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United States v. Barrett, D.C. Colo., 10-CV-02130-RBJ-BNB

United States v. Barrett, D.C. Colo., 10-CV-02130-RBJ-BNB

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Published by punktlich
United States v. Barrett, 112 AFTR 2d 2013-5697 and subsequent: tax fraud case, civil action by IRS to recover funds, seizure of passports and order not to leave the country.

Collection actions--repatriation of assets. Magistrate judge ordered that taxpayers who were involved in collection case, and against whom district court had previously issued ex parte writ ne exeat republica and default judgment, must surrender their passports and all international travel documents, cancel all airline tickets for travel out of U.S., file proof of that cancellation by stated date, and obtain no new passports or international travel documents. Magistrate also set evidentiary hearing, wherein govt. would have opportunity to establish its right to have writ continue in effect and taxpayers would have opportunity to counter same, and show there was no money available to satisfy repatriation order contained in default judgment or to pay their tax liability.
Reference(s): ¶ 74,035.01(110) Code Sec. 7403;Code Sec. 7402
United States v. Barrett, 112 AFTR 2d 2013-5697 and subsequent: tax fraud case, civil action by IRS to recover funds, seizure of passports and order not to leave the country.

Collection actions--repatriation of assets. Magistrate judge ordered that taxpayers who were involved in collection case, and against whom district court had previously issued ex parte writ ne exeat republica and default judgment, must surrender their passports and all international travel documents, cancel all airline tickets for travel out of U.S., file proof of that cancellation by stated date, and obtain no new passports or international travel documents. Magistrate also set evidentiary hearing, wherein govt. would have opportunity to establish its right to have writ continue in effect and taxpayers would have opportunity to counter same, and show there was no money available to satisfy repatriation order contained in default judgment or to pay their tax liability.
Reference(s): ¶ 74,035.01(110) Code Sec. 7403;Code Sec. 7402

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Published by: punktlich on Feb 14, 2014
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Checkpoint ContentsFederal LibraryFederal Source MaterialsFederal Tax DecisionsAmerican Federal Tax ReportsAmerican Federal Tax Reports (Current Year)2013AFTR 2d Vol. 112112 AFTR 2d 2013-5750 - 112 AFTR 2d 2013-5619 (721 F.3d 1016)U.S. v. BARRETT, 112 AFTR 2d 2013-5697, Code Sec(s) 7402; 7403, (DC CO), 08/13/2013American Federal Tax Reports
U.S. v. BARRETT, Cite as 112 AFTR 2d 2013-5697, CodeSec(s) 7403; 7402, (DC CO), 08/13/2013
UNITED STATES OF AMERICA, PLAINTIFF v. Charles BARRETT, and Kathleen BARRETT,DEFENDANTS.
Case Information:
[pg. 2013-5697]
Code Sec(s):
 7403; 7402
Court Name:
 U.S. District Court, Dist. of Colorado,
Docket No.:
 Civil Action No. 10-cv-02130-RBJ-BNB,
Date Decided:
 08/13/2013.
Prior History:
 Earlier proceeding at (2013, DC CO) 111 AFTR 2
Tax Year(s):
 Year 2007.
Disposition:
 Decision for Govt. in part.
HEADNOTE
1. Collection actions-repatriation of assets.
 Magistrate judge ordered that taxpayers who wereinvolved in collection case, and against whom district court had previously issued ex parte writ ne exeatrepublica and default judgment, must surrender their passports and all international travel documents,cancel all airline tickets for travel out of U.S., file proof of that cancellation by stated date, and obtain no
 
