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just because a criminal prosecution begins. Logically, then, the IRS could use its summons authority under $ 7602 to uncover information about the tax liability created by a fraud regardless of the status of the criminal case. But the rule forbidding such is a prophylactic intended to safeguard the following policy interests.

A referral to the Justice Department permits criminal litigation to proceed. The IRS cannot try its own prosecutions. Such authority is reserved to the Department of Justice and, more particularly, to the United States Attorneys. 28 U.S. C. $ 547 (1). Nothing in § 7602 or its legislative history suggests that Congress intended the summons authority to broaden the Justice Department's right of criminal litigation discovery or to infringe on the role of the grand jury as a principal tool of criminal accusation. Accord, United States v. Morgan Guaranty Trust Co., 572 F. 2d 36 (CA2 1978); United States v. Weingarden, 473 F. 2d 454, 458 459 (CA6 1973); United States v. O'Connor, 118 F. Supp. 248, 250– 251 (Mass. 1953); see Donaldson v. United States, 400 U. S., at 536; cf. Abel v. United States, 362 U. S. 217, 226 (1960). The likelihood that discovery would be broadened or the role of the grand jury infringed is substantial if post-referral use of the summons authority were permitted. For example, the IRS, upon referral, loses its ability to compromise both the criminal and the civil aspects of a fraud case. 26 U.S. C. $ 7122 (a). After the referral, the authority to settle rests with the Department of Justice. Interagency cooperation on the calculation of the civil liability is then to be expected and probably encourages efficient settlement of the dispute. But such cooperation, when combined with the inherently intertwined nature of the criminal and civil elements of the case, suggests that it is unrealistic to attempt to build a partial information barrier between the two branches of the executive. Effective use of information to determine civil liability would inevitably result in criminal discovery.

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The prophylactic restraint on the use of the summons effectively safeguards the two policy interests while encouraging maximum interagency cooperation.15


Prior to a recommendation for prosecution to the Department of Justice, the IRS must use its summons authority in good faith. Donaldson v. United States, 400 U. S., at 536; United States v. Poweil, 379 U. S. 48, 57–58 (1964). In Powell, the Court announced several elements of a good-faith exercise:

"[The Service] 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

16 The Third Circuit has suggested that our reference in Donaldson to the recommendation for criminal prosecution ("We hold that under $ 7602 an internal revenue summons may be issued in aid of an investigation if it is issued in good faith and prior to a recommendation for criminal prosecution,” 400 U. S., at 536) intended to draw a line at the recommendation to the Service's district office from the special agent, rather than at the recommendation from the Service to the Justice Department. United States v. Lafko, 520 F. 2d, at 625. This misread our intent. Given the interrelated criminal/civil nature of tax fraud investigation whenever it remains within the jurisdiction of the Service, and given the utility of the summons to investigate civil tax liability, we decline to impose the prophylactic restraint on the summons authority any earlier than at the recommendation to the Department of Justice. We cannot deny that the potential for expanding the criminal discovery rights of the Justice Department or for usurping the role of the grand jury exists at the point of the recommendation by the special agent. But we think the possibilities for abuse of these policies are remote before the recommendation to Justice takes place and do not justify imposing an absolute ban on the use of the summons before that point. Earlier imposition of the ban, given the balance of policies and civil law enforcement interests, would unnecessarily hamstring the performance of the tax determination and collection functions by the Service.

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possession, and that the administrative steps required by the Code have been followed .... [A] court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the

particular investigation.” Ibid. (footnote omitted). A number of the Courts of Appeals, including the Seventh Circuit in this case, 554 F. 2d, at 309, have said that another improper purpose, which the Service may not pursue in good faith with a summons, is to gather evidence solely for a criminal investigation.16 The courts have based their conclusions in part on Donaldson's explanation of the Reisman dictum. The language of Donaldson, however, must be read in the light of the recognition of the interrelated criminal/civil nature of a tax fraud inquiry. For a fraud investigation to be solely criminal in nature would require an extraordinary departure from the normally inseparable goals of examining whether the basis exists for criminal charges and for the assessment of civil penalties.

