Court Opinion

ID: 37773
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:58:11+00
Date Added: 2024-06-11T17:15:47.026520
License: Public Domain

United States Court of Appeals
                                                                                          Fifth Circuit
                                                                                        F I L E D
                      IN THE UNITED STATES COURT OF APPEALS
                                                                                         March 9, 2005
                                  FOR THE FIFTH CIRCUIT
                                                                                    Charles R. Fulbruge III
                                                                                            Clerk

                                           No. 04-10703
                                         Summary Calendar

THOMAS E. TILLEY,
                                                                              Plaintiff-Appellant,

                                               versus

UNITED STATES OF AMERICA,

                                                                                Defendant-Appellee.

                           Appeal from the United States District Court
                               for the Northern District of Texas
                                        3:03-CV-769-D

Before WIENER, BENAVIDES, and STEWART, Circuit Judges.

PER CURIAM:*

       Thomas E. Tilley challenges the district court’s denial of his petition to quash an Internal

Revenue Service (IRS) summons that was directed to a third-party recordkeeper in possession of

information pertaining to his tax liability for the years 2000 and 2001. Tilley argues that the IRS

failed to comply with certain administrative prerequisites that he believes were necessary to

       *
        Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
“properly” effectuate the summons. We reject his contention and hold that the district court’s denial

of the petition to quash the IRS summons must be affirmed.

                      FACTUAL AND PROCEDURAL BACKGROUND

       The IRS initiated an investigation related to Tilley’s tax liabilities from the years 2000 and

2001. As such, it was necessary for the IRS to issue a third-party summons to First Horizon Home

Loan (First Horizon), a company located in Dallas, Texas, that was in possession of some documents

pertaining to Tilley’s tax records.1 Thereafter, Tilley objected to First Horizon’s receipt of the

summons and moved to quash it via this action.

       The parties proceeded before a magistrate judge who recommended that the motion be denied

upon his finding that the summons that was issued to First Horizon was consistent with the purposes

of the Internal Revenue Code. Additionally, the magistrate judge observed that the IRS had

jurisdiction to issue the summons and that the purposes underlying it were legitimate. The judge also

noted that the purpose of the summons was simply to secure Tilley’s pertinent tax information and

that the means chosen by the IRS to issue the summons comported with the relevant federal statutory

procedures. Accordingly, the magistrate directed First Horizon to provide all germane information

related to Tilley’s tax liabilities from the relevant years in question. The district court adopted the

magistrate’s recommendation and this appeal followed.

                                           DISCUSSION

       A.      Standard of Review

       In our consideration of the denial of the petition to quash the summons, the magistrate judge’s

       1
        In addition, a copy of the summons was also mailed to Tilley’s personal residence in Chapel
Hill, North Carolina.

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factual findings, as adopted by the district court, are reviewed under the clearly erroneous standard.

See Mazurek v. United States, 271 F.3d 226, 229 (5th Cir. 2001). Thereafter, we evaluate whether

a prima facie case has been established pursuant to the factors articulated by the Supreme Court in

United States v. Powell, 379 U.S. 48 (1964). The Powell court stated that in order for the IRS to

enforce a summons, it must demonstrate that: (1) the basis for the underlying investigation is

legitimate, (2) the investigation’s relevancy causally relates to that basis, (3) the IRS does not already

possess the information being sought, and (4) the administrative procedures established by the

Internal Revenue Code have been adhered to. Id. at 58. In Mazurek, we recognized that the burden

on the United States to establish a prima facie case pursuant to the governing Powell factors is de

minimus, given that, for example, a “simple affidavit” from the IRS agent issuing the summons will

suffice. 271 F.3d at 231. Conversely, if the United States successfully establishes a prima facie case,

the party seeking to quash the summons bears the more daunting burden of either refuting “any of

the Powell factors, or [ ] demonstrating that the enforcement of the summons would result in an

abuse of the court’s process.” Id.

        B.      Analysis

        Tilley asserts that the IRS failed to comply with the administrative prerequisites established

by 26 U.S.C. § 7609 et seq., the statutory provision which governs the procedures for the issuance

of third-party summonses. This argument apparently takes the position that the IRS failed to comply

with its own administrative procedures. Specifically, Tilley argues that neither First Horizon nor

himself were served with an attested copy of the summons, maintaining that § 7609 et seq., at least

implicitly, mandates such attestation.

        Tilley’s argument derives from what he perceives to be the interplay between § 7609(a)(2)

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and § 7603(a). Section 7609(a)(2) provides in relevant part that notice for a third-party summons

will be sufficient if it served in a manner consistent with § 7603. In turn, § 7603 provides that a

general summons must be served by means of “an attested copy delivered in hand to the person to

whom it is directed, or at his last and usual place of abode.” 26 U.S.C. § 7603(a) (emphasis added).

Accordingly, Tilley argues that §7609 incorporated § 7603, and therefore, the third-party summons

issued to First Horizon was ineffectual as it bore no attestation.

        Several courts have considered averments similar to those proffered by Tilley in this matter.

In Conder v. United States, 17 F.3d 1331 (10th Cir. 1994) the Tenth Circuit held that §7609 was

not intertwined with § 7603. The Conder panel found that, inter alia, §7609's mention of §7603 was

simply alluding to the fact that the taxpayer whom the third-party summons related would receive

sufficient notice of the summons if it were personally served, or, if a copy was left at the individual’s

last and usual place of residence. Id. at 1333. Courts in the Ninth and Sixth Circuit, relying

principally on the reasoning employed in Conder, have held similarly. See, e.g., Kondik v. United

States, 81 F.3d 655 (6th Cir. 1996); Fortney v. United States, 59 F.3d 117 (9th Cir. 1995). We too

believe that Conder’s interpretation comports with the original understanding of § 7609.

         Tilley avers that the Eighth Circuit’s decision in United States v. Mimick, 952 F.2d 230 (8th

Cir. 1992), which held that §7609 did indeed incorporate an attestation requirement, should be found

to constitute persuasive aut hority. We however disagree, and assuming arguendo that §7609 did

mandate that an IRS summons to a third-party requires attestation, this circuit has long recognized

that we will refrain from requiring strict adherence to the technical niceties of the Internal Revenue

Code as a predicate to enforcing an IRS summons. See United States v. Bank of Moulton, 614 F.2d
1063, 1066 (5th Cir. 1980). Instead, our determination regarding whether an IRS summons will be

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enforced turns on the degree to which the objecting party would be prejudiced by the IRS’s alleged

failure to comply with its own administrative procedures, particularly as it pertains to the issuance

of a summons. Id.

       Accordingly, we hold that the denial of the petition to quash the third-party summons was

appropriate, and therefore must be affirmed.

AFFIRMED.

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