new passports or international travel documents. Magistrate also set evidentiary hearing, wherein govt.would have opportunity to establish its right to have writ continue in effect and taxpayers would haveopportunity to counter same, and show there was no money available to satisfy repatriation ordercontained in default judgment or to pay their tax liability.
Reference(s): 
 ¶ 74,035.01(110) Code Sec. 7403;Code Sec. 7402
OPINION
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO,
ORDER
Judge:
 Magistrate Judge Boyd N. BolandThis court issued,
 ex parte 
, a Writ of Ne Exeat Republica [Doc. # 27] against Charles and KathleenBarrett on December 15, 2010. The Barretts were detained on August 8, 2013, by the Marshals Serviceas they prepared to leave the country. The Barretts appeared with counsel this morning at a statusconference. The United States also was present.The United States alleged in a Complaint [Doc. # 1, filed 9/1/2010] that in their 2007 tax return theBarretts "sought a refund based on false withholding credits in the amount of $326,421," and that theInternal Revenue Service ("IRS") "issued a refund to [them] in the amount of $217,615 based on the falseinformation contained in the 2007 Return." Id. at ¶6. The Barretts deposited the refund into their bankaccount at the Paonia State Bank; wire transferred the money to an account in their names at MontroseBank; then wire transferred $64,720 to an account with the Banco de la Oriental del Uruguay. Id. at ¶¶6,8-9. An assessment of tax was made against the Barretts for unpaid federal income taxes for tax year2007 in the amount of $324,271. Id. at ¶7. By this action the United States sought to reduce the federaltax assessments against the Barretts to judgment and also sought an order requiring the Barretts torepatriate assets transferred abroad in order to pay their outstanding federal tax liabilities. Id. at pp. 3-4.The Barretts failed to answer or otherwise respond to the Complaint, and the Clerk of Court entereddefault against them. Entry of Default [Doc. # 43, filed 12/7/2011]. Subsequently default judgment wasentered against the Barretts "in the total amount of $255,976.68, plus interest and other statutoryadditions and less any payments made" and requiring the Barretts "to repatriate and pay over to theUnited States any and all funds that they wired to the Banco de la Republica Oriental del Uruguay."Default Judgment [Doc. # 52, filed 4/9/2013].The Writ of Ne Exeat Republica (the "Writ") commands the United States Marshal and any other officer inwhose presence the defendants may be found to restrain them from departing the jurisdiction of theUnited States and to "bring them before a United States Magistrate Judge where they shall either (a)
 
surrender their passports and all international travel documents; or (b) post a cash bond in an amountequal to the lesser of (i) $351,196.97 (the assessed amount of their unpaid federal tax liabilities) or (ii) thevalue of their net equity in their worldwide assets, as security that they will not depart the jurisdiction ofthe United States of America without prior permission of the court." Writ [Doc. # 27] at pp. 1-2. The UnitedStates also seeks to conduct discovery to determine the location, value, and legal status of the Barrett'sassets.The writ ne exeat republica is "an obscure writ that is ancient, infrequently used and, historically, astranger to tax law." Anthony D. Rebollo,
 The Civil Arrest and Imprisonment of Taxpayers: An Analysis of the Writ of Ne Exeat Republica 
 , 7 Pitt. Tax R. 103 (2010). Its ancient and obscure naturenotwithstanding, the writ specifically is available to the United States pursuant to 26 U.S.C. § 7402(a)in actions to collect taxes. See United States v. Shaheen, 445 F.2d 6, 9 [28 AFTR 2d 71-5026]-10(7th Cir. 1971) (stating that "[t]he power of a district court to issue a writ ne exeat republica, thoughseldom exercised, is not questioned" and that a "proper office of the writ is to aid the sovereign to compela citizen to pay his taxes"). However, a writ ne exeat republica cannot be employed "for any pur [pg.2013-5698] color> pose akin to imprisonment for debt" or "as a substitute sanction" where there is a"bona fide inability to pay." 7 Pitt. Tax R. at 148-49.Where, as here, the writ was issued
 ex parte 
 and the defendants later are detained, the writ "canauthorize no more than a brief period of initial restraint during which the Government has the burden ofproving, in an evidentiary hearing, after due notice has been given, its right to have the restraint continuein effect." Id. at p. 10. The requisite burden is described in United States v. Mathewson, 1993 WL113434 [71 AFTR 2d 93-1453] (S.D. Fla. 1993), as follows:A Writ of Ne Exeat Republica is a form of injunctive relief that restrains the defendantfrom leaving the jurisdiction in order to compel feasance to the sovereign. The court hasthe power to issue the Writ as may be necessary or appropriate for the enforcement ofthe internal revenue laws. In appropriate circumstances, the Writ may issue to detain acitizen for a limited time to enable the Government to have effective discovery, both onissues of liability and with respect to the location, value, and legal status of thetaxpayer's property.To receive issuance of the Writ, at a minimum, the Government must meet the burdenof proof associated with a preliminary injunction. In turn, preliminary injunctive reliefstems from four factors: (1) a substantial likelihood the movant will succeed on themerits; (2) the movant will suffer an irreparable injury if the injunction is not issued; (3)the potential injury to the movant outweighs the potential harm to the opposing party;and (4) the injunction would not disserve the public interest.Id. at 1-2 (internal quotations and citations omitted). With respect to the second factor--concerning

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