In order to obtain enforcement of a summons, the United States must
demonstrate that:
(1) the IRS investigation is being conducted for a legitimate purpose; (2) the
information sought by the summons is 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 have been followed.
United States v. Powell, 379 U.S. 48, 57 (1964). It has repeatedly been
held that the burden of satisfying the Powell requirements may be met by
the introduction of the sworn affidavit of the IRS agent who issued the summons.
United States v. Gilleran, 992 F.2d 232, 233 (9th Cir. 1993); United
States v. Samuels, Kramer & Co., 712 F.2d 1342, 1344-1345 (9th Cir. 1983).
The United States' burden is a slight one. Fortney v. United States, 59
F.3d 117, 118 (9th Cir. 1995). It need only demonstrate good faith in issuing
the summons. United States v. Stuart, 489 U.S. 353, 359 (1989).
Once the government establishes a prima facie case for enforcement, as
it has in the present case, the burden shifts to the party opposing enforcement
to disprove the existence of the Powell elements or to demonstrate that
judicial enforcement of the summons would constitute an abuse of the Court's
process. Powell, 379 U.S. at 57-58; Gilleran, 992 F.2d at 233.
"This burden is a heavy one...the opponent must demonstrate specific facts and
evidence to support his allegations." Liberty Financial Services v. United
States, 778 F.2d 1390, 1392 (9th Cir. 1985); United States v. Derr,
968 F.2d 943, 945 (9th Cir. 1992) ("Enforcement of a summons is generally a
summary proceeding to which a taxpayer has few defenses").
In the current case, the declaration of _______________ Agent
_________________, the IRS agent who issued the summons the government is seeking
to enforce, establishes each of the Powell elements.
Mr. __________________ is conducting an investigation to ascertain the
correctness of the income tax return (Form _______) filed by
_______________________________________ for the ________ tax year. This is, in
accordance with Section 7602(a) of the Code, clearly a proper purpose. As will
be further explained, infra, the documents and information he seeks are
directly related to that purpose. And, finally, in his declaration Agent
________________ indicates the IRS is not in possession of the information sought
by the summons, he has complied with all of the administrative steps required by
the Internal Revenue Code, and there is no Justice Department referral in effect
with respect to the respondent for __________. As a result, unless the
respondent can demonstrate that it would be an abuse of this Court's process to
do so, the summons should be enforced. We believe the respondent has failed to
sustain this burden.
Relevance Of Documents & Information Summoned
Preliminarily, the respondent's contention that the taxpayer "has no
tax liability," has no place in the current discussion. A summons enforcement
proceeding is summary in nature and is not the proper forum for a determination
whether a taxpayer has, or does not have, a tax liability. Additionally,
"ascertaining the correctness of a return," by definition, suggests that a
taxpayer may very well not have a tax liability different from that which appears
on the return that is being investigated. Nonetheless, the IRS is well within
its rights to investigate whether a taxpayer has accurately reported its tax
liability and it need not simply accept a taxpayer's word that the taxpayer has
no liability.
The respondent contends the government may not conduct a "fishing
expedition" and cannot obtain an order enforcing a summons solely on the basis
that "some chance of relevance exists or some possibility of relation remains..."
This argument is specious in the current context, however, since Agent
__________________ declaration and the information contained in the respondent's
pleadings demonstrate a direct relationship between the respondent and the
taxpayer. Agent ____________________ is not, consequently, harassing the
respondent nor merely hoping against hope that the respondent might possibly have
information and documents that are material to the investigation. Instead, it
is entirely likely, even probable, that the respondent's testimony and the
specific documents subject to this request are directly relevant to the
investigation.
The definition of relevance in the summons context is extremely broad.
United States v. Noall, 587 F.2d 123, 125 (2d Cir. 1978), cert.
denied, 441 U.S. 923 (1979). This broad construction follows from the
wording of Section 7602(a)(1) which authorizes the examination of books and
records that "may be relevant or material to the inquiry." Such a construction
is entirely logical since the overriding purpose of any investigation is to
uncover or determine the facts. See, United States v. Arthur Young &
Co., 465 U.S. 805, 813-814 (1984); La Mura v. United States, 765 F.2d
974, 979-983 (11th Cir. 1985).
Finally, in its Order to Show Cause, the Court specifically instructed
the respondent to show cause why he should not be required to permit the copying
of all documents responsive to the requests set forth in the subject summons.
The respondent wholly fails to address this matter in his pleading so, based
upon the Court's direction that only issues "brought into controversy by the
responsive pleadings" will be considered, the government is entitled to an order
directing the respondent to permit the copying of the documents identified in the
summons. We note that throughout his papers the respondent is careful to assert
that he permitted Agent _______________ to "review," "inspect," and/or "examine"
the summoned documents. This seems a conscious effort to avoid a discussion of
the "copying" issue and would call into question any future contention by the
respondent that he merely "neglected" to address this matter.
Conclusion
As we have demonstrated, the documents and testimony requested in the
subject summons are directly relevant to the investigation being conducted by
______________ Agent __________________. Further, the respondent has failed to
set forth any evidence disputing Agent Beatty's testimony that he is conducting
an investigation to ascertain the correctness of __________ income tax return
(Form ________) for __________, that the IRS is not in possession of the
documents or information requested in the summons, that the administrative steps
required by the Internal Revenue Code have been followed, and that no Justice
Department referral is in effect with respect to Mr. ________ for the year
________. The respondent has, likewise, failed to present evidence suggesting
the IRS is pursuing this matter for an improper purpose. As a result, it is
clear the IRS is not merely harassing the respondent nor is it on a fishing
expedition with no basis for believing a nexus exists between _______
_ and the taxpayer. Rather, the United States has demonstrated the respondent
is in possession or control of information and documents related to an ongoing
investigation and, accordingly, has shown that it is entitled to an order
directing the respondent to appear before Agent ___________ and fully obey the
subject summons. Finally, the Court should direct the respondent that his
compliance must include permitting the copying of all of the summoned documents.
Respectfully submitted this __________ day of February, 1997.
United States Attorney
_________________________________
Assistant United States Attorney
| October 1997
| Tax Resource Manual 30
|