UNITED STATES of America, Petitioner,
    CHURCH OF SCIENTOLOGY OF BOSTON, INC., and Antonia Chrambanis, Secretary,
                              M.B.D. No. 90-302-T.
                          United States District Court,
                                D. Massachusetts.
                                 June 18, 1990.
  Internal Revenue Service (IRS) petitioned for enforcement of summons issued to
 church as part of inquiry into church's tax-exempt status.  The District Court,
 Tauro, J., held that:  (1) IRS failed to demonstrate legitimate purpose for its
 tax inquiry into past years, and (2) IRS failed to sufficiently allege that
 documents sought for examination were necessary to legitimate purpose.
  Petition denied.

 To enforce tax summons in church tax inquiry, Internal Revenue Service must
 have complied with procedural requirements of statute guiding summons
 authority.  26 U.S.C.A. ss 7602, 7611.

 Federal court should first decide nonconstitutional issues that obviate the
 need for adjudication of constitutional questions.

 Internal Revenue Service (IRS) failed to allege existence of any underlying
 requisites for retroactive application of church's tax-exempt status, and thus
 IRS failed to demonstrate legitimate purpose for tax inquiry into past years,
 and tax summons issued to church would not be enforced;  IRS did not allege or
 show that church omitted or misstated material fact in its original exemption
 application, or that church had been operated in manner materially different
 from that originally represented.  26 U.S.C.A. ss 7611, 7805.

 Unique status afforded churches by Congress requires that Internal Revenue
 Service strictly adhere to its own procedures when delving into church
 activities.  26 U.S.C.A. s 7611.

 Even if Internal Revenue Service (IRS) had legitimate purpose for inquiring
 into church's tax-exempt status for past years, IRS had not demonstrated
 necessity for massive document request under tax summons, where revenue agent
 merely reiterated position of senior officials that church might no longer be
 exempt and asserted, without explanation, that books, records and other data
 were relevant and necessary to be examined, thus failing to link in any way the
 particular documents to explanations of their necessity.  26 U.S.C.A. s

 Affidavit swearing to existence of elements necessary to enforce tax summons,
 without reference to specific facts or circumstances supporting such relief, is
 insufficient to engage courts' enforcement power to delve into records and
 activities of churches.  26 U.S.C.A. s 7611.
  *46 George B. Henderson II, Asst. U.S. Atty., Deborah S. Meland, Tax Div.,
 Dept. of Justice, Washington, D.C., for petitioner.
  Michael Lee Hertzberg, Eric M. Lieberman, Rabinowitz, Boudin, Standard,
 Krinsky & Lieberman P.C., New York City, *47 Earle C. Cooley, Cooley Manion
 Moore & Jones P.C., Boston, Mass., for respondents.

  TAURO, District Judge.
  The Internal Revenue Service ("IRS") petitions for the enforcement of
 its summons issued on October 13, 1989 to the Church of Scientology of Boston,
 Inc. ("CSB").  In support, the IRS asserts that "[t]he books, records, papers
 and other data described and demanded by the summons are relevant and necessary
 to ... determine whether it is entitled to exempt status under Code Secs.
 501(a) and 501(c)(3) during the calendar years 1985, 1986 and 1987, as a church
 organized and operated exclusively for religious purposes." [FN1]

      FN1. Declaration of Revenue Agent Arnold ("Arnold") at p. 18.

