Barker, Roger L. v. U.S.

This is a proceeding to enforce an Internal Revenue Service Collection Summons served on Roger L. Barker on June 1, 1989. Respondent Roger L. Barker ("Barker") is charged with failure to produce for inspection, examination and copying by petitioners certain records which are relevant to determine the correct Federal tax liabilities for the years 1983 through 1988, in violation of 26 U.S.C. sections 6001 and 6012. This court has jurisdiction under 26 U.S.C. sections 7402 and 7604.

Petitioner Robert May, ("May"), an agent of the Internal Revenue Service of the United States Department of the Treasury, served a collection summons on Barker ordering respondent to appear with his documents. On June 15, 1989 respondent appeared in person without the requested documents and refused to testify. May filed a Verified Petition to Enforce an Internal Revenue Summons on April 9, 1990. This court issued an Order to Show Cause on April 16, 1990. On May 11, 1990 Barker moved the court for an extension of time to answer the petition, which was granted. On June 11, 1990 Barker filed several pleadings in opposition to enforcement of the summons, alleging that the federal income tax regulations do not apply to him. Respondent moves to dismiss the summons claiming lack of subject matter and personal jurisdiction.

For the reasons set forth below, the court denies respondent's motion to dismiss and grants petitioners' motion to enforce the IRS summons.

As noted by petitioners, "[t]he government may establish its prima facie case by an affidavit of an agent involved in the investigation averring the Powell good faith elements." Alphin v. United States [87-1 USTC ¶ 9123], 809 F.2d 236, 238 (4th Cir. 1987), cert. denied, 480 U.S. 935 (1987). "The government's burden is fairly slight because this is a summary proceeding. It occurs only at the investigative stage of an action against the taxpayer, and 'the statute must be read broadly in order to ensure that the enforcement powers of the IRS are not unduly restricted.'" Id. at 238, (quoting U.S. v. Kis [81-2 USTC ¶ 9659], 658 F.2d 526, 536 (7th Cir. 1981)).

Once the government makes this showing, the burden is upon respondent to prove that enforcement of the summons would be an abuse of the court's process, Powell, 379 U.S. at 58, or that it was issued for an improper purpose, LaSalle, 437 U.S. at 316.

The court rejects this claim based upon Ninth Circuit law. In United States v. Studley [86-1 USTC ¶ 9390], 783 F.2d 934 (9th Cir. 1986), the court held that an individual is a person under the Internal Revenue Code and is thus subject to it. Id. at 937, (citing United States v. Romero [81-1 USTC ¶ 9276], 640 F.2d 1014, 1016 (9th Cir. 1981)). Furthermore, the Studley court noted that the argument that individuals are not subject to the Internal Revenue Code "has been consistently and thoroughly rejected by every branch of the government for decades," and the use of such "utterly meritless arguments" is the basis for serious sanctions. Id. at 937, fn. 3. Accord, U.S. v. Dawes [89-2 USTC ¶ 9437], 874 F.2d 746, 750-51 (10th Cir. 1989) (Contention that appellants are not taxpayers because they are "'free born, white, preamble, sovereign, natural, individual common law de jure citizens of Kansas' is frivolous.") Respondent's first contention is without merit.

As petitioners note, the Ninth Circuit has "rejected the idea that a person is liable for a tax only if he benefits from a governmental privilege." Olson v. United States [85-1 USTC ¶ 9401], 760 F.2d 1003, 1005 (9th Cir. 1985). Respondent's second contention is rejected.

In United States v. Arthur Young [84-1 USTC ¶ 9305], 465 U.S. 805, 813 (1984), the Supreme Court recognized that the Commissioner of the Internal Revenue Service has the power to issue a summons pursuant to section 7602 of the Internal Revenue Code. Petitioners claim this authority was delegated to the Commissioner under Treasury Department Order No. 150-37 (April 22, 1982).

Barker's argument is frivolous. Section 7802 of Title 26 creates the position of Commissioner of Internal Revenue and authorizes the Secretary of the Treasury to delegate duties and powers to the Commissioner. The actual authority to issue summons and other processes under section 7602(a) has been delegated to the Commissioner and other delegees by regulation 26 C.F.R. section 301.7602-1(b). The regulation, as all federal regulations, was published in the Federal Register. Thus, the Commissioner and his delegatees do not depend merely upon the orders of the Treasury Department for their authority. The authority inheres in the statute and regulations which are paramount.

This ground for opposing the order to show cause is also rejected.

As petitioners note, 44 U.S.C. section 3518(c)(1)(B) states that the Paperwork Reduction Act does not apply to "administrative action or investigation involving an agency against specific individuals or entities." The few cases that have interpreted this language have held that the I.R.S. forms do not have to carry Office of Management and Budget control numbers to be valid. See Cameron v. Internal Revenue Service [84-2 USTC ¶ 9845], 593 F.Supp. 1540, 1556 (D.C. Ind. 1984), aff'd [85-2 USTC ¶ 9661], 733 F.2d 126 (7th Cir.); Snyder v. Internal Revenue Service [84-2 USTC ¶ 9894], 596 F.Supp. 240, 250 (D.C.Ind. 1984). Barker cites to United States v. Smith, 866 F.2d 1092 (9th Cir. 1989), which held that a plan of operations form for a mining permit was an information collection request and lack of current control number precluded conviction.

The court finds the reasoning of Cameron and Snyder more persuasive on the facts of this case. Furthermore, a review of the I.R.S. regulations requiring collection of information shows that they have been assigned OMB numbers. 26 C.F.R. § 602.101 et. seq.

In addition, section 3518(c)(1)(B) exempts this administrative action. Barker's fourth contention is also rejected.

As petitioners note, taxpayers are entitled to speak out in opposition to provisions of the tax law. However, such freedom does not relieve citizens from obligations under the internal revenue laws of the United States. United States v. Romero [81-1 USTC ¶ 9276], 640 F.2d 1014, 1017 (9th Cir. 1981) (observing that the non- taxpaying party had succumbed to "weird and illogical theories of tax avoidance" espoused by tax protester groups.) This theory is also dismissed.

Respondent maintains that the government may have already commenced criminal investigation. However, he presents no evidence of this and his allegations are merely speculation. It is respondent's burden in these proceedings to disprove the existence of a valid civil purpose. This burden has been described as a heavy one. LaSalle 437 U.S. at 316. Respondent has failed to meet it. Furthermore, contrary to respondent's assertion at the hearing, petitioners have made their prima facie case as required by LaSalle. See pages 2 and 3 supra.

Finally, respondent contends that requiring him to answer the inquiries of petitioners by responding to the order to show cause is a violation of his rights under the fifth amendment. This blanket assertion of fifth amendment rights is insufficient to defeat the government's request. Only in response to particular questions may a respondent assert his fifth amendment privilege. See United States v. Jones [83-1 USTC ¶ 9265], 703 F.2d 473 (10th Cir. 1983); see also Hudson v. United States [85-2 USTC ¶ 9575], 766 F.2d 1288 (9th Cir. 1985) (stating the principle, but not involving a section 7602 case).

Accordingly, respondent's motion to dismiss is DENIED and petitioners' petition to enforce summons is GRANTED in accordance with the form of order signed on July 30, 1990.

IT IS SO ORDERED.