United States Of America v. Olvany
Filing
13
OPINION AND ORDER re 1 Petition to Enforce IRS Summons filed by United States Of America. Petition GRANTED. Defendant is to appear on March 8, 2012 at 11:00 a.m. and produce the requested documents and testimomy to comply with the IRS Summons.Signed by Judge William I. Arbuckle, III on 02-03-2012. Mailed to Dean Olvany at 2073 Spruce Road, Sunbury, PA 17801 by first class mail.(swartz, j)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA
AND ANGELA ARGUETA,
REVENUE OFFICER INTERNAL
REVENUE SERVICE
Plaintiffs
VS.
DEAN P. OLVANY
Defendant
:
: Civil Action No.: 11-CV-2041
:
: (Chief Judge Kane)
:
:
: (Magistrate Judge Arbuckle)
:
:
:
OPINION AND ORDER
PROCEDURAL HISTORY
This is a civil action to enforce an Internal Revenue Service
(hereinafter IRS) Summons. A petition filed by the IRS (Document #1)
resulted in an Order to Show Cause (Document #2). Defendant, Dean P.
Olvany (hereinafter Olvany) filed a pro se response asserting substantive and
procedural defenses (Document #4). The matter was referred by the District
Judge to a Magistrate Judge for purposes of a hearing (Document #5). All
parties appeared at the hearing held on January 27, 2012 in Williamsport.
During the hearing Counsel for the government suggested that the
matter required the consent of the parties to proceed before a Magistrate
Judge. Consent of the parties was not given and the hearing concluded with
the announcement that a Report and Recommendation would be submitted
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to the District Judge for decision. However, after reviewing the applicable
statues this Court concludes that consent to proceed before a Magistrate
Judge is not required.
The statute authorizing judicial enforcement of an IRS Summons
states in relevant part:
26 U.S.C. §7604(b) Enforcement.--Whenever any person
summoned under section … 7602 neglects or refuses to obey such
summons, or to produce books, papers, records, or other data, or to
give testimony, as required, the Secretary may apply to the judge of
the district court or to a United States commissioner for the district
within which the person so summoned resides or is found for an
attachment against him as for a contempt. It shall be the duty of the
judge or commissioner to hear the application, and, if satisfactory
proof is made, to issue an attachment, directed to some proper officer,
for the arrest of such person, and upon his being brought before him to
proceed to a hearing of the case; and upon such hearing the judge or
the United States commissioner shall have power to make such
order as he shall deem proper, not inconsistent with the law for the
punishment of contempts, to enforce obedience to the requirements of
the summons and to punish such person for his default or
disobedience. (emphasis added).
The office of United Sates Commissioner no longer exists, but the
powers and duties of that office were transferred to the U.S. Magistrate
Judges. The Federal Magistrates Act of 1968 established the Unites States
magistrate judge system, building upon and superseding the 175 year old
United States commissioners system. The authority of a Magistrate Judge is
found in the Judiciary and Judicial Procedure Act at Section 636 which
states:
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28 U.S.C. § 636. Jurisdiction, powers, and temporary assignment
(a) Each United States magistrate judge serving under this chapter
shall have within the district in which sessions are held by the court
that appointed the magistrate judge, at other places where that court
may function, and elsewhere as authorized by law-(1) all powers and duties conferred or imposed upon United States
commissioners by law or by the Rules of Criminal Procedure for the
United States District Courts; (emphasis added). …
This matter was originally assigned to Chief Judge Kane in
accordance with the Middle District Case Assignment Policy. Judge Kane
referred the case to the Magistrate Judge for hearing (Document #5). This
matter will therefore be decided by the Magistrate Judge.
APPLICABLE LAW
The IRS seeks judicial enforcement of a summons requiring the
taxpayer to produce evidence of income for the period of January 1, 2011 to
June 30, 2011. The IRS requests this information to aid in its determination
of the collectability of an assessment of taxes owed for calendar years 2003
and 2004. The IRS relies upon 26 U.S.C. §7602 and 7604(a) for its
authority to request this information and to seek judicial enforcement of the
subpoena.
26 U.S.C. §7602 states in relevant part:
(a) Authority to summon, etc.: For the purpose of …
determining the liability of any person for any internal revenue
tax …, or collecting any such liability, the Secretary is
authorized:
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(1) To examine any books, papers, records, or other data
which may be relevant or material to such inquiry;
(2) To summon the person liable for tax …, to appear
before the Secretary at a time and place named in the summons
and to produce such books, papers, records, or other data, and
to give such testimony, under oath, as may be relevant or
material to such inquiry; and
(3) To take such testimony of the person concerned,
under oath, as may be relevant or material to such inquiry.
