Court Opinion

ID: 767151
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:24:43+00
Date Added: 2024-06-11T15:18:37.198348
License: Public Domain

199 F.3d 848 (6th Cir. 1999)
Douglas R. Shisler, Mary Ann Shisler, Libera Services  Company Ltd., Shisler Family Irrevocable Trust, MDS  Global Company, Cypress Funds, Inc., MDS International, Petitioners-Appellants,v.United States of America, Respondent-Appellee.
No. 99-3027
UNITED STATES COURT OF APPEALS  FOR THE SIXTH CIRCUIT
Argued: November 22, 1999,Decided and Filed: December 28, 1999

Matthew Gilmartin, Rocky  River, Ohio, Joe A. Izen, Jr., Izen & Associates, P.C., Bellaire, TX, for Petitioners-Appellants.
Annette G. Butler, Assistant U.S. Attorney, Cleveland, Ohio, John A. Dudeck, Charles E. Brookhart, U.S. DEPARTMENT OF JUSTICE, APPELLATE  SECTION TAX DIVISION, Washington, D.C., Joel L. McElvain, U.S. Department of Justice, Tax Division, Appellate Section, Washington, D.C., for Respondent-Appellee.
Before: KEITH, CONTIE, and NORRIS, Circuit Judges.
Appeal from the United States District Court for the Northern District of Ohio at Cleveland, No. 98-01259--George W. White, District Judge.
OPINION
CONTIE, Circuit Judge.

1
Petitioners-appellants, Douglas Shisler, et al., appeal the judgment of the district court,  dismissing their petition to quash IRS summonses to third-party recordkeepers because the petition was untimely filed. For  the following reasons, we affirm.

I. Facts

2
The Internal Revenue Service ("IRS"), pursuant to an income tax investigation of petitioner Shisler and several trusts of  which he is the trustee ("petitioners"), served third-party recordkeeper summonses on Bank One and Key Bank on May 7,  1998, requesting various records pertaining to petitioners for the period January 1, 1995, through the date of the  summonses. On May 8, 1998, the IRS served additional summonses on National City Bank and Chippewa Valley Bank  pertaining to petitioners for the same tax periods. On the same dates that the summonses were served on the third-party  banks (May 7, 1998 and May 8, 1998), the IRS mailed to petitioners by certified mail notices of these summonses and an  explanation of their right to file a petition to quash the summonses within twenty days.

3
On May 30, 1998, petitioners filed a petition to quash the summonses in the United States District Court for the  Northern District of Ohio. The petition was filed twenty-three days after notice of the Bank One and Key Bank summonses  was sent to petitioners by certified mail and twenty-two days after notice of the National City Bank and Chippewa Valley  Bank summonses was sent to them by certified mail.

4
The United States filed a motion to dismiss the petition to quash on the ground that the district court lacked jurisdiction.  The United States argued that petitioners failed to file their petition to quash within the twenty-day period after being  notified, as specified in 26 U.S.C. §a7609(b)(2)(A) of the Internal Revenue Code, and therefore they had not complied with  the terms of the United States' consent to be sued in regard to the summonses. The United States argued that the district  court therefore lacked jurisdiction, and the case must be dismissed.

5
Petitioners filed a response to the motion to dismiss. They argued that equitable tolling applied because the dates on  which they were given notice of the summonses were nebulous. They also argued that, pursuant to Fed. R. Civ. P. 6(e), they  were entitled to an additional three days in which to file their petition to quash because notice of the summonses had been  sent to them by United States mail. They argued because they filed their petition to quash within twenty-three days after  being notified, their petition was timely filed.

6
On October 1, 1998, petitioners submitted supplemental exhibits containing copies of the certified mail receipts,  indicating the dates on which notices of the summonses had been mailed to them by the IRS. Receipts for the certified mail  showed that notices of the summonses had been mailed to petitioners on May 7, 1998 and May 8, 1998, respectively. In  addition, following a non-evidentiary hearing held on October 8, 1998, the United States, at the district court's request,  submitted a declaration of a revenue agent, verifying that the notices had been mailed to petitionersby certified mail on  either May 7, 1998 or May 8, 1998, as indicated by the certificate on the reverse side of each summons.

7
On November 9, 1998, the district court granted the United States' motion to dismiss the petition to quash. The court  stated that the twenty-day limitation period of section 7609(b)(2)(A) was a jurisdictional limitation which served as a  conditional waiver of the United States' sovereign immunity. The court held that a district court did not have jurisdiction  over a petition to quash if the petitioner failed to comply with the twenty-day filing period of section 7609(b)(2)(A). Since  petitioners had filed their petition on either the twenty-second or twenty-third day after the respective notices of summonses  had been mailed to them, they did not meet the twenty-day filing requirement. Therefore, the district court concluded that it  lacked jurisdiction to hear the petition to quash. Petitioners then filed this timely appeal.

