MASCIANTONIO v. UNITED STATES et al

Filing 19

MEMORANDUM OPINION & ORDER - it is hereby Ordered that the Petitioner's motion to quash the IRS summonses (ECF No. 1 ) is DENIED; The United States motion for summary enforcement and to deny the motion to quash (ECF No. 2 ) is GRANTED; Petitio ner's motion for in camera review of the TIGTA report (ECF No. 12 ) is DENIED; Petitioners motion for protective order (ECF No. 13 ) is DENIED; First Commonwealth Bank shall produce the records demanded by the IRS summons within thirty (30) da ys from the date of this Order; Petitioner shall produce, for an in camera review by this Court, the records demanded by the IRS summons, as well as an explanation as to the applicability of the Fifth Amendment privilege to each document produced, wi thin thirty (30) days from the date of this Order; and Any and all other relief requested by Petitioner, which is not specifically addressed in this Order, is DENIED, and as more fully stated in said Memorandum Opinion & Order. Signed by Judge Kim R. Gibson on 12/16/2014. (dlg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
ANTHONY A. MASCIANTONIO d/b/a
THERMOALL REMODELING,

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CASE NO. 3:14-mc-35

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Petitioner,

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JUDGE KIM R. GIBSON

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UNITED STATES OF AMERICA et al.,

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Respondents.

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ORDER

Pending before the Court in this matter1 are several motions- Petitioner Anthony
Masciantonio's motion to quash Internal Revenue Service ("IRS") summons (ECF No. 1),
the United States' motion for summary enforcement (ECF No. 3), Petitioner's motion for
in camera review (ECF No. 12), and Petitioner's motion for protective order (ECF No.
13). The Court has carefully considered each of these motions, examined all of the
documents filed in this case, studied the relevant law, and reviewed the related cases in
this matter.2
This matter arises from two summonses issued by the IRS on July 15, 2014, both
seeking the production of documents related to an IRS investigation into Petitioner's tax

This Court has jurisdiction under 26 U.S.C. §§ 7402(b) and 7604(a). Venue is proper under 28
U.S.C. § 1391(b)(1), (2) and 26 U.S.C. § 7604(a).
1

Petitioner previously initiated three similar actions, wherein he filed nearly identical motions to
those now pending before the Court in this case. See Case No. 3:13-mc-39, No. 3:13-mc-50, and
No. 3:14-mc-26.

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filings. 3 (ECF Nos. 1-1 and 1-2). One summons was issued to First Commonwealth
Bank, seeking the production of documents pertaining to Petitioner's account, loan, and
other banking records for the 2009 calendar year (see ECF No. 4-2), while the other
summons was issued to Thermoall Remodeling and Anthony Masciantonio seeking the
production of business and financial records for the period of January 1, 2009 through
December 31, 2012 (see ECF No. 4-3).

Presently, Petitioner seeks to quash both

summonses, and the United States seeks to enforce the summonses.

1. Petitioner's Motion to Quash Summons and
Respondent's Motion to Enforce Summons
To establish a prima facie case for enforcement of a summons, the IRS must show
that (1) the summons was issued for a proper purpose; (2) the information sought may
be relevant to that purpose; (3) the information sought is not already in the IRS's
possession; and (4) the required administrative steps have been taken. United States v.

Powell, 379 U.S. 48, 57-58 (1964). "Once the IRS has made its prima facie case, the
taxpayer bears the burden of disproving any one of the four Powell elements or
otherwise demonstrating that' enforcement of the summons will result in an abuse of the
court's process."' Masciantonio v. United States, 528 F. App'x 120, 121 (3d Cir. 2013) (citing

United States v. Rockwell Int'l, 897 F. 2d 1255, 1262 (3d Cir. 1990).

In his motion, Petitioner asserts that he is seeking to quash "three new summonses" issued by
the IRS on July 15, 2014. (ECF No. 1 'li 1). Petitioner attached copies of the three summonses to
his motion as Exhibits A, B, and C. (ECF Nos. 1-1, 1-2, and 1-3). However, as the United States
notes in its response (see ECF No.4 at 2, n. 1), Exhibits Band C appear to be identical summonses,
and the Court will treat them as the same.

