United States District Court, N.D. Oklahoma
OPINION AND ORDER
V, EAGAN, UNITED STATES DISTRICT JUDGE.
matter comes on for consideration of the magistrate
judge's report and recommendation (Dkt. # 12) concerning
plaintiff's motion to quash an administrative summons
issued by the Internal Revenue Service (IRS). The summons was
issued to a third party, Gateway Morgage LLC (Gateway), to
obtain information about plaintiff's tax liability for
the years 2013 to 2017. Plaintiff argues that the summons was
not properly served and was not issued for a legitimate
purpose. The magistrate judge recommends that plaintiff's
motion to quash the IRS summons (Dkt. # 1) should be denied.
Plaintiff has filed an objection (Dkt. # 13) to the report
and recommendation. Defendants' deadline to file a
response to the objection has expired and no response has
been filed, and the report and recommendation is ripe for
Anthony James Floyd is a professional tax return preparer,
and the IRS is investigating whether Floyd was preparing
false or fraudulent tax returns on behalf of himself or
others. Dkt. # 8-1, at 2. As part of this investigation, IRS
Special Agent Robert De Los Santos issued an administrative
summons to Gateway for information about Floyd's purchase
of a home in Kennedale, Texas. Id. Santos served the
summons on Gateway, Floyd, and Floyd's wife, as required
by 26 U.S.C. § 7609, and he states that the records he
sought were relevant to an ongoing investigation and not in
the custody of the IRS. Id. Floyd filed a motion to
quash the administrative summons issued to Gateway (Dkt. #
1), and defendants filed a motion to dismiss (Dkt. # 7)
matter was referred to a magistrate judge for a report and
recommendation. The magistrate judge construed the motion to
dismiss (Dkt. # 7) as a response in opposition to
plaintiff's motion to quash the administrative summons.
Dkt. # 12, at 1. The magistrate judge noted that the Internal
Revenue Code gives the IRS broad authority to issue a summons
for books, papers, or records to conduct an inquiry into a
person's tax liability. Id. at 2; 26 U.S.C.
§ 7602(a). The IRS is not required to meet any standard
of probable cause to enforce a summons but, instead, the IRS
that the investigation will be conducted pursuant to a
legitimate purpose, that the inquiry may be relevant to the
purpose, that the information sought is not already within
the Commissioner's possession, and that the
administrative steps required by the Code have been
followed-in particular, that the ‘Secretary or his
delegate,' after investigation, has determined the
further examination to be necessary and has notified the
taxpayer in writing to that effect.
United States v. Powell, 379 U.S. 48, 57-58 (1964).
Plaintiff has requested an evidentiary hearing and he seeks
to conduct discovery in support of his motion, but the
magistrate judge found that proceedings to enforce or quash
an administrative summons are summary in nature. Id.
at 2. The magistrate judge cited United States v.
Clarke, 573 U.S. 248 (2014), for the proposition that an
evidentiary hearing is necessary only if the petitioner can
point to “specific facts or circumstances plausibly
raising an inference of improper motive.” Id.
at 256. An IRS agent's affidavit is typically sufficient
to make the necessary showing that administrative summons was
issued for a legitimate purpose and that the information
sought was relevant to an IRS investigation. Id. at
2365. The magistrate judge reviewed plaintiff's filings
and considered his claims that there was nothing inherently
unlawful about obtaining a home mortgage. Dkt. # 12, at 3-4.
However, the magistrate judge stated that Santos'
affidavit adequately explained the purpose of the
investigation and the need to obtain records from Gateway in
furtherance of the investigation, and he recommends that the
Court summarily deny plaintiff's motion to quash the
has filed an objection to the report and recommendation, and
he claims that he has a right to examine Santos as to whether
the information sought by the IRS differs from what it
already possesses. Dkt. #13. He also renews his argument that
the administrative summons was not properly served on his
wife. Id. The Court has reviewed plaintiff's
motion to quash and his objection to the report and
recommendation, and finds that the report and recommendation
should be accepted. Santos' affidavit states that the
records are needed from Gateway to “shed light on
whether Floyd is accurately reporting income, expenses or
other items on federal income tax returns.” Dkt. # 8-1,
at 2. The investigation is focused on the accuracy of
plaintiff's tax returns for 2013 to 2017. Id.
The administrative summons seeks information from Gateway
about plaintiff's purchase of home in Kennedale, Texas,
and Santos states that the information sought is not
currently in the possession of the IRS. Id. The
Court finds that this is a sufficient factual basis to
establish that the IRS has a good faith belief that Gateway
possesses information relevant to an ongoing investigation.
Plaintiff generally alleges that the administrative summons
was issued for the purpose of harassment, and he claims that
the IRS already possesses the information sought from
Gateway. Dkt. # 1, at 3. However, these general allegations
do not satisfy his burden to identify “specific facts
or circumstances” raising an inference that the
administrative summons was issued for an improper purpose. As
to plaintiffs argument concerning improper service of his
wife, he does not dispute that he was properly served and had
notice of the administrative summons, and he has not
identified any substantive argument that his wife could
assert that has not already been considered in these
enforcement proceedings. The report and recommendation is
accepted and plaintiffs motion to quash administrative
summons is denied.
IS THEREFORE ORDERED that the report and
recommendation (Dkt. # 12) is accepted, and
plaintiffs motion to quash summons (Dkt. # 1) is
IS FURTHER ORDERED that defendants' motion to
dismiss the motion to quash ...