United States v. Schmidt
1:18-cv-00196
| E.D. Cal. | Apr 17, 2018Background
- The United States filed a petition (Feb 7, 2018) to enforce an IRS administrative summons issued May 24, 2017 to respondent Arnold H. Schmidt.
- The summons seeks testimony and documents to collect Schmidt’s alleged tax liabilities for Form 1040 for tax years ending Dec. 31, 2005, 2010, 2011 and CIVPEN for quarter ending Dec. 31, 2013.
- The Court issued an Order to Show Cause; the petition and order were personally served on Schmidt. A show-cause hearing occurred April 6, 2018; Schmidt appeared but filed no written opposition.
- The Government submitted a verified petition by Revenue Officer Lisa R. Lopez supporting enforcement. The Order shifted the Powell burden to respondent to rebut the petition’s prima facie showing.
- The magistrate judge found the summons was issued in good faith for a legitimate purpose, the information sought was relevant and not already in IRS possession, statutory administrative steps were followed, and there was no DOJ criminal referral. Schmidt offered no rebuttal.
- Recommendation: enforce the summons, order Schmidt to appear at the IRS office by May 18, 2018, and retain jurisdiction to enforce by contempt if necessary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the IRS summons should be enforced | Summons was issued in good faith for a legitimate purpose to collect taxes; Powell requirements satisfied | No written or oral rebuttal presented at hearing | Summons enforcement recommended; Powell showing unrebutted |
| Whether the information sought is relevant and not duplicative | Sought records/testimony relevant to tax liabilities and not already possessed by IRS | No evidence presented that IRS already had the information | Court found relevance and non-duplication established |
| Whether statutory administrative steps were followed | Government attested that required administrative procedures under the IRC were completed | No challenge to administrative steps | Court found administrative steps satisfied |
| Whether there was improper criminal referral (chilling testimonial privilege) | Government denied referral to DOJ for criminal prosecution | No evidence offered to the contrary | Court found no DOJ referral and no privilege issue |
Key Cases Cited
- United States v. Powell, 379 U.S. 48 (1964) (establishes four-part test for enforcing IRS summons)
- Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991) (failure to timely object to magistrate judge’s findings may waive appeal)