DocketNumber: Docket No. 27306-90X
Citation Numbers: 63 T.C.M. 3096, 1992 Tax Ct. Memo LEXIS 338, 1992 T.C. Memo. 318
Filed Date: 6/4/1992
Status: Non-Precedential
Modified Date: 11/20/2020
*338 An appropriate order will be issued.
MEMORANDUM OPINION
FAY,
Petitioner was incorporated in 1977 as a nonprofit corporation under the laws of the State of Colorado. During 1978, petitioner applied for and was granted tax-exempt status under section 501(c)(3).
On January 3, 1981, respondent sent petitioner an examination letter advising petitioner that respondent planned to conduct an examination of petitioner under sections 7602 and 7605(c). On April 4, 1984, respondent served a summons on petitioner, requesting all books, records, and papers of petitioner, in the following categories:
1. Organizational documents and by-laws.
2. Books of accounts, bank records, bank statements, including canceled checks, and records of receipts and disbursements with information indicating the source and nature of such receipts and purposes for the disbursements.
3. All corresponding files, data, and records relating to any and all assets owned or used by the Church of World Peace and the manner in which such assets were acquired.
4. Records regarding*340 the nature and specific extent of all religious activities conducted by the Church including but not limited to a list of all members of the Sacerdotal Order of the Church of World Peace and the manner by which such members are selected.
5. Records to indicate which members, if any, have taken a vow of poverty with records of all, if any, of the assets or income turned over or to be turned over to the Church. All records and information on the specific activities conducted by such members to the extent that such activities are attributed to the religious purpose or creed of the church.
6. All records and information concerning any contracts and agreements entered into by the church with its Pastor, Reverend William Conklin.
7. Documents and records related to the background of petitioner's ministers and trustees to include a precis of curriculum completed by the ordained ministers who are members of the church and the circumstances pertaining to their ordination.
When petitioner refused to comply with the summons, respondent brought suit in the District Court to enforce the summons under sections 7402(b) and 7604(a). Respondent argued that the testimony and records sought*341 in the summons were necessary to determine the tax liability of petitioner and to verify petitioner's right to continued tax-exempt status. After a hearing, the United States District Court for the District of Colorado ordered enforcement of the summons. Petitioner's requests for stays of enforcement were denied by both the Tenth Circuit Court of Appeals and the District Court. Petitioner turned over to respondent the requested documents in September of 1984.
Subsequently, the Court of Appeals for the Tenth Circuit set aside the District Court's order of enforcement of the summons in its entirety based on
In addition, the Tenth Circuit held that the District*342 Court's order of enforcement was invalid because the United States failed to prove, and the District Court failed to find, that the "extent necessary" language of section 7605(c) *343 On remand, petitioner filed with the District Court a Motion for Return of Records, Expunging of Files, and Prohibiting Use of Information Obtained from Records. In this motion, petitioner sought to have all records and copies thereof returned by respondent, to have all information derived from those records expunged from respondent's files, and to prohibit the use of any such information by respondent. Respondent, in response, indicated that respondent already had returned all original documents to the Church but had retained copies of a limited portion of the originals which respondent believed were necessary to the examination of petitioner's tax-exempt status and to determine any possible tax liability petitioner may have incurred. Respondent sought the opportunity in the District Court to address the "extent necessary" language of section 7605(c) and to have the summons enforced only as to the extent of the copied documents in respondent's possession. The District Court denied petitioner's motion, and an appeal followed. The Tenth Circuit Court of Appeals dismissed petitioner's appeal "without prejudice to their right to file a timely suppression motion at such time as *344 the United States seeks to use the information obtained by means of the summons."
Petitioner in its motion essentially argues that, because the summons dated April 4, 1984, was quashed by the Tenth Circuit, the evidence obtained by respondent pursuant to such summons is illegal and should be suppressed.
This Court has the authority to consider questions of admissibility of evidence, including*345 the determination of whether to employ the exclusionary rule to suppress otherwise admissible evidence.
The exclusionary rule is the result of an effort on the part of the judiciary to ensure that constitutional limitations on law enforcement are safeguarded.
Determining the appropriateness of exclusion requires "weighing the likely social benefits * * * against the likely costs".
Initially, we note that the language of the April 4, 1984, summons tracked the language of the summons approved by the court in
*348 Since respondent acted in good faith based on an arguably valid summons, we conclude that exclusion of evidence would provide minimal or no social benefits whatsoever while imposing a substantial cost to the tax administration system.
In
In addition, we conclude that the good faith exception to the exclusionary rule enunciated in
Here, respondent obtained the documents at issue under the authority of an order of the United States District Court for the District of Colorado, after requests for stays of enforcement were denied both by the District Court and by the Court of Appeals for the Tenth Circuit. The District Court order was valid when it was entered, and respondent was entitled to reasonably rely on such order. Because respondent acted in good faith reliance on an arguably valid summons and a facially valid enforcement order, exclusion of evidence is not warranted.
