Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-01274/USCOURTS-caed-1_07-cv-01274-3/pdf.json

Parties Involved:
Danny Gathright
Petitioner
Bernadette Laubly
Respondent
United States of America
Petitioner

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Due to clerical error, the original findings and recommendations filed 1

on December 6, 2007, omitted specification of the period for filing

objections. These amended findings and recommendations are thus filed to

correct that error and differ from the original only in the addition of the

instructions concerning objections at the end of the document.

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, et )

al., )

)

Petitioners, )

v. )

)

BERNADETTE LAUBLY, )

)

Respondent. )

)

 )

1:07-cv-1274-OWW-SMS

AMENDED FINDINGS AND

RECOMMENDATION RE: PETITION TO

ENFORCE IRS SUMMONS (DOC. 1)

Petitioners are proceeding with a civil action in this

Court. The matter has been referred to the Magistrate Judge

pursuant to 28 U.S.C. § 636(b) and Local Rules 72-302(c)(9) and

72-303. Pending before the Court is a petition to enforce a

summons issued by the Internal Revenue Service (IRS), pursuant to

which the Court issues these amended findings and

recommendations.1

On September 4, 2007, Petitioners United States of America

and revenue officer Danny Gathright filed a petition to enforce

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an IRS summons. Pursuant to Petitioners’ request, on September

21, 2007, the Court issued an order to show cause (OSC) to

Respondent to appear and respond by November 2, 2007, to the

petition, which according to the proof of service was served

along with the petition and associated documents on Respondent on

September 23, 2007. Further, in a stipulation filed on November

1, 2007, Respondent admitted that she was served with the order

to show cause.

On October 29, 2007, and November 23, 2007, the government

filed replies. 

On or about October 15, 2007, Respondent wrote a letter

(Doc. 6) to the United States Attorney and the Court in which she

stated that she had received the paperwork late and was unable to

comply; by stipulation the hearing on the order to show cause was

continued to November 30, 2007. The proof of service reveals that

the stipulation and order were served on Respondent by mail on

October 23, 2007. Respondent filed a response to the petition on

November 27, 2007; however, the order continuing the order to

show cause had set November 15, 2007, as the date for the filing

of any opposition by Respondent. 

On November 30, 2007, the order to show cause came on for

hearing at 9:41 a.m. in Courtroom 7 before the Honorable Sandra

M. Snyder, United States Magistrate Judge. Stephanie Borchers and

IRS agent Danny Gathright appeared on behalf of Petitioners;

Respondent appeared on behalf of herself, and she was accompanied

by her husband. After argument the matter was submitted to the

Court. The Court discharged the order to show cause.

////

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I. Petition to Enforce IRS Summons

To defeat a motion to quash, or to enforce an IRS summons,

the government has the initial burden of proving that the

summons: (1) is issued for a legitimate purpose; (2) seeks

information relevant to the purpose; (3) seeks information not

already within the IRS's possession; and (4) satisfies all of the

administrative steps required by the Internal Revenue Code.

United States v. Powell, 379 U.S. 48, 57-58 (1964). The

government's burden is a slight one that may be satisfied by a

declaration from the investigating agent that these requirements

have been met. United States v. Abrahams, 905 F.2d 1276, 1280

(9th Cir.1990); Liberty Financial Servs. v. United States, 778

F.2d 1390, 1392 (9th Cir.1985). Once the prima facie case is

made, a heavy burden falls upon the taxpayer to show an abuse of

process, Abrahams, 905 F.2d at 1280; Liberty Financial, 778 F.2d

at 1392, or the lack of institutional good faith, Anaya, 815 F.2d

at 1377. United States v. Dynavac, Inc., 6 F.3d 1407, 1414 (9th

Cir. 1993).

Here, agent Gathright declared that as a duly commissioned

revenue officer employed by the IRS, he was authorized to issue

the IRS summons pursuant to 26 U.S.C. § 7602; he did so in the

course of conducting an investigation to investigate the tax

liabilities of Respondent, doing business as (dba) Sundance Real

Estate, for the tax years 2002 through 2005. Gathright declared

that the IRS believed that Respondent could provide testimony

relevant to the investigation that was not already in the

government’s possession; Respondent failed to comply with the

summons; all administrative steps required by the IRS had been

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undertaken; and no criminal referral to the Department of Justice

was in effect with respect to Respondent’s tax liability for the

subject years.

