of any tax return information with respect to the taxes and periods under investigation by the IRS; that the records requested by the summons are not already in the possession of the IRS and are relevant and necessary to the purposes of the investigation; and that all procedures required by the Internal Revenue Code were followed with respect to the issuance of the summons. This affidavit establishes the government's prima facie case for enforcement of the summons.
In rebuttal, the taxpayer submitted an affidavit stating that she has been "under continuous and intense criminal investigation" by the IRS for over three years; that the IRS has "harassed and annoyed" her family, friends, and associates as well as herself; and that certain documents she obtained from the IRS pursuant to the Freedom of Information Act (F.O.I.A.) reveal that she has been "targeted" for criminal prosecution as an "illegal tax protester", and that these documents have been edited (through "black-outs" or "white-outs") to conceal the IRS' "deliberate delay in submitting a recommendation to the Justice Department for criminal prosecution" and the IRS' design to use the summons "merely . . . to gather additional evidence for [her] prosecution."
Attached to her affidavit were copies of various documents obtained by the petitioner from the IRS via the F.O.I.A. (Exhibits A through L attached to petitioner's "Reply to Response to Petition to Quash Summons"). Some of these documents did indeed contain "black-outs" and "white-outs" as alleged by the petitioner. Accordingly, out of an abundance of caution the Court granted the petitioner's request for an evidentiary hearing and ordered the IRS to provide unedited copies of the documents referred to by the petitioner in order for the Court to make an in camera determination as to whether any of the documents bore any relevance to the petitioner's allegations of "bad faith".
At the hearing on July 2, 1985, the Court examined, in camera, unedited copies of Exhibits C, D, and E attached to petitioner's affidavit. The Court determined at that time that none of those documents - copies of internal IRS paperwork regarding the petitioner - had any relevance to the issues raised in the petition to quash. Exhibits G through L, which the petitioner conceded had not been "edited", similarly do not contain any information relevant to the issue of "bad faith" raised by the petition to quash. Finally, counsel for the IRS stated at the hearing that the IRS had been unable to locate copies (edited or unedited) of Exhibits A, B, and F attached to the petitioner's affidavit, because they did not, according to the government's records, appear among the documents released to the petitioner pursuant to her F.O.I.A. request. At the close of the hearing the Court requested counsel for the IRS to endeavor to locate unedited copies of those documents and forward them to the Court for in camera inspection. The IRS did locate and submit unedited copies of petitioner's Exhibits A, B, and F. The Court has examined these documents in camera and finds they contain nothing which would permit an inference of any improper conduct by the IRS in connection with the issuance of the summons in this case.
At the hearing on July 2, 1985 Agent Fournier testified that he had not recommended to anyone in the Internal Revenue Service or the Justice Department that a criminal prosecution of the petitioner be commenced, and that he was not aware of any request by the Justice Department for information regarding the petitioner's tax returns. There was no evidence presented - either through the testimony of the agent or the testimony of the petitioner - which would tend in any way to establish any of the factors identified by the Third Circuit as indicative of the IRS' "bad faith", i.e., that the summons was issued solely to harass the taxpayer, or solely to force her to settle a collateral dispute, or solely to gather information for other government agencies. See Pickel v. United States, 746 F.2d at 185.
The only contention pressed by the petitioner at the hearing was her claim - not raised in her brief - that the IRS had failed to establish its prima facie case for enforcement because the 1099 forms requested in the summons already must be in the "possession" of the IRS within the meaning of United States v. Powell, 379 U.S. at 57-58, 85 S. Ct. at 254-55. At the hearing, the agent testified that although the IRS should have received a magnetic tape from the bank containing the information contained in the 1099 forms, he had been unable to retrieve the 1099 forms from the IRS computer system, and consequently he had been unable to obtain the information contained in the 1099 forms. Under substantially identical circumstances the Third Circuit observed that the costs of "retrieval" of 1099 forms (stored in tapes or documents) is "prohibitive", and held that if "the information sought . . . is, as a practical matter, neither accessible to nor available to [the IRS]", the fact that the forms sought "may technically be deemed within the physical proprietary control of the Government" will not bar enforcement of the summons. United States v. First National State Bank of New Jersey, 616 F.2d 668, 674 (3d Cir. 1980); see also United States v. Provenzano, 569 F. Supp. at 545. In this case it is undisputed that the information sought in the summons is not, as a practical matter, accessible or available to the IRS and, accordingly, the fact that a magnetic tape containing the bank's 1099 forms may be somewhere in an IRS storage facility will not bar enforcement of the summons.
For all of the reasons set forth above, the Court has determined that the petition to quash the IRS summons filed by Jean D. Smith will be denied and the motion filed by the IRS to enforce the summons will be granted. An appropriate Order follows.
[EDITOR'S NOTE: The following court-provided text does not appear at this cite in 614 F. Supp.]
AND NOW, this 22 day of July, 1985, upon consideration of the petition filed by Jean D. Smith to quash the summons issued to Fidelity Bank and upon consideration of the motion to enforce the summons filed by respondent IRS, for the reasons stated in the Court's Memorandum of July 22, 1985,
IT IS HEREBY ORDERED:
1. The petition to quash the summons issued to Fidelity Bank is DENIED.
2. The motion for enforcement of the summons issued to Fidelity Bank is GRANTED, and the stay effected by the filing of the instant petition pursuant to 26 U.S.C. § 7609(d)(2) is DISSOLVED.
3. The Fidelity Bank shall comply with the summons served on it at a reasonable date, place, and time to be determined by the Internal Revenue Service.
4. A certified copy of this Order shall be forwarded by the Clerk to The Fidelity Bank, Broad & Walnut Streets, Philadelphia, PA 19104.
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