United States Of America et al v. Le

Filing 11

ORDER granting 1 Petition to Enforce IRS Summons. Signed by Judge Lucy H. Koh on 8/9/12. (lhklc3, COURT STAFF) (Filed on 8/9/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
For the Northern District of California

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UNITED STATES OF AMERICA and SCOTT )
J. McKAGAN, Revenue Officer,
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Petitioners,
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v.
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PHUC LE,
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Respondent.
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Case No.: 12-CV-02302-LHK
ORDER GRANTING VERIFIED
PETITION TO ENFORCE INTERNAL
REVENUE SERVICE SUMMONS

This matter is before the Court on an Order to Show Cause why Respondent Phuc Le

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should not be ordered to comply with the summons issued by the Internal Revenue Service (IRS).

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Respondent failed to respond to the Court’s Order to Show Cause and did not appear at the hearing

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held on August 9, 2012. Having considered the instant Verified Petition and the relevant legal

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authority, the Court GRANTS Petitioner’s Verified Petition to enforce the IRS summons issued to

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Respondent.

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The IRS may issue a summons for the purpose of “ascertaining the correctness of any

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return, making a return where none has been made, determining the liability of any person for any

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internal revenue tax . . . , or collecting any such liability.” 26 U.S.C. § 7602(a). In order to enforce

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a summons, the government must establish that the summons: (1) is issued for a legitimate

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purpose; (2) seeks information relevant to that purpose; (3) seeks information not already in the

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IRS’s possession; and (4) was issued in compliance with all the administrative steps required by
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Case No.: 12-CV-02302-LHK
ORDER GRANTING VERIFIED PETITION TO ENFORCE INTERNAL REVENUE SERVICE SUMMONS

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the Internal Revenue Code. United States v. Powell, 379 U.S. 48, 57-58 (1964); Crystal v. United

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States, 172 F.3d 1141, 1143-44 (9th Cir. 1999). The government’s burden is slight and may be

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satisfied by a declaration by the investigating agent that the Powell requirements have been met.

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Crystal, 172 F.3d at 1144. Once the government has met its burden under Powell, the party

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opposing enforcement bears the “heavy” burden of “disprov[ing] the actual existence of a valid

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civil tax determination or collection purpose by the Service.” United States v. Jose, 131 F.3d 1325,

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1328 (9th Cir. 1997) (quoting United States v. LaSalle Nat’l Bank, 437 U.S. 298, 316 (1978)). In

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order to successfully challenge an IRS summons, the taxpayer must allege specific facts and

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evidence to support his allegations of bad faith or improper purpose on the part of the IRS. Jose,

United States District Court
For the Northern District of California

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131 F.3d at 1328.
Here, Petitioners have satisfied the requirements set forth in Powell. First, the Verified

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Petition indicates that the summons was issued for the legitimate purpose of attempting to obtain

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records needed to conduct an investigation into the collection of Respondent’s tax liability for the

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Trust Fund Recovery Penalty, 26 U.S.C. § 6672, for the quarterly tax periods ending March 31,

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2010; June 30, 2010; and June 30, 2011. Pet. ¶ 3. Second, the summons seeks records, paper, and

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other data regarding income and other matters covered by Petitioner’s inquiry under 26 U.S.C. §

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6672 that are relevant to and can reasonably be expected to assist in the ascertainment or collection

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of Respondent’s tax liabilities. Pet. ¶¶ 5, 7. Third, the Verified Petition declares that Petitioners do

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not otherwise have access, possession, or control of this information. Pet. ¶ 5. Finally, the

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Verified Petition states that all administrative steps required by the Internal Revenue Code for

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issuance of the summons have been taken, and there has been no referral to the Department of

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Justice for criminal prosecution of the matters described in the summons. Pet. ¶¶ 11-12.

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The Petition and attached certificate of service indicate that Respondent was served with

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the summons on December 12, 2011, at his last and usual place of abode. Pet. ¶¶ 4, 6, Ex. A.

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After Respondent failed to appear at the time and place designated in the summons, Petitioners

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provided him with a second opportunity to comply. Pet. ¶¶ 8-9. Respondent did not appear at the

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second appointment and has not complied with the summons. Pet. ¶ 10.

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Case No.: 12-CV-02302-LHK
ORDER GRANTING VERIFIED PETITION TO ENFORCE INTERNAL REVENUE SERVICE SUMMONS

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On May 8, 2012, Petitioners filed a Verified Petition to Enforce Internal Revenue Service

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Summons. ECF No. 1. The Court issued an Order to Show Cause on May 14, 2012. ECF No. 5.

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Petitioners served Respondent with the Court’s Order to Show Cause on July 5, 2012. Decl. of

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Adelina Foster, ECF No. 8. To date, Respondent has failed to respond with any arguments or

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allegations as to why the summons should not be enforced.

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Accordingly, the Court GRANTS Petitioners’ Verified Petition to Enforce IRS Summons.

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The Court ORDERS Respondent Phuc Le to appear before Revenue Officer Adelina Foster, or any

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other designated agent, on or before August 30, 2012, at the Offices of the Internal Revenue

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Service located at 55 South Market Street, San Jose, CA 95113, to provide testimony and

United States District Court
For the Northern District of California

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produce the documents and records requested by Petitioners. Failure to comply with this Order

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may be grounds for a finding of contempt. See United States v. Ayres, 166 F.3d 991, 994-96 (9th

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Cir. 1999) (affirming finding of contempt where party failed to comply with court order directing

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him to provide testimony and to produce records to the IRS).

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Petitioners shall serve this Order and a copy of the IRS summons on Respondent in

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accordance with Federal Rule of Civil Procedure 4 and file proof of service with the Court.

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IT IS SO ORDERED.

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Dated: August 9, 2012

_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 12-CV-02302-LHK
ORDER GRANTING VERIFIED PETITION TO ENFORCE INTERNAL REVENUE SERVICE SUMMONS