USA v. Andre Paul Provost, Jr., No. 1:2009cv00956 - Document 25 (E.D. Cal. 2009)

Court Description: ORDER DISCHARGING 5 Order to Show Cause; FINDINGS and RECOMMENDATIONS recommending that 1 Petitioners' Petition to Enforce the IRS Summons be GRANTED and Respondent be ORDERED to Appear Before Revenue Officer Collins to Provide Testimony and to Bring With Him and Produce for Examination Documents In Obedience to the Summons, signed by Magistrate Judge Sandra M. Snyder on 11/16/2009. Referred to Judge Wanger. Objections to F&R due by 12/21/2009. (Jessen, A)

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USA v. Andre Paul Provost, Jr. Doc. 25 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 MARILYN COLLINS, Revenue 10 Officer, et al., 11 Petitioners, v. 12 ANDRE PAUL PROVOST, JR., et 13 al., 14 15 Respondent. ) ) ) ) ) ) ) ) ) ) ) ) 1:09-cv-00956-OWW-SMS ORDER DISCHARGING ORDER TO SHOW CAUSE (DOC. 3) FINDINGS AND RECOMMENDATION RE: PETITION TO ENFORCE IRS SUMMONS (DOC. 1) 16 Petitioners are proceeding with a civil action in this 17 Court. The matter has been referred to the Magistrate Judge 18 pursuant to 28 U.S.C. § 636(b) and Local Rules 72-302 and 72-303. 19 Pending before the Court is a petition to enforce a summons 20 issued by the Internal Revenue Service (IRS) to Respondent. 21 After various continuances were granted in order to permit 22 ultimately unsuccessful efforts to obtain voluntary compliance 23 with the summons, the petition came on regularly for hearing on 24 November 13, 2009, at 9:30 a.m. in Courtroom 7 before the 25 Honorable Sandra M. Snyder, United States Magistrate Judge. 26 Jeffrey James Lodge appeared on behalf of Petitioners, and Andre 27 Paul Provost, Jr., appeared on his own behalf. The Court had 28 1 Dockets.Justia.com 1 reviewed the petition, all supporting papers, and all papers 2 submitted by Respondent. After argument, the matter was submitted 3 to the Court for preparation of findings and recommendations. 4 I. Discharging Order to Show Cause 5 Respondent having appeared pursuant to the order to show 6 cause, it IS ORDERED that the order to show cause BE DISCHARGED. 7 8 9 II. Petition to Enforce IRS Summons A. Background Agent Collins declared that as a duly commissioned revenue 10 officer employed by the IRS, she was authorized to issue the IRS 11 summons pursuant to 26 U.S.C. § 7602; she did so in the course of 12 conducting an investigation of the tax liabilities of Respondent 13 for the tax years 1995 through 1997. Collins declared that she 14 believed from her knowledge of financial practices that 15 Respondent had knowledge that could aid in carrying out the 16 investigation. Collins issued an IRS summons on August 12, 2008, 17 directing Respondent to appear before her on September 17, 2008, 18 to provide testimony and documents relating to the investigation. 19 (Decl. ¶¶ 1-3.) She left an attested copy of the summons at 20 Respondent’s usual place of abode on August 13, 2008. (Id. ¶ 4.) 21 An order to show cause issued on June 17, 2009, and was 22 served on Respondent on July 1, 2009; it directed Respondent to 23 appear and the filing of a written response. Petitioner filed 24 papers, but they were returned as not recognizable or proper 25 legal filings by order dated July 14, 2009. The matter was 26 continued at the request of both parties; in September, 27 Respondent filed motions to abate the proceedings to permit 28 settlement and a notice in which he stated that he previously 2 1 failed to respond because of misunderstanding of his duties, and 2 he indicated a desire to settle the matter. (Docs. 11, 12.) 3 Petitioners asked for a further continuance until the end of 4 October in order to meet with Respondent to obtain voluntary 5 compliance with the subpoena. (Doc. 13.) 6 An order resetting the hearing on the order to show cause to 7 November 13, 2009, was served on Respondent by mail on September 8 23, 2009. On that date the Court ordered Respondent to meet with 9 Revenue Officer Marilyn Collins within forty-five days. The 10 meeting was held, but Respondent did not comply with the summons. 11 Respondent filed two very similar documents declaring that 12 Respondent had revoked a power of attorney in late October (Docs. 13 16 and 17). 14 Pursuant to the Court’s directions, both parties timely 15 filed status reports before the hearing. Plaintiff also filed 16 notices that appear to relate not to the summons, but rather to 17 the merits of the underlying tax recovery proceedings. (Docs. 21, 18 22.) 