Court Opinion

ID: 9467859
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:58:06.566755+00
Date Added: 2024-06-11T17:40:33.680638
License: Public Domain

MERRILL, Circuit Judge,
concurring:
I concur in Judge Skopil’s opinion, and agree that taxpayer has not met his burden of showing such a likelihood of bad faith on the part of IRS as would warrant the granting of discovery and further hearing.
I would add that where, as here, preliminary investigation suggested that the taxpayer, known to be engaged in income producing professional activity, had for two years failed to file income tax returns, the IRS, under any rational view of its function, was obligated to inquire further as to taxpayer’s liability. A recognition by the revenue agents of this institutional obligation could hardly be other than in good faith. Here, Agent Utaski testified that he had checked with the Fresno Service Center of the IRS to ascertain whether taxpayer had filed returns for 1975 and 1976, and had been told that there was no record of such filing. Further, he had been told by Agent Gibson in San Rafael that Gibson had no record of any returns for 1975 and 1976 having been filed by taxpayer. This may be hearsay as to the fact of filing, but it is competent evidence of Utaski’s good-faith belief that no returns had been filed for those years.1
As to the institutional good faith of the IRS, I would note that when taxpayer is *1377under investigation for trafficking in drugs, the prospect of guilt carries with it the prospect of unreported income. The IRS, for its own purposes, has as much interest in the question of taxpayer’s drug connections as has the DEA, and as much occasion to wish to check his financial records. It cannot be said that once a taxpayer is under investigation by the DEA, the pursuit of information by IRS suggests bad faith.2 Nor does it suggest bad faith to me for IRS to indicate its willingness to share its information with DEA, or to respond to a court disclosure order. Such sharing of information under the circumstances that exist here is perfectly proper and does not constitute IRS an information gatherer for DEA rather than for itself. The statutory provision for disclosure compelling such sharing when ordered by a court makes this clear.

. I do not draw the same conclusion as does Judge Wyatt in his dissent that possession of copies of tax returns for 1975 and 1976 supplied by taxpayer’s attorney and purportedly filed in San Rafael should have dispelled all questions and doubts that normally arise from a taxpayer’s failure to file. In the first place, I do not find in the record any evidence or government concession that the original re*1377turns for those years ever had turned up in IRS files. Further, it should in any event be noted that there is no claim that these returns were filed until after demand for them had been made and the suspicions, which failure to file understandably created, had already arisen.

. A different rule applies in cases such as United States v. LaSalle National Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978), and Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1971), where the IRS has requested the Department of Justice to proceed criminally in a tax matter. Where the criminal investigation is for a nontax crime, however, I find no authority that precludes the two investigations from proceeding contemporaneously, or proscribes a sharing of the information pursuant to a court disclosure order.