here - Fuerst Ittleman David & Joseph, PL

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Case: 11-1612 Document: 003110561288 Page: 26 Date Filed: 06/13/2011 that an ‗appropriate ground‘ for challenging the summons exists when the taxpayer disproves one of the four elements of the government‘s Powell showing, or otherwise demonstrates that enforcement of the summons will result in an abuse of the court‘s process.‖ [United States v.] Rockwell, 897 F.2d [1255] at 1262 [3d Cir. 1990] (citations omitted). (emphasis added). Mem. Op. at 3-4; Doc. # 25; A-000011-12. Examples of an abuse of the court's process include, but the Appellant submits are not limited to, when IRS third-party summons are issued ―such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation (emphasis added).‖ Pickel v. United States, 746 F.2d 176, 184 fn. 11 (3d Cir. 1984) citing to Powell, supra at 58. In order to succeed on an abuse of process claim, a taxpayer must show bad faith by the IRS as an institution, not just an individual agent. United States v. LaSalle National Bank, 437 U.S. 298, 316 (1978). In what appears to be a matter of first impression is the question of whether unconstitutional conduct on the part of the IRS, when demonstrated by a taxpayer, qualifies as demonstrating that the enforcement of an IRS summons would be an abuse of the District Court‘s process. Appellant submits that it would be, and the District Court erred in enforcing the subject IRS summonses. Appellant also submits that institutional bad faith exists in the instant case, and it was error for the District Court to refuse to quash said IRS summonses. FUERST ITTLEMAN, <strong>PL</strong> 1001 BRICKELL BAY DRIVE, 32 ND FLOOR, MIAMI, FL 33131 • T: 305.350.5690 • F: 305.371.8989 • WWW.FUERSTLAW.COM 18 | P a g e
Case: 11-1612 Document: 003110561288 Page: 27 Date Filed: 06/13/2011 A. UNCONSTITUTIONAL CONDUCT Unconstitutional conduct exists on the part of the IRS as evidenced by the IRS‘ position that the statute of limitations does not exist for those United States citizens residing in the USVI, unless they earn less than $75,000 per year. IRC § 6501(a) provides that the normal statute of limitations for assessment is three years from the later of the date the return was due or filed. Under the mirror code (48 U.S.C. § 1397) ―any changes to, interpretations of, regulations and revenue rulings on and court interpretations of the substantive tax provisions of the Internal Revenue Code are applicable to Virgin Islands tax cases as long as the particular provision at issue is not manifestly inapplicable or incompatible with a separate territorial income tax . . . .‖ Chicago Bridge & Iron Co., supra at 976. Consequently, the normal statute of limitations provision in IRC § 6501(a) (i.e., three years) is applicable in the USVI. In 1999, a Field Service Advice (―FSA‖) was issued by the IRS addressing the statute of limitations for a taxpayer who filed with the BIR. The 1999 FSA specifically provided that: [IRC] section 932(c)(2) requires bona fide USVI residents to file an annual return with the USVI. Since A filed a USVI tax return for Year B, he met the requirements of [IRC] section 932(c)(2). However, on account of his failure to report dividend income from a domestic corporation, A did not satisfy [IRC] section 932(c)(4)(B), which required that he report on his USVI return income from all sources FUERST ITTLEMAN, <strong>PL</strong> 1001 BRICKELL BAY DRIVE, 32 ND FLOOR, MIAMI, FL 33131 • T: 305.350.5690 • F: 305.371.8989 • WWW.FUERSTLAW.COM 19 | P a g e
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Page 47 and 48: Case Case: 3:10-mc-00024-GEB 11-161
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here - Fuerst Ittleman David & Joseph, PL

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