement of its summons against them. Dr. Barrett intervened in that proceeding. On December 6, 1983, enforcement of the summons was denied by. Judge Black. On December 12, 1983, six days after Judge Black denied enforcement against the hospitals, the IRS filed a separate petition for enforcement of its summons against Dr. Barrett. That proceeding was docketed in Judge DeAnda’s court and, on December 10, 1984, Judge DeAnda enforced the summons against Dr. Barrett.
The IRS appealed Judge Black’s denial of enforcement against the hospitals. The validity of that summons, without which the mass mailing could not have proceeded, was litigated in that appeal and gave rise to the mandate in Texas Heart. In Texas Heart, the Court recognized that the disclosure in the patient letter of the fact that Dr. Barrett was under criminal investigation might be an unauthorized disclosure of return information as defined in § 6103. It *963held, however, that “even if the IRS unlawfully disclosed ... that Dr. Barrett was under criminal investigation, that disclosure does not demonstrate [a] lack of a legitimate investigative purpose for the investigation in this case.” 755 F.2d at 480.
It remained to be seen, however, whether the enforcement of the summons could nonetheless be tailored to protect Dr. Barrett against the disclosure of the fact that he was under criminal investigation. That disclosure, if permitted to occur, would very likely be injurious to the physician’s professional, as well as to his personal, reputation. Because it recognized that such a disclosure could have grave and lasting consequences, the Court in Texas Heart remanded the case to the district judge for three critical determinations:
(i) whether the statement in the prior patient mailings that Dr. Barrett was under criminal investigation was a disclosure of “return information” under § 6103; and, if so,
(ii) whether the disclosure of that information was authorized under § 6103(k)(6) which permits the disclosure of return information to the extent such disclosure is necessary to obtain information not otherwise reasonably available; and, if the disclosure was not authorized,
(iii) whether the enforcement of the summons should be conditioned by requiring the IRS to desist from further unlawful disclosures.
755 F.2d at 482.
The present appeal arises from the separate summary proceeding instituted to enforce the summons issued to Dr. Barrett. In that proceeding, Dr. Barrett had objected that the intended use of the summons information — blind mailings to patients disclosing the fact that he was under criminal investigation — was a violation of his privacy rights. Judge DeAnda, however, unconditionally enforced the summons and Dr. Barrett then appealed.
Dr. Barrett contends on appeal that this case should be remanded to the District Court in light of the holding in Texas Heart. In Texas Heart, the Court expressly stated that “it may well be an abuse of process to allow enforcement of summonses when the IRS concedes it will continue to unlawfully disclose taxpayer return information.” 755 F.2d at 482. To guard against such potential abuses, the Court made the following unequivocal statement:
The Court reiterates that even if the past disclosure was unlawful, the district court has discretion to condition enforcement of the summonses by requiring that the IRS agree to desist from further unlawful disclosures.
Id. Dr. Barrett contends that, in light of this holding, the District Court should be required to consider whether the enforcement of the summons should be conditioned in order to protect him against the unnecessary disclosure of the fact that he is under criminal investigation.

Rejecting Re-Examination of Texas Heart

In my view, the remand sought by Dr. Barrett is essential. I dissent from the opinion of the majority because, in failing to so hold, it reexamines Texas Heart and implicitly overrules an essential part of the holding of the case. That is something which we, as a three-judge panel of this Circuit, are not empowered to do. United States v. One 254 Foot Freighter, the M/V ANDORIA, 768 F.2d 597, 602 (5th Cir. 1985); Fritiofson v. Alexander, 772 F.2d 1225, 1237 n. 6 (5th Cir.1985); United States v. 162.20 Acres of Land, 733 F.2d 377, 379 (5th Cir.1984); United States v. Albert, 675 F.2d 712, 713 (5th Cir.1982).
In its own words, the majority states “the question we must answer, then, is whether in an enforcement proceeding the District Court could have appropriately restricted the IRS in the manner that it conducted mailings to Dr. Barrett’s customers.” That question is no longer open. It was answered by the Court in Texas Heart. The answer was emphatic:
the district court has discretion to condition enforcement of the summonses by *964requiring that the IRS agree to desist from further unlawful disclosures.
755 F.2d at 482. That decision is binding on us and will remain so until overturned either by the Supreme Court or by this Court sitting en banc. To purport to replace that holding with “a new rule” that denies the existence of such discretion is simply not a decision which is within the province of this panel.

