Mary A. ROBERT, Plaintiff-Appellant, Siegel-Robert, Intervenor, v. UNITED STATES of America, Defendant-Appellee., United States Court of Appeals, Eighth Circuit., 364 F.3d 988, No. 03-1603., April 29, 2004

Mary A. ROBERT, Plaintiff-Appellant, Siegel-Robert, Intervenor, v. UNITED STATES of America, Defendant-Appellee.

United States Court of Appeals, Eighth Circuit.

364 F.3d 988

No. 03-1603.

April 29, 2004.

Submitted: Dec. 15, 2003.

Filed: April 29, 2004.

James F. Bennett, argued, St. Louis, MO (Kathleen R. Sherby and Anthony S. Gasaway, on the brief), for appellant.

Bridget M. Rowan, argued, U.S. Dept. of Justice, Tax Div., Washington, DC (Frank P. Cihlar, U.S. Dept. of Justice, Tax Div., on the brief), for appellee.

Before MELLOY, McMILLIAN, and BOWMAN, Circuit Judges.

MELLOY, Circuit Judge.

Mary A. Robert appeals the district court's ¹ adverse grant of summary judg╜ment in her action to quash four separate third-party IRS summonses. We agree with Ms. Robert that the summonses is╜sued as a result of improper ex parte communications between the IRS Appeals Office and Examination Division. See In╜ternal Revenue Service Restructuring and Reform Act (Restructuring Act) of 1998, Pub.L. No. 105-206, 112 Stat. 68 (charging the Commissioner of Internal Revenue with the duty to provide an independent Appeals Office and prohibit ex parte com╜munications that appear to compromise the independence of the Appeals Office); Rev. Proc.2000-43, 2000-2 C.B. 404 (set╜ting forth guidelines for implementation of the restriction on ex parte communica╜tions). We find, however, that in this case, the ex parte communications do not pre╜vent enforcement of the summonses. The judgment of the district court is affirmed.

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^1. ═ The Honorable Charles A. Shaw, United States District Judge for the Eastern District of Missouri.

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I. Facts

Ms. Robert, in her capacity as the trus╜tee and income beneficiary of a marital trust established by her late husband, owned approximately seven million shares out of a total of twelve million outstanding shares of Siegel-Robert, Inc. ² In 1998, she transferred 1,800,000 shares from the trust to her children in exchange for promissory notes structured as non-recourse debt. She secured the notes with Siegel-Robert stock and established a mechanism to exe╜cute on the stock through a stock redemp╜tion agreement between herself, Siegel-Robert, and her children. Ms. Robert claimed that the promissory notes were worth as much as the transferred stock and characterized the transfers as related party sales under I.R.C. ╖ 267. Also, dur╜ing 1998 and 1999, she transferred 29,750 shares to her children and other relatives. She characterized these additional trans╜fers as gifts.

Ms. Robert listed minority share values of $21.73 and $23.67 for the Siegel-Robert stock on her 1998 and 1999 gift tax re╜turns, respectively. Ms. Robert used a private appraiser to arrive at these values. Although she maintains that her valuation was accurate, she concedes that, if inaccu╜rate, any resultant increase in valuation of the transferred stock must be treated as a gift.

In 2000, the IRS began an audit of Ms. Robert's 1998 and 1999 gift tax returns. Ms. Robert cooperated and provided finan╜cial information. The IRS Estate Tax Ex╜aminer assigned to Ms. Robert's case, Paul Latt, disagreed with Ms. Robert's valua╜tion and determined that an IRS appraisal was needed. IRS Financial Analyst Er╜nest Gruenfeld conducted an appraisal and determined that the appropriate minority share prices for the 1998 and 1999 trans╜fers were $55.52 and $44.17, respectively. Based on Mr. Gruenfeld's appraisal and the number of shares that Ms. Robert transferred, Mr. Latt determined that Ms. Robert owed the IRS a deficiency payment of approximately $34 million regarding the 1998 transfers and $233,000 regarding the 1999 transfers. Mr. Latt was aware of a one million share decrease in the number of outstanding shares during 1998 but did not know what happened to those shares. Mr. Latt did not incorporate this share decrease into his valuation and deficiency determination as set out in his examination report.

