Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-05372/USCOURTS-cand-4_04-cv-05372-0/pdf.json

Parties Involved:
Willie Jackson
Respondent
Marlene Low
Petitioner
United States of America
Petitioner

Document Text:

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, et al.,

Petitioners,

v.

WILLIE JACKSON, General Partner of Janet

and Teacakes,

Respondent.

___________________________________/

No. C-04-5372 CW (EMC)

REPORT AND RECOMMENDATION

RE PETITIONERS’ VERIFIED

PETITION TO ENFORCE IRS

SUMMONS

(Docket No. 1)

Judge Wilken has referred Petitioners’ verified petition to enforce IRS summons to the

undersigned for a report and recommendation. This Court held a hearing on the petition on May 11,

2005. Respondent failed to appear at the hearing. He also failed to provide any written response to

the petition or this Court’s order to show cause (as discussed below). Having considered

Petitioners’ papers and all other evidence of record, the Court hereby recommends that the petition

be GRANTED.

I. FACTUAL & PROCEDURAL BACKGROUND

Petitioners filed a verified petition to enforce an IRS summons on December 20, 2004. 

According to the petition, Petitioners tried “to determine the collectability of certain federal income

tax liabilities of JANET AND TEACAKES [of which Respondent is a general partner] for the

taxable periods ending December 31, 2001, March 31, 2002, June 30, 2002, September 30, 2002,

December 31, 2002, March 31, 2003, June 30, 2003, September 30, 2003, and for the taxable year

ending December 31, 2002.” Pet. ¶ 2. Petitioners believed that Respondent has in his possession

Case 4:04-cv-05372-CW Document 16 Filed 05/25/05 Page 1 of 10
United States District Court

For the Northern District of California

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and control documents relevant to the IRS’s inquiry. See Pet. ¶ 6. Accordingly, August 13, 2004,

an IRS employee served a summons on Mr. Jackson by hand, requesting an appearance as well as

the production of certain documents. See Pet. ¶ 7 & Ex. A. However, Mr. Jackson did not appear

before the IRS employee as requested in the summons. See Pet. ¶ 9. Petitioners thus filed their

verified petition.

On January 3, 2005, the Court issued an order to show cause, giving Respondent an

opportunity to explain why the IRS summons should not be enforced. Petitioners were instructed to

serve the order to show cause, along with the verified petition, on Respondent in compliance with

Federal Rule of Civil Procedure 4. See Docket No. 4. Because Petitioners did not serve these

papers in accordance with Rule 4, the Court issued an amended order to show cause, instructing

Respondent to explain why the IRS summons should not be enforced. The Court subsequently

issued a second amended order to show cause asking Respondent to explain the same. Petitioners

have submitted evidence showing that the second amended order to show cause was properly served

on Respondent in compliance with Rule 4. See Docket No. 12 (Kelly declaration, confirming

service by hand on Respondent). However, Respondent never filed a written response to the second

amended order to show cause or to the verified petition; nor did he appear for the hearing on this

matter on May 11, 2005.

II. DISCUSSION

“The IRS may issue a summons only for the purposes set out in 26 U.S.C. § 7602(a). Those

purposes are ‘ascertaining the correctness of any return, making a return where none has been made,

determining the liability of any person for any internal revenue tax . . . or collecting any such

liability.’” Crystal v. United States, 172 F.3d 1141, 1143 (9th Cir. 1999) (quoting § 7602(a)). To

enforce a summons, the government must satisfy the factors set forth in United States v. Powell, 379

U.S. 48 (1964). That is, 

the government must establish that (1) the investigation will be

conducted for a legitimate purpose; (2) the material being sought is

relevant to that purpose; (3) the information sought is not already in

the IRS’s possession; and (4) the IRS complied with all the

administrative steps required by the Internal Revenue Code. “The

government’s burden is a slight one, and may be satisfied by a

declaration from the investigating agent that the [above] requirements

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United States District Court

For the Northern District of California

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[known as the Powell requirements] have been met. The burden is

minimal “because the statute must be read broadly in order to ensure

that the enforcement powers of the IRS are not unduly restricted.”

Crystal, 172 F.3d at 1143-44. 

That being said, the government’s “mere assertion of relevance may not satisfy [its] burden. 

‘Once a summons is challenged, it must be scrutinized by a court to determine whether it seeks

information relevant to a legitimate investigative purpose. . . . The cases show that the federal courts

have taken seriously their obligation to apply this standard to fit particular situations, either by

refusing enforcement or by narrowing the scope of the summons.’” United States v. Bell, 57 F.

