Is a foreign government's abusive or bad faith purpose ever relevant to the enforcement of an IRS summons issued pursuant to a treaty request?

QUESTION PRESENTED This case concerns an Internal Revenue Service summons served upon the bank of a United States citizen pursuant to a treaty request made by the Republic of India. It is fundamental that citizens have a right to be free from abuse of the judicial process, and that the Courts have inherent authority to police this abuse. In United States v. Powell, 379 U.S. 48 (1964), this Court articulated a framework for policing abuse in the Internal Revenue Service summons enforcement context. There, this Court recognized that “[i]t is the court’s process which is invoked to enforce [an IRS] summons and a court may not permit its process to be abused.” Jd. at 58. A court must therefore quash a summons if a taxpayer shows that the summons has 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. Here, Petitioner offered evidence of India’s abusive purpose for seeking the summons, but the district court declined to consider it. Instead, the district court held that in the context of a summons issued pursuant to a treaty request, a foreign government’s abusive purpose is irrelevant bar none. Rather, so long as the IRS itself acts in response to a treaty request, the IRS’s good faith is established and that is all that matters. For its part, the government acknowledges that the IRS makes no inquiry into whether the foreign government acts in good faith or for an abusive purpose. The Ninth ii Circuit affirmed, joining the Fifth Circuit in this conclusion. In taking this tack, these courts rely on an inappropriately broad reading of dicta from this Court’s decision in United States v. Stuart, 489 U.S. 3538 (1989). The upshot is that, contrary to Powell, lower courts are holding that they can and must allow their process to be abused, so long as that abuse is by foreign governments making a summons request pursuant to a tax treaty. This case presents an ideal vehicle for this Court to correct this error, and to confirm that lower courts retain the power, and the obligation, to ensure their process is not abused. Accordingly, this case presents the following question to the Court: Is a foreign government’s abusive or bad faith purpose ever relevant to the enforcement of an IRS summons issued pursuant to a treaty request?