On March 2, 2001, Mr. Latt sent Ms. Robert a "thirty-day letter" to propose these deficiencies. The letter was accom╜panied by Mr. Latt's examination report and Mr. Gruenfeld's appraisal. The March 2, 2001 letter was not a statutory deficiency notice.

On April 2, 2001, Ms. Robert replied with a letter of protest in which she set forth arguments contesting the IRS find╜ings and requested an appeals conference. On May 18, 2001, the Appeals Office as╜signed IRS Appeals Officer Daniel Mann╜ion to handle Ms. Robert's appeal. Mr. Mannion previously had worked on a gift tax case that involved Ms. Robert's de╜ceased husband and a dispute over the value of Siegel-Robert stock. In addition, Mr. Mannion was familiar with the opin╜ions from this court and the Eastern Dis╜trict of Missouri in which we approved a method for determining the "fair value" of Siegel-Robert stock. See Swope v. Siegel-Robert, Inc., 74 F.Supp.2d 876, 879-910 (E.D.Mo.1999), aff'd in part and rev'd in part by 243 F.3d 486 (8th Cir.2001).

Mr. Mannion claims that, on August 12, 2001, he conducted an initial review of Ms. Robert's file and determined that Mr. Gru╜enfeld's appraisal was inadequate because it did not follow the methodology set forth in the Swope case. "Shortly after" this review, Mr. Mannion contacted Mr. Latt on an ex parte basis to tell Mr. Latt that Mr. Gruenfeld's appraisal was inadequate. In addition, Mr. Mannion sent Mr. Latt a copy of Ms. Robert's protest with instruc╜tions to forward the protest to Mr. Gruen╜feld for review so that Mr. Gruenfeld could revise the IRS appraisal.

On September 10, 2001, Ms. Robert's attorney called Mr. Mannion to request a meeting. Mr. Mannion did not tell Ms. Robert's attorney about the August ex parte communications with Mr. Latt. Ms. Robert's attorney stated that Mr. Mannion set a meeting date for October 3, 2001, because Mr. Mannion claimed it would take approximately three weeks to review Ms. Robert's file.

At the October 3 meeting, two of Ms. Robert's attorneys discussed the case with Mr. Mannion and provided a written cri╜tique of Mr. Gruenfeld's appraisal. Mr. Mannion asked about the unaccounted-for one million share decrease in outstanding Siegel-Robert stock during 1998. Ms. Robert's attorneys stated that the marital trust redeemed the one million shares of Siegel-Robert stock for cash so that the trust could diversify its holdings. Mr. Mannion believed this redemption poten╜tially raised a new gift tax issue. In addi╜tion, he suggested that the IRS obtain an outside appraisal to value the stock. Again, Mr. Mannion did not tell Ms. Rob╜ert's attorneys about the August ex parte communications with Mr. Latt, nor did he tell them of his intention to conduct future ex parte communications with Mr. Latt. Mr. Mannion concluded the meeting by telling Ms. Robert's attorneys that he would contact them in January of 2002 to discuss resolution of the protest.

On October 3, 2001, after meeting with Ms. Robert's attorneys, Mr. Mannion called Mr. Latt to tell him about the new information concerning the 1998 one mil╜lion share decrease and to let him know that Ms. Robert's attorneys had submitted a written critique of Mr. Gruenfeld's ap╜praisal. On October 4, 2001, Mr. Latt met with Mr. Mannion and received a copy of the written critique. On October 15, 2001, Mr. Mannion referred the new information regarding the one million share decrease to Mr. Latt's IRS Examination Supervisor, Chris Mezines, and suggested that this decrease might involve the same bargain sale/gift issues already under examination.

