Commodity Futures Trading Commission v. Collins

POSNER, Circuit Judge. The Commodity Futures Trading Commission issued subpoenas directing the appellants, Thomas Collins and others, to produce copies of their federal income tax returns for the scrutiny of the Commission's staff, which is investigating the appellants for possible civil violations of the Commodity Exchange Act, 7 U.S.C. §§ 1 et seq. Among the suspected violations is the trading of commodities futures contracts other than on a commodities exchange. The staff believes that these trades were spurious, being intended to enable the appellants to reallocate losses to persons who would reap the maximum tax benefits from the losses. That in itself does not bother the staff, which is not an arm of the Internal Revenue Service; but the staff believes that the presence of tax motives is evidence of a likely violation of the rules that the Commodity Futures Trading Commission does enforce. The appellants resisted the production of their tax returns on the ground that it would force them to incriminate themselves because the returns contain information that might be evidence, or might lead to evidence, of felony violations of the Commodity Exchange Act. See 7 U.S.C. §§ 6b(a)(ii), 6c(a), 13(a)(2). The Commission replied that the tax returns are ""required records,"" so compelling their disclosure would not violate the self-incrimination clause of the Fifth Amendment. The district court agreed and ordered the subpoenas to be obeyed by a specified date. The order, which has been stayed pending our Disposition of the appeal, is appealable. It concludes the proceeding in the district court, and thus is final within the meaning of 28 U.S.C. § 1291, because the enforcement of the subpoena was the only relief sought by the Commission. Kemp v. Gay, 292 U.S. App. D.C. 124, 947 F.2d 1493, 1495-97 (D.C. Cir. 1991); cf. University Life Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 848-49 (7th Cir. 1983). The appellants do not question that they were required to file federal income tax returns with the Internal Revenue Service. The Commission does not argue that it can obtain copies of the returns from the IRS. Section 6103 of the Internal Revenue Code forbids the IRS, with certain exceptions, to release tax returns to other government agencies. One of the exceptions is for disclosure to federal employees engaged in the preparation of a judicial or administrative proceeding pertaining to the enforcement of a ""specifically designated Federal criminal statute."" 26 U.S.C. § 6103(i)(1)(A)(i). But although the Commodity Exchange Act has, as we have noted, felony provisions, the Commission does not contend that the Act is ""specifically designated"" a federal criminal statute. Nor does it argue, on this or any other basis, that the Department of Justice, which does the federal government's criminal prosecuting, already has access to the appellants' tax returns.