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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

UNITED STATES OF AMERICA,

Petitioner,

v.

EFFIE LIGON, individually, and as managing

partner of IBIS GROUP, LLC, and as trustee

of IBIS COMPANY TRUST, 

Respondent.

Case No. MS06-5017 FDB KLS

REPORT AND RECOMENDATION

Noted for September 27, 2006

THIS MATTER comes before the court on the Petition of the United States of America for an

order to enforce an Internal Revenue Service (IRS) administrative summons served on respondent. 

Pursuant to 18 U.S.C. § 636A(b)(1) the Honorable Franklin D. Burgess referred the matter to the

undersigned United States Magistrate Judge to (a) review all pleadings; (b) determine whether a hearing is

required and, if so, to schedule and preside over such a hearing; and thereafter (c) to submit the

appropriate proposal for consideration to Judge Burgess.

 REPORT

This proceeding was initiated at the Chief Counsel of the IRS by way of delegation from the

Secretary of the Treasury, and at the direction of the Attorney General of the United States. Petitioner

asserts jurisdiction over this matter under 26 U.S.C. §§ 7402(b) and 7604(a) and 28 U.S.C. §§ 1340 and

1345. 

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The petition alleges that (a) the IRS is conducting an examination to determine the correct federal

income tax liabilites of Christa Friedlander for her tax year 2002; (b) IRS agent, Paul Shipley, issued three

IRS administrative summonses to the respondent Effie Ligon, in her individual capacity, and in her

capacities as managing partner of IBIS Group, LLC, and trustee of IBIS Company Trust which directed

the respondent to appear on August 15, 2005, to give testimony and produce for examination certain

books, records, papers, and other data as described in the summonses; (c) respondent was personally

served with the summons; (d) respondent failed to appear in person and/or produce the documents

requested and has continued to fail to respond; (e) the books, papers, and other records sought by way of

the administrative summons are not within the possession of the IRS; (f) notice of the service of each of the

three summonses was given to the taxpayer, Christa Friedlander, in accordance with 26 U.S.C. § 7609, by

certified mail on July 7, 2005; (g) all administrative steps required by the Internal Revenue Service Code

for the issuance of an IRS summons have been followed; and (h) the information sought is relevant to

determine the correct federal income tax liability of the taxpayer, Christa Friedlander.

Following a review of the petition, the undersigned, on July 31, 2006, directed the respondent to

show cause as to why she should not be compelled to obey the Internal Revenue Service summonses

served upon her. The hearing date was scheduled for August 25, 2006 at 9:00 a.m. (Dkt. # 4)

In response to the Order to Show Cause, respondent filed the following document: Ligon’s 1st

Refusal for Cause UCC 3-501, Verified Declaration Re: No Consent to Jurisdiction by a Untied States

Magistrate Judge FRCvP 73, with attachments. (Dkt. #5).

The court will not summarize the forementioned documents other than to say that one of the

objections raised by the petitioner was with regard to the fact that she had not consented to a U.S.

Magistrate Judge hearing the case. 

As scheduled, the hearing on the court’s order to show cause was held on August 25, 2006 at 9:00

a.m. Petitioner appeared through counsel, Jennifer Aucheterlonie. Respondent did not appear. In light of

the objection raised by the petitioner regarding lack of consent, the court inquired of Ms. Auchterlonie and

was advised that the petitioner had not been served a copy of the Order of Reference to Magistrate Judge

(Dkt. #3). The Court then signed an Amended Order to Show Cause re: Petition to Enforce Internal

Revenue Service Summonses and scheduled the hearing date for September 8, 2006 at 9:00 a.m. (Dkt.

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#9). The Amended Order required the Petitioner to provide the Respondent with a copy of the Order of

Reference.

In response to the Amended Order to Show Cause, the respondent filed the following document:

Ligon’s 2nd Refusal for Cause UCC 3-501, Failure to State a Claim, Lack of Jurisdiction; Verified

Declaration FRCvP 12(h)(1), 12(h)(2). (Dkt. #11). 

As scheduled, the hearing on the court’s order to show cause was held on September 8, 2006 at

9:00 a.m. Petitioner appeared through counsel, Jennifer Auchterlonie. Respondent did not appear. The

court considered the oral remarks of counsel for the petitioner as well as the entirety of the record.

In order for an Internal Revenue Service Summons to be enforceable, it must meet the requirements

set forth under United States v. Powell, 379 U.S. 48 (1964), wherein the court determined the IRS need

not meet any standard of probable cause to obtain enforcement of the summons, but need only show that

(1) the investigation will be conducted pursuant to a legitimate purpose, (2) the inquiry may be relevant to

the purpose, (3) that the information sought is not already within the Commissioner’s possession, and (4)

the administrative steps required by the Code have been followed - 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. Petitioner has met this burden. See Petition and Declaration of Paul R.

Shipley (Dkt. # 2).

Once the government meets its burden, the taxpayer must show an improper purpose or lack of

good faith, by setting forth evidence to support her allegations, Fortney v. United States, 59 F.3d 117 (9th

Cir. 1995), Liberty Financial Services v. United States, 778 F.2d 1390 (9th Cir. 1985). She has not done

so. Rather, Petitioner’s responsive pleading appears to challenge jurisdiction as well as the authority of the

United States of America. Respondent’s opportunity to show an improper purpose or lack of good faith

was at or before the hearing held by the court on September 8, 2006. She did not appear or otherwise

appropriately respond.

 RECOMMENDATION

Based on the foregoing report, the undersigned recommend as follows:

1. The court has jurisdiction over the respondent and the subject matter of this proceeding.

2. That the respondent be ordered to fully obey the administrative summonses served on

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respondent by September 25, 2006, by attending, testifying, and producing all documentation required by

the terms of the summonses, before Revenue Agent Paul Shipley, or any other proper officer or employee

of the IRS, at such time and place as may be set by Revenue Agent Paul Shipley or any other propsoer

officer or employee of the IRS.

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the

parties shall have ten (10) days from service of this Report and Recommendation to file written objections. 

See also Fed. R. Civ. P. 6. Failure to file objections will result in a waiver of those objections for purposes

of appeal. Thomas v. Arn, 474 U.S. 140 (1985). Accommodating the time limit imposed by Rule 72(b)

the clerk is directed to set the matter for consideration on September 27, 2006.

Dated this 11th day of September, 2006.

A

Karen L. Strombom

United States Magistrate Judge

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