## Facts

- Gustav J. Crespo was the president of Remington Sales Bureau, Inc. (Remington), and George J. Smith, Jr. was its vice president.
- Crespo owned 60% of Remington’s stock and Smith owned the remaining 40%; there were no other shareholders during the years involved.
- In March 1967, the Internal Revenue Service (IRS) examined Remington’s books and records for the fiscal year ending March 31, 1963, to the extent necessary to complete its report for that year.
- The IRS also examined some of Remington’s books and records for the fiscal years ending March 31, 1964, and March 31, 1965, but contended it still needed additional information (including certain correspondence and purchase invoices) to complete its reports and determine Remington’s income tax liabilities for those years.
- The IRS issued two administrative summonses under I.R.C. § 7602 to Crespo (as president) and Smith (as vice president), directing them to appear, testify, and produce specified corporate books and records for the period April 1, 1963 through March 31, 1965.
- Crespo and Smith refused to comply with the summonses.
- The United States and an IRS special agent filed an enforcement proceeding under I.R.C. §§ 7402(b) and 7604(a) to compel compliance.
- Crespo and Smith argued that I.R.C. § 7605(b) limited the IRS to one inspection per taxable year unless the Secretary of the Treasury or a delegate, after investigation, provided written notice that an additional inspection was necessary; they contended no such written notice had been given.
- At the enforcement hearing, the petitioners entered into a stipulation with Smith, and the action was dismissed as to him; the dispute continued as to Crespo.

## Issues

1. Whether the IRS had already conducted the “one inspection” of Remington’s books for the fiscal years ending March 31, 1964 and March 31, 1965 within the meaning of I.R.C. § 7605(b), so that further inspection was barred absent written notice of an additional inspection.
2. Whether the summonses were issued for a legitimate purpose within the IRS’s authority under I.R.C. § 7602.
3. Whether enforcement of the summonses would constitute an unreasonable search and seizure in violation of the Fourth Amendment.
4. Whether enforcement of the summonses would violate Crespo’s Fifth Amendment privilege against self-incrimination.

## Decision

- The court granted the petition to enforce the IRS summons against Crespo and ordered him to comply by appearing, testifying, and producing the specified corporate books and records.
- The court held that § 7605(b) did not bar enforcement because the IRS had not completed its inspection or finally determined Remington’s tax liability for the fiscal years ending March 31, 1964 and March 31, 1965; the additional request was treated as part of a single, continuing examination rather than a prohibited second inspection requiring written notice.
- The court found the summonses were issued for a legitimate tax-determination purpose authorized by § 7602 and sought information directed to determining Remington’s income tax liabilities for the years under review.
- The court rejected the Fourth Amendment objection, concluding that judicial enforcement of the summonses for identified corporate records tied to a tax inquiry was not an unreasonable search or seizure.
- The court rejected Crespo’s Fifth Amendment claim as a basis to withhold corporate records, holding that a corporate officer or custodian cannot refuse to produce corporate books and records on the ground of personal self-incrimination.
- The action remained dismissed as to Smith based on the parties’ stipulation.

## Legal Principles

- I.R.C. § 7605(b)’s “one inspection” limitation applies to repeated inspections after the IRS has completed an examination for a taxable year; it does not prevent the IRS from obtaining additional records needed to finish an examination and determine tax liability for that year.
- Under I.R.C. § 7602, the IRS may issue administrative summonses to require testimony and production of books and records for purposes such as determining the correctness of returns and tax liability.
- An IRS summons for specified records connected to a lawful tax inquiry, when subject to judicial enforcement, does not constitute an unreasonable search or seizure under the Fourth Amendment.
- The Fifth Amendment privilege is personal and does not permit a corporate officer, acting in a representative capacity, to refuse production of corporate books and records (the collective-entity rule).

## Conclusion

The district court enforced the IRS summons against Crespo, holding that the IRS’s request for additional corporate records for fiscal years 1964 and 1965 was part of an unfinished examination rather than a barred second inspection under § 7605(b), and further holding that the summonses served a lawful tax-investigation purpose and were not defeated by Crespo’s Fourth or Fifth Amendment objections.


United States v. Crespo, 281 F. Supp. 928 (1968)