Petitioners have thus established that the subpoena was

issued for a legitimate purpose and seeks information relevant to

the purpose that is not already within the IRS's possession;

further, it is demonstrated that all of the administrative steps

required by the Internal Revenue Code have been satisfied. A

prima facie case has been made. United States v. Dynavac, Inc., 6

F.3d 1407, 1414 (9 Cir. 1993). th

Respondent has not submitted any evidence of bad faith or

improper purpose. 

Although Respondent filed a response to the summons, the

response was late. Respondent did not offer any explanation or

justification for the late response. Pursuant to Local Rule 78-

230(c), Respondent was not entitled to be heard in opposition to

the petition; nevertheless, the Court gave Respondent an

opportunity to address the Court at the hearing. 

Respondent stated that there could be no enforcement of the

summons unless the Court orders it. The Court informed Respondent

that the Court would now be issuing the order.

Respondent argued in her response that she had not broken

any law. The Court notes that such information is consistent with

the agent’s averment that no criminal referral had been made.

Further, it is not required that the taxpayer fail to cooperate

with the IRS auditors before there is authority to issue a

summons. United States v. Derr, 968 F.2d 943, (9 Cir. 1992). th

Respondent argued that the Court had no jurisdiction over

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her body or person. However, in her letter dated October 15, 2007

(Doc. 6), Respondent indicated an address of 2929 Stanford

Avenue, Clovis, California. The district courts have jurisdiction

to order compliance with a summons issued by the IRS to

investigate a taxpayer’s federal income tax liability. 26 U.S.C.

§§ 7602, 7402(b), 7604(a); Church of Scientology of California v.

United States, 506 U.S. 9, 12 n. 4 (1992); United States v. Derr,

968 F.2d 943, 945 (9 Cir. 1992). Section 7604(a) expressly th

provides that the district court of the district in which the

person resides or is found shall have jurisdiction by appropriate

process to compel attendance, testimony, or production in

response to an internal revenue service subpoena. 

Accordingly, the Court finds that Respondent resides within

the district. The Court has jurisdiction to enforce the summons.

Further, considering the acknowledgment of service, the

Respondent received sufficient notice. Therefore, the Court will

require no further demonstration of jurisdiction.

Although Respondent raised her Fourth and Fifth Amendment

rights with respect to the examination that agent Gathright will

conduct. However, that concern is premature, and the Court does

not find that any ripe Fourth or Fifth Amendment issue is before

the Court.

Plaintiff asserted that the agent sent her a document

simulating a summons in violation of a statute that is not

clearly identified. (Response p. 2.) However, the Court finds no

evidence that the summons that was served was not authentic, or

that it was unauthorized. 

Accordingly, the Court finds that enforcement of the IRS

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summons should be ordered.

VII. Recommendation

Accordingly, it IS RECOMMENDED that 

1) Petitioners’ petition to enforce the IRS summons BE

GRANTED; and

3) Respondent BE ORDERED to appear in obedience to the

summons on February 21, 2008, at 10:00 a.m. at the IRS office at

5104 North Blythe Avenue, Fresno, California.

This report and recommendation is submitted to the United

States District Court Judge assigned to the case, pursuant to the

provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 72-304 of the

Local Rules of Practice for the United States District Court,

Eastern District of California. Within thirty (30) days after

being served with a copy, any party may file written objections

with the Court and serve a copy on all parties. Such a document

should be captioned “Objections to Magistrate Judge’s Findings

and Recommendations.” Replies to the objections shall be served

and filed within ten (10) court days (plus three days if served

by mail) after service of the objections. The Court will then

review the Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636

(b)(1)(C). The parties are advised that failure to file

objections within the specified time may waive the right to

appeal the District Court’s order. Martinez v. Ylst, 951 F.2d

1153 (9th Cir. 1991).

IT IS SO ORDERED.

Dated: December 7, 2007 /s/ Sandra M. Snyder 

icido3 UNITED STATES MAGISTRATE JUDGE

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