United States v. Clarke

Whether an unsupported allegation that the Internal Revenue Service (IRS) issued a summons for an improper purpose entitles the summoned party to an evidentiary hearing to question IRS officials about their basis for issuing the summons.

Respondent challenges five administrative summons that were issued by the IRS pursuant to an investigation into tax liabilities. In order to enforce a summons the IRS must meet a four-part prima facie case showing that (1) “the investigation will be conducted pursuant to a legitimate purpose,” (2) “the inquiry may be relevant to the purpose,” (3) “the information sought is not already within the Commissioner's possession,” and (4) “the administrative steps required by the Code have been followed.” United States v. Powell, 379 U.S. 48, 57–58, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964). Once the prime facie showing has been made, the burden shifts to the opposing party to either; (1) disprove one of the four elements; or, (2) convince the court that enforcement would be an abuse of the court’s process. Abuse of the court process would stem out of the order being issued and enforced based on an improper purpose.

The United States District Court for the Southern District of Florida found in favor of the IRS and enforced the orders. Upon appeal, respondents argued that they were entitled to discovery and an evidentiary hearing before the district court granted the IRS's petitions to enforce the summonses because they alleged the IRS may have had improper purposes. The Court of Appeals for the Eleventh Circuit vacated and remanded for a hearing allowing respondents to question the IRS decision regarding the issue of summons.

The Supreme Court granted certiorari to decide whether an unsupported allegation that the IRS issued a summons for an improper purpose entitles the summoned party to an evidentiary hearing to question IRS officials about their basis for issuing the summons.