## Facts

- The IRS examined Dynamo Holdings L.P.’s partnership tax returns for tax years 2005–2007 and issued a Final Partnership Administrative Adjustment proposing changes.
- Soon after, the IRS issued five administrative summonses under 26 U.S.C. § 7602(a) to individuals associated with Dynamo (including Michael Clarke) seeking testimony and records relevant to Dynamo’s tax obligations.
- None of the summoned individuals complied.
- Dynamo and Clarke challenged the FPAA in the Tax Court.
- While that Tax Court matter was pending, the United States sought enforcement of the summonses in federal district court.
- The respondents opposed enforcement, alleging the IRS acted with an improper retaliatory purpose (to punish their refusal to extend a limitations waiver and to gain litigation advantage) and requested an evidentiary hearing to question IRS officials about motive.

## Issues

1. Whether a summons opponent is entitled to examine IRS officials about the reasons for issuing a summons based solely on allegations of improper purpose.
2. What threshold showing is required to obtain an evidentiary hearing (including examination of IRS agents) in an IRS summons enforcement proceeding.

## Decision

- The Supreme Court unanimously vacated the court of appeals’ judgment and remanded.
- The Court held that a summons opponent may examine IRS officials only when the opponent points to specific facts or circumstances plausibly raising an inference of bad faith.
- A mere allegation of improper motive, without credible supporting evidence, does not entitle the opponent to an evidentiary hearing or agent examination.
- The court of appeals was directed to assess the respondents’ submissions under the correct standard, with appropriate deference to the district court’s discretionary management of the enforcement proceeding.

## Legal Principles

- IRS summons enforcement proceedings are summary in nature; the central question is whether the summons was issued in good faith.
- The Government makes a prima facie case for enforcement by meeting the Powell factors: legitimate purpose, relevance, lack of possession, and compliance with required administrative steps.
- After the Government’s prima facie showing, the opponent bears the burden to show an improper purpose or bad faith.
- To obtain examination of IRS officials, the opponent must offer more than naked allegations and must identify specific facts or circumstances that make bad faith a plausible inference; circumstantial evidence may suffice, and a fully developed proof is not required.
- District courts have discretion in managing enforcement proceedings, but legal determinations about what qualifies as an improper motive must reflect the governing standard.

## Conclusion

The Court rejected an automatic right to question IRS agents upon an allegation of improper purpose and required a threshold showing—specific facts plausibly indicating bad faith—before allowing evidentiary examination in IRS summons enforcement proceedings.


United States v. Clarke, 573 U.S. 248 (2014)