8
II. Legal Background Regarding Summons to Third-Party Recordkeepers

9
Section 7609 of the Internal Revenue Code provides a specific set of rules for IRS summons issued to "third-party  recordkeepers," a term that is defined to include various third parties, such as banks and credit unions, which customarily  maintain records of individual or business financial transactions. 26 U.S.C. §a7609(a)(3)(A). When the IRS serves a  summons on a third-party recordkeeper, it must also give notice to the person to whom the records pertain. Such notice  must be accompanied by a copy of the summons which has been served on the third-party recordkeeper and must contain  an explanation of the taxpayer's right to bring a proceeding to quash the summons. 26 U.S.C. §a7609(a)(1). With regard to  the timing of the notice, this subsection provides that "notice of the summons shall be given to . . . [such] person . . . within  3 days of the day on which such service is made [upon the third-party recordkeeper]." Id. The recipient of the notice of the  summons may then file a petition to quash the summons pursuant to 26 U.S.C. §a7609(b)(2)(A), which states in relevant  part:

10
In general. Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under  subsection (a) shall have the right to begin a proceeding to quash such summons not later than the 20th day after the  day such notice is given in the manner provided in subsection (a)(2).

11
Subsection (a)(2) specifies, in part, that notice is "sufficient" if it is mailed by certified or registered mail to the last  known address of the person entitled to notice. Courts have determined that notice is "given in the manner provided in  subsection (a)(2)" on the date on which notice is mailed to the taxpayer under investigation by certified or registered mail. Faber v. United States, 921 F.2d 1118, 1119 (10th Cir. 1990); Stringer v. United States, 776 F.2d 274, 275 (11th Cir.  1985). Thus, according to the statute, a taxpayer entitled to notice must begin a proceeding to quash a summons to a  third-party recordkeeper within twenty days from the date on which notice of the summons and the right to file a petition to  quash is mailed by certified or registered mail to him by the IRS.

III. Notice

12
Petitioners first argue that the United States failed to show by competent evidence that notice of the summonses and an  explanation of their right to file a motion to quash was mailed to them by certified mail on the dates stated in the United  States' motion to dismiss--on May 7, 1998, and May 8, 1998. Without citing any authority, petitioners contend that a postal  service date stamp and the declaration of the person who actually mailed the notices is required in order to establish the dateson which the notices were mailed by the IRS to petitioners.

13
The district court found in regard to this issue that "on Maya7, 1998 and May 8, 1998, the IRS sent copies of the  summonses to Petitioners via certified mail." The record supports the district court's finding. The record contains copies of  the Service of Summons, Notice, and Recordkeeper Certificates of the IRS, which specify that the dates of giving notice to  petitioners were on May 7, 1998 and May 8, 1998, respectively. See Joint Appendix at 75-154. The record also contains the  Postal Service receipts for certified mail, which were signed by petitioner Shisler, and which indicate by handwritten  notation that the dates of certified mailing were on May 7, 1998, and May 8, 1998, respectively. See Joint Appendix at  242-43. In addition, the United States submitted a declaration of a revenue agent, verifying that notices of the summonses  had been mailed to petitioners by certified mail on either May 7, 1998 or May 8, 1998.

14
Petitioners' argument that the district court erred in relying on this evidence has no merit. The statute at issue provides  that notice to the taxpayer about the summonses served on third-party recordkeepers "shall be sufficient" if notice is mailed  to the noticee by certified mail within three days of the day on which service of the original summons is made on the  third-party recordkeeper. 26 U.S.C. §§a7609(a)(1) and (2). In the present case, the evidence shows that notices of the  summonses were mailed to petitioners (the taxpayer entitled to notice) by certified mail on the same days the summonses  were served on the third-party recordkeepers--May 7, 1998 and May 8, 1998. The purpose of sections 7609(a) and  (b)(2)(A) is to allow the noticee to bring a petition to quash within twenty days by giving him notice that his bank has been  summoned to furnish the IRS with records and other documents relating to the noticee's financial affairs. In the present  case, the purpose of the statute was clearly fulfilled as the evidence demonstrated that notice of the summonses and an  explanation of petitioners' right to bring a motion to quash had been sent to petitioners by certified mail on May 7, 1998  and May 8, 1998.

