## Facts

- An IRS Intelligence Division special agent was assigned to investigate John Gattuso’s federal tax liability for 1970–1972.
- Acting under 26 U.S.C. § 7602, the agent issued summonses to LaSalle National Bank seeking files for certain land trusts created for Gattuso’s benefit.
- A bank officer appeared but refused to produce the requested files.
- The United States sought judicial enforcement of the summonses.
- The district court found the summonses were issued without good faith because the agent was conducting the investigation solely to obtain evidence of criminal conduct.
- At the time the summonses issued, the IRS had not recommended prosecution to the Department of Justice.

## Issues

1. Whether a § 7602 summons must be denied enforcement whenever the issuing agent is found to be investigating solely to gather evidence of criminal conduct.
2. Whether the enforceability of a § 7602 summons turns on the IRS’s institutional good faith and the absence of a referral to the Department of Justice for criminal prosecution.

## Decision

- The Supreme Court reversed and remanded with directions to enforce the summonses.
- A finding that a particular agent had a solely criminal investigatory purpose did not, by itself, establish that the summonses were issued outside § 7602 or in bad faith.
- The controlling limitations were whether a Department of Justice referral had occurred and whether the IRS, as an institution, still pursued authorized civil tax purposes.

## Legal Principles

- IRS use of § 7602 occurs within a tax enforcement system in which civil and criminal elements are intertwined; summons limits must reflect that structure.
- A § 7602 summons is generally enforceable if issued before the IRS recommends to the Department of Justice that a criminal prosecution be initiated regarding the summons’s subject matter.
- Enforcement also requires institutional good faith: the IRS may not abandon its responsibility to determine and collect taxes and civil fraud penalties.
- The subjective motive of a single IRS agent is not dispositive of institutional good faith.
- The party resisting enforcement bears the burden to disprove the existence of a valid civil tax determination or collection purpose, or otherwise show institutional misuse of the summons power.

## Conclusion

The Court held that IRS summonses issued under § 7602 remain enforceable absent a Justice Department referral and absent proof that the IRS had abandoned a legitimate civil tax purpose, even when the issuing agent is found to have pursued only criminal evidence.


United States v. LaSalle Nat'l Bank, 437 U.S. 298 (1978)