UNITED STATES OF AMERICA (Internal Revenue Service) v. Navarro et al
Filing
32
MEMORANDUM AND ORDER re 1 Petition to Enforce IRS Summons. The Court finds no basis to preclude enforcement of the IRS summonses and GRANTS the government's petition, (Docket No. 1). Judgment shall be entered accordingly. Signed by Judge Francisco A. Besosa on 10/12/2011. (brc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
UNITED STATES OF AMERICA,
Plaintiff,
v.
RICARDO
al.,
GONZALEZ
CIVIL NO. 10-1989 (FAB)
NAVARRO,
et
Defendants.
MEMORANDUM AND ORDER
BESOSA, District Judge
On October 12, 2010, the government filed a petition to
enforce six Internal Revenue Service (“IRS”) summonses.
No. 1.)
(Docket
In response to an ex parte motion, the Court ordered
respondents to “show cause why each should not be compelled to obey
[the IRS] summonses . . . .”
(Docket No. 7.)
The Court further
ordered respondents to file a response to the government’s petition
supported
by
appropriate
affidavits,
and
“that
any
affidavit
failing to comply with [the standard set forth in the order] shall
not be considered by the Court.”
(Docket No. 7.)
On November 11,
2010, the individuals subject to those summonses, Ricardo GonzalezNavarro (“Gonzalez-Navarro”) and Clara Alonso-Quintero (“AlonsoQuintero”)
(collectively
“respondents”),
filed
a
response
in
Civil No. 10-1989 (FAB)
opposition
to
the
2
government’s
petition,
speculating
about
potential criminal charges and asserting blanket privileges without
evidentiary support.
(See Docket No. 14.)
the government filed a reply.
On December 1, 2010,
(Docket No. 21.)
“The IRS has ‘expansive information-gathering authority’ to
determine tax liability under the Internal Revenue Code, including
by issuance of summonses to taxpayers and third-party record
holders.”
Sugarloaf Funding, LLC v. U.S. Dept. of the Treasury,
584 F.3d 340, 345 (1st Cir. 2009) (citing United States v. Arthur
Young
&
Co.,
465
U.S.
85,
816
(1984);
26
U.S.C.
§
7602).
“Taxpayers may petition to quash such summonses and the IRS may
petition to enforce them.”
Id. (citing 26 U.S.C. §§ 7604, 7609).
“Enforcement proceedings are designed to be summary in nature.”
Id. (citing Donaldson v. United States, 400 U.S. 517, 529 (1971)).
“‘The court’s role is to ensure that the IRS is using its broad
authority in good faith and in compliance with the law.’”
Id.
(citing United States v. Gertner, 65 F.3d 963, 966 (1st Cir.
1995)).
Once a petition is filed, “the court follows a familiar
structured analysis in a summons enforcement proceeding.” Id. The
initial burden falls on the IRS to make a prima facie case
consisting of the following elements: “‘[1] that the investigation
Civil No. 10-1989 (FAB)
3
will be conducted pursuant to a legitimate purpose, [2] that the
inquiry may be relevant to the purpose, [3] that the information
sought is not already within the Commissioner’s possession, and
[4] that the administrative steps required by the Code have been
followed.’”
Id. (citing United States v. Powell, 379 U.S. 48, 57-
58 (1964)).
In order to satisfy those elements, “[t]he IRS need
only make a ‘minimal showing.’”
at 966).
Id. (citing Gertner, 65 F.3d
“An affidavit of the investigating agent that the Powell
requirements are satisfied is sufficient to make the prima facie
case.”
Id. (citations omitted).
Once the IRS has satisfied the elements of a prima facie case,
the taxpayer has the burden “to disprove one or more of the Powell
requirements, or to show that enforcement would be ‘an abuse of
process, e.g., that the summons was issued in bad faith for an
improper purpose.’”
Id. (quoting Sterling Trading, LLC v. United
States, 553 F. Supp. 2d 1152, 1155-56 (C.D. Cal. 2008)).
In order
to satisfy this onerous burden, the taxpayer “‘must allege specific
facts and evidence to support his allegations.’”
Id.
The government’s petition was filed in conjunction with an
affidavit from the investigating agent in this case, detailing the
circumstances which fulfill the Powell requirements for a prima
facie case.
See Sugarloaf Funding, LLC, 584 F.3d at 345; (Docket
Civil No. 10-1989 (FAB)
Nos. 1-1 & 21.)
4
Given that the government filed such an affidavit,
it is clear that the burden falls on respondents to rebut properly
one of the Powell requirements, or demonstrate that an abuse of
process would result from granting the government’s petition.
id.
See
The response to the government’s petition fails to carry that
burden in either respect.
(See Docket No. 14.)
That response
ignores the relevant legal standard and the Powell requirements,
and provides only arguments which rest primarily on speculation and
conjecture unsubstantiated by the record in this case.
Both
the
legal
standard
for
responding
to
See id.
government
petitions to enforce IRS summonses and the Court’s order to show
cause required respondents to support any arguments or allegations
made against enforcement of the IRS summonses with specific facts
and evidence. See Sugarloaf Funding, LLC, 584 F.3d at 345; (Docket
No.
7.)
Although
respondents
submitted
some
exhibits
in
conjunction with their response to the government’s petition, those
documents are, for reasons detailed extensively in the government’s
reply,
unauthenticated,
purposes
of
rebutting
irrelevant,
the
or
government’s
inadmissible
prima
facie
for
the
case
and
defeating enforcement of the summonses. (See Docket Nos. 14 & 21.)
Those documents also fail to comply with the standard set forth in
the order to show cause for affidavits supporting their response to
Civil No. 10-1989 (FAB)
the government’s petition.
5
See id.; (Docket No. 7.)
Given the
respondents’ failure to carry their burden under the relevant legal
standard and respond properly to the order to show cause, the Court
finds no basis to preclude enforcement of the IRS summonses and
GRANTS the government’s petition, (Docket No. 1).
Judgment shall be entered accordingly.
IT IS SO ORDERED.
In San Juan, Puerto Rico, October 12, 2011.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE
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