United States v. Rylander
Headline: Tax enforcement ruling reverses appeals court, lets courts hold people in contempt for refusing IRS document orders even when invoking the Fifth Amendment, making it harder to avoid producing corporate tax records.
Holding:
- Makes it harder to avoid IRS document orders by invoking the Fifth Amendment.
- Leaves courts able to imprison noncompliant record holders until they produce documents.
- Strengthens IRS enforcement of corporate record subpoenas during tax investigations.
Summary
Background
A businessman who was president of two corporations was served with an IRS summons to produce corporate books and to testify about them. He repeatedly avoided the summons, then filed a sworn statement saying he did not have the records and refused further questioning by asserting the Fifth Amendment right against self-incrimination. The district court enforced the summons, found he had possession or control of the records, and held him in civil contempt for failing to produce them.
Reasoning
The Court addressed whether claiming the Fifth Amendment at the contempt hearing relieved the man of the obligation to show he was currently unable to comply. The Ninth Circuit had said his untested statement that he did not have the records was enough, and that the Government then had to prove the records existed and were in his control. The Supreme Court rejected that view. It explained that an unappealed enforcement order carries a presumption of continuing possession, and a person defending against contempt must produce evidence showing present inability to comply; merely invoking the Fifth Amendment does not replace that evidentiary burden.
Real world impact
The decision makes it harder for people served with IRS document orders to avoid compliance simply by refusing to answer questions at a contempt hearing. Courts may hold nonproducing custodians in contempt until they either produce the documents or come forward with evidence that they presently cannot. The opinion stresses the importance of effective tax enforcement and discourages relitigating enforcement findings at contempt proceedings.
Dissents or concurrances
Justice Marshall dissented, warning the ruling creates a new exception to the Fifth Amendment and argued the district court never found present possession, so the case should have been remanded to decide the privilege claim first.
Opinions in this case:
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