Maxton v. USA

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 96-20224
Summary Calendar
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THOMAS O. MAXTON, JR.,
Petitioner-Appellant,
versus
UNITED STATES OF AMERICA; INTERNAL REVENUE
SERVICE; CRIS FLORES,
Respondents-Appellees.
_________________________________________________________________
Appeal from the United States District Court for the
Southern District of Texas
(94-MC-298)
_________________________________________________________________
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
November 26, 1996
Before JOLLY, STEWART and DENNIS, Circuit Judges.
PER CURIAM:*
On July 27, 1994, the Internal Revenue Service issued third-
party recordkeeper summonses to two financial institutions seeking
information relating to Thomas Maxton's tax liability. Maxton
filed a petition to quash the summonses. The government filed an
answer and a counterclaim that sought dismissal of Maxton's
*
Pursuant to Local 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this opinion should not be published and is not precedent except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 Local Rule 47.5.4.
petition and enforcement of the summonses.1 Maxton did not file a
reply to the counterclaim. The district court denied the
taxpayer's petition and ordered compliance with the summonses.
Maxton first argues that the IRS has no probable cause to
issue the summons, and therefore enforcement of them would violate
his rights protected by the Fourth Amendment. Nevertheless, the
Supreme Court has held that the IRS "need not meet any standard of
probable cause to obtain enforcement of [a] summons." United
States v. Powell, 379 U.S. 48, 57, 85 S. Ct. 248, 255, 13 L. Ed. 2d
112 (1964). Rather, the government needs only to make a minimal
prima facie showing that (1) the summons is issued for a proper
purpose; (2) the material sought is relevant to that purpose; (3)
the information sought is not already within the Commissioner's
possession; and (4) the administrative steps required by the
Internal Revenue Code have been followed. Id.
Here, the district court properly denied Maxton's petition to
quash and ordered the financial institutions to comply with the
summonses based on the answer and counterclaim filed by the
government. The government has satisfied the Powell test. The
summonses were issued to obtain information about Maxton's tax
liability and, therefore, was for a proper purpose. The summonses
1
The IRS must apply to a district court to enforce its
summonses. See United States v. Claes, 747 F.2d 491, 494 (8th Cir.
1984).
2
only requested information relevant to that purpose, including
ledger sheets for Maxton's accounts, and applications for loans.
There is no evidence that the IRS possessed the requested
information. Finally, the IRS followed the required administrative
steps.
Maxton contends that Revenue Agent Flores was not authorized
to issue and serve administrative summonses. Under §§ 7602 and
7603 of the Internal Revenue Code ("IRC"), the Secretary of the
Treasury and his delegates are vested with authority to issue and
serve administrative summonses. The Secretary of the Treasury has
vested the Commissioner of the Internal Revenue with the
responsibility for administering the Internal Revenue laws. See
Treas. Ord. No. 150-10 (Apr. 22, 1982); Treas. Ord. No. 150-37
(Mar. 17, 1955 and Apr. 22, 1982). The Commissioner has the power
to designate IRS employees to issue summonses. Treas. Reg. §
301.7603-1(b)(T.D. 7188, 37 Fed. Reg. 12,796 (June 29, 1972), as
amended by T.D. 7297, 38 Fed. Reg. 34,803 (Dec. 19, 1973). The
Commissioner has exercised this power, and delegated her authority
to issue and serve summonses to revenue agents, like Revenue Agent
Cris Flores, who issued the summons here. Delegation Order No. 4
(Rev. 20 § 1(d)(3)(March 5, 1990), 1990-1 C.B. 294 (55 Fed. Reg.
7626 (Mar. 2, 1990)). Therefore, the summonses in this case were
properly issued and served.
3
Maxton further argues that the authority to issue
administrative summonses applies only in connection with alcohol,
tobacco and firearms taxes or offenses. This contention is
absolutely without merit. 26 U.S.C. § 7602 gives the IRS broad
authority to issues summons enforcing all types of taxes. See,
e.g., United States v. Sanders, 951 F.2d 1065, 1067 (9th Cir.
1991); United States v. Joyce, 498 F.2d 592, 594 (7th Cir. 1974).
District courts across the country have been inundated with
arguments similar to Maxton's. See, e.g., Darland v. United
States, No. 4:96:MC:4, 1996 WL 498430 (W.D.Mich. June 10, 1996);
Hogan v. United States, 873 F. Supp. 80 (S.D. Ohio 1994); Wallace v.
United States, No. MS-1-94-035, 1994 WL 676498 (S.D. Ohio Aug. 22,
1994); United States v. Klimek, No. 91-4682, 1992 WL 99634 (E.D.Pa.
April 29, 1992); United States v. Streett, 791 F. Supp. 563 (D.Md.
1992). Although the district court has shown restraint, it would
be well within its discretion to sanction a party under these
circumstances.
Maxton also tosses a variety of constitutional arguments into
his brief. None have merit; the IRS summonses issued here are
commonplace, and have been upheld in similar circumstances. See,
e.g., Powell, 379 U.S. 48. The district court properly denied
Maxton's petition to quash and ordered enforcement of the third
4
party recordkeeper summonses issued by the IRS. Its judgment is
therefore
A F F I R M E D.
5