Source: http://de.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180129_0000045.DDE.htm/qx
Timestamp: 2019-04-20 17:08:35+00:00

Document:
HONORABLE LEONARD P. STARK, UNITED STATES DISTRICT COURT.
At Wilmington this 29th day of January, 2018, having reviewed the petitions filed by Jerry V. Smith ("Petitioner") to quash third-party summons issued by the Internal Revenue Service ("IRS"), as well as the papers filed in connection therewith, IT IS HEREBY ORDERED that the petitions to quash (Misc. No. 16-79 D.I. 1; Misc. No. 16-165 D.I. 1) are DENIED, for the reasons that follow.
3. Title 26 of the United States Code section 7601 gives the IRS a mandate to investigate "persons ... who may be liable" for taxes. To enforce this mandate, the IRS has been given the power to examine records, to issue summonses (to the taxpayer or to a third party), and to take testimony for purposes of (1) ascertaining the correctness of any tax return, (b) making a tax return where none has been made, (c) determining the tax liability of any person, (d) collecting a tax liability, or (e) inquiring into any offense connected with the administration or enforcement of the internal revenue laws. 26 U.S.C. § 7602; see also Donaldson v. United States, 400 U.S. 517, 523-524 (1971), abrogated on other grounds by 26 U.S.C. § 7609.
4. Once the legality of a summons is questioned, the burden is on the IRS to demonstrate: (a) the summons was issued for a legitimate purpose; (b) the summons sought information that may be relevant to that purpose; (c) the information sought was not already within the possession of the IRS; and (d) all administrative requirements were met. See United States v. Clarke, 134 S.Ct. 2361, 2365 (2014) (citing United States v. Powell, 379 U.S. 48, 57-58 (1964)). In addition, there must not have been any criminal referrals to the Department of Justice regarding the taxpayer. See 26 U.S.C. § 7602(d); United States v. Garden State Nat'l Bank, 607 F.2d 61, 68-69 (3d Cir. 1979).
5. The record includes two declarations of Agent Marino, which are identical in all material respects, other than that the first declaration relates to the first summons (see Misc. No. 16-79 D.I. 2-1) while the second declaration relates to the second summons (see Misc. No. 16-165 D.I. 3-2). The issues presented in the two motions are substantively identical, differing only in the tax years concerned. Therefore, the Court addresses both motions together. As explained below, the two declarations satisfy each of the requirements set out above. See generally Grandup v. United States, 2015 WL 3507966 (D. Del. June 2, 2015).
d. A third-party summons issued by the IRS may be served by certified or registered mail to the last known address of the summoned party. See 26 U.S.C. § 7603(b). Agent Marino complied with the service requirement by sending a copy of the first summons via certified mail to Bank of America, N.A., Legal Order Processing, 800 Samoset Drive, DE5-024-02-08, Newark, Delaware, 19713. (See Misc. No. 16-79 D.I. 2-1 ¶ 10) The IRS is also required to provide notice of such a third-party summons to the taxpayer. See 26 U.S.C. § 7609(a). Agent Marino complied with this notice requirement by contemporaneously sending a copy of the summons to Petitioner via certified mail at his last known address. (See Misc. No. 16-79 D.I. 2-1 ¶ 10) Although Agent Marino's second declaration does not specifically indicate how he complied with the service and notice requirements for the second summons, he does declare: "All administrative steps required by the Internal Revenue Code for issuance of a summons have been taken." (Misc. No. 16-165 D.I. 3-2 ¶ 13) Petitioner does not argue to the contrary and the record reveals no basis to doubt that all required administrative steps were taken. In fact, in his motion Petitioner alleges that the second summons was issued to Bank of America (Misc. No. 16-165 D.I. 1 ¶ 2); and it appears Petitioner received a copy on May 16, 2016 (Misc. No. 16-165 D.I. 1-6 at page 1 of 6).
6. Because the IRS has met its burden to show that the requirements for a valid summons have been met, the burden shifts to Petitioner to show, through particularized factual averments, that the IRS is not acting in good faith or that enforcement of the summons would constitute an abuse of the Court's process. See Garden State, 607 F.2d at 71; Godwin v. United States, 564 F.Supp. 1209, 1213 (D. Del. 1983). Petitioner has failed to meet his burden.

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