On October 29, 2001, Mr. Latt sent a letter to Ms. Robert's attorneys to ask for information about the one million share decrease. Mr. Latt's letter referred to the fact that the Appeals Office requested that he gather information about the one mil╜lion share transfer. In December 2001, Mr. Latt sent Ms. Robert's attorneys an╜other letter to explain that the IRS had retained a private appraiser and to request additional financial information. In a fol╜low-up call, Mr. Latt told Ms. Robert's attorneys that Mr. Mannion believed Mr. Gruenfeld's initial appraisal was inade╜quate. Ms. Robert's attorneys challenged Mr. Latt's authority because the Appeals Office had jurisdiction over the case and Mr. Mannion had last told them that he would contact them in January to resolve the case.

On January 11, 2002, Mr. Latt called Ms. Robert's attorneys and left a tele╜phone message. Ms. Robert's attorneys saved the recorded message and prepared a transcript of the message. In the mes╜sage, Mr. Latt made clear that Mr. Mann╜ion was still in charge of the case; the examination division was going to be "do╜ing the leg work" for Mr. Mannion to collect financial data and obtain a private party appraisal; and Mr. Mannion had stated the "in house appraisal was not going to do the job as far as the IRS was concerned."

Ms. Robert's attorneys then arranged a January 23, 2002 meeting with Mr. Mann╜ion and his supervisor, Chris Roth, to dis╜cuss the ex parte communications between Mr. Mannion, Mr. Latt, and Mr. Mezines. At the January 23 meeting, Mr. Mannion stated that, during the October 3, 2001 meeting, Ms. Robert successfully refuted the valuation that Mr. Gruenfeld prepared for the IRS. On January 29, 2002, Ms. Robert's attorneys met again with Mr. Mannion and Mr. Roth. Mr. Latt, Mr. Mezines, and IRS counsel were present for this meeting. Ms. Robert's attorneys sug╜gested that, as a remedy for the ex parte communications, the IRS should either as╜sign a different appeals officer to review the record independently or issue a statu╜tory notice of deficiency. Mr. Roth stated that he would coordinate the IRS response to these proposals. Several days later, Mr. Roth called Ms. Robert's attorneys and stated that instead of assigning a new appeals officer, the IRS would assign a new examiner and start a new audit.

The IRS assigned a new examiner, John Crowe, to conduct the new audit. Mr. Crowe requested the financial records nec╜essary for a third-party appraisal of the Siegel-Robert stock. He then issued the four summonses that are the subject of the current action. Mr. Crowe directed these summonses to Siegel-Robert and its presi╜dent, vice-president, and treasurer.

On March 14, 2002, Ms. Robert peti╜tioned the district court to quash the sum╜monses. Ms. Robert argued that the sum╜monses were issued as a direct result of the ex parte communications, to prepare the case for litigation, and as a direct result of Mr. Mannion's failure to review the case independently and impartially. She specifically argued that the summons╜es were issued in bad faith and that court enforcement of the summonses would be an abuse of the court's process. Ms. Rob╜ert requested discovery and an evidentiary hearing.

On June 10, 2002, the government re╜sponded and simultaneously filed a motion for summary judgment to seek enforcement of the summonses. The government provided affidavits from Messrs. Mann╜ion, Latt, Mezines, and Crowe. Ms. Rob╜ert claims that, through these affidavits, the IRS disclosed numerous previously un╜disclosed ex parte communications. In particular, Ms. Robert and her attorneys claim that prior to receipt of the govern╜ment's motion and the accompanying affi╜davits, they knew only of the October 3, 2001 discussion between Messrs. Mannion and Latt. Ms. Robert claims she learned of the following allegedly improper ex parte communications only through the govern╜ment's affidavits: the August 13, 2001 dis╜cussion between Messrs. Mannion and Latt; an August 13, 2001 discussion be╜tween Messrs. Latt and Gruenfeld; the October 4 meeting between Messrs. Latt and Mannion; an October 4, 2001 discus╜sion between Messrs. Latt and Mezines; the October 15, 2001 discussion between Messrs. Mannion and Mezines; and dis╜cussions on an unknown date between an examiner and personnel at the private ap╜praisal firm that the IRS hired in late 2001.

