United States District Court, N.D. California, San Jose Division
ORDER GRANTING PETITION TO ENFORCE IRS SUMMONS Re:
Dkt. No. 1
H. KOH United States District Judge
matter is before the Court on an order to show cause why
Respondent Ashley Urbanski (“Respondent”) should
not be required to comply with an Internal Revenue Service
(“IRS”) summons. Having considered Petitioner
United States of America's
(“Petitioner's”) verified Petition to Enforce
IRS Summons, ECF No. 1 (“Pet.”), and the
discussions at the hearing on July 20, 2017, the Court GRANTS
Petitioner's Petition to Enforce IRS Summons.
to the petition, the IRS is investigating the collection of
Eugenia Reyes' tax liabilities for 2011-2015. Pet. at 5
& ¶ 3. The IRS “is informed and believes that
[Respondent] has knowledge or information concerning records,
paper and other data regarding income and other matters
covered by [the IRS] inquiry and to which [the IRS] does not
otherwise have access, possession or control.”
Id. ¶ 5. As part of its investigation, the IRS
served a summons on Respondent on December 14, 2016 that
required Respondent to appear on January 9, 2017. The record
before the Court shows that service was properly made
pursuant to 26 U.S.C. § 7603, which requires service
“by an attested copy delivered in hand to the person to
whom it is directed, or left at his last and usual place of
abode.” The IRS left the summons at one of
Respondent's “last and usual places of
abode.” Pet. ¶ 6.
Respondent did not appear on January 9, 2017 or produce
testimony or records as requested by the summons. See
Id. ¶ 8. By letter dated January 19, 2017,
Respondent was given another opportunity to comply with the
summons by appearing for an appointment with Revenue Agent
Elisa Dang on February 16, 2017. Id. ¶ 9, Ex.
C. According to the Petition, Respondent has still not
complied. Id. ¶ 10.
April 27, 2017, Petitioner filed the instant action to
enforce the summons. See Pet. On May 26, 2017, the
Court issued an order to show cause and set a briefing
schedule and a hearing for July 20, 2017. ECF No. 8. The
record shows that Respondent was served with the verified
Petition and the order to show cause on June 1, 2017. ECF No.
9. However, the Court received no written response to the
order to show cause, and Respondent did not appear at the
show cause hearing.
26 U.S.C. § 7602(a), the IRS is authorized to issue a
summons relevant to the investigation of any taxpayer's
liability. Summons may be issued for the purposes of
“ascertaining the correctness of any return, making a
return where none has been made, determining the liability of
any person for any internal revenue tax or . . . collecting
any such liability . . . .” 26 U.S.C. § 7602(a);
see also Crystal v. United States, 172 F.3d 1141,
1143 (9th Cir. 1999) (quoting 26 U.S.C. § 7602(a)). To
enforce a summons, the IRS must first establish “good
faith” by showing that the summons (1) is issued for a
legitimate purpose; (2) seeks information relevant to that
purpose; (3) seeks information that is not already in the
IRS's possession; and (4) satisfies all of the
administrative steps set forth in the Internal Revenue Code.
United States v. Powell, 379 U.S. 48, 57-58 (1964).
“‘The government's burden is a slight one,
and may be satisfied by a declaration from the investigating
agent that the Powell requirements have been
met.'” Crystal, 172 F.3d at 1144 (quoting
United States v. Dynavac, Inc., 6 F.3d 1407, 1414
(9th Cir. 1993)). “The burden is minimal ‘because
the statute must be read broadly in order to ensure that the
enforcement powers of the IRS are not unduly
restricted.'” Id. (quoting Liberty
Fin. Servs. v. United States, 778 F.2d 1390, 1392 (9th
the government has met its burden in establishing the
Powell elements, if the taxpayer chooses to
challenge the enforcement, he or she bears a
“heavy” burden to show an abuse of process or
lack of good faith on the part of the IRS. United States
v. LaSalle Nat'l Bank, 437 U.S. 298, 316 (1978).
“Enforcement of a summons is generally a summary
proceeding to which a taxpayer has few defenses.'”
Crystal, 172 F.3d at 1144 (quoting United States
v. Derr, 968 F.2d 943, 945 (9th Cir. 1992)).
“‘The taxpayer must allege specific facts and
evidence to support his allegations of bad faith or improper
purpose.'” Id. (quoting United States
v. Jose, 131 F.3d 1325, 1328 (9th Cir. 1997)). As
explained by the Ninth Circuit:
The taxpayer may challenge the summons on any appropriate
grounds, including failure to satisfy the Powell
requirements or abuse of the court's process. Such an
abuse would take place if the summons had been issued for an
improper purpose, such as to harass the taxpayer or to put
pressure on him to settle a collateral dispute, or for any
other purpose reflecting on the good faith of the particular
investigation. In addition, it has become clear since
Powell that gathering evidence after having decided
to make a recommendation for prosecution would be an improper
purpose, and that the IRS would be acting in bad faith if it
were to pursue a summons enforcement under these
circumstances. While neither the Powell elements nor
the LaSalle requirements is an exhaustive
elaboration of what good faith means, still the dispositive
question in each case is whether the Service is pursuing the
authorized purposes in good faith.
Id. at 1144-45 (internal quotes and citations
omitted). Once a summons is challenged by a respondent, it
must be “scrutinized by the court” to determine
whether it seeks information relevant to a legitimate
investigative purpose, and the court may choose either to
refuse enforcement or narrow the scope of the summons.
United States v. Goldman, 637 F.2d 664, 668 (9th
instant case, Petitioner has met its burden of showing that
the Powell elements have been satisfied, largely
through the verification of the Petition by Revenue Agent
Elisa Dang. See Crystal, 172 F.3d at 1144 (stating
that it was undisputed that the special agent's
declaration satisfied the Powell requirements and
that the government therefore “established a prima
facie case to enforce the summonses”); Dynavac,
Inc., 6 F.3d at 1414 (stating that the government's
burden “may be satisfied by a declaration from the
investigating agent that the Powell requirements
have been met.”); United States v. Bell, 57
F.Supp.2d 898, 906 (N.D. Cal. 1999) (“The government
usually makes the requisite prima facie showing by affidavit
of the agent.”).
the first Powell element, the verified Petition
indicates that the IRS's investigation is being conducted
for a legitimate purpose of ascertaining Eugenia Reyes'
assets and liabilities as part of an effort to investigate
federal tax liabilities for certain periods of time. Pet.
¶ 3; 26 U.S.C. § 7602(a) (allowing issuance of
summons for the purpose of “determining the [tax]
liability of any person”). As to the second
Powell element, the summons is relevant to the
purpose of ascertaining Eugenia Reyes' assets and
liabilities. The summons asks Respondent to appear and bring
“books, records, papers, and other data relating to the
tax liability” of Eugenia Reyes. See Id. Exs.
A & B. As to the third Powell element, the
Petition further indicates that the information is not
already in the IRS's possession. As to the fourth
Powell element, the Petition certifies that all
administrative steps required by the Internal Revenue Code
for the issuance of the summons have been taken. Id.
¶¶ 5, 7, 11-12.
Petitioner has met its burden in establishing the
Powell elements, the burden shifts to Respondent to
show an abuse of process or lack of good faith.
LaSalle, 437 U.S. at 316 (placing the
“heavy” burden on the respondent). As discussed
above, Respondent did not file any response to the order to
show cause and did not appear at the show cause hearing held
on July 20, 2017. This Court therefore finds that ...