  CSB opposes the IRS petition, raising issues that merit somewhat extensive
  On November 7, 1988, IRS Regional Commissioner for the Northeast, Cornelius
 Coleman, sent a Notice of Tax Inquiry to CSB stating that he had reason to
 believe that the church might have lost its tax exempt status, pursuant to
 26 U.S.C. ss 501(a) and 501(c)(3), because of operating for a substantial
 non-exempt commercial purpose, and because of the inurement of benefits to
 private individuals.  In that letter, the IRS asked CSB five questions upon
 whose answers apparently hinged whether further inquiry would be necessary.
 After receiving detailed responses from CSB, the IRS determined that
 examination of CSB's books, records, and activities was necessary to answer the
 underlying question of entitlement to exemption.
  On December 20, 1988, CSB was sent a Notice of Church Examination.  See 26
 U.S.C. s 7611(b)(2), (3).  In the notice, the IRS informed CSB of its statutory
 right to request a conference, and it asked CSB to provide certain materials
 for examination.
  CSB requested a conference which ultimately took place on February 22 and 23,
 1989.  In May, 1989, the IRS proposed another conference for July, and
 requested information concerning twenty designated areas.  It also requested
 sixteen categories of documents.
  CSB provided written responses with respect to the twenty enumerated areas
 prior to the follow-up conference in July.  It did not, however, produce the
 sixteen categories of documents requested.  As well, it did not submit any
 documents in response to three subsequent IRS requests, one of which sought an
 additional nine categories of documents.
  The IRS issued a summons on October, 13, 1989, specifically directing Antonia
 Chrambanis, as CSB's agent, to appear on October 27, 1989 and produce all
 requested documents.  After CSB failed to comply, the government brought this
 petition to enforce its summons.
  The IRS has broad authority with respect to tax inquiries.  Congress, however,
 has scaled back these powers with respect to church tax inquiries.  See 130
 Cong.Rec. S 4485-86 (daily ed. April 12, 1984) ("[T]his legislation is designed
 to give churches a special audit procedure to require the IRS to take greater
 care in the examination of churches than is required under the current
 law....").  Reflective of this Congressional purpose, Title 26 U.S.C. s 7611
 now provides certain procedural protections to insure that the IRS does not
 embark on an impermissibly intrusive inquiry into church affairs.
  A church tax inquiry can only begin if:
   "... an appropriate high-level Treasury official reasonably believes (on the
 basis of facts and circumstances recorded in writing) that the church may not
 be exempt, by reason of its status as a church, ... or may be carrying on an
 unrelated trade or business ... or otherwise engaged in activities subject to
  *48 26 U.S.C.A. s 7611(a)(2) (West Supp.1990).  Proper notice, including
 an explanation of the concerns which gave rise to the inquiry, and a statement
 of the general subject matter of the inquiry, must be given to the subject
 church.  26 U.S.C. s 7611(a)(3)(B)(i).  The church must also be apprised of
 applicable administrative and constitutional provisions with respect to the
 inquiry, as well as relevant statutory citations.  26 U.S.C. s
 7611(a)(3)(B)(ii).  Both records and activities may be inquired into, but only
 to the extent necessary to determine either liability for tax (or its extent)
 or whether the entity really was a church for the relevant period.  26
 U.S.C. s 7611(b)(1).  The contents of any examination notice must include a
 copy of the tax inquiry notice, a description of the church records and
 activities sought to be examined, an offer to have a conference with the IRS
 "in order to discuss, and attempt to resolve, concerns relating to the
 examination," and a copy of all documents used which are required to be
 disclosed by the Freedom of Information Act.  26 U.S.C. s 7611(b)(3).
 Examinations must be completed within two years of the examination notice
 date.  26 U.S.C. s 7611(c)(1)(A).  The secretary may revoke tax-exempt
 status by finding that the putative church is not entitled to exemption, and
 may then send the church a notice of deficiency.  26 U.S.C. s 7611(d).
  Tax summonses have long been judged by the standard set forth in United
 States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-55, 13 L.Ed.2d 112
 (1964).  Under Powell, to obtain judicial enforcement of an IRS summons, the
 government must show that (1) the investigation will be conducted pursuant to a
 legitimate purpose;  (2) the inquiry may be relevant to that purpose;  (3) the
 information sought is not already in the possession of the IRS;  and, (4) the
 administrative steps required by the Internal Revenue Code for issuance of a
 summons were followed.
  With respect to church tax inquiries, several courts have interpreted
 Powell 's relevancy standard to be one of necessity.  See United States
 v. Holmes, 614 F.2d 985, 988 (5th 1980); [FN2]  United States v. Church of
 World Peace, 775 F.2d 265, 267 (10th Cir.1985) (s 7611 "make[s] it clear
 that the IRS examination of church records may only be made to the 'extent
 necessary' to determine tax exempt status....").  See also United States v.
 Church of Scientology Flag Service Org., Inc., 90-1 U.S.T.C. P 50,019, 1989 WL
 165589 (M.D.Fla. Dec. 22, 1989) ("Absent a finding that each of the items
 sought in the summons is necessary for the Service to determine the tax status
 of the Church, the Court cannot enforce the summons.").