On July 2, 2002, Ms. Robert filed a motion under Fed.R.Civ.P. 56(f) to strike the government's motion for summary judgment or, in the alternative, for an extension of time that would allow for a period of discovery. On November 14, 2002, the district court denied Ms. Rob╜ert's motion, denied her request for discov╜ery and an evidentiary hearing, and or╜dered her to respond to the government's outstanding motion for summary judg╜ment. On January 9, 2003, the district court granted the government's motion, finding that "petitioner has cited no cases for the proposition that violation of the IRS's internal regulation against ex parte communications by an appeals officer in╜validates any subsequently-issued sum╜mons for information." Finally, the dis╜trict court found that the facts suggested neither that enforcement of the summons╜es would be an abuse of the court's process nor that the ex parte communications sug╜gested bad faith by the IRS.

II. Standard of Review

We review under a de novo stan╜dard the district court's summary enforce╜ment of, and refusal to quash, an IRS summons. E.g., United States v. Scherp╜ing, 187 F.3d 796, 800 (8th Cir.1999) (sum╜mary judgment standard); Crystal v. United States, 172 F.3d 1141, 1145 (9th Cir.1999) (summary summons enforcement standard). We review the district court's denial or limitation of discovery in an ac╜tion to enforce or quash an IRS summons for abuse of discretion. United States v. Lask, 703 F.2d 293, 300 (8th Cir.1983); Mazurek v. United States, 271 F.3d 226, 234 (5th Cir.2001).

III. ═ Violation of the Restriction on Ex Parte Communications

As an initial matter, we may dispense with the IRS argument that the ex parte communications were permissible and not in violation of the Restructuring Act and Rev. Proc.2000-43. Congress passed the Restructuring Act to ensure that "taxpay╜ers would have adequate protections when the agency exercised its powers in an im╜proper fashion." National Commission on Restructuring the Internal Revenue Ser╜vice, Report of the National Commission on Restructuring the Internal Revenue Service, A Vision for a New IRS, at 8 (June 25, 1997). One method Congress chose to provide these protections was to direct the Commissioner of Internal Reve╜nue to enhance the independence of the IRS Appeals Office by restricting certain types of ex parte communication between the Appeals Office and other areas of the IRS. Congress mandated, among other things, that:

The Commissioner of the Internal Reve╜nue shall develop and implement a plan to reorganize the Internal Revenue Ser╜vice. The plan shall . . . (4) ensure an independent appeals function within the Internal Revenue Service, including the prohibition in the plan of ex parte com╜munications between appeals officers and other Internal Revenue Service em╜ployees to the extent that such commu╜nications appear to compromise the in╜dependence of the appeals officers.

Restructuring Act ╖ 1001(a).

In Revenue Procedure 2000-43, promulgated under the Restructuring Act, the IRS set forth its own position regard╜ing which communications appear to com╜promise the independence of the appeals officer. The IRS distinguished between "ministerial, administrative, and procedur╜al matters," on the one hand, and sub╜stantive matters, on the other. Id . ╖ 3. As to the former, the IRS does not con╜sider ex parte communications to be pro╜hibited under the Restructuring Act. The IRS provided examples of communications considered to be permissible: questions regarding whether certain information was requested and received; questions re╜garding whether a document referred to in the work papers but not found in the file is available; questions to clarify illegi╜ble documents; questions about case con╜trols on the IRS's management informa╜tion systems; and questions regarding tax calculations that are purely mathematical in nature. Id . ╖ 3, at Q & A 5. As clearly demonstrated through this list, the IRS itself set forth a limited view of communi╜cations that would be considered ministe╜rial and that could occur on an ex parte basis between the Appeals Office and oth╜er Divisions.