Supp. 2d 898, 906 (N.D. Cal. 1999).

Once the government has established the Powell elements,

“‘those opposing enforcement of a summons . . . bear the burden to

disprove the actual existence of a valid civil tax determination or

collection purpose by the Service. . . . Without a doubt, this burden is a

heavy one.’” As we observed in Derr, “enforcement of a summons is

generally a summary proceeding to which a taxpayer has few

defenses.” “‘The taxpayer must allege specific facts and evidence to

support his allegations’ of bad faith or improper purpose.”

“The taxpayer ‘may challenge the summons on any appropriate

grounds,’ including failure to satisfy the Powell requirements or abuse

of the court’s process.” “Such an abuse would take place if the

summons had been issued for an improper purpose, such as to harass

the taxpayer or to put pressure on him to settle a collateral dispute, or

for any other purpose reflecting on the good faith of the particular

investigation.” In addition, it has become clear since Powell that

gathering evidence after having decided to make a recommendation

for a prosecution would be an improper purpose, and that the IRS

would be acting in bad faith if it were to pursue a summons

enforcement under these circumstances. . . . [T]he ‘dispositive

question in each case’ is ‘whether the Service is pursuing the

authorized purposes in good faith.’”

Crystal, 172 F.3d at 1144-45.

In the instant case, the United States has met its burden of meeting the Powell requirements,

largely through the verification of the petition by Marlene Low, an IRS employee. See id. at 1144

(stating that it was not disputed that special agent’s declaration satisfied the Powell requirements and

that therefore the government had “established a prima facie case to enforce the summonses”); see

also United States v. Dixon, No. 02-CV-183 H, 2002 U.S. Dist. LEXIS 10594, at *3 (S.D. Cal. Apr.

8, 2002) (“Assertions in a declaration by an investigating officer can satisfy the IRS’s burden.”);

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United States District Court

For the Northern District of California

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Bell, 57 F. Supp. 2d at 906 (“The government usually makes the requisite prima facie showing by

affidavit of the agent.”).

The verified petition indicates that the IRS’s investigation is being conducted for a legitimate

purpose, namely, to determine the collectability of the federal tax liabilities of Janet and Teacakes of

which Respondent is a general partner. See Pet. ¶ 8. The summons is relevant to that purpose,

asking Respondent to appear and bring with him documents related to the assets and liabilities of

Janet and Teacakes (e.g., bank statements, checkbooks, documents regarding stocks and bonds), see

Pet., Ex. A; and the information sought is not already in the IRS’s possession. See Pet. ¶ 6 (stating

that government does not have “access, possession, or control” of information sought). Finally, as

stated in the verified petition, the IRS complied with all the administrative steps required by the

Internal Revenue Code -- “in particular, that ‘the Secretary or his delegate,’ after investigation, has

determined the further examination to be necessary and has notified the taxpayer in writing to that

effect.” Powell, 379 U.S. at 58. See Pet. ¶ 11 (“All administrative steps required by the Internal

Revenue Code for issuance of the summons have been taken.”); Pet. ¶ 7 & Ex. A (confirming

service of summons on Respondent by hand as required by 26 U.S.C. § 7603).

Because Petitioners have established the Powell elements, the burden shifts to Respondent to

disprove the actual existence of a valid collection purpose. As noted above, here, Respondent has

failed to provide any response to the order to show cause and/or verified petition. Nor did

Respondent appear at the hearing before this Court on May 11, 2005. Accordingly, Respondent has

not met his burden and the Court therefore recommends that Petitioners’ verified petition to enforce

IRS summons be granted.

III. RECOMMENDATION

For the foregoing reasons, the Court recommends that the petition be granted and that an

order be issued enforcing the IRS summons -- i.e., instructing Respondent to appear before the IRS

on a date certain to provide testimony and produce documents in compliance with the summons. 

The Court also recommends that, if Respondent fails to comply with the order enforcing the

summons by failing to appear to provide testimony or by failing to produce documents, then an

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For the Northern District of California

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order should be issued, instructing Respondent to show cause why he should not be held in contempt

of the order enforcing the summons.

Petitioners have submitted a proposed order at Docket No. 15, incorporating both such

recommendations.

Any party may file objections to this report and recommendation with the district judge

within ten days after being served with a copy. See 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P. 72(b);

Civil L.R. 72-3. Petitioners are instructed to serve a copy of this report and recommendation

on Respondent within three days of the filing date of this report and recommendation.

Dated: May 25, 2005

_________________________ EDWARD M. CHEN

United States Magistrate Judge

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United States District Court

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, et al.,

Petitioners,

v.

