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delay in submitting a recommendation to the Justice Department when there is an institutional commitment to make the referral and the Service merely would like to gather additional evidence for the prosecution. Such a delay would be tantamount to the use of the summons authority after the recommendation and would permit the Government to expand its criminal discovery rights. Similarly, the good-faith standard will not permit the IRS to become an information-gathering agency for other departinents, including the Department of Justice, regardless of the status of criminal cases. 19

investigation. It reaches this conclusion because it says the Code contains no limitation to prevent such use. Its argument reveals a fundamental misunderstanding about the authority of the IRS. The Service does not enjoy inherent authority to summon production of the private papers of citizens. It may exercise only that authority granted by Congress. In $ 7602 Congress has bestowed upon the Service the authority to summon production for four purposes only: for "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 collecting any such liability.” Congress therefore intended the summons authority to be used to aid the determination and collection of taxes. These purposes do not include the goal of filing criminal charges against citizens. Consequently, summons authority does not exist to aid criminal investigations solely. The error of the dissent is that it seeks a limit on the face of the statute when it should seek an affirmative grant of summons authority for purely criminal investigations. We have made that search and could uncover nothing in the Code or its legislative history to suggest that Congress intended to permit exclusively criminal use of summonses. As a result, the IRS employs its authority in good faith when it pursues the four purposes of $ 7602, which do not include aiding criminal investigations solely.

19 To the limited extent that the institutional good faith of the Service with regard to criminal purpose may be questioned before any recommendation to the Department of Justice, our position on this issue necessarily rejects the Government's argument that prerecommendation enforcement of summonses must meet only the Powell elements of good faith. We have concluded that the Government's contention fails to recognize the essence of the good-faith inquiry. The Powell elements were not intended as an exclusive statement about the meaning of good faith. They were examples

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In summary, then, several requirements emerge for the enforcement of an IRS summons.20 First, the summons must be issued before the Service recommends to the Department of Justice that a criminal prosecution, which reasonably would relate to the subject matter of the summons, be undertaken. Second, the Service at all times must use the summons authority in good-faith pursuit of the congressionally authorized purposes of $ 7602. This second prerequisite requires the Service to meet the Powell standards of good faith. It also requires that the Service not abandon in an institutional sense, as explained in Parts III-A and III-C above, the pursuit of civil tax determination or collection.


On the record before us, respondents have not demonstrated sufficient justification to preclude enforcement of the IRS summonses. No recommendation to the Justice Department for criminal prosecution has been made. Of the Powell criteria, respondents challenge only one aspect of the Service's showing: They suggest that Olivero already may possess the evidence requested in the summonses. Brief for Respondents 16-19. Although the record shows that Olivero had uncovered the names and identities of the LaSalle National Bank land trusts, it does not show that the Service knows the value of the trusts or their income or the allocation of interests therein. Because production of the bank's complete records on the trusts reasonably could be expected to reveal part or all of this information, which would be material to the computation

of agency action not in good-faith pursuit of the congressionally authorized purposes of 8 7602. The dispositive question in each case, then, is whether the Service is pursuing the authorized purposes in good faith.

20 These requirements are not intended to be exclusive. Future cases may well reveal the need to prevent other forms of agency abuse of congressional authority and judicial process.


STEWART, J., dissenting

of Gattuso's tax liability, the Powell criteria do not preclude enforcement. Finally, the District Court refused enforcement because it found that Olivero's personal motivation was to gather evidence solely for a criminal prosecution. The court, however, failed to consider whether the Service in an institutional sense had abandoned its pursuit of Gattuso's civil tax liability. The Court of Appeals did not require that inquiry. On the record presently developed, we cannot conclude that such an abandonment has occurred.

The judgment of the Court of Appeals is therefore reversed with instructions to that court to remand the case to the District Court for further proceedings consistent with this opinion.

It is so ordered.


This case is here only because of judicial misreadings of a passage in the Court's opinion in Donaldson v. United States, 400 U. S. 517, 533. That passage has been read by the federal courts, in this case and in others, to mean that a sum

21 Respondents argue that the District Court made a factual finding when it concluded that the summonses were issued solely to gather evidence for & criminal prosecution. They then submit that the District Court's decision may be overturned only if this Court holds this finding to be clearly erroneous. Several Courts of Appeals have discussed the factual and legal issues that lurk in summons enforcement proceedings. Compare United States v. Zack, 521 F. 2d, at 1367–1368; United States v. National State Bank, 454 F. 2d 1249, 1252 (CA7 1972); Boren v. Tucker, 239 F. 2d, at 773, with United States v. Weingarden, 473 F. 2d, at 460. Whether the issue of the Service's good faith generally poses a factual question, or a legal and factual one, or a legal question, is not necessarily presented in the case now before the Court, and we do not reach it. The lower courts employed an incorrect legal standard to measure good faith when they limited their consideration to the personal motivation of Special Agent Olivero. In this case, then, a legal error compels reversal.

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mons under $ 7602 of the Internal Revenue Code, 26 U. S. C. § 7602, is improper if issued in aid of an investigation solely for criminal purposes. Yet the statute itself contains no such limitation, and the Donaldson opinion in fact clearly stated that there are but two limits upon enforcement of such a summons: It must be “issued in good faith and prior to a recommendation for criminal prosecution.” 400 U. S., at 536. I adhere to that view.

The Court concedes that the task of establishing the “purpose” of an individual agent is “undesirable and unrewarding.” Ante, at 316. Yet the burden it imposes today—to discover the "institutional good faith" of the entire Internal Revenue Service—is, in my view, even less desirable and less rewarding. The elusiveness of "institutional good faith” as described by the Court can produce little but endless discovery proceedings and ultimate frustration of the fair administration of the Internal Revenue Code. In short, I fear that the Court's new criteria will prove wholly unworkable.

Earlier this year the Court of Appeals for the Second Circuit had occasion to deal with the issue now before us in the case of United States v. Morgan Guaranty Trust Co., 572 F. 2d 36. Judge Friendly's perceptive opinion for his court in that case read the Donaldson opinion correctly: This Court was there "laying down an objective test, 'prior to a recommendation for criminal prosecution,' that would avoid a need for determining the thought processes of special agents; and ... the 'good faith' requirement of the holding related to such wholly different matters as those mentioned in" the case of United States v. Powell, 379 U. S. 48.2 "Such a view would ... be

1 See ante, at 305–306, n. 6.

2 As Judge Friendly pointed out, this Court's Powell opinion simply declared that a court may not permit its process in enforcing a summons to be abused, and its examples of "abuse” were: “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

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consistent with the only rationale that has ever been offered for preventing an otherwise legitimate use of an Internal Revenue Service third party summons, namely that Congress could not have intended the statute to trench on the power of the grand jury or to broaden the Government's right to discovery in a criminal case ...." 572 F. 2d, at 41-42.

Instead of standing by the objective and comparatively bright-line test of Donaldson, as now clarified, the Court today further muddies the waters. It does not even attempt to identify the source of the requirements it now adds to enforcement proceedings under $$ 7402 (b) and 7604 (a) of the Code. These requirements are not suggested by anything in the statutes themselves, and nobody suggests that they derive from the Constitution. They are simply imposed by the Court from out of nowhere, and they seem to me unjustified, unworkable, and unwise.

I would reverse the judgment, not for further hearings in the District Court, but with instructions to order enforcement of the summons.

to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation.' [379 U.S., at 58.] “Nothing was said to indicate that an intention by the Commissioner to uncover criminal tax liability would reflect 'on the good faith' of the inquiry, and the rule of ejusdem generis would dictate the contrary.” 572 F. 2d, at 40.

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