      FN2. Holmes held that Congress pruned back the second prong of the
     Powell test in 1969, when it added subsection (c) to 26 U.S.C. s 7605
     which limited inquiry into religious activities and church finances "to the
     extent necessary."  This church-protective standard appears to have been
     imported into s 7611 as well.  See 26 U.S.C. s 7611(b)(1)(A), (B).

  [1] In addition, the Powell test now necessarily incorporates the
 procedural requirements of s 7611 by hinging summons enforcement upon a
 finding that "the administrative steps required by the Code have been
 followed."  This means that the IRS must have complied with the procedural
 requirements of s 7602 (guiding the summons authority).  In the church
 inquiry context, however, even more is required.  See 26 U.S.C. s
 7611(a)(1) (conditioning church tax inquiry upon compliance with both
 reasonable belief and notice requirements).
  [2] CSB has raised a number of objections to the instant enforcement
 petition.  But, this court need not reach all the proffered issues, because it
 finds that the IRS has failed to meet the requirements of the modified
 Powell test. [FN3]

      FN3. CSB contends that the IRS failed to comply with several of its
     obligations under s 7611, particularly with respect to both the
     conference and reasonable belief requirements.  Moreover, CSB raises
     several First Amendment challenges to the IRS's attempted enforcement.
     Federal courts should first decide nonconstitutional issues that obviate
     the need for adjudication of constitutional questions.  See, e.g.,
     Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101, 105, 65 S.Ct.
     152, 154, 89 L.Ed. 101 (1944) ("If there is one doctrine more deeply rooted
     than any other in the process of constitutional adjudication, it is that we
     ought not to pass on questions of constitutionality ... unless such
     adjudication is unavoidable.").

  *49 In its brief, the IRS conceded that CSB could avoid enforcement of the
 summons by introducing some evidence that the Powell requirements were not
 met.  See Government's Memo in Support of Petition to Enforce ("Government's
 Memo "), at 15 (citing United States v. Freedom Church, 613 F.2d 316, 319
 (1st Cir.1979)).  CSB has done so.  Most notably, CSB points out that the
 government has failed to demonstrate a legitimate purpose for its tax inquiry
 into the years 1985-1987, or to allege sufficiently that the documents sought
 for examination are necessary to a legitimate purpose.
  The IRS argues broadly that an inquiry aimed at determining whether a church
 is properly exempt is one unquestionably conducted pursuant to a legitimate
 purpose.  Further, the IRS implies that a presumption of legitimate purpose
 attaches to these sorts of inquiries that can be rebutted only by a showing of
 bad faith.  While CSB has furnished what it sees as a voluminous record of bad
 faith on the part of the IRS, this thorny factual issue need not be reached,
 because a dispositive infirmity in the IRS's pleadings exists.
  The IRS, itself, circumscribed the scope of its CSB tax inquiry to encompass
 only the question of its tax status for the years 1985-87. [FN4]  CSB points
 out that, because the IRS's inquiry is directed to past years, it necessarily
 engages the protective machinery of 26 U.S.C. s 7805, and regulations
 promulgated thereunder, pertaining to the retroactive revocation of tax exempt

      FN4. Specifically, it claimed that:
     [t]he books, records, papers and other data described and demanded by the
     summons are relevant and necessary to complete the examination of CSB
     [ ] and determine whether it is entitled to exempt status under Code
     Secs. 501(a) and 501(c)(3) during the calendar years 1985, 1986 and
     1987, as a church organized and operated exclusively for religious
     Government's Memo, at 5.

  [3][4] The IRS's purpose, if its "reasonable belief" is vindicated, is to
 revoke CSB's tax exempt status for the years 1985-1987, a retroactive
 revocation.  In order to effect a retroactive revocation, however, the IRS must
 show that either the organization "omitted or misstated a material fact" in its
 original exemption application, or that the organization has been "operated in
 a manner materially different from that originally represented...."  See 26
 C.F.R. (Treas.Reg.) s 601.201(n)(6)(i); [FN5]  Virginia Education Fund v.
 Comm'r of Internal Revenue Service, 85 T.C. 743 (1985).  The IRS has made no
 allegations in its pleadings as to the existence of any of the underlying
 requisites for retroactive revocation.