Petitioner next argues that this Court should suppress relevant parts of the administrative record because copies of certain summonses served on petitioner and other third party recordkeepers were not attested copies as required by section 7603. *350 relies exclusively on the District Court holding in
The District Court in
On appeal,
At the hearing in this case, respondent presented unrefuted evidence showing respondent's good faith in preparing and serving the summonses at issue. In preparing these summonses, respondent's agents verified that all copies of the summonses served were identical. Respondent's agents testified that they followed all the procedures for service of summonses, as directed by the Internal Revenue Manual, and that nothing in such manual required a written notation of attestation on the copies of the summonses. We find respondent's agents' testimony credible and reliable. In addition, petitioner did not show that there was any harm which resulted from the failure of the summonses to be more formally*353 attested or indeed that the copies served were not identical to the originals.
At the outset, we note that we are faced with a Motion to Suppress Evidence, based on alleged improper attestation, not a summons enforcement proceeding. Mimick is misplaced. Such opinion, reversed on appeal, is not controlling on this Court. Moreover, even if we employed the good faith test adopted by the Eighth Circuit, we conclude that petitioner failed to present
1. All section references are to the Internal Revenue Code in effect for the years in issue unless otherwise indicated. ↩
2. Sec. 7428 specifically confers jurisdiction on this Court to make a declaration with respect to the continuing qualification of certain tax-exempt organizations.↩
3. Sec. 7605(c) provided:
(c)
4. The documents turned over pursuant to the summons at issue before this Court are contained in the administrative record, Exhibits 95-CQ through 360-MV. Pursuant to an order of this Court, however, the parties stipulated that Exhibits 115-DK, 116-DL, 121-DQ, 124-DT, 346-MH, 347-MI, and 352-MN are not at issue.↩
5. The language of the summons approved in
All books, records, and papers of The Freedom Church including but not limited to Organizational documents and by-laws; books of accounts, bank records, bank statements, including cancelled checks, and records of receipts and disbursements with information indicating the source and nature of such receipts and purposes for the disbursements. All correspondence files, data and lists of substantial contributors to the church and records relating to any and all assets owned or used by the Freedom Church and the manner in which such assets were acquired. Records regarding the nature and specific extent of all religious activities conducted by the Church to include but not limited to a list of all members of the congregation and members of the Sacerdotal Order of the Freedom Church and the manner by which such members are selected. Records to indicate which members, if any, have taken a vow of poverty with records of all, if any, of the assets or income turned over or to be turned over to the Church. All records and information on the specific activities conducted by such members to the extent that such activities are attributed to the religious purpose or creed of the church. Correspondence files which will explain the relationship, if any, between the Freedom Church, The Council of Free Churches, Life Science Church and Bishop William E. Drexer, D.D. All records and information concerning any contracts and agreements entered into by the church with its Pastor, Reverend Doncaster. Documents and records related to the background of your ministers and trustees to include a precis of curriculum completed by the ordained ministers who are members of the church and the circumstances pertaining to their ordination.↩
6. Sec. 7603 provides:
A summons issued under section 6420(e)(2), 6421(f)(2), 6427(i)(2), or 7602 shall be served by the Secretary, by an
7. At the time petitioner filed its Motion to Suppress based on alleged improper attestation (Oct. 16, 1991), the Eighth Circuit had not reversed the District Court's opinion. The Eighth Circuit Court of Appeals reversed the District Court's opinion on Dec. 26, 1991, prior to the hearing in this matter on Feb. 7, 1992.↩
8. Respondent argues that petitioner waived the right to contest the issue of attestation under sec. 7603 because petitioner failed to properly raise this issue during the summons enforcement proceeding provided by sec. 7604. We agree and hold this to be an alternate ground for denying petitioner's Motion to Suppress. See
9. We also note that our consideration in this matter is limited to the two motions to suppress before us. As such, we express no opinion as to the proper definition of "attested copy" within the context of sec. 7603.↩
united-states-of-america-and-william-e-lucas-special-agent-v-robert , 648 F.2d 361 ( 1981 )
united-states-of-america-and-a-jerome-simpson-revenue-agent-internal , 878 F.2d 1281 ( 1989 )
United States of America and Anthony Carsanaro, Revenue ... , 613 F.2d 316 ( 1979 )
thomas-o-mimick-and-michele-r-mimick-v-united-states-of-america-united , 952 F.2d 230 ( 1991 )
Wong Sun v. United States , 83 S. Ct. 407 ( 1963 )
United States v. Leon , 104 S. Ct. 3405 ( 1984 )
United States of America and A. Jerome Simpson, Revenue ... , 775 F.2d 265 ( 1985 )