In this case, respondents submit that such a departure did indeed occur because Special Agent Olivero was interested only in gathering evidence for a criminal prosecution. We disagree. The institutional responsibility of the Service to calculate and to collect civil fraud penalties and fraudulently reported or unreported taxes is not necessarily overturned by a single agent who attempts to build a criminal case. The

16 See, e. g., United States v. Hodge & Zweig, 548 F. 2d, at 1350, 1351; United States v. Zack, 521 F. 2d, at 1368; United States v. Lafko, 520 F. 2d, at 625; United States v. McCarthy, 514 F. 2d, at 374 375; United States v. Theodore, 479 F. 2d 749, 753 (CA4 1973); United States v. Weingarden, 473 F. 2d, at 459; United States v. Wall Corp., 154 U. S. App. D. C., at 311, 475 F. 2d, at 895.

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review process over and above his conclusions is multilayered and thorough. Apart from the control of his immediate supervisor, the agent's final recommendation is reviewed by the district chief of the Intelligence Division, 26 CFR S$ 601.107 (b) and (c) (1977); Internal Revenue Manual, ch. 9600, $$ 9621.1, 9622.1, 9623 (CCH 1977); see Donaldson v. United States, 400 U. S., at 534. The Office of Regional Counsel also reviews the case before it is forwarded to the National Office of the Service or to the Justice Department. 26 CFR § 601.107 (c) (1977); Internal Revenue Service Organization and Functions § 1116 (3), 39 Fed. Reg. 11602 (1974); Internal Revenue Manual, ch. 9600, $$ 9624, 9631.2, 9631.4 (CCH 1977). If the Regional Counsel and the Assistant Regional Commissioner for Intelligence disagree about the disposition of a case, another complete review occurs at the national level centered in the Criminal Tax Division of the Office of General Counsel. Internal Revenue Service Organization and Functions § 1113.(11) 22, 39 Fed. Reg. 11599 (1974); Internal Revenue Manual, ch. 9600, § 9651 (1) (CCH 1977). Only after the officials of at least two layers of review have concurred in the conclusion of the special agent does the referral to the Department of Justice take place. At any of the various stages, the Service can abandon the criminal prosecution, can decide instead to assert a civil penalty, or can pursue both goals. While the special agent is an important actor in the process, his motivation is hardly dispositive.

It should also be noted that the layers of review provide the taxpayer with substantial protection against the hasty or overzealous judgment of the special agent. The taxpayer may obtain a conference with the district Intelligence Division officials upon request or whenever the chief of the Division determines that a conference would be in the best interests of the Government. 26 CFR $ 601.107 (b)(2) (1977); Internal Revenue Manual, ch. 9300, $ 9356.1 (CCH 1977). If prosecution has been recommended, the chief notifies the taxpayer of

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the referral to the Regional Counsel. 26 CFR $ 601.107 (c) (1977); Internal Revenue Manual, ch. 9300, § 9355 (CCH 1977).

As in Donaldson, then, where we refused to draw the line between permissible civil and impermissible criminal purposes at the entrance of the special agent into the investigation, 400 U. S., at 536, we cannot draw it on the basis of the agent's personal intent. To do so would unnecessarily frustrate the enforcement of the tax laws by restricting the use of the summons according to the motivation of a single agent without regard to the enforcement policy of the Service as an institution. Furthermore, the inquiry into the criminal enforcement objectives of the agent would delay summons enforcement proceedings while parties clash over, and judges grapple with, the thought processes of each investigator.?? See United States v. Morgan Guaranty Trust Co.,572 F. 2d 36 (CA2 1978). This obviously is undesirable and unrewarding. As a result, the question whether an investigation has solely criminal purposes must be answered only by an examination of the institutional posture of the IRS. Contrary to the assertion of respondents, this means that those opposing enforcement of a summons do bear the burden to disprove the actual existence of a valid civil tax determination or collection purpose by the Service. After all, the purpose of the good-faith inquiry is to determine whether the agency is honestly pursuing the goals of $ 7602 by issuing the summons.

Without doubt, this burden is a heavy one. Because criminal and civil fraud liabilities are coterminous, the Service rarely will be found to have acted in bad faith by pursuing the former. On the other hand, we cannot abandon this aspect of the good-faith inquiry altogether.18 We shall not countenance

17 We recognize, of course, that examination of agent motive may be necessary to evaluate the good-faith factors of Powell, for example, to consider whether a summons was issued to harass a taxpayer.

18 The dissent would abandon this aspect of the good-faith inquiry. It would permit the IRS to use the summons authority solely for criminal

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