      FN5. 26 C.F.R. s 601.201(n)(6)(i) provides, in pertinent part, that:
     [t]he revocation or modification [of an exempt status] may be retroactive
     if the organization omitted or misstated a material fact, operated in a
     manner materially different from that originally represented, or engaged in
     a prohibited transaction of the type described in subdivision (vii) of this
     subparagraph.  In any event, revocation or modification will ordinarily
     take effect no later than the time at which the organization received
     written notice that it exemption ruling of determination letter might be
     revoked or modified.
     s 601.201(n)(6)(vii) provides that:
     [i]f it is concluded that an organization that is subject to the provisions
     of section 503 of the Code intered [sic] into a prohibited transaction for
     the prupose [sic] of diverting corpus or income from its exempt purpose,
     and if the tranaction [sic] involved a substantial part of the corpus or
     income of the organization, its exemption is revoked effective as of the
     beginning of the of the taxable year during which the prohibited
     transaction was commenced.

  The unique status afforded churches by Congress requires that the IRS
 strictly adhere to its own procedures when delving into church activities.
 Cf., e.g., Church Audit Procedures Act:  Hearing Before the Subcommittee on
 Oversight of the Internal Revenue Service of the Senate Committee on Finance,
 98th Cong., 1st Sess., 61 (1983) (testimony of Deputy Assistant Sec'y of
 *50 Treasury) (assuring conferees that requirement of reasonable belief
 based on "facts and information recorded in writing" serves as a safeguard
 against the IRS "going on a fishing expedition" into church books and
 records).  As CSB has been recognized as an exempt church pursuant to 26
 U.S.C. s 501(c)(3) since 1975, it is clearly entitled to such safeguards.  See
 Virginia Education Fund, 85 T.C. 743 (recognizing that, although the
 Commissioner ordinarily has broad discretion in deciding whether to revoke a
 ruling retroactively, "the Secretary has limited the Commissioner's discretion
 to revoke retroactively a favorable ruling on exempt status[,]" citing
 s 601.201(n)(6)(i)).
  The IRS has not addressed these regulatory requirements in its petition.
 Because the record is devoid of any showing either that a material fact was
 misstated or omitted in connection with CSB's original exemption application,
 or that CSB is now "operated in a manner materially different from that
 originally represented," this court must conclude that the IRS has failed to
 show a legitimate purpose for its tax inquiry into the years 1985-1987.
  [5][6] Even assuming, arguendo, the legitimacy of the government's purpose,
 there has not been a demonstration of necessity for the IRS's massive document
 request. [FN6]  Such a showing is expressly required by statute.  See 26
 U.S.C. s 7611(b)(1).  The IRS's citations to non-church cases adopting the
 "relevance" standard do not provide support for the proposition that it has met
 the applicable "necessity" standard.

      FN6. CSB has estimated that the request covers 200,000 pages of material.
     See Chrambanis Decl., P 3.

  The IRS's only attempt to satisfy its burden with respect to the "necessity"
 showing comes in the declaration of the IRS case Revenue Agent Arnold.  Without
 stating facts or circumstances to support such a belief, Arnold reiterates the
 position of senior IRS officials that CSB may no longer be exempt.  See Walter
 Decl., P 4.  Arnold simply asserts, without explanation, that "books, records
 and other data are relevant and necessary" to CSB's examination.  Id. at P
 17.  This failure to link in any way particular documents to explanations of
 their necessity to the instant examination proves fatal. [FN7]

      FN7. The government, once again citing a non-church case, implies that any
     element of its required prima facie showing can be established simply by an
     affidavit of the investigating agent averring its existence.  See
     Government's Memo, at 14 (citing United states v. White, 853 F.2d 107,
     111 (2d Cir.1988)).  Reliance upon White is misplaced.  Special
     considerations attach in church tax inquiries.  Based upon these
     protections for churches, clarified by legislative history, this court
     concludes that an affidavit swearing the existence of the Powell
     elements, without reference to specific facts or circumstances supporting
     such a belief, is insufficient to engage the courts' enforcement power to
     delve into the records and activities of churches.

  Both for failure to show a legitimate purpose for its inquiry into CSB's books
 and records for the years 1985-87, and for failure to proffer facts
 establishing the necessity of any of the requested documents, the government's
 Petition To Enforce Internal Revenue Service Summons must be denied.
  An order will issue.