At least some of the communications in the present case did not involve merely ministerial, administrative, and procedural matters, but rather, involved the substance of Ms. Robert's appeal. Accordingly, under the Restructuring Act and the IRS's own procedures, at least some of the com╜munications in the present case should not have taken place on an ex parte basis. Mr. Mannion should not have expressed his opinions regarding the sufficiency of Mr. Gruenfeld's appraisal to Messrs. Latt and Mezines on an ex parte basis. In addition, he should not have shared with the Examination Division the written cri╜tique and additional information that Ms. Robert's attorneys provided without in╜cluding Ms. Robert's attorneys in the com╜munications. Finally, he should not have recommended to Mr. Mezines that the Ex╜amination Division hire an outside apprais╜er to value the Siegel-Robert stock. At a minimum, these communications appeared to compromise Mr. Mannion's indepen╜dence.

The ex parte communications are made more troubling by the fact that the IRS delayed disclosure of at least some of these communications until this matter reached the stage of litigation. Further, even on appeal to this court, the IRS did not will╜ingly concede the improper nature of its ex parte communications. If anything, this denial by the IRS suggests an institutional failure to embrace the ex parte restrictions and militates against our enforcement of the summonses.

Nevertheless, as explained below, we will enforce the summonses in this case because Congress did not specifically legis╜late a limitation on the IRS summons pow╜er as a remedy for violation of the ex parte restrictions; the IRS did proscribe an ad╜ministrative remedy to address violations of the ex parte restrictions; the Supreme Court has cautioned that we should be slow to erect barriers to enforcement of IRS summonses; and, we discern no im╜proper purpose or bad faith behind issu╜ance of the IRS summonses nor nexus between the improper communications and any improper purpose for the investiga╜tion.

IV. Validity of the Summonses

The Supreme Court made clear in United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), that a court should not enforce an IRS summons if enforcement will result in abuse of the court's process. The Court stated:

It is the court's process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation.

Id. at 58, 85 S.Ct. 248 (footnote omitted). The above listing is not an exhaustive in╜ventory of the potential "improper pur╜poses" that might reflect on the good faith of an investigation and prevent enforce╜ment of a summons. See id. (stating that taxpayer " 'may challenge the summons on any appropriate ground' " (quoting Reis╜man v. Caplin, 375 U.S. 440, 449, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964))). Rather, courts may consider new situations as they arise to determine whether the enforce╜ment of a summons would further an im╜proper purpose, reflect on the good faith of the IRS, or result in an abuse of the court's process. See United States v. La╜Salle Nat'l Bank, 437 U.S. 298, 318 n. 20, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978) ("These requirements are not intended to be exclusive. Future cases may well re╜veal the need to prevent other forms of agency a use of congressional authority and judicial process.").

In Powell, the Court also set forth a mode of analysis to determine the good faith of the IRS for the purpose of enforcing an IRS summons. "[The IRS] must show [1] that the investigation will be con╜ducted pursuant to a legitimate purpose, [2] that the inquiry may be relevant to that purpose, [3] that the information sought is not already within the [IRS]'s possession, and [4] that the administrative steps re╜quired by the Code have been followed . . . ." 379 U.S. at 57-58, 85 S.Ct. 248. If the IRS makes this showing, the challeng╜er is afforded the opportunity to rebut the IRS showing as to one or more of the requirements "or to demonstrate that judi╜cial enforcement of the summons would otherwise constitute an abuse of the court's process." United States v. Claes, 747 F.2d 491, 494 (8th Cir.1984); see also Lask, 703 F.2d at 297. The Supreme Court has stated that courts should be slow to erect barriers to enforcement of IRS summonses where the summonses are being used to further the IRS mission of effectively investigating taxpayer liabili╜ties. United States v. Euge, 444 U.S. 707, 711, 100 S.Ct. 874, 63 L.Ed.2d 141 (1980) ("[T]his Court has consistently construed congressional intent to require that if the summons authority claimed is necessary for the effective performance of congres╜sionally imposed responsibilities to enforce the tax Code, that authority should be upheld absent express statutory prohibi╜tion or substantial countervailing poli╜cies."). Accordingly, the burden on the IRS to make a prima facie showing as to the Powell good faith requirements is slight, and the burden on the challenger to rebut the IRS showing as to one or more of these requirements "or to demonstrate that judicial enforcement of the summons would otherwise constitute an abuse of the court's process" is great. Claes, 747 F.2d at 494 ("That burden is a heavy one. The party must show either that the IRS is acting in bad faith or that the IRS has abandoned any civil purpose in the investi╜gation.").

