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United States v. American Express Co.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


April 30, 1979

UNITED STATES OF AMERICA AND LEROY MARTIN, SPECIAL AGENT, INTERNAL REVENUE SERVICE, PETITIONERS-APPELLANTS,
v.
AMERICAN EXPRESS COMPANY; DINERS CLUB, INC.; AND CHEMICAL BANK, RESPONDENTS, AND DAVID QUINN AND GAIL QUINN, INTERVENORS-APPELLEES.

Appeal from the United States District Court for the Southern District of New York.

Present: HONORABLE STERRY R. WATERMAN, HONORABLE WILFRED FEINBERG, HONORABLE WALTER R. MANSFIELD, Circuit Judges.

This cause came on to be heard on the transcript of record from the United States District Court for the Southern District of New York, and was argued by counsel.

ON CONSIDERATION WHEREOF, it is now hereby ordered, adjudged, and decreed that the order of said District Court be and it hereby is REVERSED.

This is an appeal by the government from an order denying in part an application to enforce Internal Revenue Service (IRS) summonses issued pursuant to section 7602 of the Internal Revenue Code, 26 U.S.C. ยง 7602. The IRS, seeking to audit intervenors' tax returns for the years 1973, 1974 and 1975, sought financial data from respondents for the years 1969 to 1975 inclusive, in order to perform a net worth analysis to investigate the possibility of unreported income. The district court refused enforcement with respect to the years 1969-1971. It appears that the investigation is being conducted pursuant to a legitimate IRS purpose, United States v. Powell, 379 U.S. 48, 57 (1964), and that the material sought "may shed light upon the correctness of the [taxpayers'] returns," United States v. Noall, 587 F.2d 123, 125 (2d Cir. 1978), and that the information sought is not already in the possession of the IRS, United States v. Powell, supra, 379 U.S. at 57-58. Even if the information sought was purportedly contained in intervenors' tax returns for the years 1969-1971, the IRS need not be forced to rely on them where its purpose in seeking the information is verification of intervenors' tax returns in later years. Therefore, since there is no showing that the summonses were issued for any improper purpose, we reverse the portion of the district court's order denying enforcement of the IRS summonses pertaining to the years 1969-1971, and direct that they be enforced.

19790430

© 1998 VersusLaw Inc.



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