Motion Picture Association of America v. CrystalTech Web Hosting Inc.

Filing 1389

Motion Picture Association of America v. CrystalTech Web Hosting Inc.

Doc. 1389

Case 2:08-mc-00130 Document 3

Filed 01/06/09 Page 1 of 4

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PAUL K. CHARLTON United States Attorney District of Arizona JANET M. WALSH Assistant United States Attorney Bar No. 014087 Two Renaissance Square 40 North Central Avenue, Suite 1200 Phoenix, AZ 85004-4408 Telephone: [phone] Facsimile: [phone] E-Mail: [e-mail]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA UNITED STATES OF AMERICA, Petitioner, v. JOHN J. KULAK, Respondent. ) ) ) ) ) MC 07-0001-PHX-MHM ) ) ) MOTION FOR ORDER TO ) SHOW CAUSE HEARING ) ) )

The United States of America respectfully requests that this Court enter an Order setting a Show Cause Hearing for Respondent John J. Kulak to show cause, if any, why he should not comply with and obey the Internal Revenue Service Summons issued to him. This Motion is supported by the attached Memorandum of Points and Authorities. /// /// ///

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Case 2:08-mc-00130 Document 3

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Respectfully submitted this 12th day of January, 2007. PAUL K. CHARLTON United States Attorney District of Arizona s/Janet M. Walsh Janet M. Walsh Assistant United States Attorney

MEMORANDUM OF POINTS AND AUTHORITIES I. FACTS Paul Chase, a Revenue Officer of the Internal Revenue Service ("IRS"), is conducting an investigation into the federal tax liability of John J. Kulak for the calendar years ending on December 31, 2004 and December 31, 2005. [Declaration of Revenue Officer Paul Chase ("Chase Dec.") is attached as an exhibit to the United States' Petition To Enforce Internal Revenue Service Summons, and is incorporated herein by reference.] (Chase Dec. at ¶¶ 1, and 3) Respondent John J. Kulak is in possession and control of the documents, which are relevant to the IRS investigation. (Chase Dec. ¶ 9) On August 10, 2006, Revenue Officer Chase issued an IRS Summons, directing John J. Kulak to appear before an IRS officer on September 13, 2006, to testify and produce the documents identified in the Summons. On August 10, 2006, Revenue Officer Chase served the IRS Summons by leaving a copy of it with Respondent's spouse, Patricia Kulak, at their residence. (Chase Dec. ¶¶ 6 and 7) On September 13, 2006, Respondent John J. Kulak appeared at the IRS office, but failed to bring the summoned documents. In response to each and every question presented to him, Respondent John J. Kulak asserted a Fifth Amendment privilege and

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Case 2:08-mc-00130 Document 3

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refused to provide any records. (Chase Dec. ¶ 8) As of the date of execution of the Declaration, Respondent has refused to comply with the Summons. (Chase Dec. ¶ 8) II. ARGUMENT In United States v. Derr, 968 F.2d 943 (9th Cir. 1992), the Ninth Circuit Court of Appeals explained the nature of a summons enforcement proceeding: Enforcement of a summons is generally a summary proceeding to which a taxpayer has few defenses. As delegate of the Secretary of the Treasury, the IRS has authority to issue a summons to investigate a taxpayer's federal income tax liability. 26 U.S.C. § 7602. The district courts have jurisdiction to order compliance with a summons. Id. §§ 7402(b), 7604(a). "`[S]ummons enforcement proceedings should be summary in nature and discovery should be limited.'" United States v. Stuart, 489 U.S. 353, 369 (quoting S. Rep. No. 494, 97th Cong., 2d Sess. 285 (1982), reprinted in 1982 U.S.C.C.A.N. 781, 1031). To obtain enforcement of an IRS summons, the government "must show [1] that the investigation will be conducted pursuant to a legitimate purpose, [2] that the inquiry may be relevant to the purpose, [3] that the information sought is not already within the Commissioner's possession, and [4] that the administrative steps required by the Code have been followed." [United States v.] Powell, 379 U.S. [48] at 57-58 [(1964)]. Id. at 945 (footnote and parallel citations omitted). According to the Ninth Circuit, the normal method by which the IRS makes a prima facie showing that it has issued a summons in good faith is by submitting affidavits stating that the summons was issued in compliance with the four Powell factors. Ponsford v. United States, 771 F.2d 1305, 1308 (9th Cir. 1985). The showing by the IRS "need only be minimal" and "[a]ssertions by affidavit of the investigating agent that the requirements are satisfied are sufficient." Liberty Financial Services v. United States, 778 F.2d 1390, 1392 (9th Cir. 1985). Once the Powell requirements are established, the party opposing summons enforcement must disprove "the actual existence of a valid civil tax determination or

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Case 2:08-mc-00130 Document 3

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collection purpose . . . . . Without a doubt, this burden is a heavy one.'" United States v. Jose, 131 F.3d 1325, 1328 (9th Cir. 1997) (en banc), quoting, United States v. LaSalle Nat'l Bank, 437 U.S. 298, 316 (1978). In conclusion, Revenue Officer Paul Chase's Declaration meets the Powell requirements. The United States requests, therefore, that this Court enter an Order setting a Show Cause Hearing in this matter. Respectfully submitted this 12th day of January, 2007. Respectfully submitted, PAUL K. CHARLTON United States Attorney District of Arizona s/Janet M. Walsh Janet M. Walsh Assistant United States Attorney

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