adequately advised of his constitutional rights under the Fourth, Fifth and Sixth Amendments of the United States Constitution.
From the evidence, the following facts appear:
The defendant is forty-four years of age and a high school graduate, and has operated a gasoline station in Lehighton, Pennsylvania, since September, 1960. Defendant conducts the business himself and occasionally has part-time help. Under Section 4041(a)(1) of the Internal Revenue Code, defendant is required to file quarterly Retail Dealer's Excise Tax Returns on Government Form 720 for diesel fuel sold at retail, which form is forwarded to the taxpayer by the Internal Revenue Service approximately one month before the tax is due. Defendant filed his quarterly returns and made timely payment of his tax obligation for the quarterly periods from September, 1960, to September, 1962. Defendant did not file the quarterly returns and did not forward payment of the tax due for the quarterly periods ending December 31, 1962; March 31, 1963; June 30, 1963, and September 30, 1963. On December 30, 1963, Internal Revenue Agent Carl Woelfel appeared at defendant's station, identified himself as being from the Internal Revenue Service, and informed defendant that he wanted to verify defendant's excise tax returns for the first three quarters of 1962. At that time, defendant told Agent Woelfel that he did not file returns or pay excise tax for the last quarter of 1962 and the first three quarters of 1963. In response to the Agent's inquiry as to the reason for this failure to file, defendant stated " . . . I didn't have the money as I was having financial trouble." Agent Woelfel reviewed some of defendant's daily records, but when it was ascertained that the bulk of defendant's records were not on the premises, defendant was asked to bring them to the premises for inspection at a later date. Agent Woelfel returned on January 6, 1964, at which time he examined defendant's records for several hours. Agent Woelfel submitted his findings and the information obtained to his Group Supervisor, who, in turn, discussed the investigation with the Chief of the Audit Division. The result of these discussions was that it was recommended that Agent Woelfel officially refer this case to the Intelligence Division for possible criminal prosecution. The referral form was executed by Agent Woelfel on January 17, 1964, in which he listed as reasons for the referral the fact that defendant did not file a return, that he did not have the money to pay the tax at that time, and that during the period defendant did not pay his federal excise tax, he had paid the Pennsylvania diesel fuel tax. The Intelligence Division accepted the referral and Special Agent William F. Glase was assigned to conduct the criminal investigation and Agent Woelfel was to assist him. At this point it should be noted that Agent Woelfel is a Revenue Agent and functions on the civil side of Internal Revenue Service investigations and it is his responsibility to conduct audits, assess civil liability and, in some instances, to collect delinquent taxes. If, during a civil investigation, the Revenue Agent suspects that a potential criminal violation may be involved, then he discusses his findings with his Group Supervisor and the Chief of the Audit Division and, if they approve, he formally refers the file to the Intelligence Division, which division conducts all criminal investigations and prosecutions. If the Intelligence Division agrees to accept a referral and embark on a criminal investigation, then a Special Agent assumes charge of the investigation and the Revenue Agent assists him.
In the latter part of January, 1964, Special Agent Glase assumed command of the investigation and met with Agent Woelfel and reviewed the file. By his own admission, he is authorized to make arrests and was searching for a violation of 26 U.S.C. § 7203. On March 16, 1964, Special Agent Glase and Agent Woelfel proceeded to defendant's place of business and Woelfel introduced Glase as a Special Agent of the Intelligence Division. Glase displayed his credentials and informed defendant that " . . . he didn't have to answer any questions which I might ask him or he didn't have to show me any records or anything, and, if he did, his answers or the information he gave me could be used against him subsequently by the Government." It is conceded that this was the only warning given to the defendant throughout the entire investigation and at no time was he advised of any right to counsel or any right to confer with his lawyer. On March 16, both Agents checked and examined defendant's records and they returned on March 19, with photocopying equipment and were granted permission by defendant to photocopy some of his records. On May 1, 1964, the Agents returned and asked defendant if he would be willing to come to the Internal Revenue Service Office in Allentown to answer certain questions
and defendant agreed. On May 15, 1964, at the Internal Revenue Service Office in Allentown, in the presence of both Agents and a stenographer who was summoned from the Philadelphia Office, defendant was sworn and questioned at length concerning the investigation. As was hereinbefore noted, defendant was not advised of any constitutional rights at this Question and Answer Session. This indictment followed.