WILLIE JACKSON, General Partner of Janet

and Teacakes,

Respondent.

___________________________________/

No. C-04-5372 CW (EMC)

REPORT AND RECOMMENDATION

RE PETITIONERS’ VERIFIED

PETITION TO ENFORCE IRS

SUMMONS

(Docket No. 1)

Judge Wilken has referred Petitioners’ verified petition to enforce IRS summons to the

undersigned for a report and recommendation. This Court held a hearing on the petition on May 11,

2005. Respondent failed to appear at the hearing. He also failed to provide any written response to

the petition or this Court’s order to show cause (as discussed below). Having considered

Petitioners’ papers and all other evidence of record, the Court hereby recommends that the petition

be GRANTED.

I. FACTUAL & PROCEDURAL BACKGROUND

Petitioners filed a verified petition to enforce an IRS summons on December 20, 2004. 

According to the petition, Petitioners tried “to determine the collectability of certain federal income

tax liabilities of JANET AND TEACAKES [of which Respondent is a general partner] for the

taxable periods ending December 31, 2001, March 31, 2002, June 30, 2002, September 30, 2002,

December 31, 2002, March 31, 2003, June 30, 2003, September 30, 2003, and for the taxable year

ending December 31, 2002.” Pet. ¶ 2. Petitioners believed that Respondent has in his possession

Case 4:04-cv-05372-CW Document 16 Filed 05/25/05 Page 6 of 10
United States District Court

For the Northern District of California

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and control documents relevant to the IRS’s inquiry. See Pet. ¶ 6. Accordingly, August 13, 2004,

an IRS employee served a summons on Mr. Jackson by hand, requesting an appearance as well as

the production of certain documents. See Pet. ¶ 7 & Ex. A. However, Mr. Jackson did not appear

before the IRS employee as requested in the summons. See Pet. ¶ 9. Petitioners thus filed their

verified petition.

On January 3, 2005, the Court issued an order to show cause, giving Respondent an

opportunity to explain why the IRS summons should not be enforced. Petitioners were instructed to

serve the order to show cause, along with the verified petition, on Respondent in compliance with

Federal Rule of Civil Procedure 4. See Docket No. 4. Because Petitioners did not serve these

papers in accordance with Rule 4, the Court issued an amended order to show cause, instructing

Respondent to explain why the IRS summons should not be enforced. The Court subsequently

issued a second amended order to show cause asking Respondent to explain the same. Petitioners

have submitted evidence showing that the second amended order to show cause was properly served

on Respondent in compliance with Rule 4. See Docket No. 12 (Kelly declaration, confirming

service by hand on Respondent). However, Respondent never filed a written response to the second

amended order to show cause or to the verified petition; nor did he appear for the hearing on this

matter on May 11, 2005.

II. DISCUSSION

“The IRS may issue a summons only for the purposes set out in 26 U.S.C. § 7602(a). Those

purposes are ‘ascertaining the correctness of any return, making a return where none has been made,

determining the liability of any person for any internal revenue tax . . . or collecting any such

liability.’” Crystal v. United States, 172 F.3d 1141, 1143 (9th Cir. 1999) (quoting § 7602(a)). To

enforce a summons, the government must satisfy the factors set forth in United States v. Powell, 379

U.S. 48 (1964). That is, 

the government must establish that (1) the investigation will be

conducted for a legitimate purpose; (2) the material being sought is

relevant to that purpose; (3) the information sought is not already in

the IRS’s possession; and (4) the IRS complied with all the

administrative steps required by the Internal Revenue Code. “The

government’s burden is a slight one, and may be satisfied by a

declaration from the investigating agent that the [above] requirements

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United States District Court

For the Northern District of California

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[known as the Powell requirements] have been met. The burden is

minimal “because the statute must be read broadly in order to ensure

that the enforcement powers of the IRS are not unduly restricted.”

Crystal, 172 F.3d at 1143-44. 

That being said, the government’s “mere assertion of relevance may not satisfy [its] burden. 

‘Once a summons is challenged, it must be scrutinized by a court to determine whether it seeks

information relevant to a legitimate investigative purpose. . . . The cases show that the federal courts

have taken seriously their obligation to apply this standard to fit particular situations, either by

refusing enforcement or by narrowing the scope of the summons.’” United States v. Bell, 57 F.

Supp. 2d 898, 906 (N.D. Cal. 1999).

