Jimmie O. Clements v. United States of America, et al
REPORT AND RECOMMENDATIONS re 2 Motion for Miscellaneous Relief, filed by United States of America. Signed by Judge Andrew W. Austin. (jf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
JIMMIE O. CLEMENTS
UNITED STATES OF AMERICA,
MICHAEL L. HERVEY, REVENUE
REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
Before the Court are the United States’ Motion to Summarily Deny Petition to Quash
Summonses and for Enforcement of Summons (Dkt. No. 2); Petitioner’s Response in Opposition
(Dkt. No. 3); and United States’ Reply to Petitioner’s Response (Dkt. No. 4). The District Court
referred the motion to the undersigned Magistrate Judge for Report and Recommendation pursuant
to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of
the Local Court Rules.
The Internal Revenue Service is conducting an investigation into the federal income tax
liabilities of Jimmie O. Clements, an attorney who practices law in Travis County, Texas, for the tax
years 2010, 2013 and 2014. In connection with that investigation, IRS Revenue Officer Michael
Hervey issued summonses to Wells Fargo Bank, N.A. and Bank of America, N.A., pursuant to 26
The Government correctly notes that the IRS Officer Michael Hervey is not a proper
defendant in his action as the United States is the only proper party in such a lawsuit. See Kaebel
v. United States, 2015 WL 7731398, at *3 (N.D. Tex. Oct. 21, 2015). Accordingly, the District
Court should dismiss Michael Hervey from this lawsuit.
U.S.C. §7603(b), seeking production of the banks’ records regarding the financial accounts and
transactions of Clements. Clements then filed this proceeding seeking to quash the summonses
pursuant to 26 U.S.C. § 7609(b)(2), arguing that the IRS did not issue the summonses in good faith,
the summonses are overbroad, the information requested is not relevant to the investigation and the
summonses seek information protected by the attorney client privilege.2 The United States requests
that the Court summarily deny the petition, arguing that it meets the legal requirements under 26
U.S.C. § 7603 for enforcement. The Court agrees.
The IRS is granted wide latitude to issue summonses. See 26. U.S.C. § 7602. “Section 7602
of the Internal Revenue Code authorizes the IRS to summon an individual or third party to testify
and produce documents relevant to any inquiry regarding tax liability.” United States v. Battle, 213
F. App’x 307, 309 (5th Cir. 2007). Upon receipt of a summons to appear or produce information
as part of an investigation by the IRS, a summoned individual may begin a proceeding to quash a
summons. See 26 U.S.C. § 7609(b)(2)(a). In response, the IRS must show: (1) the investigation will
be conducted for a legitimate purpose; (2) the material being sought is relevant to that purpose; (3)
the information sought is not already in the IRS’s possession; and (4) the IRS complied with all the
administrative steps required by the Internal Revenue Code. United States v. Powell, 379 U.S. 48,
57-58 (1964). The IRS’s burden to establish this prima facie case is minimal and may be met by
introduction of an affidavit from the summoning IRS officer which attests the Powell requirements
have been met. Mazurek v. United States, 271 F.3d 226, 229 (5th Cir. 2001); United States v. Davis,
636 F.2d 1028, 1034 (5th Cir.), cert. denied, 454 U.S. 862 (1981). If the IRS satisfies this minimal
Clements has filed two previous Petitions to Quash in this Court that were dismissed as
moot after the United States withdrew their summonses. See 1:16-MC-1148 LY and 1:16-MC-972
burden, the burden shifts to the party seeking to quash the summons to either refute one or more of
the Powell factors, or demonstrate enforcement of the summons would result in an abuse of judicial
process. Powell, 379 U.S. at 57-58; Mazurek, 271 F.3d at 229. An abuse of the judicial process
occurs when a summons is sought for an “‘improper purpose, such as . . . harass[ing] the taxpayer,
. . . put[ting] pressure on him to settle a collateral dispute.”’ Mazurek, 271 F.3d at 231 (quoting
Powell, 379 U.S. at 58). The party seeking to quash a summons faces a heavy burden, and therefore,
must assert specific facts and evidence. Miller v. United States, 150 F.3d 770, 772 (7th Cir.1998);
Liberty Fin. Servs. v. United States, 778 F.2d 1390, 1392 (9th Cir.1985).
