United States v. Lanoie ( 2010 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
November 24, 2010
TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA/
INTERNAL REVENUE SERVICE,
Petitioner - Appellee,
No. 10-2125
v. (D.C. No. 08-MC-00030-MV)
(D. New Mexico)
PAUL LANOIE, JR.,
Respondent - Appellant.
ORDER AND JUDGMENT *
Before HARTZ, ANDERSON, and TYMKOVICH, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Paul Lanoie Jr. proceeding pro se, appeals an order of the district court
ordering him to provide the Internal Revenue Service (“IRS”) with information
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
sought in a summons issued by the IRS, as well as a separate judgment enforcing
the summons against him. We affirm.
BACKGROUND
As part of an ongoing investigation relating to the collection of potential
outstanding tax liabilities of Mr. Lanoie for the 1997, 1998 and 1999 tax years, on
June 25, 2008, IRS Revenue Officer Dean Chavez issued a summons to
Mr. Lanoie, along with a Form 433-A Collection Information Statement. The
summons directed Mr. Lanoie to appear before Mr. Chavez on July 16, 2008, to
provide testimony and produce certain categories of documents pertaining to his
assets and liabilities.
On July 15, 2008, Mr. Chavez received a letter from Mr. Lanoie stating that
he could not attend the scheduled July 16 meeting and requesting that he be given
a choice of at least three more dates for the meeting. In his letter, Mr. Lanoie
noted case law providing that only a court can enforce an IRS summons, and
asked, “If that is the case, why should I appear before you and give you
documents and answer any of your questions?” Letter at 2, R. Vol. 1 at 36. 1 He
1
Mr. Lanoie cited a Second Circuit opinion, Schulz v. IRS, 395 F.3d 463,
465 (2d Cir.), clarified on rehearing, 413 F.3d 297 (2d. Cir. 2005), for the
proposition that “absent an effort to seek enforcement through a federal court,
IRS summonses apply no force to taxpayers, and no consequence whatever can
befall a taxpayer who refuses, ignores, or otherwise does not comply with an IRS
(continued...)
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further stated, “[i]t seems to me that every relevant question or request for
documents that you can ask from me can be used in a criminal tax case against
me,” and that if he was “wrong about this and you still want to meet and put all
the above into action, let me know and we can meet.” Id.Mr. Chavez left messages on Mr. Lanoie’s home telephone, rescheduling
the meeting for July 28, 29 or 30, 2008, but Mr. Lanoie failed to appear on any of
those dates. Mr. Lanoie claimed that he never received the messages left by Mr.
Chavez.
On September 2, 2008, the United States Attorney for the District of New
Mexico, after consulting with Mr. Chavez, sent Mr. Lanoie a letter identifying the
categories of information sought in the summons and requesting that Mr. Lanoie
meet with Mr. Chavez to provide the requested information on September 11,
2008. In his response letter dated September 9, 2008, Mr. Lanoie complained that
Mr. Chavez had not yet answered the questions Mr. Lanoie asked in his previous
letter, stated that he could not attend the September 11 meeting, and requested
three more dates for a meeting.
On September 16, 2008, the government filed a petition in federal district
court to enforce the summons. The petition was supported by a declaration from
Mr. Chavez and a copy of the summons. The petition alleged that the IRS sought
1
(...continued)
summons until that summons is backed by a federal court order.”
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the summoned information for the purpose of determining Mr. Lanoie’s ability to
pay and that the IRS had not referred the issue of Mr. Lanoie’s tax liabilities to
the Department of Justice for criminal prosecution.
On October 6, 2008, Mr. Lanoie filed an objection to the petition, stating
that he had not been uncooperative in response to the summons, but was
“attempting to get [the IRS] to clarify [his] confusion and lack of knowledge
regarding IRS rules and procedure.” Resp’t’s Objection to Pet’r’s Pet. to Enforce
IRS Summons at 1, R. Vol. 1 at 29. Mr. Lanoie did not argue in his Objection
that the materials sought by the summons were protected from disclosure by the
Fifth Amendment. He did, however, include a copy of his previous letter to the
IRS, which stated, “[i]t seems to me that every relevant question or request for
documents that you can ask from me can be used in a criminal tax case against
me.” Id. at 36. He made no other reference to the Fifth Amendment’s right to not
incriminate himself.
On December 30, 2008, the district court issued an order directing Mr.