Once the government has established the Powell elements,

“‘those opposing enforcement of a summons . . . bear the burden to

disprove the actual existence of a valid civil tax determination or

collection purpose by the Service. . . . Without a doubt, this burden is a

heavy one.’” As we observed in Derr, “enforcement of a summons is

generally a summary proceeding to which a taxpayer has few

defenses.” “‘The taxpayer must allege specific facts and evidence to

support his allegations’ of bad faith or improper purpose.”

“The taxpayer ‘may challenge the summons on any appropriate

grounds,’ including failure to satisfy the Powell requirements or abuse

of the court’s process.” “Such an abuse would take place if the

summons had been issued for an improper purpose, such as to harass

the taxpayer or to put pressure on him to settle a collateral dispute, or

for any other purpose reflecting on the good faith of the particular

investigation.” In addition, it has become clear since Powell that

gathering evidence after having decided to make a recommendation

for a prosecution would be an improper purpose, and that the IRS

would be acting in bad faith if it were to pursue a summons

enforcement under these circumstances. . . . [T]he ‘dispositive

question in each case’ is ‘whether the Service is pursuing the

authorized purposes in good faith.’”

Crystal, 172 F.3d at 1144-45.

In the instant case, the United States has met its burden of meeting the Powell requirements,

largely through the verification of the petition by Marlene Low, an IRS employee. See id. at 1144

(stating that it was not disputed that special agent’s declaration satisfied the Powell requirements and

that therefore the government had “established a prima facie case to enforce the summonses”); see

also United States v. Dixon, No. 02-CV-183 H, 2002 U.S. Dist. LEXIS 10594, at *3 (S.D. Cal. Apr.

8, 2002) (“Assertions in a declaration by an investigating officer can satisfy the IRS’s burden.”);

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United States District Court

For the Northern District of California

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Bell, 57 F. Supp. 2d at 906 (“The government usually makes the requisite prima facie showing by

affidavit of the agent.”).

The verified petition indicates that the IRS’s investigation is being conducted for a legitimate

purpose, namely, to determine the collectability of the federal tax liabilities of Janet and Teacakes of

which Respondent is a general partner. See Pet. ¶ 8. The summons is relevant to that purpose,

asking Respondent to appear and bring with him documents related to the assets and liabilities of

Janet and Teacakes (e.g., bank statements, checkbooks, documents regarding stocks and bonds), see

Pet., Ex. A; and the information sought is not already in the IRS’s possession. See Pet. ¶ 6 (stating

that government does not have “access, possession, or control” of information sought). Finally, as

stated in the verified petition, the IRS complied with all the administrative steps required by the

Internal Revenue Code -- “in particular, that ‘the Secretary or his delegate,’ after investigation, has

determined the further examination to be necessary and has notified the taxpayer in writing to that

effect.” Powell, 379 U.S. at 58. See Pet. ¶ 11 (“All administrative steps required by the Internal

Revenue Code for issuance of the summons have been taken.”); Pet. ¶ 7 & Ex. A (confirming

service of summons on Respondent by hand as required by 26 U.S.C. § 7603).

Because Petitioners have established the Powell elements, the burden shifts to Respondent to

disprove the actual existence of a valid collection purpose. As noted above, here, Respondent has

failed to provide any response to the order to show cause and/or verified petition. Nor did

Respondent appear at the hearing before this Court on May 11, 2005. Accordingly, Respondent has

not met his burden and the Court therefore recommends that Petitioners’ verified petition to enforce

IRS summons be granted.

III. RECOMMENDATION

For the foregoing reasons, the Court recommends that the petition be granted and that an

order be issued enforcing the IRS summons -- i.e., instructing Respondent to appear before the IRS

on a date certain to provide testimony and produce documents in compliance with the summons. 

The Court also recommends that, if Respondent fails to comply with the order enforcing the

summons by failing to appear to provide testimony or by failing to produce documents, then an

Case 4:04-cv-05372-CW Document 16 Filed 05/25/05 Page 9 of 10
United States District Court

For the Northern District of California

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order should be issued, instructing Respondent to show cause why he should not be held in contempt

of the order enforcing the summons.

Petitioners have submitted a proposed order at Docket No. 15, incorporating both such

recommendations.

Any party may file objections to this report and recommendation with the district judge

within ten days after being served with a copy. See 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P. 72(b);

Civil L.R. 72-3. Petitioners are instructed to serve a copy of this report and recommendation

on Respondent within three days of the filing date of this report and recommendation.

Dated: May 25, 2005

_________________________ EDWARD M. CHEN

United States Magistrate Judge

Case 4:04-cv-05372-CW Document 16 Filed 05/25/05 Page 10 of 10