Ms. Robert's challenge focuses generally on the good faith and abuse of process concerns expressed in Powell. She argues that the general prohibition on abuse of the court's process is sufficiently broad to permit the court to quash a summons based on an underlying violation of a law or rule by the IRS. See In re Spencer, 123 B.R. 858, 862 (Bankr.N.D.Cal.1991) (stat╜ing that if issuance of a summons is in violation of a bankruptcy stay, the court "should quash the Summons unless good cause exists for declining to do so"). But see Mimick v. United States, 952 F.2d 230, 232 (8th Cir.1991); United States v. Gil╜bert C. Swanson Found., Inc., 772 F.2d 440, 441 (8th Cir.1985) (refusing to hold that a rule violation mandated the quash╜ing of a summons and instead adopting an approach that " 'requires the court to eval╜uate the seriousness of the violation under all the circumstances including the govern╜ment's good faith and the degree of harm imposed by the unlawful conduct' " (quot╜ing United States v. Payne, 648 F.2d 361, 363 (5th Cir.1981))). To the extent that Ms. Robert's challenge fits into the frame╜work set forth in Powell, she focuses on the "proper purpose" requirement. In particular, she argues that the IRS "violat╜ed the rule [against certain ex parte com╜munications] for the improper purpose of trying to improve its litigating position."

In Gilbert C. Swanson Foundation, we stated, "We take very seriously the statutory and administrative regulations that govern the issuance of IRS summons╜es. They are an essential check on the discretion of an agency with broad investi╜gatory powers over all American citizens." 772 F.2d at 441. Our approach, however, was not to adopt a per se rule and hold unenforceable all summonses that involve a violation of a rule or law. Id. Rather, we adopted the position of the Fifth Circuit to hold that the enforceability of a summons that the IRS issued through a violation of a law or rule depends upon all of the circumstances surrounding the summons, including the seriousness of the violation, the government's good faith, and the harm, if any, caused by the violation. See id. (adopting the Fifth Circuit's method as set forth in Payne, 648 F.2d at 363).

Applying this test, we find that the violation in the present case was serious. The ex parte communications violated the spirit of the Restructuring Act and its congressional mandate to the Commission╜er, not just the letter of Revenue Proce╜dure 2000-43. Accordingly, the violation was not merely a violation of a non-bind╜ing, internal IRS guideline.

Congress, however, delegated to the Commissioner the responsibility for reor╜ganizing the IRS and ensuring compliance with the restriction on ex parte communi╜cations. Congress did not legislate a spe╜cific remedy for violation of the restriction, and we generally will not fashion a remedy where Congress creates a right but fails to create an accompanying remedy. See United States v. James Daniel Good Real Property, 510 U.S. 43, 63, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993). In James Daniel Good Real Property, the Court said:

We have long recognized that "many statutory requisitions intended for the guide of officers in the conduct of busi╜ness devolved upon them . . . do not limit their power or render its exercise in disregard of the requisitions ineffectu╜al." French v. Edwards, 80 U.S. (13 Wall.) 506, 511, 20 L.Ed. 702 (1871). We have held that if a statute does not specify a consequence for noncompliance with statutory timing provisions, the fed╜eral courts will not in the ordinary course impose their own coercive sanc╜tion.

Id . (alteration in original).

Exercising its delegated authority under the Restructuring Act, the IRS provided that violations of the ex parte restriction would be addressed "in accordance with existing administrative and personnel pro╜cesses." Rev. Proc.2000-43, ╖ 3, at Q & A 28. Accordingly, an alternate remedy ex╜ists for the IRS to address the present violations. The presence of this alternate means to address the violations suggests that it is not necessary to quash the cur╜rent summonses.

