Court Opinion

ID: 167238
Source: CourtListenerOpinion
Date Created: 2010-08-14 09:52:25+00
Date Added: 2024-06-11T09:16:54.149319
License: Public Domain

FILED
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                        UNITED STATES COURT OF APPEALS
                                                                             March 27, 2006
                                   TENTH CIRCUIT                           Elisabeth A. Shumaker
                                                                              Clerk of Court

 UNITED STATES OF AMERICA,

          Plaintiff-Appellee,
 v.                                                          No. 05-8085
 MARC EDWARDS,                                         (D.C. No. 05-CV-141-D)
                                                            (D. Wyoming)
          Defendant-Appellant.

                                ORDER AND JUDGMENT*

Before HENRY, BRISCOE, and O’BRIEN, Circuit Judges.

      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist in the determination of this

appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is, therefore,

ordered submitted without oral argument.

      Defendant Marc L. Edwards, appearing pro se, appeals an order of the district

court enforcing an Internal Revenue Service (IRS) summons pursuant to 26 U.S.C. §§

      *
         This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
7602 and 7604. We affirm the district court’s order and grant the government’s motion

for sanctions against Edwards for maintaining a frivolous appeal.

                                              I.

       Edwards, a resident of Gillette, Wyoming, is the subject of an IRS investigation

into his federal income tax liabilities for the years 2000 through 2003. On January 21,

2005, IRS agent Bruce Gilbert, in connection with the investigation, served Edwards with

a summons directing him to appear before Gilbert on February 4, 2005, to testify and to

produce for examination certain books, records, papers and other data. Edwards appeared

but failed to provide any of the information requested in the summons. Gilbert apparently

met with Edwards two additional times, but Edwards continued to refuse to provide the

requested information.

       On May 11, 2005, the United States filed a petition in federal district court to

enforce the summons. ROA, Vol. 1, Doc. 1. Attached to the petition was a declaration

from Gilbert. The declaration stated, in pertinent part, that “[a]ll administrative steps

required by the Internal Revenue Code for the issuance of a summons ha[d] been taken,”

and that “no Justice Department referral [was] in effect per Internal Revenue Code §

7602(d)(2)” at the time. Id., Decl. at 2. On June 3, 2005, the district court issued a show

cause order directing Edwards to appear before the court “to show cause why [he] should

not be compelled to obey the . . . summons . . . .” Id., Doc. 2 at 1-2.

       Prior to the show cause hearing, Edwards filed a host of pro se motions. Included

was (1) a motion to strike the petition for failure to “present a cause of action” and for

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lack of standing on the part of the government, id., Doc. 4 at 1, (2) a motion for more

definite statement because Edwards was allegedly confused about whether the petition

“[wa]s alleging a contract dispute or a tort,” id., Doc. 5 at 1, (3) a motion to strike

Gilbert’s declaration on the grounds that Gilbert was “not qualified to testify against”

Edwards (because, in part, at the February 4, 2005, meeting Gilbert could not tell

Edwards “the difference between Wyoming and the State of Wyoming”), id., Doc. 6 at 1,

and (4) a motion to strike arguing that it was not clear whether the “United States of

America” or simply the “United States” was “bringing the action.” Id., Doc. 13 at 1.

       The district court conducted a show cause hearing on August 26, 2005, at the

conclusion of which it denied Edwards’ motions and granted the government’s petition.

Edwards filed a notice of appeal on September 2, 2005.

                                              II.

       Edwards contends the district court erred in granting the government’s petition.

We review for clear error the “district court’s determination of whether the factual

conditions for enforcement of [the] summons [were] met . . . .” United States v. Ins.

Consultants of Knox, Inc., 187 F.3d 755, 759 (7th Cir. 1999).

       Section 7602 of the Internal Revenue Code authorizes the IRS to issue summonses

for various purposes, including “determining the liability of any person for any internal

revenue tax . . . .” 26 U.S.C. § 7602(a). In turn, § 7604 of the Internal Revenue Code

authorizes federal district courts to compel compliance with IRS summons. More

specifically, § 7604(a) affords jurisdiction to “the United States district court for the

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district in which” the person summoned “resides or is found” to compel the person’s

“attendance, testimony, or production of books, papers, records, or other data.” Further, §

7604(b) provides that “[w]henever any person summoned . . . neglects or refuses to obey

such summons,” the government may seek enforcement of the summons from the federal

district court having jurisdiction over the matter.