19 20 B. The Merits of the Petition At the hearing, Petitioners stated that although a meeting 21 had taken place, Respondent had refused to answer questions or 22 turn over any documents; thus, Petitioners were not anticipating 23 settlement, and they requested enforcement of the summons. 24 Respondent requested forgiveness and asked to settle the case. 25 In light of the previously unsuccessful meeting concerning 26 voluntary compliance, and in order to ensure that Petitioners are 27 not deprived of the relief to which they have established that 28 they are entitled, the Court considers the merits of the 3 1 petition. 2 The IRS is authorized to examine papers or data which may be 3 relevant or material in determining the correctness of a tax 4 return or the liability of any person for any internal revenue 5 tax. 26 U.S.C. § 7602(a)(1). It has the authority to issue 6 summonses for the purpose of ascertaining the correctness of any 7 return, making a return where none has been made, determining the 8 liability of any person for any internal revenue tax, or 9 collecting any such liability. 26 U.S.C. § 7602(a); Crystal v. 10 United States, 172 F.3d 1141, 1143 (9th Cir.1999). 11 To defeat a motion to quash, or in order to enforce an IRS 12 summons, the government has the initial burden of proving that 13 the summons: (1) is issued for a legitimate purpose; (2) seeks 14 information relevant to the purpose; (3) seeks information not 15 already within the IRS's possession; and (4) satisfies all of the 16 administrative steps required by the Internal Revenue Code. 17 United States v. Powell, 379 U.S. 48, 57-58 (1964); Crystal v. 18 United States, 172 F.3d at 1143-44. The government's burden is a 19 slight one that may be satisfied by a declaration from the 20 investigating agent that these requirements have been met. United 21 States v. Abrahams, 905 F.2d 1276, 1280 (9th Cir.1990); Liberty 22 Financial Servs. v. United States, 778 F.2d 1390, 1392 (9th 23 Cir.1985). Once the prima facie case is made, a heavy burden 24 falls upon the taxpayer to show an abuse of process, Abrahams, 25 905 F.2d at 1280; Liberty Financial, 778 F.2d at 1392, or the 26 lack of institutional good faith, Anaya, 815 F.2d at 1377. United 27 States v. Dynavac, Inc., 6 F.3d 1407, 1414 (9th Cir. 1993). 28 The summons to Respondent Provost summoned him to appear 4 1 before Officer Collins, to give testimony, and to bring with him 2 and to produce for examination papers and other data relating to 3 the tax liability, collection thereof, or for the purpose of 4 inquiring into any offense connected with the administration or 5 enforcement of the internal revenue laws concerning Respondent 6 for the relevant periods, including all documents in his 7 possession and control reflecting the assets and liabilities of 8 the taxpayer, including but not limited to all bank statements, 9 checkbooks, canceled checks, savings account passbooks, and 10 records of certificates of deposit, for the period January 1, 11 2007, to May 31, 2008, regarding accounts or assets held in the 12 taxpayer’s name or for his benefit; and all of records or 13 documents regarding stocks and bonds, deeds or contracts 14 regarding real property, current registration certificates for 15 motor vehicles, and life or health insurance policies currently 16 in force, either owned, wholly or partially, by the taxpayer, or 17 in which the taxpayer has a security interest, or held for the 18 benefit of the taxpayer, so that a collection information 19 statement could be prepared. (Decl. Ex. A.) 20 Collins declared that Respondent did not appear on September 21 17, 2008, and he failed to provide testimony and documents as 22 required by the summons. Respondent’s failure to comply 23 continues, and the information sought by the summons is not 24 already in the possession of the IRS. (Decl. ¶¶ 5-7.) Further, 25 all administrative steps required by the IRS had been undertaken, 26 and no criminal referral to the Department of Justice was in 27 effect with respect to Respondent’s tax liability for the subject 28 years. (Id. ¶¶ 8-9.) 5 1 Petitioners have shown that Respondent has received the 2 required notice. Petitioners have established that the subpoena 3 was issued for a legitimate purpose and seeks information 4 relevant to the purpose that is not already within the IRS's 5 possession; further, it is demonstrated that all of the 6 administrative steps required by the Internal Revenue Code have 7 been satisfied. A prima facie case has been made. United States 8 v. Dynavac, Inc., 6 F.3d 1407, 1414 (9th Cir. 1993). 