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B. John Doe Summons/Assessments of Promoter Penalties
In early 1987, Mr. O'Neill, on behalf of the Honolulu
District Examination Division, requested the Justice Department
to initiate legal proceedings to serve Mr. Kersting with a John
Doe Summons (summons).51 The purpose of the summons was to
compel Mr. Kersting to identify the participants in
Mr. Kersting's programs during the taxable years 1984, 1985, and
1986, and to aid the Internal Revenue Service in developing a
case against Mr. Kersting for so-called promoter penalties under
sections 6700 and 6701.
On May 15, 1987, the U.S. Attorney's Office filed a petition
in the Federal District Court for Hawaii to serve Mr. Kersting
with the summons. The summons requested production of all books
and records in Mr. Kersting's custody and control relating to
participants in Mr. Kersting's programs for 1984, 1985, and 1986.
The summons specifically requested production of customer lists
and similar documents containing the names, addresses, and other
identifying information of the participants. Mr. Kersting moved
to quash the summons.
51 Sec. 7609(f) provides that the Secretary may issue a
John Doe summons, i.e., a summons that does not identify the
person with respect to whose liability the summons is issued,
only with court approval after the Secretary establishes that:
(1) The summons relates to the investigation of a particular
person or ascertainable group or class of persons; (2) there is a
reasonable basis for believing that such person or group or class
of persons may fail or may have failed to comply with any
provision of any internal revenue law; and (3) the information
sought to be obtained and the identity of the person or persons
with respect to whose liability the summons is issued are not
readily available from other sources.
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