and that all administrative steps required by the United States Code have been met. See Forney v.
United States, 59 F.2d at 119. Therefore, the “burden” shifts to the petitioner to show abuse of
process or bad faith.

To satisfy the burden of establishing abuse of process or bad faith, a petitioner is required
to submit an opposing factual affidavit. See United State v. Balanced Fin. Management, 769 F.2d
1440, 1444 (10" Cir.1985). The taxpayer must allege specific facts and cite evidence to support
his or her allegation. See Liberty Financial Services v. United States, 778 F.2d 1390, 1392 (o"
Cir.1985); United States v. Samuels, Kramer & Co., 712 F.2d 1342, 1347-48 o" Cir.1985).
Here, Petitioner has not submitted a factual affidavit opposing the affidavit of Agent Johnson,
and he, therefore, fails to meet his burden on the petition to quash summons.

The court finds Petitioner’s remaining arguments to be insufficient as a mater of law.
First, Petitioner contends that the summons form 2039 is in improper form. Courts routinely
have recognized the use of Form 2039 for issuance of third party summonses. See, e.g., Theuring
vy. United States, No. 98-3378, 1999 WL 220135 (6" Cir. 1999) (upholding validity of Form
2039 as form used for issuance of third party summonses on domestic earned income); Remark y.
Untied states, 979 F2d 770, 771 (9" Cir.1992); Lobello v. United States, No. 99-CV-1932 H,
2000 WL 276938 (S.D.Cal.2000). Thus, Petitioner’s objections to the Form 2039 do not
constitute a valid basis for quashing the summons.

Petitioner also contends that the revenue agent has not been properly delegated the
authority to issue and serve the IRS summons. The commissioner has delegated the authority to
issue summons to revenue agents in Internal Revenue Service Delegation Order No. 4 (Rev.22)
(2000). When a third party summons is issued, Delegation Order No. 4 requires the issuing

officer’s manager, or any supervisory official above that level to have authorized the issuance of


to that purpose; (3) seeks information that is not already within the IRS’ possession; and (4)
satisfies all administrative steps required by the United States Code. United State v. Powell, 379
USS. 48, 57-58, 85 S.Ct. 248, 254-55 (1964). The government’s burden is “a light one” and
typically is satisfied by the introduction of the sworn statement for the revenue agent who issued
the summons declaring that the Powell requirements have been met. United States v. Dynavac,
Inc., 6 F.3d 1407, 1414 (9" Cir.1993); United State v. Gilleran, 992 F.2d 232, 233 (9" Cir.1993).

Once a prima facie case is made, a ‘heavy’ burden is placed on the taxpayer to show an
‘abuse of process’ or ‘the lack of institutional good faith.’ Dynavac, 6F.3d at 1414; Fortney v.
United States, 59 F.3d 117, 119 o" Cir.1995); accord United State v. Abrahams, 905 F.2d 1276,
1280 o* Cir.1990); Ponsford v. United States 771 F.2d 1305, 1307, 1308 con Cir.1985); Liberty
Financial Services v. United States, 778 F.2d 1390, 1392 (ot Cir.1985).

The court finds that the government has satisfied the Powell factors by way of the
declaration of Revenue Agent James Johnson. The IRS is conducting an investigation into the
federal income tax liabilities of the Petitioner for the tax years 1997 and 1998 (Johnson
Declaration 42). The summons seeks the production and examination of books, records, papers
and other data relating to the tax liability of the Petitioner for tax years 1997 and 1998. (Johnson
Declaration 413). Agent Johnson specifically states in his declaration that the IRS does not
already have possession of the documents and all administrative steps were followed. (Johnson
Declaration 412, 10).

The declaration of Revenue Agent Johnson satisfies the government’s prima facie case by
meeting all of the Powell requirements. The government has established its “good faith” by
providing evidence that the summons was issued for a legitimate purpose, that it seeks

information relevant to that purpose, that it seeks information not already in the IRS’ possession,


, a summons. See Rude v. Brown, 80 A.F.T.R.2d 97-8301 (E.D.Cal.1997); Wright v. United States,
964 F.Supp. 336, 340 (M.D. Florida 1997). The summons in question shows that the summons
was approved by Revenue Agent Johnson’s immediate supervisor and team manager, Steven
Nickels. Accordingly, the summons was issued in compliance with Delegation Order No. 4.

Petitioner asserts that the IRS has no authority to issue the summons because the IRS’
power to summons is related to 26 U.S.C. §§6420(e)(2) (Gasoline used on Farms), 6421(g)(2)
(Gasoline used on Non-Highway purposes), and 6427 (j)(2) (Fuel not used for Taxable purpose).
However, these sections are irrelevant to the case at bar. The IRS’ authority to issue
administrative summonses is authorized by 26 U.S.C $7602 and the authority of the IRS under
§7062 repeatedly has been upheld. See, e.g., Powell U.S. at 51; Rude, 80 AE.T.R. 2d 97-8301
(E.D Cal.1997) (upheld validity of third party summons by the IRS as a legitimate use of the
summons power of §7602).

Petitioner’s assertion that the IRS has no authority to issue the summons because the
power to utilize IRC 7601-4 is related Alcohol, Tobacco, and Firearms Division is without merit.
Issuance of administrative summonses is authorized by 26 U.S.C. §7602. Powell, 379 US. at 51.
The District court in Faber case rejected the petitioner’s assertion that the regulations are
inapplicable to him because they are lodged under the authority of the Bureau of Alcohol,
Tobacco and Firearms by stating that the “name of the division assigned responsibility for
various duties under the regulations does not limit the substantive authority granted by the
authorizing statute.” See, Faber v. United States, 69 F. Supp.2d 965, 970 (W.D.Mich. 1999).
Also, §7602 is not so limited and a summons can be issued to determine the tax liability of “any
person.” Umlauf v. United States, No. 1:98 CV 795 1999 WL 501011 (W.D. Michigan, May 28,

1999).


