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United States v. Chaffee

United States District Court, Eastern District of Michigan, Northern Division

March 3, 2015

UNITED STATES OF AMERICA, Plaintiff
v.
RANDY J. CHAFFEE, Defendant.

ORDER DENYING MOTION TO QUASH AND MOTION TO DISMISS

THOMAS L. LUDINGTON UNITED STATES DISTRICT JUDGE

On December 1, 2014, the United States filed a petition to enforce an IRS summons that had been served on Defendant Randy Chaffee on June 24, 2014. ECF No. 1. An Order to Show Cause was issued on December 8, 2014 that directed Chaffee to appear in court to explain why he did not comply with the IRS summons. ECF No. 2. Chaffee responded to this December 8, 2014 Order by filing a Motion to Quash Ex Parte Order to Show Cause and Dismiss Petition. ECF No. 3. In his motion Chaffee alleges a series of defects regarding the Government’s Petition and this Court’s December 8, 2014 Order. He claims that United States Attorney for the Eastern District of Michigan Barbara McQuade lacks standing to bring the December 1, 2014 Petition to Enforce IRS Summons; that this Court lacks jurisdiction over this matter; that the case is not an adversarial proceeding and thus cannot be adjudicated; that the December 1, 2014 Petition is “fatally flawed”; that the December 8, 2014 Order violates due process; that the IRS agent assigned to his case is not acting in good faith; and that it is unfair to coerce testimony. ECF No. 3. The Government was directed to respond to these contentions. ECF No. 5. The Government filed their response on February 13, 2015. ECF No. 6. Chaffee is currently scheduled to appear on the show cause order on March 3, 2015. ECF No. 2.

I.

Under § 7602(a) of the Internal Revenue Code, Congress granted the IRS the power to issue summons to determine compliance with the Code:

(a) Authority to summon, etc.-For the purpose 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 the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized-
(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
(3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.

26 U.S.C.A. § 7602. The IRS is empowered to issue such summonses for “the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws.” Id. § 7602(b); see also United States v. Powell, 379 U.S. 48, 57 (1964). The summons power is “critical to the investigative and enforcement functions of the IRS.” United States v. Arthur Young & Co., 465 U.S. 805, 814 (1984).

In order to enforce a summons, the IRS must meet the Powell requirements for establishing a prima facie case. This involves demonstrating the IRS’ “good faith” that the summons: “(1) is issued for a legitimate purpose; (2) seeks information relevant for that purpose; (3) seeks information that is not already within IRS possession; and (4) satisfies all administrative steps required by the United States Code.” English v. Krubsack, 371 F.Supp.2d 1198, 1202 (E.D. Cal. 2005) (citing Powell, 379 U.S. at 57-58). The IRS bears a light burden and generally meets that burden “by the introduction of the sworn declaration of the revenue agent who issued the summons that the Powell requirements have been met.” Fortney v. United States, 59 F.3d 117, 120 (9th Cir. 1995). “Once a prima facie case is made a ‘heavy’ burden is placed on the taxpayer to show an ‘abuse of process’ or ‘the lack of institutional good faith.’” Id.

II.

In Chaffee’s dual motion to quash and dismiss he alleges six different defects in the Court’s December 8, 2014 Order to Show Cause and the Governments December 1, 2014 Petition to Enforce IRS Summons. As noted above, these defects are: that United States Attorney for the Eastern District of Michigan Barbara McQuade lacks standing to bring the December 1, 2014 Petition to Enforce IRS Summons; that this Court lacks jurisdiction over this matter; that the case is not an adversarial proceeding and thus cannot be adjudicated; that the December 1, 2014 Petition is “fatally flawed”; that the December 8, 2014 Order violates due process; that the IRS agent assigned to his case is not acting in good faith; and that it is unfair to coerce testimony. ECF No. 3. These objections are without merit and Chaffee’s motion will be denied.

A.

Chaffee’s first contention is that Barbara McQuade, the United States Attorney for the Eastern District of Michigan, lacks standing to file the December 1, 2014 Petition to Enforce the IRS Summons that was served upon Chaffee. This formulation is misleading. Chaffee does not contend that Barbara McQuade, lacks in an individual or professional capacity, to pursue this matter against Chaffee. Rather, Chaffee contends that the United States does not have standing to pursue this claim through its agent, United States Attorney Barbara McQuade. Chaffee makes two claims in support of this point. First, there is no active case or controversy because Congress does not have jurisdiction to order him to ...


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