At the hearing, it was also established that prior to the May 15th session, the Agents had interviewed approximately twenty persons with whom defendant had business dealings; that the Agents checked to see if defendant's income tax returns were filed, and that prior to the referral to the Intelligence Division, Agent Woelfel ascertained the amount of taxes, interest and penalties owed by defendant and, at that point, could have collected the delinquency and closed the case.
Defendant argues most strenuously that when Special Agent Glase entered the picture, it had been clearly ascertained that defendant had not filed returns or paid the excise tax for the periods in question and that the investigation had focused on him as one accused of a criminal violation and that he should have been fully advised of his rights under the Fourth, Fifth and Sixth Amendments. The failure to so advise, according to defendant, deprived him of his rights under the United States Constitution and all evidence obtained thereafter must be suppressed.
The defendant having been advised on March 16, of his right to refuse to answer questions, the dispute appears to be twofold: (1) should defendant have been warned at some appropriate stage of the investigation of his right to counsel, and (2) should defendant have been warned once again of his right to refuse to answer on May 15, 1964, when a Question and Answer Session was conducted at the Allentown Office of the Internal Revenue Service?
After considering the evidence and arguments raised, I conclude that:
(1) there was no requirement that defendant be advised of his constitutional rights prior to March 16, when Special Agent Glase met defendant for the first time;
(2) defendant was properly advised of his constitutional rights under the Fourth and Fifth Amendments by Special Agent Glase on March 16;
(3) Special Agent Glase was not required to advise defendant of his right to counsel prior to the Question and Answer Session of May 15;
(4) under the circumstances of this case, Special Agent Glase should have advised defendant of his right to remain silent at the time of the Question and Answer Session of May 15, and further, at this point, defendant should have been advised of his right to counsel.
Even though some evidence of criminal involvement had been made known to Revenue Agent Woelfel in his civil audit of defendant's records, there was no constitutional or legal requirement that he informed defendant of any rights or contemplated course of action that might be taken. After Woelfel referred the case to the Intelligence Division there was no further personal contact with defendant until March 16, which was after Special Agent Glase assumed control of the investigation. Although a Special Agent is the police arm of the Internal Revenue Service and conducts inquiries for possible criminal violations,
the mere entry of such an agent into the case does not transform it from an investigatory status to an accusatory one. Upon Glase's first contact with defendant, he advised of defendant's right to refuse to answer questions or furnish records and that answers made or information given could be used against him at a future time. Glase was obligated to do no more. There was no requirement, at this point, that he inform defendant of any right to counsel. There is much to be said for the argument that the assistance of counsel is necessary during a tax investigation to protect Fourth and Fifth Amendment rights of the taxpayer, but the great weight of authority is to the contrary. A reading of Escobedo v. Illinois, 378 U.S. 478, 12 L. Ed. 2d 977, 84 S. Ct. 1758 (1963) and Miranda v. Arizona, 384 U.S. 436, 16 L. Ed. 2d 694, 86 S. Ct. 1602 (1965), indicates that the direct holding of those cases was limited to those instances where a defendant was actually in custody or deprived of freedom of action in any significant way:
"Our holding will be spelled out with some specificity in the pages which follow but briefly stated it is this: the prosecution may not use statements, whether exculpatory or inculpatory, stemming from custodial interrogation of the defendant unless it demonstrates the use of procedural safeguards effective to secure the privilege against self-incrimination. By custodial interrogation, we mean questioning initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way.
. . . . Miranda v. Arizona (supra).