9 Respondent has not submitted any evidence of bad faith or 10 improper purpose. 11 Respondent attempts to use the status report as a vehicle 12 for lodging an untimely response to the order to show cause. In 13 the interest of eliminating further delay and addressing 14 Respondent’s contentions on the merits, the issues raised therein 15 will be addressed. 16 Respondent argues that Officer Collins “may have 17 misrepresented herself” as an officer or employee of the United 18 States Government. However, Officer Collins declared that she was 19 a duly commissioned revenue officer employed by the IRS in Fresno 20 who was authorized to issue summonses pursuant to the authority 21 contained in 26 U.S.C. § 7602 and 26 C.F.R. §301.7602-1. (Decl. 22 in Supp. of Pet., ¶ 1.) Respondent does not provide evidence to 23 the contrary. Further, it is established that the IRS is an 24 agency of the United States. 26 U.S.C. § 7801; Donaldson v. 25 United States, 400 U.S. 517, 534 (1971); Salman v. Department of 26 Treasury-Internal Revenue, 899 F.Supp. 471, 471-72 (D.Nev. 1995). 27 Respondent asserts without supporting evidence that Officer 28 Collins provided no delegation of authority authorizing her 6 1 actions. However, it is established that the authority of IRS 2 employees is derived from the provisions of the Internal Revenue 3 Code. See, 26 U.S.C. § 7602 (authorizing the examination of 4 papers to determine tax liability and collect taxes). Respondent 5 cites no authority requiring any specific indicia of authority. 6 Respondent asserts that Officer Collins stated that no 7 contract existed between Respondent and the IRS. The legal 8 significance of this assertion is unclear but does not appear to 9 affect the legal sufficiency of the petition before this Court. 10 Respondent argues that the government cannot compel self- 11 incrimination through a United States Attorney or otherwise, and 12 that it would be a violation of the Fifth Amendment. 13 The Fifth Amendment provides that no person shall be 14 compelled in any criminal case to be a witness against himself. 15 The Fifth Amendment applies when the accused is compelled to make 16 a testimonial communication that is incriminating. Fisher v. 17 United States, 425 U.S. 391, 408 (1976). The privilege protects 18 against any disclosures that the witness reasonably believes 19 could be used in a criminal prosecution or could lead to other 20 evidence that might be so used. Kastigar v. United States, 406 21 U.S. 441, 444-45 (1972). The claimant of the privilege has the 22 burden to submit sufficient evidence to make it evident, in view 23 of the implications of the question in the setting in which it is 24 asked and in light of the peculiarities of the case, that a 25 responsive answer to a question might be dangerous because 26 injurious disclosure could result. Hoffman v. United States, 341 27 U.S. 479, 486-87 (1951); United States v. Drollinger, 80 F.3d 28 389, 392 (9th Cir. 1996). The privilege is validly invoked only 7 1 where there are substantial hazards of self-incrimination that 2 are real and appreciable, not merely imaginary and unsubstantial. 3 United States v. Brown, 918 F.2d 82, 84 (9th Cir. 1990). 4 Generally a Fifth Amendment privilege cannot be invoked as a 5 means to justify the mere refusal to produce documents in a 6 summons enforcement proceeding. See, United States v. Rylander, 7 460 U.S. 752, 757-58 (1983) (holding it was not unfair to put the 8 burden of showing impossibility of compliance on a taxpayer who 9 claimed a privilege against self-incrimination with respect to 10 answering questions). To be privileged under the Fifth Amendment, 11 an accused’s communication must be testimonial; that is, it must 12 itself explicitly or implicitly relate a factual assertion or 13 disclose information. Doe v. United States, 487 U.S. 201, 209-10 14 (1988). Thus, the privilege typically does not protect the 15 production of documents or records voluntarily prepared, even if 16 the contents are incriminatory. United States v. Doe, 465 U.S. 17 605, 610 (1984) (noting that a subpoena that demands production 18 of documents generally does not compel oral testimony or compel 19 the restating, repetition of, or affirmance of the truth of the 20 contents of documents sought); Fisher v. United States, 425 U.S. 21 391, 408-13 (1976). Given the nature of the documents subpoenaed 22 here (bank statements, checkbooks, canceled checks, savings books 23 and records of certificates of deposit, records of stocks and 24 bonds, deeds, vehicle registration certificates, and insurance 25 policies), it appears that most of these documents are not of a 26 type created by the taxpayer, and thus it is not likely that any 27 testimonial evidence would be sought in the form of these 28 documents. See, Fisher v. United States, 425 U.S. at 409. 