…
(d) No administrative summons when there is Justice
Department referral.:
(1) Limitation of authority.--No summons may be issued
under this title, and the Secretary may not begin any action
under section 7604 to enforce any summons, with respect to
any person if a Justice Department referral is in effect with
respect to such person.1
26 U.S.C. §7604(a) states in relevant part:
§ 7604. Enforcement of summons
(a) Jurisdiction of district court.--If any person is
summoned under the internal revenue laws to appear, to testify,
or to produce books, papers, records, or other data, the United
States district court for the district in which such person resides
or is found shall have jurisdiction by appropriate process to
compel such attendance, testimony, or production of books,
papers, records, or other data.
(b) Enforcement.-- Whenever any person summoned
under section … 7602 neglects or refuses to obey such
summons, or to produce books, papers, records, or other data,
or to give testimony, as required, the Secretary may apply to the
judge of the district court or to a United States commissioner
for the district within which the person so summoned resides or
is found for an attachment against him as for a contempt. It
shall be the duty of the judge or commissioner to hear the
application, and, if satisfactory proof is made, to issue an
1
What constitutes a “Justice Department referral” is defined by subsection (d)(2). The Assistant U.S.
Attorney at the January 27, 2012 hearing and the IRS Agent in her declaration have each stated that a
Justice Department referral has not been made. Olvany has not asserted that such a referral has been made.
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attachment, directed to some proper officer, for the arrest of
such person, and upon his being brought before him to proceed
to a hearing of the case; and upon such hearing the judge or the
United States commissioner shall have power to make such
order as he shall deem proper, not inconsistent with the law for
the punishment of contempts, to enforce obedience to the
requirements of the summons and to punish such person for his
default or disobedience.
REPORT OF HEARING
All parties were present for the hearing on January 27, 2012. The
Defendant elected to proceed pro se.
The Defendant objected to the Summons on the grounds that certain
of his property was seized to satisfy the 2003 & 2004 tax obligation and the
Assessment of Tax that he received was incorrect.
Counsel for the IRS argued that the pleadings on their face satisfy the
statutory requirements and meet the four point test established by U.S. v.
Powell, 379 U.S. 48 (1964), entitling the IRS to enforcement of the
subpoena by Court Order.
Testimony was not taken and no exhibits were offered or admitted.
All argument was on the record.
DISCUSSION
The IRS seeks judicial enforcement of a summons requiring Olvany to
produce:
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“All documents and records you possess or control
regarding assets, liabilities or accounts held in the taxpayer’s
name or for the taxpayer’s benefit which the taxpayer wholly or
partially owns or in which the taxpayer has a security interest.
These records and documents include but are not limited to: all
bank statements, checkbooks, canceled checks, saving account
passbooks, records, or certificates of deposit for the period:
from 01/01/2011 to 06/30/2011. Also include all current
vehicle registration certificates, deeds or contracts regarding
real property, stocks and bonds, accounts, notes and judgments
receivable, and all life or health insurance policies.” (Summons,
Document #1, Exhibit 1)
The authority for this request is 26 U.S.C. § 7602.
Attached as
Exhibits to the Complaint to Enforce IRS Summons (Document #1) is the
Summons, a Certificate of Service, and the declaration of IRS Agent Angel
Argueta.
By these documents the IRS has established that it is seeking
information to be used to collect a tax liability; that the records sought are
for a limited period and thus not burdensome; and that the proper procedure
for service of the summons was followed. The requirements of the statute
are met by the petition and declaration of Agent Argueta.
While the Petition and Declaration do not specifically state that a tax
liability exists2 or exactly what that liability is, Olvany stated at the hearing
2
The Complaint (Document #1) states at paragraph 4: “The Internal Revenue Service is presently
conducting an investigation with respect to the collection of the outstanding Federal income tax liabilities
(Forms 1040) of Olvany for the tax years ending in December 31, 2003 and December 31, 2004.” The
Argueta Declaration (Document #1, Exhibit 1) states at paragraph 2: “In my capacity as a Revenue Officer,
I am conducting an investigation into the collection of the income tax liabilities (Forms 1040) of Dean P.
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that he had received assessments for tax years 2003 and 2004 and that he
disputed the amount owed. The question of the amount of tax owed is not
before the court. This proceeding is limited to determining if the taxpayer
can be required to respond to a summons for records and information to aid
in the collection of taxes owed.
At the hearing, the IRS cited U.S. v. Powell, 379 U.S. 48 (1964), to
support its request. In Powell, the Supreme Court held that the IRS need not
establish probable cause to suspect fraud as a prerequisite to seeking
enforcement of a summons unless the taxpayer raises a substantial question
that judicial enforcement of the summons would be abusive use of the
Court’s process.
