[EL] Supreme Court grants cert in IRS investigation case

[BZall at aol.com]

Last Friday the Supreme Court granted cert in a case with some relevance to 
 the list. It asks what an investigation target must show to pierce the  
traditional IRS veil of secrecy around internal decisionmaking. In U.S. v.  
Clarke, No. 13-301, the question is what a taxpayer who receives an IRS  
summons must show to challenge the summons. Under current interpretations, a  
taxpayer cannot ask for internal IRS documents; there is an exception if the  
taxpayer shows malfeasance by the IRS. This cert petition asks how much the  
taxpayer has to show to claim malfeasance by the IRS and obtain discovery of 
the  real reasons for the IRS action. 
 
The relevance to this list? This is a key question in some of the lawsuits  
filed over the IRS targeting of applications by conservative and other  
organizations. Can the targeted organizations get discovery from the IRS, and  
what do they have to show to get that discovery? Is just an allegation of  
malfeasance enough, or does the organization need to add supporting facts? 
 
The Petition can be found here: 
http://www.justice.gov/osg/briefs/2013/2pet/7pet/2013-0301.pet.aa.pdf
 
The Opposition to the Petition can be found here:
http://sblog.s3.amazonaws.com/wp-content/uploads/2013/12/2013-12-06_Responde
nts_-Brief-in-Opposition-to-Writ-of-Certiorari.pdf. 
 
The very short opinion below can be found here: 
http://www2.bloomberglaw.com/public/desktop/document/United_States_v_Clarke_
517_Fed_Appx_689_11th_Cir_2013_Court_Opini

The Willamette Law Review summary is below:
 
United States v. Clarke

Date Filed: January 10, 2014
Case #:  13-301
517 Fed. Appx. 689 (11th Cir. 2013)
Full Text Opinion:  
http://www2.bloomberglaw.com/public/desktop/document/United_States_v_Clarke_517_Fed_Appx_689_11th_Cir_2013_Court_Opini


TAX  LAW: Whether an unsupported allegation that the Internal Revenue
Service  (IRS) issued a summons for an improper purpose entitles the
summoned party to  an evidentiary hearing to question IRS officials
about their basis for  issuing the summons.

Respondent challenges five administrative summons  that were issued by
the IRS pursuant to an investigation into tax  liabilities. In order to
enforce a summons the IRS must meet a four-part  prima facie case
showing that (1) “the investigation will be conducted  pursuant to a
legitimate purpose,” (2) “the inquiry may be relevant to the  purpose,”
(3) “the information sought is not already within the  Commissioner's
possession,” and (4) “the administrative steps required by the  Code
have been followed.” United States v. Powell, 379 U.S. 48, 57–58,  85
S.Ct. 248, 13 L.Ed.2d 112 (1964).  Once the prime facie showing  has
been made, the burden shifts to the opposing party to either;  (1)
disprove one of the four elements; or, (2) convince the court  that
enforcement would be an abuse of the court’s process.  Abuse of  the
court process would stem out of the order being issued and  enforced
based on an improper purpose.

The United States District  Court for the Southern District of Florida
found in favor of the IRS and  enforced the orders.  Upon appeal,
respondents argued that they were  entitled to discovery and an
evidentiary hearing before the district court  granted the IRS's
petitions to enforce the summonses because they alleged the  IRS may
have had improper purposes. The Court of Appeals for the  Eleventh
Circuit vacated and remanded for a hearing allowing respondents  to
question the IRS decision regarding the issue of summons.

The  Supreme Court granted certiorari to decide whether an unsupported
allegation  that the IRS issued a summons for an improper purpose
entitles the summoned  party to an evidentiary hearing to question IRS
officials about their basis  for issuing the summons.

[Summarized by: Brad Weyer]



Barnaby Zall 
Of Counsel 
Weinberg, Jacobs & Tolani,  LLP 
10411 Motor City Drive, Suite 500
Bethesda, MD 20817
301-231-6943  (direct dial) 
bzall at aol.com  
_____________________________________________________________ 
U.S.  Treasury Circular 230 Notice 

Any U.S. federal tax advice included in  this communication (including 
any attachments) was not intended or written  to be used, and cannot be 
used, for the purpose of (i) avoiding U.S. federal  tax-related penalties 
or (ii) promoting, marketing or recommending to  another party any 
tax-related matter addressed herein.  
_____________________________________________________________
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://webshare.law.ucla.edu/Listservs/law-election/attachments/20140114/be606591/attachment.html>