The opinion of the court was delivered by: MUIR
On November 28, 1989, Petitioner E. Bruce Hatcher filed a motion to quash a summons issued by Joel Ozburn, IRS Special Agent, directed to the First National Bank of Berwick with a place and time for appearance set for Wilkes-Barre at 9:00 A.M. on December 19, 1989. In an order dated December 15, 1989, this Court stayed execution of the summons pending further order because the Respondent United States failed to comply with our order dated November 30, 1989, which expedited briefing in this matter. The United States filed an answer and a brief in opposition to Hatcher's brief on December 22, 1989. Hatcher filed a reply to the answer and a reply brief on January 3, 1990.
Hatcher claims that the Commissioner's Orders published in IR Manual 1229 are only prima facie evidence that an Internal Revenue Officer (IRS Officer) or employee has been delegated authority to perform any function for the Secretary pursuant to the Code. Hatcher contends that all orders which affect the rights or property of natural born inhabitants of one of the states of the United States must be published in accordance with the proper authority. Furthermore, no citizen can be adversely affected or bound by an unpublished order and may safely ignore such order with impunity.
Hatcher offers as an example the administrative summons at issue in this case as set forth in Commissioner's Order No. 4 (Rev. 19), effective January 26, 1989. Hatcher argues that this Order is only prima facie evidence that an IRS Officer has delegated authority to issue a summons because this Order derives its authority from Treasury Order No. 150-10 which was never published in the Federal Register. Hatcher notes that Treasury Order No. 150-10 was filed with the Federal Register on July 10, 1986, but was not published as required by 44 U.S.C. § 1505, et seq. Hatcher found the citation to the unpublished Treasury Order in the Commerce Clearing House Standard Federal Reporters, 1986 edition.
Hatcher has analyzed the history of revisions to Commissioner's Order No. 4 in order to show that there is no published delegation of authority for this Order. Hatcher does not state whether Commissioner's Order No. 4 (Rev. 18) was published in the Federal Register. He does note that Commissioner's Order No. 4 (Rev. 17) was published in the Federal Register but applied only to the authority to issue summons under international laws. According to Hatcher, Commissioner's Order No. 4 (Rev. 16) was not published in the Federal Register. Commissioner's Order No. 4 (Revisions 9 through 15) vested summons authority in the hands of the Commissioner pursuant to the authority derived from Treasury Department Order No. 150-37, dated March 17, 1955. Treasury Order No. 150-37, however, was not published in the Federal Register. Commissioner's Order No. 4 (Revisions 0 through 8) were issued prior to the promulgation of Treasury Order No. 150-37 but dealt with tax treaties and tax conventions and the relationship of foreign countries relative to tax matters with the United States.
The United States contends that the authority to issue a summons with respect to tax matters derived from 26 U.S.C. § 7602, which states in part:
(a) Authority to summon, etc. -- For 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 . . . the Secretary is authorized --
(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
(2) To summon the person liable for tax or required to perform the act . . . to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry. . . .
The United States's brief in opposition cites the case of Couch v. United States in which the Supreme Court stated that "it is now undisputed that a special agent is authorized, pursuant to 26 U.S.C. § 7602, to issue an Internal Revenue summons in aid of a tax investigation with civil and possible criminal consequences." 409 U.S. 322, 326, 93 S. Ct. 611, 34 L. Ed. 2d 548 (1973). The question in that case, however, was whether the taxpayer was able to invoke the Fifth Amendment privilege against compulsory self-incrimination to prevent the production of business and tax records in the possession of the accountant. Id. at 323. The Court in Couch did not discuss Hatcher's argument that the agents lack authority because the underlying Treasury Department orders were not published in the Federal Register.
The United States also argues that Commissioner's Order No. 4 (Rev. 15), effective March 15, 1984, was published in the Federal Register on April 9, 1984. See 49 F.R. 13946. The United States contends that this Order states that the authority granted to the Commissioner to issue summons is delegated to, among others, the Chief of the District Criminal Investigation (Chief). The Chief may designate any other officer or employee of the Internal Revenue Service as the individual before whom a person summoned pursuant to § 7602 must appear. The United States points out that an IRS Special Agent is considered among those officers who may be delegated such authority. See Commissioner's Order No. 4 (Rev. 15) at para. 4(b) (2).
The weakness in the United States's argument is that Hatcher does not contest that Commissioner's Order No. 4 (Rev. 15) was published in the Federal Register. Hatcher is claiming that the Secretary has not delegated authority to the Commissioner and hence the Commissioner cannot redelegate authority to any subordinates to execute the Internal Revenue laws. Hatcher argues in his reply brief -- and this Court agrees -- that the United States has failed to address the major issue which Hatcher raises in his brief -- the absence of any duly promulgated and published ...