Lanoie to appear before the court on January 22, 2009, to show cause why he
should not comply with the IRS summons. Subsequently, on January 14, 2009,
Mr. Lanoie finally met with Mr. Chavez, who asked him the questions that had
been posed to him in the Collection Information Statement, which had been sent
to Mr. Lanoie as part of that first summons issued on June 25, 2008. While
Mr. Lanoie provided his name, address and social security number, he invoked
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the Fifth Amendment in response to the questions on the form pertaining to
employment and other financial information.
Mr. Chavez did not request that Mr. Lanoie provide any specific documents
during the meeting because, without answers to the questions, he did not know
which documents Mr. Lanoie possessed.
On January 22, 2009, Mr. Lanoie filed a motion to dismiss, claiming that he
had complied with the summons during his meeting with Mr. Chavez on
January 14, 2009. In support of his motion, Mr. Lanoie declared that during the
meeting, he had answered Mr. Chavez’s questions, invoking the Fifth Amendment
response to some of them, and that Mr. Chavez had not asked for any documents.
Also on January 22, 2009, Mr. Lanoie appeared at the show-cause hearing
before the district court and stated that, during his meeting with Mr. Chavez on
January 14, 2009, he had “answered [Mr. Chavez’s] questions invoking the Fifth
Amendment right. I believe it is my privilege and my right, and it is an answer.”
Tr. of Proceedings at 6, R. Vol. 2 at 8. The district court reviewed the questions
and told Mr. Lanoie that he had no valid Fifth Amendment right to refuse to
answer the questions posed him by Mr. Chavez:
Mr. Lanoie, quite frankly and quite simply, without answering
these questions with regard to your assets, your income, your
expenses, the IRS is not in a position to know what your liability is.
And you do not have a valid Fifth Amendment right to refuse to
answer these questions, because the Government, without this basic
information, cannot even determine whether you have any liability.
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So, you have not fulfilled your responsibilities, You have not
done what you were requested by me to do under my Order to Show
Cause. So, unless you answer the questions now, in a meeting that I
will give you an opportunity right [now] to do . . ., you will be
arrested.
Id. at 10-11. Mr. Lanoie declined to answer the questions and was arrested for
being in contempt of court.
Mr. Lanoie was released from jail a few hours later. In its Order of
Release, the court stated that, in accordance with its earlier ruling at the hearing,
Mr. Lanoie had “not shown that he faces a real hazard of criminal liability if this
information is provided and, therefore, has not properly asserted a Fifth
Amendment privilege.” Order of Release, R. Vol. 1 at 54.
Mr. Lanoie then filed a notice of appeal to this court. We dismissed that
appeal for lack of jurisdiction because no enforcement order had been entered and
prejudgment civil contempt findings are not reviewable on interlocutory appeal.
United States v. Lanoie, No. 09-2030 (10th Cir., Feb. 4, 2010) (unpublished).
After our dismissal of that first appeal, the district court entered an order
and separate judgment in favor of the United States, enforcing the summons. The
court observed that it had informed Mr. Lanoie at the show-cause hearing that “he
had no valid Fifth Amendment right not to answer the questions.” Order
Enforcing Summons at 1, R. Vol. 1 at 87. It further noted that it had
“inadvertently failed to enter a final order enforcing the summons before finding
Lanoie in contempt.” Id. at 88. Mr. Lanoie appeals the order and judgment
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enforcing the summons, arguing that the district court erred in concluding that he
had not complied with the IRS summons; that the district court used the wrong
standard to determine whether Mr. Lanoie had complied with the IRS summons;
and that the district court erred in enforcing the summons.
DISCUSSION
We review a district court’s enforcement order for clear error. United
States v. Coopers & Lybrand, 550 F.2d 615, 620 (10th Cir. 1977).
Pursuant to §§ 7801 and 7802 of the Internal Revenue Code, 26 U.S.C.
§§ 7801, 7802, Congress has conferred upon the Secretary of the Treasury and the
Commissioner of Internal Revenue the responsibility of administering and
enforcing the Internal Revenue Code. See United States v. Ford, 514 F.3d 1047,
1053 (10th Cir. 2008); Lonsdale v. United States, 919 F.2d 1440, 1447 (10th Cir.
1990). Accordingly, under 26 U.S.C. § 6201, the Secretary is “authorized and
required to make the inquiries, determinations, and assessments of all taxes
(including interest, additional amounts, additions to the tax, and assessable
penalties) imposed by” the Code. Section 7602 grants the IRS “expansive
information-gathering authority” in order to ensure effective tax investigations.