There is no basis in the record to suggest that the
enforcement of the summons would be an abuse of the court’s process.
Olvany in his answer (Document #4) attempts to enter a “special
appearance” to challenge the jurisdiction of the Court.
His answer is
rambling, does not contain numbered paragraphs, and does not respond
directly to the allegations in the Complaint. In fact, he states “I have never
seen the complaint.” (Document #4, at page 2, line 13). He does however
respond to “assertions” of the plaintiffs (Document #4, at page 2, line 12);
and to the “notice pleading” (Document #4, at page 3, lines 6 & 18). The
Olvany for the calendar years ending December 31, 2003 and December 31, 2004.” These statements
presume that a tax liability exists.
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record also contains a “certificate of service” (Document #3) which
establishes personal service on Olvany. Olvany’s statement that he has
“never seen the complaint” is contradicted by the record and his own
pleading.
Jurisdiction to hear a petition to enforce a summons is vested in the
District Court where the Defendant resides or may be found. 26 U.S.C. §
7604(a).
In the instant case the IRS alleges, and Olvany admitted at the
hearing, that he resides at 2073 Spruce Road, Sunbury, PA 17801. The
Court takes judicial notice that this address is within the geographic
jurisdiction of the Middle District of Pennsylvania (F.R.E. 201).
Olvany also objects to the jurisdiction of the Court because he has not
received a “verified tax assessment or substitute for return (SFR) followed
by a deficiency notice as mandated by Congress.” (Document #4, at page 3,
line 16). He cites no authority for this proposition, and as noted earlier, he
admitted at the hearing that he has received an assessment of tax owed and
disputes the amount. Based on the information before the court it appears
that the IRS is attempting in good faith to collect taxes due. That is all that
is required to invoke the jurisdiction of the court to enforce a summons. The
amount of tax owed is not before the court at this time.
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Olvany also demurs, claiming that the complaint is an attempt to form
a contract, and he does not wish to contract with the IRS (Document 4, page
4, line 19 and page 3, line 6). Olvany cites no authority for this proposition
and the court finds none.
Finally, Olvany does concede the jurisdiction of the Court to “remove
all erroneous liens and furthermore order all property(s) and accounts seized
in the matter returned.” (Document #4, page 5, line 3). There is nothing in
the record to indicate what the liens and seizures are or why they are
improper. Olvany also cites no authority for this proposition and the court
finds none.
ORDER
Accordingly, for the foregoing reasons, IT IS ORDERED that the IRS
Complaint to Enforce Summons (Doc. #1) is GRANTED and the
Defendant’s Objections to Jurisdiction, Demur, and Request to Remove all
Liens and Levies (Doc. # 4) are DENIED.
IT IS FURTHER ORDERED that the United States be permitted to
recover its costs in maintaining this action.
IT IS FURTHER ORDERED that the Defendant appear before the
undersigned Magistrate Judge in Williamsport, on Thursday, March 8, 2012
at 11:00 a.m. and produce the requested documents and testimony to comply
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fully with the IRS Summons (Document #1, Exhibit #1) issued August 1,
2011. Failure to appear and comply will constitute contempt. Olvany is
once again strongly advised to seek competent legal advice.
NOTICE REGARDING APPELLATE RIGHTS
LR 72.2 Appeals from Non-Dispositive Orders of
Magistrate Judges.
Any party may appeal from a magistrate judge's order
determining a non-dispositive pretrial motion or matter in
any civil or criminal case in which the magistrate judge is
not the presiding judge of the case, within fourteen (14)
days after issuance of the magistrate judge's order,
unless a different time is prescribed by the magistrate
judge or a judge. Such party shall file with the clerk of
court, and serve on the magistrate judge and all parties, a
written statement of appeal which shall specifically
designate the order, or part thereof, appealed from and
the basis for any objection thereto. At the time the appeal
is filed, the appellant shall also file a brief addressed to
the issue raised by the objection to the order or part
appealed from Any party opposing the appeal shall file a
responsive brief within fourteen (14) days after service of
the appellant's brief. A brief in reply may be filed within
seven (7) days after service of the opposing party's brief.
A judge of the court shall consider the appeal and shall
set aside any portion of the magistrate judge's order
found to be clearly erroneous or contrary to law. The
judge may also reconsider sua sponte any matter
determined by a magistrate judge under this rule.
SO ORDERED this 3rd day of February, 2012.
s/William I. Arbuckle, III
William I. Arbuckle, III
U. S. Magistrate Judge
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