The United States District Court for the Northern District of California ruled in a recent matter and ordered an individual to company with IRS summons, namely, to appear before the IRS, to give testimony and to produce books, papers, records or other data in an investigation of corporation tax liability.

The IRS is investigating Pillarton Corporation for tax liability from year 2010 to 2012. The respondent did not agree to extend the statute of limitations, and did not cooperate to produce financial records for relevant fiscal years, asserting privileged information. The IRS filed petition to enforce the summons. Later the respondent filed a response to the order to show cause.

The Court held that the IRS built a prima facie case of the legitimacy, relevancy, necessity of the investigation. However, the respondent failed to rebut the legitimacy of the summons issued by the IRS in reasonable facilitation of the federal investigation. Neither did he rebut the evidentiary value of the information summoned by the IRS. Since the IRS was acting in good faith and had substantially complied with statutory requirements, the Court granted the verified petition in favor of the IRS to enforce the summons.

 

See United States v. Ghafourifar, No.: 5:2014cv03819 (November 2014).

Posted by Jiaqi Wang, Associate Editor, Wealth Strategies Journal.