United States of America v. Pate et al

Filing 18

IT IS ORDERED the United States Petition to Enforce IRS Summonses (Doc. #1) is GRANTED IN PART and DENIED IN PART. The petition is GRANTED with respect to the April 2015 summonses, but DENIED AS MOOT with respect to the June 2015 summonses. It is fur ther ORDERED Magistrate Judge Whitworths findings of fact and conclusions of law are ADOPTED with respect to the April 2015 summonses. To the extent the Report and Recommendation recommends enforcement of the June 2015 summonses, the United States co ncedes that the June 2015 summonses are denied as moot. It is further ORDERED Magistrate Judge Whitworths Report and Recommendation (Doc. #10) shall be attached to and made part of this Order, but is adopted only with respect to the April 2015 summon ses. To the extent the Report and Recommendation relates to the June 2015 summonses, the petition for enforcement is DENIED AS MOOT, and that portion of the Report and Recommendation does not require adoption by the district court. Signed on 9/30/16 by District Judge Brian C. Wimes. (Attachments: # 1 Report and Recommendation - Doc. # 10) (Baldwin, Joella)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
UNITED STATES OF AMERICA,
Petitioner,
v.
GEORGE PATE, et al.,
Respondents.

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Case No. 2:15-MC-09003-BCW

ORDER
Before the Court is Magistrate Judge Whitworth’s Report and Recommendation granting
the United States’ Petition to Enforce IRS Summonses. (Doc. #1). After an independent review
of the record, the Court adopts in part Magistrate Judge Whitworth’s findings of fact and
conclusions of law, thus granting in part and denying as moot in part the relief sought by the
United States.
In April and June 2015, the IRS served administrative summonses on Respondents
George and Cookie Pate. In response to the April summonses, Respondents appeared before the
IRS, but declined to answer any questions posed to them. In response to the June summonses,
Respondents did not appear, but instead produced some, though not all documents requested in
the June summonses.
On August 28, 2015, Magistrate Judge Whitworth issued an order for Respondents to
show cause why they should not be compelled to obey the April and June 2015 summonses. The
show cause order also scheduled a hearing for November 5, 2015. Respondents filed a response
to the show cause order (Doc. #5).

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The parties appeared at the November 5, 2015 show cause hearing before Magistrate
Judge Whitworth, with counsel. Judge Whitworth heard evidence on the United States’ petition
to enforce the April and June 2015 summonses. Thereafter, Judge Whitworth issued the instant
Report and Recommendation (Doc. #10).
Respondents filed objections to the Report and Recommendation, citing two specific
objections. First, Respondents argue enforcement of the June 2015 summonses has been
rendered moot because Respondents have filed their 2012, 2013, and 2014 tax returns since the
enforcement petition was filed. Second, Respondents argue enforcement of the April 2015
summonses should be denied because compelling Respondents’ testimony about their living
expenses and assets would violate their constitutional rights against self-incrimination. (Doc.
#10). Petitioner filed a response to Respondents’ objections (Doc. #16).
ANALYSIS
When a party files objections to the Report and Recommendation of a Magistrate Judge,
the district court conducts a de novo review of the record and applicable law. United States v.
Lothridge, 324 F.3d 599, 600 (8th Cir. 2003).
A prima facie case for enforcement of a summons requires the United States to make a
“minimal showing” that: (1) the summons is for a legitimate purpose; (2) the material sought by
summons is relevant to the investigation; (3) the material sought is not otherwise in the IRS’s
possession; and (4) the administrative steps of the Internal Revenue Code have been met. United
States v. Powell, 379 U.S. 48, 57-58 (1964). If the United States presents a prima facie case, the
burden shifts to the respondent to disprove the assertions made by the IRS in support of
enforcement. United States v. Norwood, 420 F.3d 888, 893 (8th Cir. 2005).

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The Court first considers Respondents’ objection to enforcement of the June 2015
summons on the basis that compelling compliance at this stage is moot. Respondents attached an
email exchange to their objections to the Report and Recommendation. (Doc. #11-2). The email
exchange, dated February 9, 2016, indicates counsel’s confirmation “that enforcement of the
June Summonses is now moot,” in light of the IRS’s receipt of Respondents’ 2012, 2013, and
2014 federal income tax returns. (Doc. #11-2). The United States’ response to Respondents’
objections makes reference only to the April 2015 summonses. For these reasons, this Court
concludes that the United States concedes that the June 2015 summonses are now moot, because
Respondents have complied with the June 2015 summonses since issuance of the Report and
Recommendation (Doc. #10). The Court thus grants Respondents’ objection to the Petition to
Enforce as it relates to the June 2015 summonses only.
By contrast, with respect to Respondents’ second objection, the Court agrees with the
findings and conclusions of Magistrate Judge Whitworth and adopts the Report and
Recommendation with respect to the April 2015 summonses. This Court’s independent review of
the record, the applicable law, and the parties’ arguments indicate the United States has
established a prima facie case for enforcement of the April 2015 summonses under Powell. To
the extent Respondents object to enforcement of the April summonses based on the 5th
Amendment right against self-incrimination, the objection is overruled and denied. Notably, this
matter has not been formally referred to the Department of Justice up to this point. Additionally,
the record does not indicate that the IRS acted for any improper purpose or otherwise outside the
confines of the Internal Revenue Code. Finally, the record provides no basis on which to find
that enforcement of the April 2015 summonses would constitute an abuse of process.
Accordingly, it is hereby

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ORDERED the United States’ Petition to Enforce IRS Summonses (Doc. #1) is
GRANTED IN PART and DENIED IN PART. The petition is GRANTED with respect to the
April 2015 summonses, but DENIED AS MOOT with respect to the June 2015 summonses. It is
further
ORDERED Magistrate Judge Whitworth’s findings of fact and conclusions of law are
ADOPTED with respect to the April 2015 summonses. To the extent the Report and
Recommendation recommends enforcement of the June 2015 summonses, the United States
concedes that the June 2015 summonses are denied as moot. It is further
ORDERED Magistrate Judge Whitworth’s Report and Recommendation (Doc. #10) shall
be attached to and made part of this Order, but is adopted only with respect to the April 2015
summonses. To the extent the Report and Recommendation relates to the June 2015 summonses,
the petition for enforcement is DENIED AS MOOT, and that portion of the Report and
Recommendation does not require adoption by the district court.
IT IS SO ORDERED.

DATED: September 30, 2016

/s/ Brian C. Wimes
JUDGE BRIAN C. WIMES
UNITED STATES DISTRICT COURT

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