Court Opinion

ID: 3000477
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:05:22.306574+00
Date Added: 2024-06-11T18:01:55.666553
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                      To be cited only in accordance with
                              Fed. R. App. P. 32.1

           United States Court of Appeals
                             For the Seventh Circuit
                             Chicago, Illinois 60604

                              Submitted May 16, 2007*
                               Decided May 16, 2007

                                       Before

                     Hon. WILLIAM J. BAUER, Circuit Judge

                     Hon. KENNETH F. RIPPLE, Circuit Judge

                     Hon. DIANE S. SYKES, Circuit Judge

No. 06-4418

STEVEN E. BORCHERT,                             Appeal from the United States
    Plaintiff-Appellant,                        District Court for the Northern
                                                District of Indiana,
                                                Lafayette Division
      v.
                                                No. 4:06-cv-140
UNITED STATES OF AMERICA,
    Defendant-Appellee.                         Allen Sharp,
                                                Judge.

                                     ORDER

       Steven and Helen Borchert did not file federal income tax returns for 2001,
2002, 2003, or 2004. In 2006 the Internal Revenue Service issued four summonses
to two banks for financial records relating to the Borcherts and two businesses in
which they have an interest. The Borcherts received notice, see 26 U.S.C. § 7609(a),
and petitioned to quash the summonses, see id. § 7609(b)(2). The district judge

      *
        After an examination of the briefs and the record, we have concluded that oral
argument is unnecessary. The appeal is submitted on the briefs and the record. See
Fed. R. App. P. 34(a)(2).
No. 06-4418                                                                      Page 2

rejected the Borcherts’ various arguments and denied their motion. Only Steven
Borchert appeals.2

        As he did in the district court, Borchert maintains that because he is not
“engaged in the administration or enforcement of the income tax laws” he is not
part of the “class of persons” that the IRS may use a third-party summons to
investigate. According to Borchert, the IRS may investigate only its own personnel
and not “any person,” as 26 U.S.C. § 7602(a) provides, else it would violate the
Fourth Amendment.

        Borchert is wrong; “[f]or the purpose of . . . determining the liability of any
person for any internal revenue tax . . . the Secretary is authorized . . . [t]o summon
. . . any person having possession, custody, or care of books of account containing
entries relating to the business of the person liable for tax.” 26 U.S.C. § 7602(a)
(emphasis added); see United States v. Ins. Consultants of Knox, Inc., 187 F.3d 755,
759 (7th Cir. 1999). Borchert insists that we disregard § 7602 because the Internal
Revenue Code has not been enacted as positive law, but it has, see Tax Analysts v.
IRS, 214 F.3d 179, 183 n.1 (D.C. Cir. 2000). And the Supreme Court held long ago
that the IRS’s power to issue a third-party summons does not violate the Fourth
Amendment rights of the person investigated. See Donaldson v. United States, 400
U.S. 517, 522 (1971). As long as the summons was issued in good faith—and
Borchert has never contended that it was not—it must be enforced. See United
States v. Stuart, 489 U.S. 353, 359-60 (1989); United States v. Powell, 379 U.S. 48,
57-58 (1964).

      Borchert also renews his contention that the IRS may collect tax only on
income derived from a “revenue stream that is internally connected with the federal
government.” His argument is patently frivolous, and was rejected in a published
opinion more than twenty years ago. See Motes v. United States, 785 F.2d 928, 928
(11th Cir. 1986) (per curiam). The Sixteenth Amendment plainly authorizes
Congress to collect taxes on income “from whatever source derived,” U.S. Const.
Amend. XVI; see Lovell v. United States, 755 F.2d 517, 519 (7th Cir. 1984).

      2
        Steven Borchert signed the notice of appeal on behalf of both himself and his
wife. The rules of procedure allowed this preliminary step, see Fed. R. App. P. 3(c)(2),
but Steven Borchert is not a lawyer and cannot represent Helen Borchert in this
appeal. See Malone v. Nielson, 474 F.3d 934, 937 (7th Cir. 2007) (per curiam);
Muzikowski v. Paramount Pictures Corp., 322 F.3d 918, 924 (7th Cir. 2003); Navin v.
Park Ridge Sch. Dist., 270 F.3d 1147, 1149 (7th Cir. 2001) (per curiam). Since she did
not sign his brief or file one of her own, we have dismissed her from the appeal.
No. 06-4418                                                                   Page 3

       The government asks that we sanction Borchert for abusing the judicial
process by filing a frivolous appeal. See Fed. R. App. P. 38. We have set $4,000 as
the presumptive penalty for a frivolous tax-protestor case, see Szopa v. United
States, 460 F.3d 884, 887 (7th Cir. 2006), and we agree with the government that
this sanction is appropriate here. See Ins. Consultants of Knox, 187 F.3d at 761-62
(sanctions warranted where tax protestor “made no attempt whatsoever to explain
why we should reverse almost a century of caselaw”).

      Accordingly, we AFFIRM the judgment of the district court and GRANT the
government’s motion for sanctions in the amount of $4,000.