LOCATION: Sable Communications of California
DOCKET NO.: 87-1064
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Ninth Circuit
CITATION: 489 US 353 (1989)
ARGUED: Dec 05, 1988
DECIDED: Feb 28, 1989
Charles E. Peery - on behalf of the Respondents
Lawrence G. Wallace - on behalf of the Petitioner
Facts of the case
Media for United States v. StuartAudio Transcription for Oral Argument - December 05, 1988 in United States v. Stuart
Audio Transcription for Opinion Announcement - February 28, 1989 in United States v. Stuart
William H. Rehnquist:
The opinion of the Court in number 87-1064, United States against Stuart will be announced by Justice Brennan.
William J. Brennan, Jr.:
This case is here on certiorari to the Court of Appeals for the Ninth Circuit.
Articles 19 and 21 of the 1942 Convention respecting double taxation between the United States and Canada require the United States on request and consistent with the United States revenue laws to obtain and convey information to Canadian authorities to assist them in determining a Canadian taxpayer's income tax liability.
The respondents, Canadian citizens and residents maintained accounts in the bank in the United States.
In attempting to ascertain their Canadian income tax liability for certain years, the Canadian Department of National Revenue, pursuant to Articles 19 and 21 of the treaty, requested our Internal Revenue Service to provide pertinent bank records.
After the IRS Director of Foreign Operations concluded that the request fell within the 1942 Convention's scope and that it would be appropriate for the United States to honor them, the IRS served in the bank administrative summonses for the requested information, but, at respondents' request, the bank refused to comply.
The respondents then petitioned the Federal District Court to quash the summonses contending that because under 26 USC 7602(c), the IRS may not issue a summons to further its investigation of a United States taxpayer when a justice department referral for possible criminal prosecution is in effect and because Revenue Canada's investigation of respondents was a criminal investigation in its preliminary stage, United States law proscribed the use of a summons to obtain the information for Canadian authorities regarding respondents' American bank accounts.
That argument was rejected, and the District Court ordered the bank to comply with a summonses.
The Court of Appeals reversed holding that before the IRS may honorary request for information under the 1942 Convention.
It must determine that Revenue Canada's investigation has not reached the stage analogous to a justice department referral by the IRS that here, the affidavit submitted by the IRS failed to state that such a determination had been made with respect to revenue Canada's investigation of respondents.
We reverse the judgment of the Court of Appeals.
We hold that neither the 1942 Convention nor domestic legislation requires the IRS to attest that the Canadian tax investigation has not reached the stage analogous to a Justice Department referral by the IRS in order to obtain enforcement of a summons issued pursuant to a request by Canadian authorities under the convention.
Justice Kennedy, joined by Justice O'Connor, joins all but part 2c of the Court's opinion and has filed an opinion concurring in part and concurring in the judgment.
Justice Scalia has filed an opinion concurring in the judgment.