United States District Court, Northern District of Illinois

N
Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Ronald A. Guzman than Assigned Judge
CASE NUMBER 01 C 2126 DATE 6/7/2001
CASE REX E. BLACK vs. UNITED STATES OF AMERICA
TITLE
Lin the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the

MOTION: nature of the motion being presented.)

DOCKET ENTRY:

qQ) Qa Filed motion of [ use listing in “Motion” box above.]

(2) a Brief in support of motion due

(3) Oo Answer brief to motion due. . Reply to answer brief due. :

(4) o Ruling/Hearing on set for at

(5) o Status hearing[held/continued to] [set for/re-set for] on set for at

(6) im Pretrial conference[held/continued to] [set for/re-set for] on set for at :

(7) im Trial[set for/re-set for] on at

(8) Qo [Bench/Jury trial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) (General Rule21 OFRCP41(a)\(1) OFRCP41(a)(2).

(10) [Other docket entry] Petitioner Black’s motion to quash summons [5-1] is denied. Because the
court denies the motion to quash the petition, the above-entitled action shall be terminated. ENTER
MEMORANDUM OPINION AND ORDER.

al of [For further detail see order attached to the original minute order.]

No notices required, advised in open court,

No notices required.

number of notices

/ | Notices mailed by judge’s staff,

Notified counsel by telephone,

Docketing to mail notices,

Mail AO 450 form, The
TING

Copy to judge/magistrate judge.

Ol JUN 12 At 9: 29
courtroom

deputy’s oG
initials

date maited notice

CG

Date/time received in

central Clerk’s Office maiting deputy initiats



Finally, Petitioner contends that the IRS failed to determine the Petitioner’s taxable status
before issuing a third party summons. Contrary to petitioner’s contention, there is no requirement
that the IRS make any assessment before it issued a summons. See Methvin v. United States, No.
CIV, 98-1513 ST., 1999 WL 458976 (D.Or.1999).

Petitioner has failed to state a legitimate basis for challenging IRS authority to issue
administrative summons under 26 U.S.C.§7602.

CONCLUSION

For the reasons set forth above, Petitioner Black’s motion to quash summons is denied.

(#5) Because the court denies the motion to quash the petition, the above-entitled action shall be

terminated.

SO ORDERED enterep: 6/7/77

Ali. 2

fION. RONALD A. GU KN
United States Judge



n

IN THE UNITED STATE DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
REX E. BLACK, )
)
Petitioner, ) 8 2n,
)} Civil No. 01-€-2126 "4
v. )
) Judge Ronald A. Guzman
UNITED STATES OF AMERICA )
)
Respondent )

MEMORANDUM OPINION AND ORDER

Petitioner Rex E. Black moves the court to quash an IRS summons issued to the Bank of

Homewood. For the reasons set forth below, this motion is denied. (#5)

BACKGROUND FACTS

The Internal Revenue Service and Revenue Agent James Johnson are conducting an
investigation into the federal income tax liabilities of Petitioner for the tax years 1997 and 1998.
During the course of the investigation, Agent James Johnson determined that the Bank of
Homewood may have information and/or records pertaining to Petitioner’s tax liabilities. On
March 16, 2001, the Agent Johnson issued a summons to the Bank of Homewood (formerly the
Bank of Matteson), 4600 Lincoln Highway, Matteson, Illinois 60443. The petitioner, Rex E.
Black, former trustee for Liberty Estate Planning, has also been served with a form 2039

summons titled; In the matter of the tax liability of Rex E. and Carol L. Black.

The summons seeks documentation concerning the accounts in the name of Liberty

Estate Planning or Liberty Estate Planning, Ltd. There is no referral to the Department of Justice


in effect regarding petitioner, and the material summonsed is not already in the possession of the
IRS. Notice of issuance of the IRS summons was sent via certified mail to Rex E. Black on

March 16, 2001. On March 27, 2001, Petitioner moved to quash the IRS summons.

DISCUSSION

A. Issues

The court has construed the petition to quash on presenting six issues: 1) that summons
was improper because the summons form 2039 was “Administrative Summons Obtaining
Evidence from Abroad Administratively”; 2) that the Revenue Agent lacked the authority to
issue IRS summons; 3) that the IRS lacked the application to enforce the summons because the
IRS’ power to issue summons is related to 26 U.S.C. § 6420 (Credit for Gasoline Used on
Farms), 26 U.S.C. §6421 (Credit for Gasoline Used for Certain Non-Highway Purposes) and 26
U.S.C. §6427 (Credit for Fuel Not Used for Taxable Purposes), and the Petitioner was engaged
in none of these activities, 4) that IRS may no longer use Treasury regulation §1.7601-4 because
the powers of that regulation have been delegated to the Bureau of Alcohol, Tobacco and
Firearms, and that the Petitioner does not traffic in alcohol, tobacco or firearms; and 5) that the
IRS must first determine the taxable status of the Petitioner before issuing a summons. Each of
these arguments will be addressed in turn.

B. Analysis

The Ninth circuit has summarized the well-established requirements for enforcement of
an IRS summons, as follows:

To obtain enforcement of a summons, the IRS must first establish its “good faith” by

showing that the summons: (1) is issued for a legitimate purpose; (2) seeks information relevant