Puri v. United States

Puri v. United States

Opinion

MEMORANDUM¹

Sabena Puri appeals the district court's order granting the government's motion to dismiss and denying her petition to quash an administrative third-party summons issued by the United States Internal Revenue Service ("IRS") to Citibank N.A. for information relating to her bank accounts. The summons was issued at the request of the tax authorities of the Republic of India pursuant to the Convention Between the United States [*2]  of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, Jan. 1, 1991, T.I.A.S. 90-1218. We have jurisdiction pursuant to 26 U.S.C. § 7609(h) and 28 U.S.C. § 1291, and we affirm.

As in domestic tax investigations, the IRS may issue third-party summonses to obtain relevant documents when requested by a tax treaty partner pursuant to the terms of the treaty. See United States v. Stuart, 489 U.S. 353, 355-56, 370, 109 S. Ct. 1183, 103 L. Ed. 2d 388 (1989). If the taxpayer objects by filing a petition to quash in the district court, the court applies the two-step framework set forth in United States v. Powell, 379 U.S. 48, 57-58, 85 S. Ct. 248, 13 L. Ed. 2d 112 (1964). First, the IRS must make a prima facie showing of its "good faith" in issuing the summons. Stuart, 489 U.S. at 359. To satisfy this minimal burden, the IRS need only demonstrate its own good faith, not that of the requesting sovereign. Id. at 370. The burden then shifts to the taxpayer to challenge the government's evidence or show that the summons should be quashed "on any [other] appropriate ground." United States v. Clarke, 573 U.S. 248, 250, 134 S. Ct. 2361, 189 L. Ed. 2d 330 (2014) (citation omitted).

1. Puri does not dispute that the IRS satisfied its burden under Powell by establishing a prima facie case that it acted in good faith in issuing the summons at the Indian tax authorities' behest. The burden therefore shifts to Puri to challenge [*3]  the IRS's evidence or provide other "appropriate" grounds for quashing the summons. Puri contends that she has met this burden, or is at least entitled to further discovery in order to meet her burden, by presenting evidence that the Indian tax authorities' true purpose is to harass her family, who are prominent members of the Indian government's political opposition.

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