Tiffany Fine Arts, Inc. v. United States

PETITIONER: Tiffany Fine Arts, Inc.
RESPONDENT: United States
LOCATION: Public Schools

DOCKET NO.: 83-1007
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 469 US 310 (1985)
ARGUED: Oct 31, 1984
DECIDED: Jan 09, 1985

ADVOCATES:
Lawrence G. Wallace - on behalf of Respondents
Michael D. Savage - on behalf of Petitioners

Facts of the case

Question

Media for Tiffany Fine Arts, Inc. v. United States

Audio Transcription for Oral Argument - October 31, 1984 in Tiffany Fine Arts, Inc. v. United States

Warren E. Burger:

Mr. Savage, I think you may begin whenever you're ready.

Michael D. Savage:

Mr. Chief Justice, and may it please the Court, this case is about one small restriction on the power of the IRS to investigate people, the John Doe summons rules of Section 7609(f).

The power is enormous.

And what Section 7609(f) says is that before the IRS can bring all of that power to bear on people whose identity it doesn't even know yet, first it has to show a court of law that it has a reasonable basis for wanting to investigate these people.

The question is: Do those John Doe summons rules apply when the person who can provide the IRS with the identities it seeks is also a taxpayer who is under audit.

Sandra Day O'Connor:

Mr. Savage, does 7609(f), the John Doe summons procedure, apply only to summons to the people who are third party record keepers, as defined in 7609(a)?

Michael D. Savage:

No, Your Honor.

In fact, Section 7609(a) does not apply when Section 7609(f) applies.

Section 7609(f) deals with summonses which are seeking identities or information about unknown taxpayers.

Section 7609(a) applies when the IRS has the identities and is seeking information about those people from designated record keepers.

Now, whether Section 7609(f) applies in this case depends on how you read that statute, how you read Section 7609(f), and at first glance the statute does seem ambiguous... but only at first glance.

The problem is that Congress used the word 7609(f).

It said that a summons is a John Doe summons if it fails to identify the person with respect to whose tax liability the summons was issued.

I don't think there would be any doubt, though... I don't think the government would contend that Congress didn't expect 7609(f) to be used to obtain identities of more than one person.

One of the examples Congress uses in the legislative history, one of the examples it uses of how the summons was to be applied was in the case of a corporation in which the IRS was trying to get the names of the shareholders of a corporation who had been advised that a corporate reorganization was a tax-free transaction.

Now, the government takes the position that as long as the summons identifies one person with respect to whose tax liability it was issued, it's not a John Doe summons.

But that can't be a correct interpretation of the statute.

Suppose, in the example of the corporation that had advised taxpayers that the reorganization was tax-free, suppose that the IRS served a summons which said,

"Furnish us with the letter that you gave to John Smith advising him the transaction was tax-free, and also furnish us with the names and addressed and Social Security numbers of all the other shareholders in the corporation who received the letter. "

I don't think the government would contend that that summons was not a John Doe summons simply because it identified one of the shareholders, John Smith, who the IRS said was under audit.

So the real problem with the statute is that the word "person" is used in the singular.

If the statute said that a John Doe summons was a summons that did not identify a person or persons with respect to whose tax liability it was issued, then interpreting the statute in this case would be much easier.

But that is clearly what the statute means.

Otherwise, the IRS could get around the John Doe summons rules simply by identifying one of Tiffany's customers who was under investigation.

The statute itself confirms that the word "person", the term "person" must be read as "person" or "persons".

The statute says that it applies to any summons described in subsection (c) of Section 7609.

One of the summonses described in subsection (c) of Section 7609 is a summons served under Section 7602.

One of the summonses... the summons served under Section 7602 is your standard, run-of-the mill summons, served on a taxpayer who's under audit, and who is obviously identified in the summons.

The summons served on Tiffany Fine Arts was a Section 7602 summons, and it seems to me that Section 7609(f) says quite clearly that it applies to that kind of a summons.

So the language and the meaning of the statute is not so ambiguous after all.