Looking at the broader question of good faith, we find nothing to suggest that the communications and the resultant sum╜monses were motivated by any goal other than the accurate determination of Ms. Robert's tax liability. While the fact of the ex parte communications and the fail╜ure to timely disclose these communica╜tions is improper and troublesome, there are no parallel criminal proceedings for which the summonses might serve as im╜proper discovery tools, there is no allega╜tion of an ulterior motive on the part of Mr. Mannion or any of the Examination Division personnel, and there are no alle╜gations that the IRS is attempting to coerce Ms. Robert to settle some other, collateral matter. In short, there is noth╜ing to suggest any purpose to issuance of the summonses other than a desire to ac╜curately appraise the Siegel-Robert stock and accurately determine Ms. Robert's tax liability.

Ms. Robert's entire argument regarding good faith and improper purpose hinges on her interpretation of the Appeals Office's role subsequent to passage of the Restruc╜turing Act. While it is undisputed that the Appeals Office served a role as a dispute resolution body prior to the Restructuring Act, Ms. Robert characterizes the Appeals Office today as a limited appellate review body that may only affirm or reverse the IRS position that is presented for review. Ms. Robert, therefore, argues that any action by the Appeals Office that might change the IRS position from that ex╜pressed in the thirty-day letter is a wrong╜ful attempt by the Appeals Office to en╜gage in partisanship and enhance the IRS position in future litigation. Consequently, to accept Ms. Robert's bad faith argument, we would be required to view the Appeals Office as limited in its authority to either (1) adopt the IRS position as set forth in the thirty day letter or (2) adopt the tax╜payer's position for the tax years under investigation, even if an Appeals Officer comes to believe that neither position accu╜rately reflects the taxpayer's liability.

We disagree with this characterization of the role of the Appeals Office. The Restructuring Act is concerned with the independence of the Appeals Office and ex parte communications. See Restructuring Act ╖ 1000(a)(4). The Restructuring Act contains no prohibition on the referral of a matter from the Appeals Office back to the Examination Division if the matter ap╜pears to have reached the Appeals Office prematurely or if new, material evidence is disclosed to the Appeals Office. See Rev. Proc.2000-43 ╖ 3:

Q-7 Does the prohibition on ex parte communications change the criteria for premature referrals?

A-7 As a general rule, there is no change to current criteria or proce╜dures. In essence, [the Restructuring Act] reinforces the instructions in Sec╜tion 8.2.1.2 of the Internal Revenue Manual (IRM) and reaffirms Appeals' role as the settlement arm of the Ser╜vice. If a case is not ready for Ap╜peals consideration, Appeals may re╜turn it for further development or for other reasons described in IRM 8.2.1.2.

The Restructuring Act simply instructs that such referrals should not occur on an ex parte basis.

The history of the Restructuring Act, as set forth by the IRS in Rev. Proc.2000-43, demonstrates that the Appeals Office maintains its role as the settlement arm of the IRS and is not as limited in its power as Ms. Robert suggests. In particular, the legislative history reveals that Congress rejected a more far-reaching overhaul of the Appeals Office when it passed the Re╜structuring Act.

S. Rep. No. 1669, 105th Cong., 2nd Sess., ╖ 304(a) (Feb. 24, 1998), would have established an independent Office of Appeals in the Internal Revenue Ser╜vice, the head of which was to be ap╜pointed by and report directly to the Oversight Board. Further, this propos╜al would have barred Appeals from con╜sidering issues not "raised" by the origi╜nating function and prohibited "any communication" with the originating function unless the taxpayer or taxpay╜er's representative had an opportunity to be present.

