E.D.Ky.: “Reasonable cause” for production of taxpayer information from the IRS in a public corruption investigation is less than PC

“Reasonable cause” for production of taxpayer information from the IRS in a public corruption investigation is less than “probable cause.” USMJ denial of order overruled. In re United States for Taxpayer Return Information, 2016 U.S. Dist. LEXIS 119895 (E.D.Ky. Sept. 6, 2016):

The United States of America, pursuant to 26 U.S.C. § 6103(i)(1), filed an application for an ex parte order directing the Internal Revenue Service to disclose certain tax return information in furtherance of a public corruption investigation. United States Magistrate Judge Hanly A. Ingram reviewed the Government’s application and denied it, and the United States now appeals that decision to the undersigned. Importantly, the Government argues the “reasonable cause” standard of proof required under 26 U.S.C. § 6103(i)(1)(B)(i) presupposes a lesser burden than the “probable cause” standard which Judge Ingram applied when reviewing the application. For the reasons that follow, the Court agrees with the United States and finds that § 6103(i) requires the Government to satisfy a lower evidentiary threshold than “probable cause” to obtain a court order under the statute.