Eulich v. United States , 74 F. App'x 373 ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
For the Fifth Circuit August 27, 2003
Charles R. Fulbruge III
Clerk
No. 02-11165
JOHN EULICH; VIRGINIA WALSH EULICH,
Plaintiffs-Appellants,
VERSUS
UNITED STATES OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Texas
(00-CV-587)
Before DAVIS, SMITH, AND DUHÉ, Circuit Judges.
PER CURIAM:1
John and Virginia Eulich are under investigation by the
Internal Revenue Service for the tax years 1995, 1996, and 1997.
As part of its investigation, the IRS issued formal document
requests (FDRs) and summonses seeking documents relating to a
Bahamian trust and various corporations controlled by the trust.
The Eulichs ask this Court to reverse the district court order
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Pursuant to 5th Circuit Rule 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5th Circuit
Rule 47.5.4.
enforcing the summonses and FDRs, arguing that (1) the FDRs are
facially defective and (2) the Eulichs have no control over the
requested documents. We affirm the order as it applies to John
Eulich and reverse as to Virginia Eulich.
In reviewing mixed questions of law and fact, this court
reviews conclusions of law de novo and findings of fact for clear
error. Payne v. United States, 289 F.3d 377, 381 (5th Cir. 2002).
Fact findings are clearly erroneous only if the reviewing court is
left with a definite and firm conviction that a mistake has been
made. United States v. United States Gypsum Co., 333 U.S. 364, 395
(1948).
The standards for enforcement of an FDR and a summons are
similar, though not identical. See Chris-Marine USA, Inc. v. United
States, 892 F. Supp. 1437, 1143 (M.D. Fla. 1995). For either, the
IRS must establish that it has fulfilled the requirements set forth
in United States v. Powell, 379 U.S. 48, 57-58 (1964), which
include technical compliance with the applicable sections of the
Code.
In the case of an FDR, the IRS must comply with the technical
requirements of 26 U.S.C. § 982. Under § 982(c)(1)(D), the FDR
must include a description of the consequences of failure to
produce the documentation. Eulich contends that under § 982 and
principles of due process, a specific definition of the “examined
item” is necessary to the description of the consequences. Eulich
asserts that the FDR fails in this regard because it describes the
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“examined item” only in terms of the tax years under review.
Neither § 982 nor the cases cited at argument support the
proposition that the FDR must provide a precise description of the
examined item in order to inform the taxpayer of the consequences
of noncompliance. The FDRs in the record reproduce the language of
§ 982 (a), stating clearly that failure to produce the documents
covered by the FDR will result in their exclusion in future court
proceedings. We conclude that the IRS complied with the
requirements of Powell, including the technical requirements of
§ 982, which themselves provide the taxpayer due process, including
a hearing.
Next the Eulichs argue that the district court erred in
finding that they have custody or control of the requested
documents. Virgina Eulich asserts, and the government concedes,
that she is named in the FDRs and summonses only because she is
married to John Eulich and because community property was used in
establishing the trust. We are left with the firm conviction that
the district court erred in finding that Virginia Eulich had
control of the documents. Our review of the record reveals no
clear error with respect to John Eulich; therefore, we will not
disturb the finding that John Eulich has control of the documents.
We conclude that John Eulich’s remaining arguments are without
merit. We affirm the district court’s order with regard to John
Eulich, and reverse as to Virginia Eulich.
AFFIRMED in part, REVERSED in part.
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