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2

Here, Agent David McKinzie stated in a sworn declaration that he issued both
summonses as part of his investigation into whether Petitioner committed any offense
under the Internal Revenue Code for tax years 2009 through 2012, and in order to
determine the correct amount of income earned by Petitioner, as well as the correct
amount of business expenses that he incurred. (ECF No. 4-1 «]f«]f 3-4). Determining the
correctness of petitioner's tax returns and his corresponding tax liability is a legitimate
purpose for which a summons may be issued. See 26 U.S.C. § 7602. Furthermore, the
pertinent bank records and business records are directly related to Agent McKinzie's
investigation, the information sought is not currently in the IRS's possession, and Agent
McKinzie followed the proper administrative steps for issuing a summons. Accordingly,
because the United States has adequately shown each element to establish a prima facie
case, the United States' request to enforce the summonses will be granted. Likewise,
because Petitioner has failed to raise any arguments sufficient to overcome the United
States' prima facie showing that the summons should be enforced, his request to quash
the summons will be denied.
Additionally, regarding the summons issued to First Commonwealth Bank ("the
Bank"), as the Third Circuit has already noted regarding Petitioner's past attempts to
quash summonses issued in this case, "the Supreme Court has already foreclosed
[Petitioner's] arguments when asserted to defeat enforcement of an administrative
summons served on third-party record keepers." Masciantonio v. United States, 528 F.
App'x 120, 122 (3d Cir. 2013) (citing United States v. Miller, 425 U.S. 435, 444 (1976)

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("[T]he issuance of a subpoena to a third party to obtain the records of that party does
not violate the rights of a defendant, even if a criminal prosecution is contemplated at
the time of the subpoena is issued."); Fisher v. United States, 425 U.S. 391, 397 (1976)).
Therefore, Petitioner's motion to quash the summons issued to the Bank is denied, and
the Bank shall produce to the United States all relevant documents.
Next, Petitioner asserts that the IRS is conducting a criminal investigation rather
than a civil investigation. (See ECF No. 1 at 3-6, 1114-28). However, this Court has
previously addressed this argument and, like before, now finds it to be without merit.
Specifically, under 26 U.S.C. § 7602, the IRS may issue a summons in pursuit of criminal
tax investigations, provided no Justice Department referral has been made as of the date
the summons issued. See Moutevelis v. United States, 727 F. 2d 313, 315 (3d Cir. 1984);

Pickel v. United States, 746 F. 2d 176, 183 (3d Cir. 1984). Petitioner has not presented any
evidence of a Justice Department referral as of July 15, 2014-the date when the IRS
issued the summons. The United States further established through Agent McKinzie's
declaration that no Justice Department referral had been made as of September 23, 2014.
(ECF No. 4-1 at 4115). Accordingly, Petitioner's argument is without merit.
Petitioner has asserted his Fifth Amendment privilege against self-incrimination
as a defense to the summons issued to him. 4 However, a taxpayer may not assert a
"blanket invocation of his fifth amendment privilege." United States v. Allshouse, 622 F.2d
Inasmuch as Petitioner attempts to invoke his Fifth Amendment rights regarding the summons
issued to the Bank, the production of relevant documents by the Bank is not subject to Petitioner's
Fifth Amendment privilege. See Couch v. United States, 409 U.S. 322, 328 (1973) ("[T]he Fifth
Amendment privilege is a personal privilege: it adheres basically to the person, not to
information that may incriminate him.").
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53, 56 (3d Cir. 1980). Instead, he must make specific assertions of the privilege on a
document by document basis. Id.; United States v. Raniere, 895 F. Supp. 699, 704 (D. N.J.
1995). Accordingly, Petitioner must submit to the Court, for an in camera review, a log
describing each document that Petitioner believes is protected by the Fifth Amendment
along with the documents claimed to be privileged so that the Court can determine, as to
each individual document, whether Petitioner has a legitimate Fifth Amendment
concern. See United States v. Amabile, No. 11-cv-6591, 2012 WL 2421481, at *4 (E.D. Pa.
June 26, 2012).
Petitioner also appears to request an evidentiary hearing. 5 (ECF No. 1 at 8).
However, no evidentiary hearing is required if "the taxpayer cannot refute the
government's prima facie Powell showing or cannot factually support a proper
affirmative defense." United States v. Garden State Nat'l Bank, 607 F.2d 61, 71 (3d Cir.
1979). Petitioner's conclusory assertions do not provide any basis for an evidentiary
hearing. See United States v. Clarke, 134 S. Ct. 2361, 2367 (2014). Accordingly, Petitioner
has failed to show that he is entitled to an evidentiary hearing and his request will
therefore be denied.

