United States v. Crespo

Gustav Crespo (defendant) was the president of Remington Sales Bureau, Inc. (Remington). George Smith (defendant) was Remington’s vice president. In March 1967, the Internal Revenue Service (IRS) sufficiently examined Remington’s books and records for Remington’s fiscal year ending March 31, 1963, to enable the IRS to complete its report for that year. The IRS also examined some of Remington’s books and records for Remington’s fiscal years ending March 31, 1964, and March 31,1965, but asserted that it needed to see additional information (e.g., certain correspondence and purchase invoices) to complete its reports for those years. Accordingly, the IRS issued summonses to Crespo and Smith, seeking their testimonies and production of specified records. Crespo and Smith declined to comply with the summonses, leading the United States to bring suit to enforce the summonses. Crespo and Smith responded that § 7605 of the Internal Revenue Code (code) permitted only one inspection of Remington’s books and records because the secretary of the Treasury (secretary) or his delegee, after an investigation, did not formally notify Remington that an additional inspection was necessary. The United States countered that § 7605 applied only to second inspections, which would have occurred only if the IRS had already completed its inspection of Remington’s books and records and already determined Remington’s tax liability for the relevant years.