Juan Gomis Rabassa v. USA, et al

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 23-12445
Non-Argument Calendar
____________________
JUAN RAMON GOMIS RABASSA,
Plaintiff-Appellant,
versus
UNITED STATES OF AMERICA,
INTERNAL REVENUE SERVICE,
Defendants-Appellees.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:22-cv-20456-JEM
____________________
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2 Opinion of the Court 23-12445
Before R OSENBAUM , GRANT, and B RASHER , Circuit Judges.
PER CURIAM:
Juan Gomis Rabassa appeals the district court’s order deny-
ing both his petition to quash a summons that the Internal Revenue
Services issued to his bank and his request for an evidentiary hear-
ing. After reviewing the record and briefing, we affirm.
I.
In 1990, the United States and Spain entered a treaty in
which both nations agreed that their respective tax authorities
would exchange information with one another to enable the na-
tions to enforce their tax provisions. See generally Convention Be-
tween the United States of America and the Kingdom of Spain for
the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income, Together with a Related
Protocol, U.S.-Spain, Feb. 22, 1990, S. Treaty Doc. No. 101-16. Ar-
ticle 1 of the treaty explains that the Convention applies “to persons
who are residents of one or both of the Contracting States, except
as otherwise provided in the Convention.” Id. Later in Article 27,
the treaty states that Spain and the United States “shall exchange
such information as is necessary for carrying out the provisions of
this Convention or of the domestic laws of the Contracting States
concerning taxes covered by the Convention.” Id. Given the na-
tions’ broad goal of preventing income tax evasion, the treaty goes
on to explain that this “exchange of information is not restricted by
paragraph 1 Article 1,” which is the treaty’s residency provision.
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23-12445 Opinion of the Court 3
Protocol Amending the Tax Convention with Spain, Spain-U.S.,
art. XXVII, Jan. 14, 2013, S. Treaty Doc. No. 113-4. Rather, if one
of the countries requests information in accordance with the treaty,
the other country “shall use its information gathering measures to
obtain the requested information, even though that other State
may not need such information for its own tax purposes.” Id.
In June 2021, the Spanish tax authority submitted an ex-
change of information request to the IRS regarding Spain’s exami-
nation of Juan Gomis Rabassa’s 2015 through 2018 tax liabilities.
The request explained that Gomis Rabassa was the majority owner
of the Spanish company Technical Minds Investments S.L., and
that it was seeking information about accounts relating to Gomis
Rabassa at the Miami branch of Banco de Sabadell, S.A. After de-
termining the request was proper under the treaty, the IRS issued
a summons on January 26, 2022, to the Miami bank, seeking bank
account records related to Gomis Rabassa during those tax years.
The summons stated that it was issued to investigate Gomis Ra-
bassa’s Spanish income and capital tax liabilities, and the IRS pro-
vided Gomis Rabassa with a copy.
Soon after, Gomis Rabassa petitioned the district court to
quash the summons. In his amended petition, Gomis Rabassa ar-
gued that the IRS did not issue the summons in good faith because
he is not a resident of either the U.S. or Spain, rendering the treaty
inapplicable. He also argued that the summons was a veiled at-
tempt to help Spain launch a criminal investigation against him.
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4 Opinion of the Court 23-12445
The IRS moved to dismiss the petition, arguing that because
the treaty applied to non-residents, Gomis Rabassa’s residency was
a non-issue. Attached to its motion were two declarations from
government officials. The first was by Tina Masuda on behalf of
the U.S. competent authority. She explained that, based on her re-
view of the request, it was proper, within the guidelines of the
treaty, and should be honored. The second declaration was by
Floyd Penn, the IRS agent responsible for authorizing the issuance
of summonses based on treaty partner requests. He explained that,
despite Gomis Rabassa’s petition and claims of non-residency, the
Spanish authority continued to require the requested bank infor-
mation to aid its tax examination of Gomis Rabassa. Therefore, it
continued to be appropriate for the United States to honor Spain’s
request. The IRS argued that, based on these declarations, it had
issued the summons for the legitimate purpose of complying with
the nation’s treaty obligations to Spain.
The district court referred the IRS’s motion to dismiss the
petition to a magistrate judge who, following a hearing, recom-
mended granting the motion. The magistrate judge determined
that the treaty permits the exchange of information relating to non-
residents, the IRS had established a prima facie case that its sum-
mons was valid, and Gomis Rabassa had not met his burden of re-
butting that prima facie showing or otherwise presenting adequate
evidence that the IRS lacked good faith. The district court adopted
the findings and recommendations, granted the motion to dismiss,
and dismissed the amended petition to quash. Gomis Rabassa
timely appealed.