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Rather than providing any legal argument to support his request for an evidentiary hearing,
Petitioner simply and audaciously asserts, "this court lacks courage to permit at the very
minimum an Evidentiary Hearing on this matter." (ECF No. 1 at 7). Despite Petitioner's
provocative challenge, he has failed-as before-to demonstrate a legally or factually sound basis
sufficient to require an evidentiary hearing. See Masciantonio v. United States, 528 F. App'x 120,
122 (3d Cir. 2013) cert. denied, 135 S. Ct. 213 (2014) ("[T]he District Court did not err in denying
Masciantonio's request for an evidentiary hearing ... Masciantonio's conclusory assertions did
not provide any basis for an evidentiary hearing.") (citing United States v. Garden State Nat'l Bank,
607 F. 2d 61, 71 (3d Cir. 1979)).

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In sum, Petitioner has not presented any evidence showing that the two
summonses issued by the IRS on July 15, 2014, are invalid. As such, Petitioner's motion
to quash will be denied, and the United States' motion to enforce will be granted.
Petitioner must submit for review by the Court any document that he believes is
protected by the Fifth Amendment.

Petitioner must provide to the IRS all non-

privileged documents requested by the summons.

2. Petitioner's Motion for In Camera Review

Petitioner has also filed a motion (ECF No. 12), pursuant to Brady v. Maryland,
373 U.S. 83 (1963), requesting an in camera review of a Treasury Inspector General for
Tax Administration ("TIGTA") investigation report. Petitioner's motion lacks merit and
must be denied. With few limited exceptions, Brady applies only to criminal cases and to
the evidence that a prosecutor must provide to a criminal defendant. See Fox ex rel. Fox

v. Elk Run Coal Co., 739 F. 3d 131, 138 (4th Cir. 2014) ("[C]ourts have only in rare
instances found Brady applicable in civil proceedings.").

Thus, the Brady rule is

inapplicable to administrative and civil proceedings, such as the IRS enforcement
proceeding at issue in this case. See United States v. Koziol, 79 F. 3d 1155 (9th Cir. 1996)
("A summons enforcement proceeding is civil, not criminal."). Accordingly, because

Brady does not apply to the instant IRS civil summons enforcement proceeding,
Petitioner's motion for an in camera review of the TIGTA investigation report is denied.

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3. Petitioner's Motion for Protective Order
Finally, Petitioner has moved for a protective order, pursuant to Federal Rule of
Civil Procedure 26(c)(1), "prohibiting Respondent from conducting discovery of
Petitioner." (ECF No. 13 at 1). Petitioner's motion is simply an attempt to creatively
recast his prior argument-that the IRS summonses should be quashed because they
lack a basis in good faith. 6 Petitioner has failed to meet his burden for a protective order
under Rule 26, and the motion is therefore denied. 7 Importantly, the Court has already
determined that the IRS properly established a prima facie case for enforcement under

Powell, which Petitioner has failed to rebut.

6

To the extent that Petitioner is reasserting his Fifth Amendment right against self-incrimination
(See ECF No. 13 at 5, "Notice is hereby given ... that Petitioner Masciantonio will invoke his Fifth
Amendment Right to any questions presented to him, and will invoke his Fifth Amendment
Right for the request of production of records ... "), the Court has considered such argument and
will permit Petitioner to specifically assert the privilege through an in camera review of the
records requested by the IRS.

"Rule 26(c) places the burden of persuasion on the party seeking the protective order. To
overcome the presumption, the party seeking the protective order must show good cause by
demonstrating a particular need for protection. Broad allegations of harm, unsubstantiated by
specific examples or articulated reasoning, do not satisfy the Rule 26(c) test." Cipollone v. Liggett
Grp., Inc., 785 F.2d 1108, 1121 (3d Cir. 1986).

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AND NOW, the Court having given due consideration to each of the motions

pending in this matter, IT IS HEREBY ORDERED as follows:

1.

Petitioner's motion to quash the IRS summonses (ECF No.1) is DENIED;

2. The United States' motion for summary enforcement and to deny the motion to
quash (ECF No. 2) is GRANTED;
3. Petitioner's motion for in camera review of the TIGTA report (ECF No. 12) is
DENIED;

4. Petitioner's motion for protective order (ECF No. 13) is DENIED;
5. First Commonwealth Bank shall produce the records demanded by the IRS
summons within thirty (30) days from the date of this Order;
6. Petitioner shall produce, for an in camera review by this Court, the records
demanded by the IRS summons, as well as an explanation as to the applicability
of the Fifth Amendment privilege to each document produced, within thirty (30)
days from the date of this Order; and
7. Any and all other relief requested by Petitioner, which is not specifically
addressed in this Order, is DENIED.

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IT IS SO ORDERED this J '

day of December, 2014.
BY THE COURT:

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KIM R. GIBSON
UNITED STATES DISTRICT JUDGE

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