United States v. Arthur Young & Co., 465 U.S. 805, 816 (1984); Codner v.
United States, 17 F.3d 1331, 1332 (10th Cir. 1994). That section authorizes the
Secretary to examine records, to summon taxpayers, and to take testimony for the
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purposes 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 or liability at law or in equity . . . or collecting any such liability.”
United States v. Euge, 444 U.S. 707, 710-11 (1980) (quoting 26 U.S.C. § 7602).
When an individual fails to obey an IRS summons, the government may
petition a federal district court to enforce the summons. 26 U.S.C. § 7402(b);
United States v. Balanced Fin. Mgmt., Inc., 769 F.2d 1440, 1446-47 (10th Cir.
1985). To obtain enforcement of a summons, the government “must show that the
investigation will be conducted pursuant to a legitimate purpose, that the inquiry
may be relevant to the purpose, that the information sought is not already within
the Commissioner’s possession, and that the administrative steps required by the
Code have been followed.” United States v. Powell, 379 U.S. 48, 57-58 (1964);
Ford, 514 F.3d at 1049; Application to Enforce Admin. Subpoenas Duces Tecum
v. Knowles, 87 F.3d 413, 415 (10th Cir. 1996); United States v. Silvestain, 668
F.2d 1161, 1163 (10th Cir. 1982). Furthermore, a summons may not be issued,
nor an enforcement proceeding commenced, if a “Justice Department referral is in
effect with respect to such person.” 26 U.S.C. § 7602(d)(1).
“The burden [on the government to show compliance with Powell] is a
slight one because the statute must be read broadly in order to ensure that the
enforcement powers of the IRS are not unduly restricted.” Balanced Fin. Mgmt.,
Inc., 769 F.2d at 1443. It may be satisfied “by affidavit of the agent who issued
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the summons and who is seeking enforcement.” Id. (further quotation omitted).
If the government makes the minimal showing necessary for enforcement, the
party opposing enforcement bears the “heavy” burden of establishing a valid
defense. United States v. LaSalle Nat. Bank, 437 U.S. 298, 316 (1978); Balanced
Fin. Mgmt., Inc., 769 F.2d at 1444. If the taxpayer fails to meet that heavy
burden, the summons must be enforced. LaSalle, 437 U.S. at 316-18; Powell, 379
U.S. at 58.
I. Compliance with Summons:
Mr. Lanoie does not dispute that the government established the requisite
prima facie elements for enforcement of the summons. That conclusion is
indisputable. Accordingly, the next question is whether Mr. Lanoie has met the
heavy burden of proving that enforcement of the summons would “constitute an
abuse of the court’s process, or that in issuing the summons the IRS lack[ed]
institutional good faith.” Anaya v. United States, 815 F.2d 1373, 1377 (10th Cir.
1987) (citation and internal quotation marks omitted). Rather than challenging
the government’s establishment of a prima facie case, either before the district
court or in his opening brief on appeal, Mr. Lanoie invoked the Fifth Amendment
as a defense to answering financial questions.
As the government concedes, a taxpayer may challenge a summons under
the Fifth Amendment’s provision that no person “shall be compelled in any
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criminal case to be a witness against himself.” U.S. Constitution, Amend. V. The
protection of the Fifth Amendment must, however, be invoked in the proper
manner. “[I]n this circuit . . . specificity is required in order properly to invoke
Fifth Amendment protection.” United States v. Clark, 847 F.2d 1467, 1474 (10th
Cir. 1988). Thus, “[a]ppellants’ generalized fear of criminal prosecution for a
violation of the tax laws is an insufficient basis for asserting a blanket claim of
the Fifth Amendment privilege in refusing to produce any of the documents
requested by the summons[].” United States v. Schmidt, 816 F.2d 1477, 1481-82
(10th Cir. 1987) (footnote omitted). As we further explained in Schmidt:
[I]n order to invoke the constitutional protection under the Fifth
Amendment that bars compelled self-incrimination, appellants must
demonstrate that they have a reasonable cause to apprehend danger
upon giving a responsive answer that would support a conviction, or
would furnish a link in the chain of evidence needed to prosecute
them for a violation of the criminal statutes. To satisfy this
requirement, appellants must factually establish that the risks of
incrimination resulting from their compelled testimonial
communications to be substantial and real, not merely trifling or
imaginary, hazards of incrimination. Appellants are not exonerated
from answering merely because they declare that in so doing they
would incriminate themselves–their say-so does not of itself establish
the hazard of incrimination. Appellants have offered no evidence or
sworn statements to justify their claim that injurious disclosure could
result from a responsive production of the summoned documents.