The New Rule

The majority states that “henceforth a taxpayer’s sole remedy for unlawful violations of § 6103(a) shall be the civil provisions set forth in § 7431.” It justifies this decision by stating that it has “no indication ... that Congress intended §§ 6103 and 7431 to burden purportedly ‘summary’ enforcement proceedings with the time-consuming litigation that § 6103(k)(6) determinations would entail.” One wonders, however, where the burden really lies and just how heavy or time-consuming it truly is.
Unless acquiesced in, the IRS is already required to seek enforcement of its summonses in the District Court, where it must prove that it possesses a legitimate investigative purpose for the summons. United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964). Given that a hearing is already required to determine whether such a legitimate investigative purpose exists, it does not appear unreasonable to permit, or to require, a District Court to inquire at that proceeding into whether the breadth of the IRS summons, or the practices flowing from its use, can be tailored so as not to collide with the Congressional intent to protect the taxpayer against unnecessary invasions of his privacy. Much of the evidence pertinent to the existence of a legitimate investigative purpose for the summons will also be relevant to the determination of whether the disclosure of return information is necessary to obtain information that is otherwise not reasonably available. See 26 U.S.C. § 6103(k)(6). The determination of whether there exists a legitimate investigative purpose for the summons is certainly not far removed from the determination of whether the practices flowing from its enforcement are an unnecessary invasion of privacy or threaten injury to a taxpayer’s reputation.
The result of the majority’s opinion, however, is that the District Court is required to stand idly by and enforce a summons which unnecessarily subjects a taxpayer to the ridicule and humiliation of being labeled as a criminal tax evader in the eyes of his fellows. This case presents a perfect illustration of the harm which will be wrought by adhering to such a result. Despite the instruction in the IRS Manual that “caution must be exercised not [to] damage the reputation of the taxpayer by making [a mass mailing] either offensive or suggestive of any wrongdoing by the taxpayer,” 5 CCH Internal Revenue Manual, ¶ 9781 ch. 347 at 26,891, Agent Hanson's letter to Dr. Barrett’s patients began with the startling disclosure that the physician was “currently under investigation by the Criminal Investigation Division of the Internal Revenue Service.” That language cannot, by any stretch of the imagination, be termed cautious. Indeed, the IRS Manual instructs its agents that “appropriate wording [for a mass mailing] could be ‘the Internal Revenue Service is conducting an investigation of [taxpayer’s name].’ ” Id. (Emphasis added).
The Government, in response to a specific request by the Court at oral argument for any authoritative statement on behalf of the Department of Justice, justifies the letter on the grounds that if, in a follow-up to the letter, an agent were to interview one of Dr. Barrett’s patients who has been identified as a result of the summons, the agent would be required to identify himself as a special agent affiliated with the Criminal Investigation Division. I recognize that many factors — some approaching considerations of due process — support this requirement. But we deal here not with a true field investigation. Instead, we have only the broadside, initial inquiry to hundreds of unsuspecting persons who may well harbor a godfather image of their doctor.
*965An entire reputation was jeopardized by the injudicious, inappropriate, and wholly unnecessary use of language by Special Agent Hanson, and by the IRS’ disclosure of the fact that Dr. Barrett was under criminal investigation. Among the sophisticated clientele of a plastic surgeon, the reference to a “criminal investigation” is far from an innocuous indication that Dr. Barrett’s tax returns — like those of innumerable, honest business and professional people — reflected signs of neglect or mistake. Rather, the language used in the letter was a tell-tale pronouncement to the public that the IRS suspected that Dr. Barrett’s conduct met the severe standards of willful violation for which the physician was subject to criminal charges, indictment, possible conviction, and a penitentiary sentence.
The disclosure of the fact that Dr. Barrett was under criminal investigation, in my view, could not possibly have been reasonably necessary to obtain information that would not otherwise be available. It seems unlikely to me that the number of responses received by the IRS, 81 to be exact, would have differed significantly had the letter disclosed only the fact that the income taxes of Dr. Barrett were under investigation. At the very least, it is clear that under our binding decision in Texas Heart it is up to the district judge to consider, at the enforcement proceeding, whether such a disclosure is reasonably necessary and whether he should condition his enforcement by eliminating such unnecessary disclosures that will mark the identified taxpayer as a federal criminal.
The majority concludes, nonetheless, that the problem is most adequately addressed through the vehicle of an action in damages under § 7431. In these days of overloaded dockets and scarce judicial resources, the majority requires that the taxpayer commence a separate lawsuit to redress his injury, rather than avoiding the harm through the immediately available vehicle of conditional enforcement. In these days of budgetary deficits, they choose as the preferred remedy a damage action, when the necessity for paying such damages could be avoided in the first instance at the summons enforcement hearing.
That is why their decision is, in my view, simply unsound and is why I dissent.