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court in United States v. Bonaguro,151 which granted a defendant's nonstatutory motion for return of his funds after he established that the IRS had made a jeopardy assessment with no inquiry into his true tax liability.

A substantial body of precedent authorizes federal courts to return illegally seized property prior to indictment.152 These cases find jurisdiction in the inherent authority of the court over its officers.153 Although several older cases indicate that IRS agents are not included within this doctrine,154 more recent decisions have expanded the reach of the supervisory power to include revenue agents.155 A recent California case has found that the criminal court has authority to order the return of funds subject to tax liens. under the "inherent power of the court to control and prevent the abuse of its process.'

156

If the taxing agency failed to levy, a court might be reluctant to endanger eventual collections of the tax by returning the funds. Although any interests of the taxing agency would theoretically be protected because a tax lien attaches to after-acquired property, the defendant's future income may be severely curtailed if he is incarcerated. If the defendant assigned the assets to an attorney, however, transferring the funds to the attorney cannot further endanger collection of the tax because the assets are the property of the attorney-assignce.

If the IRS has levied on the funds, a motion for return of the funds would necessitate appearances by all parties. A levy is the seizure of a particular piece of property, and it transfers ownership

151 294 F. Supp. 750 (E.D.N.Y. 1968), aff'd, 428 F.2d 204 (2d Cir.), cert. denied, 400 U.S. 829 (1970). While the court did not articulate the jurisdictional grounds for returning the defendant's funds, it did note that return was proper because the IRS had established no right to the funds.

152 See, e.g., In re Grand Jury Proceedings, 450 F.2d 199 (3d Cir. 1971), aff'd sub nom. Gelbard v. United States, 408 U.S. 41 (1972); Smith v. Katzenbach, 351 F.2d 810 (D.C. Cir. 1965).

153 The classic statement of this theory, followed in numerous cases, was set out by Judge Hough in United States v. Maresca, 266 F. 713 (S.D.N.Y. 1920):

Whenever an officer of the court has in his possession or under his control books or papers, or (by parity of reasoning) any other articles in which the court has official interest, and of which any person (whether party to a pending litigation or not) has been unlawfully deprived, that person may petition the court for restitution. This I take to be an elementary principle, depending upon the inherent disciplinary power of any court of record.

Id. at 717.

154 See, e.g., Eastus v. Bradshaw, 94 F.2d 788, 789 (5th Cir.), cert. denied, 304 U.S. 576 (1938).

155 Hunsucker v. Phinney, 497-F.2d 29 (5th Cir. 1974), cert. granted, 95 S. Ct. 1124 (1975); Smith v. Katzenbach, 351 F.24 810 (D.C. Cir. 1965); Lord v. Kelley, 223 F. Supp. 684, 688-89 (D. Mass. 1963).

150 Buker v. Superior Court, 25 Cal. App. 3d 1085, 1089, 102 Cal. Rptr. 494, 496 (4th Dist. 1972).

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to the Government. 157 Since a levy does affect ownership rights, the court could order the return of property to the defendant or his assignce only if the Government, a potential claimant, were before the court. However, the court could order the IRS to appear for purposes of adjudicating ownership and thereby avoid lengthy delays which would prejudice the defendant's rights.158

The interest of the prosecution in preserving seized funds as evidence in the criminal proceedings is not an insurmountable problem. It can be resolved by stipulations or photographs of the money.150

C. Continuance of the Criminal Case Pending Resolution of Civil Actions

If the criminal court is unwilling to either enjoin the assessment or return the funds without altering the tax liability, it should be required to continue the criminal trial until the defendant has had an opportunity to recover the funds in a civil action. However, a continuance is the least desirable form of relief because the defendant will deplete his resources obtaining the return of the funds, and will be denied the right to a speedy criminal trial. Although there is no express federal authority for this remedy,' 1 GO a California court has held that a defendant is entitled to a continuance until the conflicting claims to ownership of the seized funds are resolved in a separate civil action.'

157 INT. REV. CODE OF 1954, §§ 6331, 6337(c).

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158 The court in Gershenhorn v. Superior Court, 227 Cal. App. 2d 361, 38 Cal. Rptr. 576 (2d Dist. 1964), rejected the state's argument that an action in claim and delivery or conversion was an adequate alternative to an order to

return:

[A]n action for conversion gives only damages, not a return in specie. And the expense and complications of bonds and other procedures involved in claim and delivery seem an unnecessary apparatus to recover property which . . . is already in the hands of the court.

Id. at 366, 38 Cal. Rptr. at 578.