8 1 Further, it is established that a person claiming the Fifth 2 Amendment privilege must present himself for questioning with the 3 records and must specifically claim the privilege with respect to 4 each question and each record. United States v. Drollinger, 80 5 F.3d 389, 392 (9th Cir. 1996); see, United States v. Brown, 918 6 F.2d 82, 84 (9th Cir. 1990). 7 In summary, it is concluded that Respondent has not made out 8 his claim concerning the Fifth Amendment. 9 Respondent argues that for the reasons discussed above, the 10 “debt” is “in question to its validity.” (Status Report, Doc. 20, 11 p. 2.) He asserts that he has “demanded Revenue Officer Marilyn 12 Collins provide a Verification of the Debt” (id. p. 2) pursuant 13 to 15 U.S.C. § 1692.1 Section 1692 is part of the Fair Debt 14 Collections Practices Act. However, it does not appear that the 15 IRS qualifies as a debt collector within the meaning of that 16 statute because a debt collector is defined as a “person,” and 17 the statute specifically excludes “any officer or employee of the 18 United States... to the extent that collecting or attempting to 19 collect any debt is in the performance of his official duties.” 20 15 U.S.C. § 1692a(6)(C). Further, Respondent has not established 21 any violation of 26 U.S.C. § 6304 (concerning fair tax collection 22 practices). Accordingly, Respondent has stated no grounds for 23 abating the proceeding, as requested in the status report, until 24 Respondent receives valid proof of various matters, such as the 25 verification of the debt, of the agent’s authority, and of the 26 agent’s and the IRS’s registration to do business. 27 1 28 One of the documents filed by Respondent at the time he filed his status report was a notice of demand for verification of the debt. (Doc. 22.) 9 1 Further, because of the foregoing analysis, the notice of 2 demand for verification of the debt filed by Plaintiff on 3 November 9, 2009, will not affect the Court’s enforcement of the 4 summons. 5 Respondent also has filed a notice of correction for fraud, 6 which the Court has reviewed; it relates to Respondent’s alleged 7 misnomer on a birth record and does not appear pertinent to the 8 present proceedings. 9 In summary, the Court finds that Respondent has not 10 established any basis to deny enforcement of the IRS summons. 11 The Court concludes that enforcement of the summons should 12 be ordered. 13 III. Recommendation 14 Accordingly, it IS RECOMMENDED that 15 1) Petitioners’ petition to enforce the IRS summons BE 16 GRANTED; and 17 2) Respondent BE ORDERED to appear before Revenue Officer 18 Collins on January 13, 2010, at 10:00 a.m., at the United States 19 Attorney’s Office at 2500 Tulare Street, Suite 4401, Fresno, 20 California, 93721, to provide testimony, and to bring with him 21 and produce for examination documents in obedience to the summons 22 that issued on August 12, 2008. 23 This report and recommendation is submitted to the United 24 States District Court Judge assigned to the case, pursuant to the 25 provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 72-304 of the 26 Local Rules of Practice for the United States District Court, 27 Eastern District of California. Within thirty (30) days after 28 being served with a copy, any party may file written objections 10 1 with the Court and serve a copy on all parties. Such a document 2 should be captioned “Objections to Magistrate Judge’s Findings 3 and Recommendations.” Replies to the objections shall be served 4 and filed within ten (10) court days (plus three days if served 5 by mail) after service of the objections. The Court will then 6 review the Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636 7 (b)(1)(C). The parties are advised that failure to file 8 objections within the specified time may waive the right to 9 appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 10 1153 (9th Cir. 1991). 11 IT IS SO ORDERED. 12 Dated: 13 icido3 November 16, 2009 /s/ Sandra M. Snyder UNITED STATES MAGISTRATE JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11

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