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23-12445 Opinion of the Court 5
II.
We will not reverse an order enforcing an IRS summons un-
less it is clearly erroneous. United States v. Clarke, 816 F.3d 1310,
1315 (11th Cir. 2016). We review a district court’s denial of an evi-
dentiary hearing for an abuse of discretion. United States v. Clarke,
573 U.S. 248, 255–56 (2014).
III.
Gomis Rabassa argues on appeal that the IRS lacked good
faith when issuing the summons because it knew that he was not a
resident of either nation and that he had fulfilled any tax obligations
between 2015 and 2018. The summons was also improper, he ar-
gues, because the IRS sought to initiate a Spanish criminal investi-
gation by using civil means. And because he could “point to specific
facts or circumstances plausibly raising an inference of bad faith,”
he was entitled to an evidentiary hearing. Clarke, 573 U.S. at 254.
We disagree. The district court did not err in enforcing the sum-
mons because the treaty applies to non-residents and because the
legitimacy of Spain’s investigation is irrelevant to whether the IRS
acted in good faith.
The IRS has broad statutory authority to issue summonses
to taxpayers to determine tax liabilities. Id. at 249. That authority
includes issuing a summons pursuant to a treaty partner’s request.
See United States v. Stuart, 489 U.S. 353, 360–63 (1989). Taxpayers
can petition a district court to quash a summons the IRS issued to
a third party for records relating to the taxpayer. See 26 U.S.C. §
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6 Opinion of the Court 23-12445
7906(a), (b)(2). To defeat the petition, the IRS must make a prima
facie showing that it issued the summons in good faith, demon-
strating that (1) it issued the summons for a legitimate purpose,
(2) the information sought may be relevant to that legitimate pur-
pose, (3) it does not already possess the information, and (4) it fol-
lowed the required administrative steps to issue a summons. United
States v. Powell, 379 U.S. 48, 57–58 (1964). “The IRS can satisfy this
burden merely by presenting the sworn affidavit of the agent who
issued the summons attesting to these facts.” La Mura v. United
States, 765 F.2d 974, 979 (11th Cir. 1985).
If the IRS makes this prima facie showing, the burden then
shifts to the taxpayer to disprove one of the four elements or con-
vince the court that enforcing the summons would constitute an
abuse of the court’s process. Id. at 979–80; Powell, 379 U.S. at 58.
Such abuse takes place “if the summons had been issued for an im-
proper purpose, such as to harass the taxpayer or to put pressure
on him to settle a collateral dispute, or for any other purpose re-
flecting on the good faith of the particular investigation.” Powell,
379 U.S. at 58. Unlike the IRS’s light burden to establish a prima
facie enforcement case, the burden on the petitioner contesting the
summons is heavy. United States v. Leventhal, 961 F.2d 936, 940 (11th
Cir. 1992). And although courts have the power to enforce a sum-
mons, we may inquire only whether the IRS issued the summons
in good faith and “must eschew any broader role of overseeing the
IRS’s determinations to investigate.” Clarke, 573 U.S. at 254. Our
focus is on the IRS’s good faith in issuing the summons, not the
treaty partner’s good faith in requesting the information. See
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23-12445 Opinion of the Court 7
Mazurek v. United States, 271 F.3d 226, 231 (5th Cir. 2001) (citing
Stuart, 489 U.S. at 370).
On appeal, Gomis Rabassa challenges only the first of the
Powell factors, contending that the IRS did not issue the summons
for a legitimate purpose. But the declarations attached to the IRS’s
motion satisfied this factor by explaining that it issued the sum-
mons to assist Spain’s investigation, pursuant to the IRS’s infor-
mation-sharing obligations under the treaty. See Mazurek, 271 F.3d
at 230 (“Assisting the investigation of a foreign tax authority has
been held to be a legitimate purpose by itself.”); see also La Mura,
765 F.2d at 979 (explaining that the IRS can satisfy its prima facie
showing “merely by presenting the sworn affidavit of the agent
who issued the summons attesting to these facts”).