The United States has met its minimal burden of making a prima facie showing of the Powell
factors. The United States has provided the Court with a sworn declaration by Officer Hervey, the
Revenue Officer in charge of the investigation. See Mazurek, 271 F.3d at 230 (“The government’s
minimal burden at this stage can be fulfilled by a ‘simple affidavit’ by the IRS agent issuing the
summons”). In his declaration, Hervey states that the investigation of Clements is being conducted
for the legitimate purpose of ascertaining the correctness of Clements’ tax returns, to collect tax
liabilities and to ascertain whether Clements has committed any offense connected with the
administration or enforcement of the Internal Revenue laws. Dkt. No. 2-1. The United States has
also shown that the requested records are relevant to the investigation. Id. Further, Hervey’s
declaration states that the requested documents are not already in the IRS’s possession. Id. Lastly,
the declaration demonstrates that the required administrative steps set out in the Internal Revenue
Code for the service and issuance of a summons were followed here.
As noted, to prevail, Clements must either refute one of the Powell factors that the United
States has established or “show that the enforcement of summonses would amount to an ‘abuse’ of
the judicial process.” Mazurek, 271 F.3d at 231. Clements has failed to do either. Indeed, Clements
only response was merely to argue that the United States’ Motion is now moot because he has paid
all his past-due taxes. Clements is mistaken. As stated in Hervey’s declaration, the summonses had
multiple purposes beyond collecting past-due taxes, including “to ascertain the correctness of
Clements’ tax returns, to verify the accuracy of the documents filed by Clements in his bankruptcy
case, to collect the tax liabilities and to ascertain whether Clements has committed any offense
connected with the administration or enforcement of the Internal Revenue laws.” Dkt. No. 2-1 at
¶ 4. Because the IRS still needs the information sought in the summonses to ascertain the
correctness of Clements’ returns and to inquire into any offense connected with the administration
or enforcement of the Internal Revenue laws, the summonses are not moot.3
Based upon the foregoing, the Court finds that the United States has met the legal
requirements for enforcement of the summonses at issue in this case. Accordingly, the Court
recommends that the United States’ Motion to Summarily Deny the Petition to Quash Summonses
In light of the foregoing, the undersigned RECOMMENDS that the District Judge DISMISS
Michael L. Hervey as a Defendant in this case since he is not a proper party. The Court FURTHER
RECOMMENDS that the District Judge GRANT the United States’ Motion to Summarily Deny
Clements also contends that the summons in part seek information protected by the attorneyclient privilege. Again, he is incorrect. Courts have held that bank records relating to the transfer
of funds into and out of a lawyer’s trust account are not privileged communications. See, e.g. SEC
v. First Security Bank of Utah, N.A., 447 F.2d 166, 167 (10th Cir. 1971), cert. denied, 404 U.S. 1038
(1972); Harris v. United States, 413 F.2d 316, 319–20 (9th Cir. 1969); O’Donnell v. Sullivan, 364
F.2d 43, 44 (1st Cir .), cert. denied, 385 U.S. 969 (1966). That is because the attorney-client privilege
extends only “to the substance of matters communicated to an attorney in professional confidence,”
and “[t]he deposit and disbursement of money in a commercial checking account are not confidential
communications.” First Security Bank, 447 F.2d at 167 (citations omitted). Clements cites no
contrary authority to support his claim of privilege.
Petition to Quash Summonses and for Enforcement of Summons (Dkt. No. 2), DENY Jimmie O.
Clements’ Petition to Quash Two Internal Revenue Service Summons (Dkt. No. 1), and ORDER
the enforcement of the two summonses. Finally, should the Court adopt this recommendation, it
should CLOSE this case.
The parties may file objections to this Report and Recommendation. A party filing objections
must specifically identify those findings or recommendations to which objections are being made.
The District Court need not consider frivolous, conclusive, or general objections. See Battle v.
United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party’s failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the Report
shall bar that party from de novo review by the District Court of the proposed findings and
recommendations in the Report and, except upon grounds of plain error, shall bar the party from
appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the
District Court. See 28 U.S.C. § 636(b)(1)(c); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass
v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
SIGNED this 7th day of April, 2017.
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE
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