Villarreal v. United States
2:11-cv-01594
D. Nev.Feb 7, 2013Background
- Petitioner Villarreal seeks to quash an IRS summons to Bank of America for SAT information under a U.S.-Mexico tax information exchange treaty (TIEA).
- SAT requested Bank of America records to investigate Mexican tax liabilities for 2009, alleging Villarreal directed transfers via Bull Denim to Rambas.
- IRS reviewed SAT request, determined relevance, and issued the summons only for the SAT-requested information under TIEA.
- Petitioner challenged the summons in Colorado; the case was transferred to Nevada for enforcement proceedings.
- Court analyzes under Powell/Stuart four good-faith factors to determine enforceability of the summons.
- Court grants government’s summary judgment and enforcement of the summons, and denies the petition to quash.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether enforcement is proper under Powell and Stuart. | Villarreal argues bad faith and treaty circumvention. | IRS acted in good faith to comply with TIEA. | Enforcement granted; good faith established. |
| Whether the information sought was relevant and not already possessed. | Information already possessed by tax authorities or irrelevant. | Information relevant to SAT investigation and not in IRS/SAT possession. | Information necessary and not already in possession. |
| Whether petitioner is entitled to an evidentiary hearing. | Requests an evidentiary hearing on bad faith. | No evidentiary hearing needed absent minimal showing. | No evidentiary hearing warranted. |
Key Cases Cited
- United States v. Stuart, 489 U.S. 353 (1989) (good-faith standard for summons enforcement)
- United States v. Powell, 379 U.S. 48 (1964) (four-factor test for administrative summonses)
- Arthur Young & Co., 465 U.S. 805 (1984) (relevance of information to investigation)
- Lidas, Inc. v. United States, 238 F.3d 1076 (9th Cir. 2001) (tax summons at treaty request may proceed if good faith shown)
- Fortney v. United States, 59 F.3d 117 (9th Cir. 1995) (no evidentiary hearing without prima facie lack of good faith)
- Mazurek v. United States, 271 F.3d 226 (5th Cir. 2001) (prima facie showing of good faith may be shown by official affidavit)