159 The use of stipulations to avoid introducing evidence is firmly established in California law. See People v. Perry, 271 Cal. App. 2d 84, 101, 76 Cal. Rptr. 725, 736 (1st Dist. 1969); People v. Gonzales, 262 Cal. App. 2d 286, 290-91, 68 Cal. Rptr. 578, 581 (4th Dist. 1968). The court in Buker v. Superior Ct., 25 Cal. App. 3d 1085, 102 Cal. Rptr. 494 (4th Dist. 1974), noted that the evidentiary value of currency could be preserved through photographs, and suggested that "if the prosecuting attorney sincerely believed the currency, as such, was admissible in evidence he might have demonstrated his good faith in the premises by offering defendants a county warrant in the same amount." Id. at 1088, 102 Cal. Rptr. at 495.

160 The court's duty to postpone the criminal case can be inferred from cases requiring a continuance until a defendant has adequate opportunity to ob tain an attorney of his choice. See United States v. Johnston, 318 F.2d 288 (6th Cir. 1963); Releford v. United States, 288 F.2d 298 (9th Cir. 1961).

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101 People v. Vermouth, 42 Cal. App. 3d 353, 116 Cal. Rptr. 675 (4th Dist. 1974). As a strategic consideration, a continuance may force the prosecutor to pressure the taxing agency into returning the funds so that the criminal trial may proceed.

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D. Dismissal of the Criminal Charges or Furnishing of Alternative Funds

A court refusing to exercise any of the above options162 should dismiss the criminal charges if the defendant makes an initial showing that the assessment is invalid or if for some other reason the Government is not entitled to the funds. Courts have the authority to dismiss criminal charges because of governmental misconduct.1c3 One federal court has dismissed charges without a showing of misconduct when the defendant whose assets had been seized by the taxing authorities established his need for funds to adequately defend his criminal prosecution.14 An alternative to dismissal is for the governmental entity prosecuting the defendant to provide him with alternative funds for use in the criminal defense.165 Although this would place a burden on the public treasury, public funds are frequently expended to remedy fortuitous disadvantage, as when an indigent defendant is provided with an attorney and other services needed to secure his sixth amendment rights.166 The prosecutor's use of public funds to prevent dismissal is even more appropriate when he is simply repairing deprivations produced by governmental misconduct. 167

CONCLUSION

The summary assessment and seizure of assets of criminal defendants raises significant constitutional problems. If the defendant obtains review of the assessment in a civil proceeding before the criminal case, he may be required to admit incriminating facts. If the defendant cannot obtain re

162 See notes 92-104 & accompanying text supra.

163 United States v. Bryant, 439 F.2d 642 (D.C. Cir.), aff'd upon remand, 448 F.2d 1182 (1971) (per curiam); United States v. Apex Distrib. Co., 270 F.2d 747 (9th Cir. 1959); United States v. Acosta, 386 F. Supp. 1072 (S.D. Fla. 1974).

164 United States v. Brodson, 136 F. Supp. 158 (E.D. Wis. 1955), rev'd, 241 F.2d 107 (7th Cir. 1957). For cases in which courts have dismissed charges after the Government refused to supply funds necessary for investigation and travel expenses see note 165 infra.

165 In Davis v. Coiner, 356 F. Supp. 695 (N.D.W. Va. 1973), petitioner was granted habeas corpus relief because he was denied effective assistance of counsel when the court refused to provide his appointed attorney with the necessary funds to depose alibi witnesses in another state. In United States v. Products Marketing, 281 F. Supp. 348 (D. Del. 1968), charges were dismissed against several indigent defendants because the Government would not provide them with funds to copy voluminous relevant documents and to return to the jurisdiction to consult with their attorney.

166 Sce, c.g., Gideon v. Wainwright, 372 U.S. 335 (1963); Griffin v. Tilinois, 351 U.S. 12 (1956). See also note 136 supra.

167 United States v. Brodson, 136 F. Supp. 158 (E.D. Wis. 1955), rev'd, 241 F.2d 107 (7th Cir. 1957). See note 138 supra.

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view of the assessment prior to the prosecution, as is usually the case, his assets are unavailable for the criminal defense. The problem is exacerbated by compelling evidence that assessments are often made without any information about the defendant's income. The clear inference is that assessments against criminal defendants are often used to administratively punish suspects and to impede their defense, not to raise revenue.

In light of the inadequacy of existing civil remedies, the defendant should have an opportunity to recover funds necessary to properly defend his case, in the most appropriate forum, the criminal court. Although relief from tax assessments may at first appear to be a solely civil matter, the impact of a summary assessment on a defendant's right to a fair trial and the absence of an adequate civil forum make it incumbent upon criminal courts to provide meaningful relief. If the defendant's assets are seized in bad faith, only the criminal courts are capable of providing a range of effective remedies that will ensure a fair trial and deter future abuse of jeopardy tax procedures. †

