Pragovich v. Internal Revenue Service et al

Filing 9

OPINION AND ORDER denying 1 MOTION to Quash Third Party Summonses filed by George K Pragovich. ***Civil Case Terminated. Signed by Magistrate Judge Andrew P Rodovich on 12/16/08. (kjp)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA HAMMOND DIVISION GEORGE K. PRAGOVICH, Petitioner v. INTERNAL REVENUE SERVICE, JOSEPH CONROY, SAM ANDERSON, Respondents ) ) ) ) ) ) ) ) ) )

Case No.

2:08-MC-33

OPINION AND ORDER This matter is before the court on the Petition to Quash Third Party Summonses [DE 1] filed by the petitioner, George Pragovich, on April 18, 2008. the motion is DENIED. Background The petitioner, George Pragovich, proceeding pro se, seeks an order quashing the summons issued by the IRS to James Gorman. The summons was issued as part of an investigation of Pragovich to determine whether he could be assessed tax liability for his promotion and sales of services and materials assisting customers in filing frivolous lawsuits to impede tax law administration. Gorman, the third party recipient of the summons, filed one such lawsuit in the District of Columbia. The respondents seek to For the reasons set forth below,

establish to what extent, if any, Pragovich facilitated or assisted Gorman in bringing his frivolous suit or otherwise impeded tax law administration. Discussion The respondents argue that the issuance of the summons meets the good faith requirements of U.S. v. Powell, 379 U.S. 48, 85

S.Ct. 248, 13 L.Ed.2d 112 (1964), which are "that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner's possession, and that the administrative steps required by the Code have been followed."

Powell, 379 U.S. at 57-58.

See generally Khan v.

U.S., ___ F.3d ___, 2008 WL 4936861 (7th Cir. Nov. 12, 2008)
(applying Powell elements). showing of these elements: Respondents have made a prima facie (1) the investigation of Pragovich

relates to whether he has assisted his customers in filing frivolous lawsuits in order to impede tax law administration; (2) the inquiry of James Gorman is relevant to that purpose because he filed a frivolous lawsuit; (3) the IRS does not already have the information sought; and (4) the proper administrative steps have been followed. Since the respondents have made a prima facie showing, the burden shifts to Pragovich to show an abuse of the court's process.

Powell, 379 U.S. at 58; 2121 Arlington Heights Corp.

v. IRS, 109 F.3d 1221, 1224 (7th Cir. 1997).
Pragovich contends that the summons was issued for the improper purpose of chilling his First Amendment rights. How-

ever, the First Amendment does not protect false commercial speech.

Virginia State Bd. of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748, 771, 96 S.Ct. 1817, 48
L.Ed.2d 346 (1976); U.S. v. Kaun, 827 F.2d 1144, 1152 (7th Cir. 1987). Such unprotected false speech includes that which is 2

misleading, fraudulent, or related to illegal activity.

Posadas

de Puerto Rico Ass'n v. Tourism Co. of Puerto Rico, 478 U.S. 328,
340, 106 S.Ct. 2968, 92 L.Ed.2d 266 (1986). Such speech, includ-

ing erroneous and frivolous arguments about tax law, that occurs in connection with a commercial interest is unprotected false commercial speech.

See U.S. v. Raymond, 228 F.3d 804, 815 (7th

Cir. 2000)(enjoining the advertising, marketing or selling documents providing false income tax advice as "the dissemination of false or misleading commercial speech"). Therefore, Pragovich

has not met the burden, and his petition to quash the summons is DENIED. __________________ For the foregoing reasons, the Petition to Quash Third Party Summons [DE 1] filed by the petitioner, George Pragovich, on April 18, 2008, is DENIED. case. ENTERED this 16th day of December, 2008 The Clerk is directed to CLOSE this

s/ Andrew P. Rodovich United States Magistrate Judge

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