15
Petitioners contend that the certified mail receipts were insufficient to prove the dates of mailing, because they did not  have a valid postmark from the Postal Service, but merely contained handwritten notations of the dates of mailing. There is  no authority on which petitioners can rely that states such evidence is insufficient. Neither the statute nor case law require  the IRS to produce the additional evidence that petitioners allege is necessary-- a statement of the person who actually  mailed the notices and the Postal Service date stamp, rather than a handwritten date on the certified mail receipts. For these  reasons, we find the district court was correct in concluding that the IRS complied with the notice provisions of sections  7609(a)(1) and (2) and that notice to petitioners was given on May 7, 1998 and May 8, 1998, respectively. The district court  is affirmed on this issue.

IV. Equitable Tolling

16
Petitioners argue that the district court should have applied the doctrines of equitable tolling and equitable estoppel to  the twenty-day time period in which to bring a suit to quash a third-party summons.1 The doctrine of equitable tolling  permits a prospective plaintiff to delay filing suit beyond the statute of limitations if, despite due diligence on his part, he is  given insufficient notice or cannot timely obtain the information he needs in order to determine whether he has a claim on  which a suit can be founded. Flight Attendants Against UAL Offset (FAAUO) v.Commissioner, 165 F.3d 572, 575 (7th Cir.  1999).

17
We find that it is not necessary for us to reach the issue of whether the doctrine of equitable tolling can be invoked to  toll the statute of limitations specified in 26 U.S.C. §a7609(b)(2)(A), because petitioners provide no factual reason why  principles of equity should be applied in the present case. The only argument petitioners make in regard to equitable tolling  is that the dates of the certified mailings are nebulous. However, as previously discussed, the dates of certified mailing of  notice to petitioners are not nebulous, but occurred on May 7, 1998 and May 8, 1998, respectively. Thus, there is no  question that notice was sufficient and given in the manner prescribed by the statute.

18
Equitable tolling is available in suits only where notice is insufficient or "where the claimant has actively pursued his  judicial remedies by filing a defective pleading [during the statutory period] or where he has been induced or tricked by his  adversary's misconduct into allowing the filing deadline to pass." Irwin v. Dep't of Veteran Affairs, 498 U.S. 89, 90 (1990); See also Juice Farms, Inc. v. United States, 68 F.3d 1344, 1346 (Fed. Cir. 1995). In the present case, petitioners did not  argue before the district court that a defective pleading was filed or that the IRS somehow tricked or induced petitioners  into missing the filing deadline. Thus, petitioners have stated no factual basis for application of the doctrine of equitable  tolling. See Flight Attendants, 165 F.3d at 577 (court refuses to decide whether equitable tolling "may ever be invoked in a  federal tax case," because the plaintiff did not make a case for equitable tolling based on the facts). In the present case, as in Flight Attendants, petitioners have not made a case for equitable tolling based on the facts. Therefore, there is no reason for  this court to decide whether the doctrine of equitable tolling applies to 26 U.S.C. §a7609, and we decline to address the  issue.

V. Fed. R. Civ. P. 6(e)

19
Petitioners argue that the district court improperly dismissed the petition to quash because Fed. R. Civ. P. 6(e) should  have been applied and gives them an additional three days beyond the twenty-day period of section 7609(b)(2)(A) in which  to file their petition to quash. Petitioners argue that because the petition to quash was filed within twenty-two and  twenty-three days, respectively, it was timely filed. The IRS argues that the twenty-day filing requirement of section  7609(b)(2)(A) is jurisdictional, and that in the present case, the district court lacked jurisdiction because the petition to  quash the summonses was not timely filed within twenty days.

20
We have found in a published opinion, Clay v. United States, No. 99-3175 (6th Cir. Dec. 20, 1999) that a petition to  quash a third-party summons that is filed more than twenty days after the IRS mails notice of the summons to the taxpayer  must be dismissed for lack of jurisdiction, and that Fed. R. Civ. P. 6(e) does not extend the statute of limitations for  commencing the suit by three days. Therefore, the district court is affirmed on this issue.

VI. Conclusion

21
A taxpayer's motion to quash an IRS third-party summons must be filed within twenty days from the date notice of the  summons is sent by certified mail to the taxpayer in order to comply with the requirements of 26 U.S.C. §a7609(b)(2)(A).  Because petitioners in the present case did not file a petition to quash until the 22nd or 23rd day after notice was given, the  district court correctly dismissed petitioners' motion to quash for lack of jurisdiction. For these reasons, the decision of the  district court is hereby AFFIRMED.

Notes:

1
  Petitioners did not discuss the issue of equitable estoppel before the district court and may not raise the issue for the  first time on appeal.