After the press deadline for this issue of the UCLA Law Review, the California Supreme Court filed its opinion in Dupuy v. Superior Court, No. L.A. 30381 (Cal. Sup. Ct., filed Aug. 13, 1975), discussed in note 108 supra. In Dupuy, the Franchise Tax Board issued jeopardy assessments against the taxpayer and then seized his property. The taxpayer sought a preliminary injunction to prevent the sale and to order the return of the property. The trial court concluded that an anti-injunction provision of California law precluded it from exercising jurisdiction. Id. at 7, 8 n.7. In an opinion authored by Justice McComb, the Court adopted the exception to the federal anti-injunction statute articulated in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962). See notes 83-104 & accompanying text supra. A California trial court now has jurisdiction to enjoin a jeopardy assessment seizure of property if the taxpayer establishes that he or she (1) has no adequate remedy at law and (2) is certain to succeed on the merits. In Dupuy, the Supreme Court approved the holding in Shapiro v. Secretary of State, 499 F.2d 527 (D.C. Cir. 1974), cert. granted, 43 U.S.L.W. 3451 (U.S. Feb. 18, 1975), discussed in notes 102-04 & accompanying text supra, and concluded that when a taxpayer seeks injunctive relief, the Franchise Tax Board "must show good faith.. and to do so, it is required to reveal the foundation for its claim[ed assessment] . . . ." Dupuy v. Superior Court, supra at 16. Although rejecting the argument that a taxpayer is entitled to an administrative hearing prior to the seizure of property, the Court held that due process requires a post-seizure hearing before any property is sold. The opinion is unclear as to whether a taxpayer is entitled to a prompt and meaningful post-seizure hearing when assets such as currency are seized. See note 108 supra.

[From the Journal of Taxation, August 1976]

THE PRIVACY ACT OF 1974: How IT AFFECTS TAXPAYERS, PRACTITIONERS AND THE IRS

(By William J. Bowe)

"The privacy Act of 1974, among other things, makes it possible for
individual taxpayers to examine and amend information about them
which the Service has collected and stored. The author analyzes the
impact of the Act on taxpayers and the Service."

Many practitioners were probably asked by their clients about the significance of a half-page announcement in their 1975 tax returns, entitled "Privacy Act Notification." This notification was but one of a host of changes which the Privacy Act of 19741 brought to the collection, maintenance, and use of taxpayer information. Briefly, the Act restricts the collection of improper personal information by Federal agencies and for the first time, gives individuals the legal right to compel deletion or amendment of Federal records concerning them, where such records are inaccurate. For background information see the material in the box on page 75.

The Privacy Act was passed by the Congress on December 31, 1974, and became effective on September 27, 1975. Prior to the effective date, the Act provided that every Federal agency, including the IRS, publish in the Federal Register a list of each "system of records" under its control from which information can be retrieved by the name of an individual or by some other identifier assigned to an individual (such as their Social Security number). Thus, on August 26, 1975, the Treasury on behalf of the IRS, published in the Federal Register notice of the existence of over 200 separate IRS systems of records falling within the definition of the Act, In all, 8,000 separate systems of records containing files on millions of individuals were identified by Federal agencies.' According to the IRS, it maintained files on individuals in the following categories: Public Affairs, Accounts, Collection and Taxpayer Service Accounts and Data Processing; Collection; Administration; Fiscal Management; Facilities Management; Personnel; Audit; Appellate; Intelligence; Office of International Relations; Inspection; Planning and Research; Technical; Office of Chief Counsel; as well as a catch-all category entitled "General Items Not Otherwise Numbered."

Typical of the specific systems of records within these categories are: System 22.011, Card Index File of Erroneous Refunds; System 22.055, Tax Prac titioner, Extension-of-Time Card File; System 42.012, Tax Shelter Program File; System 46.005, Electronic Surveillance File; System 60.002, Bribery Investigation File.

In a triumph of bureaucratic euphemism, the infamous IRS "enemies list,” which helped prompt passage of this kind of legislation, became System 26.023, Defunct Special Service Staff File Being Retained Because of Congressional Directive.

As to each of these systems of records, there was disclosed in accordance with the Act: the name and location of the system; the categories of individuals on whom records are maintained in the system; the categories of records in the system, the routine uses of the records contained in the system, including the categories of users and the purpose of such use; the policies and practices of the IRS regarding storage, retrievability, access, controls, retention and disposal of records; the title and business address of the IRS official responsible for the system, the procedures by which an individual can obtain notice if the system of records contains information pertaining to him; and the procedures by which an individual can obtain access to and contest the content of a record in the system.

The Act also codifies standards concerning the collection, maintenance, and use of taxpayer information. To the extent it did not before, the IRS now is to maintain only such information about an individual as is relevant and necessary to accomplish the purpose for collecting the information established by statute or Executive Order." The IRS also must now maintain all records with

1 P.L. 93-579. 12/31/74, 5 U.S.C., Section 552 (a)-(q).

25 U.S.C., Section 552(e) (4).

Speech by David F. Lincives, Chairman, Privacy Protection Study Commission, 11/18/75. 45 U.S.C., Section 552(e) (4) (A)~(I).

55 U.S.C., Section 552 (e) (1).

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