Rev. Proc.2000-43 ╖ 2. As enacted, the Restructuring Act only prohibits those ex parte communications that "appear to com╜promise the independence of the appeals officers." Restructuring Act ╖ 1000(a)(4). It does not prohibit the Appeals Office from examining new issues or returning a case for further examination. Further, it does not bar all ex parte communications. The IRS, in its regulation, concluded:

When the evolution of ╖ 1000(a)(4) . . . is considered in light of Appeals['] long╜standing methods of operation, it can be fairly concluded that Appeals must be accorded a significant degree of indepen╜dence from other IRS components, and should be mindful to avoid ex parte com╜munications with other IRS functions that might appear to compromise that independence. The statutory provision cannot, however, be interpreted as man╜dating a major redesign of the funda╜mental processes Appeals has traditionally followed to carry out its dispute resolution mission.

Rev. Proc.2000-43 ╖ 2. The IRS, then, concluded that even after Congress passed the Restructuring Act, the Appeals Office was to remain "a flexible administrative settlement authority" rather than a rigidly constrained appellate review organization limited to affirming or rejecting proposed deficiencies. Id. Rev. Proc.2000-43 pro╜ceeds to make clear the IRS position that the Appeals Office retains the ability to "(a) return[ ] cases that are not ready for Appeals consideration, (b) rais[e] certain new issues, and (c) seek[ ] review and com╜ments from the originating IRS function with respect to new information or evi╜dence furnished by the taxpayer or repre╜sentative." Id. We agree.

Because we find nothing improper in the fact of the referral of Ms. Robert's case for further development-only in the ex parte nature of this referral-we find no evidence to suggest an improper purpose behind the summonses or bad faith in issuance of the summonses. Because referral of the case for further development was not improper, we cannot find that the present violations of the ex parte restriction caused any harm to Ms. Robert. Accordingly, under Gilbert C. Swanson Foundation, we do not find it necessary to quash the summonses.

V. Discovery

We next address Ms. Robert's ar╜guments concerning the district court's de╜nial of discovery. Discovery is not neces╜sary in every summons action, and, in fact, the summary nature of proceedings on an IRS summons militate against' expansive discovery. See United States v. Stuart, 489 U.S. 353, 369, 109 S.Ct. 1183, 103 L.Ed.2d 388 (1989) (" '[S]ummons enforce╜ment proceedings should be summary in nature and discovery should be limited.' " (quoting S.Rep. No. 97-194, Vol. 1, p. 285 (1982))). However, in many cases, some discovery is appropriate and should be allowed. See United States v. Kis, 658 F.2d 526, 540 (7th Cir.1981) ("[W]e do not want to put the taxpayer in the anomalous posi╜tion of having to allege specific facts when he has no means to gather that informa╜tion through discovery . . . . "); United S tates v. Cortese, 614 F.2d 914, 921 n. 12 (3d Cir.1980) ("[I]n almost every case, the information needed to demonstrate an im╜proper motive on the part of the Service is in the hands of the government. Normal╜ly, the taxpayer's only access to such infor╜mation is through limited basic discovery carefully tailored to the purposes of the inquiry. Accordingly, such discovery should be provided."). To strike a balance between the summary nature of summons proceedings and the relative disadvantage taxpayers face regarding access to infor╜mation, we have held that discovery in a summary summons proceeding is appro╜priate where a taxpayer makes a substan╜tial preliminary showing that enforcement of a summons would result in an abuse of the court's process. Tax Liabs. v. United States, 866 F.2d 1015, 1019 (8th Cir.1989).

Ms. Robert made a substantial, in fact conclusive, showing that the IRS con╜ducted improper ex parte communications. She made no showing, however, that the resultant summonses were issued for an illegitimate purpose that would reflect on the good faith of the IRS or cause our enforcement to be an abuse of process. Ms. Robert argued that discovery was nec╜essary because she did not know the con╜tents of the ex parte communications and did not even know of many of the commu╜nications until the government filed its mo╜tion for summary judgment. In the affida╜vits, however, the government disclosed both known and unknown communications, none of which suggests a motive other than a desire to accurately value Siegel-Robert stock. Because Ms. Robert failed to make the requisite showing and demonstrate that discovery would likely lead to useful, relevant evidence, the district court did not abuse its discretion.

The judgment of the district court is affirmed.

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