....
In order to validly raise the Fifth Amendment privilege,
appellants must comply with the instructions of the summons[]. At
the appropriate time, appellants may interpose their claim of Fifth
Amendment privilege pertaining to specific documents and in
response to individual questions upon their reasonable belief that a
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compulsory response by them to these testimonial matters will pose a
substantial and real hazard of subjecting them to criminal liability.
Id. (citations, quotations and internal alterations omitted); see also Clark, 847
F.2d at 1474-75.
Under this standard, Mr. Lanoie clearly failed to properly invoke his Fifth
Amendment privilege. Officer Chavez asked him to answer the questions
contained on IRS Form 433-A Collection Information Statement. Other than
personal data, the questions pertained to employment and other financial
information. In response to each question, Mr. Lanoie invoked the Fifth
Amendment privilege, stating generally such things as “it seems to me that every
relevant question or request for documents . . . can be used in a criminal tax case
against me,” Letter at 2, R. Vol. 1 at 36, and that he had a “right to not give
testimony that could be used against him.” Resp’t’s Mot. to Dismiss at 3, R. Vol.
1 at 49. Those general assertions do not satisfy Mr. Lanoie’s obligation to show
that he faced a real and substantial risk of criminal liability; rather, they amount
to the kind of generalized claim of privilege we have found to be insufficient.
Furthermore, as the government points out, the summons here was issued as
part of a civil investigation, for the purpose of determining Mr. Lanoie’s tax
liability. When the IRS is conducting a “civil investigation, the mere fact that
evidence might be used against [a taxpayer] in a later prosecution will not support
a claim of self-incrimination.” United States v. Roundtree, 420 F.2d 845, 852
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(5th Cir. 1985). Accordingly, the district court correctly rejected Mr. Lanoie’s
assertion of a Fifth Amendment privilege as a defense to answering the questions
posed in the summons.
II. Applicable Standard to Determine Compliance with Summons:
Mr. Lanoie next argues that the district court at the hearing “used the
incorrect standard to determine if Lanoie complied with the IRS administrative
summons. The correct standard is whether Lanoie had a real and appreciable fear
of criminal prosecution.” Appellant’s Br. at 10. We have already determined that
the district correctly determined that Mr. Lanoie failed to comply with the
summons, so this argument is moot, or, at least, beside the point. The government
focuses on a sentence in the conclusion of Mr. Lanoie’s brief, asserting that Mr.
Lanoie’s argument is that “[t]he record clearly supports the fact that Lanoie had a
real and appreciable fear of criminal prosecution because the IRS alleges he fails
to file tax returns, a crime pursuant to 26 U.S.C. Section 7203, or even Section
7201.” Id. at 15.
As the government further points out, Mr. Lanoie never made this argument
below, and he therefore may not bring it up for the first time on appeal. See
McDonald v. Kinder-Morgan, Inc., 287 F.3d 992, 999 (10th Cir. 2002) (“[W]e
will not consider arguments raised for the first time on appeal.”). Even were we
to address it, Mr. Lanoie fails to point us to where in the record the IRS claimed
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he had failed to file tax returns. Indeed, the whole point of the summons was to
provide sufficient information so that the IRS could determine if, in fact, Mr.
Lanoie had tax liabilities. The IRS did not yet know whether Mr. Lanoie actually
had such liabilities. This argument is, accordingly, meritless.
III. Enforcement of Summons:
Finally, Mr. Lanoie argues that the district court “should not have ordered
enforcement of the summons, rather, the District Court should have conducted an
Argomaniz in camera hearing to determine if Lanoie’s Fifth Amendment claim
had a basis in fact.” Appellant’s Opening Br. at 15 (citing United States v.
Argomaniz, 925 F.2d 1349 (11th Cir. 1991)). We have set forth, above, the
necessary procedure for a court to evaluate a claim of Fifth Amendment privilege
in this circuit. We specify no requirement for an in camera hearing. Neither
does Argomaniz itself mandate such a hearing; it simply states that, in the
circumstances of that case, the district court would be best able to evaluate the
records and documents provided by the taxpayer to determine if they are
incriminatory by using an in camera hearing. This argument is also meritless.
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CONCLUSION
For the foregoing reasons, we AFFIRM the order and judgment of the
district court.
ENTERED FOR THE COURT
Stephen H. Anderson
Circuit Judge
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