Gomis Rabassa’s argument that the summons could not
have a legitimate purpose because he is a non-resident fails because
the treaty’s exchange-of-information agreement applies to taxpay-
ers who are not residents of either the United States or Spain. Go-
mis Rabassa misreads how Articles 1 and 27 of the treaty interact.
Although Article 1 states that the treaty applies to residents of both
nations, Article 27 explains that the nations’ exchange-of-infor-
mation duties are “not restricted” by Article 1’s residency clause.
Protocol Amending the Tax Convention with Spain, Spain-U.S.,
art. XXVII, Jan. 14, 2013, S. Treaty Doc. No. 113-4. Rather, the two
nations agreed that they “shall exchange such information as is
foreseeably relevant for . . . the administration or enforcement of
the domestic laws concerning taxes of every kind.” Id. And
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8 Opinion of the Court 23-12445
although Gomis Rabassa is not a resident of either country, he con-
cedes that he pays non-resident income taxes in Spain. Gomis Ra-
bassa has a connection to both countries—as a non-resident tax-
payer and businessowner in Spain and a bank account holder or
beneficiary in the United States. Not only does the summons there-
fore possess a legitimate purpose under the letter of the statute, but
the treaty’s purpose of enabling the nations to enforce their “do-
mestic laws concerning taxes of every kind” clearly includes non-
resident taxpayers like Gomis Rabassa as well. Id.
Our reading of the treaty is consistent with the Department
of the Treasury’s technical explanation, which explains that “if a
third-country resident has a permanent establishment in the other
Contracting State, and that permanent establishment engages in
transactions with a U.S. enterprise, the United States could request
information with respect to that permanent establishment, even
though the third-country resident is not a resident of either Con-
tracting State.” Dep’t of the Treasury, Technical Explanation of the
Protocol Amending the Convention Between the United States of
America and the Kingdom of Spain for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to
Taxes on Income and Its Protocol 48.
Just as Gomis Rabassa’s residency is not relevant to the le-
gitimacy of the summons, neither are the arguments he makes at-
tacking the legitimacy of Spain’s investigation. “As long as the IRS
acts in good faith, it need not also attest to—much lest prove—the
good faith of the requesting nation.” Mazurek, 271 F.3d at 231
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23-12445 Opinion of the Court 9
(citing Stuart, 489 U.S. at 370). Gomis Rabassa’s unsupported argu-
ments that Spain is engaging in an improper criminal investigation
and that he fulfilled whatever tax liabilities he had to Spain are ir-
relevant. The legitimacy of Spain’s investigation does not rebut the
IRS’s prima facie showing under Powell because the enforcement
inquiry ends with a determination that the IRS acted in good faith.
See Stuart, 489 U.S. at 356; Mazurek, 271 F.3d at 233.
Because non-resident taxpayers are covered by the treaty
and because Spain’s good faith is irrelevant, the district court did
not clearly err in finding that the IRS had a legitimate purpose in
issuing the summons. The declarations explain how Spain’s request
was proper under the treaty, and the United States is required un-
der the treaty to help Spain collect tax liability information. See Stu-
art, 489 U.S. at 355 (explaining, in the context of a similar interna-
tional agreement, that tax treaties “oblige the United States . . . to
obtain and convey information” to the treaty partner). Therefore,
the IRS has made a prima facie showing under Powell’s first factor
that the summons was issued for a legitimate purpose, and Gomis
Rabassa has failed to meet his heavy burden to refute that factor on
appeal. And because Gomis Rabassa challenged only the first ele-
ment of the IRS’s prima facie showing, we will not consider any
challenge to the remaining Powell factors. See APA Excelsior III L.P.
v. Premiere Techs., Inc., 476 F.3d 1261, 1269 (11th Cir. 2007) (“[W]e
do not consider claims not raised in a party’s initial brief.”).
Lastly, the district court did not abuse its discretion by deny-
ing an evidentiary hearing. Gomis Rabassa had to “point to specific
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10 Opinion of the Court 23-12445
facts or circumstances plausibly raising an inference of bad faith” to
warrant an evidentiary hearing. Clarke, 573 U.S. at 254. But his re-
quest centered around his arguments about his residency and the
legitimacy of Spain’s investigation, both of which are irrelevant to
the determination of the IRS’s good faith. Accordingly, the district
court was well within its discretion to deny the request because the
hearing would have centered on irrelevant evidence. See Mazurek,
271 F.3d at 235.
IV.
The district court is AFFIRMED. We deny all pending mo-
tions as moot.
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