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Bone v. United States

United States District Court, Ninth Circuit

August 12, 2013

KIMBERLY A. & CLINTON D. BONE, Petitioners,
v.
UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE, and LISA WOLFE, IRS Agent, Respondents.

REPORT AND RECOMMENDATION

CANDY W. DALE, Magistrate Judge.

INTRODUCTION

This matter is before the Court pursuant to a petition filed on February 11, 2013, by Kimberly and Clinton Bone (Petitioners) to quash two IRS summonses served upon Petitioners' bank seeking their respective bank records. (Dkt. 1.) In turn, the IRS moved to dismiss the petition to quash, and to enforce the summonses. (Dkt. 3.) The parties have briefed the motion and it is ripe for the Court's consideration. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the motion will be decided on the record without oral argument. Dist. Idaho L. Rule 7.1(d).

Petitioners have not rebutted the arguments of Respondents, and the Court therefore recommends that the motion be granted, while the petition to quash be denied.[1]

BACKGROUND

On January 23, 2013, the IRS issued two summonses to Mountain West Bank, seeking bank records for Petitioners. IRS Agent Wolfe sent copies of the summonses to the Petitioners by certified mail, and the Bones received the copies on January 24, 2013. The summonses indicated Mountain West Bank had until February 22, 2013, within which to comply.

The IRS served the summonses as part of its examination to determine the tax liability of the Bones for the 2010 and 2011 tax years. During the investigation, the IRS informed the Bones on September 9, 2012, via IRS letters 2205, Publication 1, and Notice 609, that the IRS may be contacting third parties as part of the examination. These same letters were sent again on September 21, 2012.

Agent Wolfe avers that the information sought by the summonses may be relevant in determining the Bones' tax liability for 2010 and 2011, and that the IRS does not otherwise have in its possession the information requested by the summonses. Further, Agent Wolf stated that there has been no referral to the Department of Justice with respect to the tax liabilities of either Clinton or Kimberly Bone for the 2010 and 2011 tax years.

The Petitioners do not dispute the above facts.

REPORT

1. Applicable Law

26 U.S.C. § 7602(a) authorizes the IRS to issue an administrative summons for determining the liability of any person for any internal revenue tax. 26 U.S.C. § 7609 sets for the applicable procedures. Section 7609 provides that notice must be given to any person other than the person summoned who is identified in the summons within three days of the day on which such service is made. 26 U.S.C. § 7609(a)(1). Notice must include a copy of the summons, and may be served by certified or registered mail to the last known address of the person identified in the summons. 26 U.S.C. § 7609(a)(1), (2). The taxpayer may seek to quash the summons, and the IRS may alternatively seek to compel compliance. 26 U.S.C. § 7609(b)(2)(A).

When faced with a petition to quash and obtain enforcement of a summons, the Government must establish a prima facie case for enforcement under United States v. Powell, by showing that the summons: (1) is issued for a legitimate purpose; (2) seeks information relevant to that purpose; (3) seeks information that the IRS does not already possess; and (4) satisfies all administrative steps required by the Internal Revenue Code. 379 U.S. 48, 57-58 (1964).

To establish a need for judicial enforcement, the showing must only be minimal. United States v. Jose, 131 F.3d 1325, 1327 (9th Cir. 1997). Assertions by affidavit of the investigating agent that the statute's requirements are satisfied are sufficient to make the prima facie case. Liberty Fin. Servs. v. United States, 778 F.2d 1390, 1392 (9th Cir. 1985). The burden of establishing an abuse of the court's process is on the taxpayer, Powell, 379 U.S. at 58, who must come forward with ...


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