United States v. Clarke (13-301)
argument 13-301United States v. Clarke
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We'll hear argument first this morning in case 13301, United States v. Clark. Ms. Harrington.
Thank you, Mr. Chief Justice, and may it please the Court. In this case, the 11th Circuit unambiguously held that a district court always abuses its discretion when it denies a summons opponent's request to examine IRS officials based on an unsupported allegation of improper purpose. That holding was wrong for at least three reasons, and even respondents don't defend it at this point. The three reasons are, first, the 11th Circuit's rule ignores Congress's intent that IRS summons enforcement proceedings be summary in nature. Second, The automatic examination rule is inconsistent with this Court's treatment of analogous administrative and grand jury subpoenas in other contexts. And third, the rule fails to respect the District Court's core discretion to govern its own proceedings, including governing when and how evidence should be developed.
As you say, the respondent concedes all that. So why don't you talk about what the difference is between you and the respondent? Nobody defends what the lower Court said here, right?
I'm happy to. The respondent suggests two what we think of as unworkable limitations or potential limitations on the rule. The first is that there would be a requirement that the allegation be plausible, though totally unsupported by evidence. And in our view, any plausibility requirement that is untethered to a requirement that a summons opponent actually point to some evidence that would substantiate the allegation is really not a limitation at all.
Is there really a difference between those two, do you think? Can it be plausible if there's no evidence that suggests that it's true?
Well, in our view, no. I think that's the question you might want to direct your respondents. They seem to suggest that — It
may well be that the two of you agree, in other words, depending on what they think.
And if that's true, then we invite the Court to reverse the Eleventh Circuit. I mean, the rule that we want — What we would like is that before a district court is actually required to allow examination of IRS officials, a summons opponent has to put in enough evidence to at least raise an inference of—
But it all depends on what you mean by evidence. You mean direct evidence? Is circumstantial evidence enough?
Circumstantial evidence is enough. And again, what we're asking for is really a modest rule. A district court, in our view, has discretion to allow examination of an IRS
official. Could you apply your rule, district court discretion, in this particular case? There were two allegations, I think. The first one was that this was in retaliation for the taxpayer's refusal for the third time to extend the limitation period, and the other was this was an effort to circumvent the limited discovery that's allowed in the tax court. Now, those are the allegations. What would the taxpayer have to say in addition to those two allegations to pass your test?
Well, so I think there are sort of two threshold questions that the district court would consider. The first is whether those would actually be improper purposes. And the second is whether, if they would be, they were actually the motivating purposes in this case. The District Court, the Court of Appeals in this case only considered the statute of limitations question, and it found that issuing a summonses after a taxpayer declined to extend a statute of limitations would be an improper purpose. We disagree with that legal holding, but that's not the question in which we sought this Court's review.
Well, let's assume that it is inappropriate for the IRS to avoid taxpayer tax court limitations on discovery. Let's assume that a subpoena cannot do that. The Sapinski declaration, it seems to me, is quite sufficient to make that showing.
Well, I would just say, so there's a case we cited in our reply brief called Ash v. Commissioner, which is a tax court case. which says that in the tax court's view, there's no problem with enforcing a summons that was issued before tax court proceedings were initiated, as was the case here, that there's no problem, there's no interference with the tax court discovery rule when you do that.
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