       In United States v. Powell, 379 U.S. 48 (1964), the Supreme Court outlined four

requirements that must be established by the government in order to obtain enforcement

of a summons. These include: “(1) the investigation is being conducted for a legitimate

purpose; (2) the information sought is relevant to the investigation and (3) not already in

the government's possession; and (4) the administrative steps required by the Internal

Revenue Code have been followed.” Ins. Consultants of Knox, 187 F.3d at 759 (citing

Powell, 379 U.S. at 57-58). “The Powell requirements impose only a ‘minimal burden’

on the agency,” and “can usually be satisfied by an affidavit stating that the government

has met them.” Id. (citations omitted). “Once the government meets this prima facie

burden, the taxpayer faces a heavy burden to either present facts to disprove one of the

Powell factors, or to show that the IRS issued the summons in bad faith.” Id. (internal

quotation marks omitted). “The taxpayer can rebut the government’s prima facie case

only by alleging specific facts in rebuttal.” Id. (internal quotation marks omitted).

       Here, the district court found, based upon Gilbert’s testimony, that all four of the

Powell requirements had been satisfied. The district court further found that Edwards had

not met his burden of presenting facts to disprove any of the Powell factors, and, in fact,

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“ha[d] not even attempted” to do so. ROA, Vol. 2 at 6. After reviewing the record on

appeal, we conclude there was no clear error on the part of the district court in making

these findings. Indeed, Edwards’ appellate brief makes no mention of any of the Powell

factors, and instead focuses on the arguments asserted in the prehearing motions he filed

with the district court. Like the district court, we reject those arguments as patently

frivolous. We also reject as frivolous Edwards’ assertion that the district court denied

him the opportunity to “attack the credibility and competency” of Gilbert during the show

cause hearing.1

       Finally, the government has filed a motion asking us to sanction Edwards for

maintaining a frivolous appeal by ordering him, pursuant to 28 U.S.C. § 1912 and Rule

38 of the Federal Rules of Appellate Procedure, to pay the government $6,000. In

support of its motion, the government has presented evidence that, “[a]ccording to the

records of the Tax Division of the Department of Justice, the average expense in attorney

salaries and other costs incurred by [the government] in the defense of frivolous appeals

in which sanctions were ordered during 2001 and 2002 (the latest period for which figures

are available) was approximately $6,900.” Mot. at 7. The government argues that,

although the requested award of $6,000 “might not cover all of the costs attending this

litigation, it would nevertheless at least partially compensate the Government for the

direct costs of defending the appeal and might deter future frivolous appeals.” Id. at 7-8.

       1
        In support of this argument, Edwards argues only that the district court erred in
refusing to permit Gilbert to answer the following question posed by Edwards: “Would
there be an obligation [to pay federal taxes] if there was no constitution?” Aplt. Br. at 8.

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In response, Edwards has filed a motion to strike the government’s motion for sanctions,

arguing that the length of the government’s appellate brief (twenty-six pages) and the fact

that several attorneys have appeared on behalf of the government demonstrate that his

appeal is not frivolous.

       We agree with the government that Edwards’ appeal is frivolous. As discussed

above, the results of both the government’s petition and this appeal were “obvious,” and

Edwards’ arguments on appeal were “wholly without merit.” Braley v. Campbell, 832

F.2d 1504, 1510 (10th Cir. 1987) (discussing when an appeal is frivolous). Accordingly,

we award $6,000 to the government under Rule 38 as damages. See Stafford v. United

States, 208 F.3d 1177 (10th Cir. 2000) (awarding similar lump sum sanction in lieu of

actual costs); Parker v. Commissioner, 117 F.3d 785, 787 (5th Cir. 1997) (approving the

practice of imposing a lump sum sanction because it “saves the government the additional

cost of calculating its expenses, and also saves the court the time and expense of

reviewing the submission of costs”).

       The order of the district court enforcing the summons is AFFIRMED. The

government’s motion for sanctions is GRANTED in the amount of $6,000. Edwards’

motions to strike are DENIED. Edwards motion to admit evidence is denied.

                                                  Entered for the Court

                                                  Mary Beck Briscoe
                                                  Circuit Judge

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