Court Opinion

ID: 9906592
Source: CourtListenerOpinion
Date Created: 2023-12-04 18:01:43.977436+00
Date Added: 2024-06-11T09:25:14.044940
License: Public Domain

USCA11 Case: 23-11648   Document: 27-1    Date Filed: 12/04/2023   Page: 1 of 7

                                                [DO NOT PUBLISH]
                                 In the
                United States Court of Appeals
                        For the Eleventh Circuit

                         ____________________

                              No. 23-11648
                         Non-Argument Calendar
                         ____________________

       SAMUEL BARNABY DYER CORIAT
       SHEYLA DYER CORIAT,
       PIERO MARTIN DYER CORIAT,
                                               Petitioners-Appellants,

       versus
       UNITED STATES OF AMERICA,
       INTERNAL REVENUE SERVICE,
       TRUIST BANK,
       WELLS FARGO BANK, NA,
USCA11 Case: 23-11648     Document: 27-1      Date Filed: 12/04/2023    Page: 2 of 7

       2                      Opinion of the Court                23-11648

                                                   Respondents-Appellees.

                            ____________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                     D.C. Docket No. 1:22-cv-22788-RNS
                           ____________________

       Before WILLIAM PRYOR, Chief Judge, and BRASHER and ABUDU, Cir-
       cuit Judges.
       PER CURIAM:
              The Dyer Coriat siblings—Samuel Barnaby, Sheyla, and
       Piero Martin—natives and citizens of Peru, appeal the dismissal of
       their petitions to quash summonses issued by the Internal Revenue
       Service to their banking institutions in the United States. 26 U.S.C.
       § 7609(b). The Dyer Coriats argue that the district court erred in
       dismissing their petitions and denying an evidentiary hearing to in-
       vestigate whether the Service knew that the Peruvian government
       had requested the information in bad faith. We affirm.
             On August 23, 2022, the Dyer Coriats received notices of
       summonses that the Service issued to their respective banks in the
       United States. The Service issued the summonses after receiving
       exchange-of-information requests from Peru’s National Superin-
       tendence of Customs and Tax Administration under the Tax Infor-
       mation Exchange Agreement of 1990 between the United States
       and the Republic of Peru.
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       23-11648               Opinion of the Court                         3

                The Peruvian Tax Administration stated that it was examin-
       ing each sibling’s income tax in fiscal years 2016, 2017, and 2018
       because each sibling had failed to declare taxes for income from
       foreign sources for those fiscal years and failed to submit docu-
       ments required to correct the inconsistencies. It stated that each
       sibling owned a bank account at the banks and provided bank ac-
       count numbers. It explained that, to determine if the Peruvian tax-
       payers had complied with their tax obligations, it was requesting
       reports of the bank account statements for these three years
       “where [each sibling] appears as a direct owner, or jointly . . . , or
       through intermediary entities, or as beneficial ownership, at the
       [named] financial entity” and reports of the “benefits obtained, and
       the withholding tax applied in the United States to [each sib-
       ling] . . . regarding the bank account.”
              A week after receiving the summonses, the Dyer Coriats
       filed petitions to quash the summonses on three grounds. Id. They
       asserted that the Service failed to identify a legitimate good-faith
       purpose and failed to comply with standards for issuing valid sum-
       monses, United States v. Powell, 379 U.S. 48 (1964). They argued that
       the summonses violated the tax treaty by seeking “private infor-
       mation which is precluded under Peruvian law without the Peru-
       vian government complying with certain conditions precedent,”
       under the Peruvian Constitution. And they asserted that the sum-
       monses “fail[ed] to identify the kind of investigation against
       [them].”
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       4                      Opinion of the Court                 23-11648

              After the district court consolidated their petitions, the Ser-
       vice moved to dismiss the petitions for failure to state a claim.
       Fed. R. Civ. P. 12(b)(6). The Service argued that it had acted in
       good faith, and the tax treaty obliged the Service to issue sum-
       monses on behalf of Peru without considering Peruvian law. The
       Service argued that it complied with the Powell factors and issued
       the summonses only after determining that the request was valid.
       The Service also argued that, because it acted in good faith, it was
       irrelevant whether the Peruvian Administration also acted in good
       faith. The Service attached to its motion declarations from Tina
       Masuda and Floyd Penn of the Service’s Exchange of Information
       Program regarding the process the Service followed to issue the
       summonses.
               The Dyer Coriats responded and agreed that the Service
       “ha[d] made its prima facie case for enforcement of the summons
       [under Powell] by filing a sworn affidavit by the investigating
       agent.” But they maintained that the Peruvian Administration
       acted in bad faith, and the Service knew about the “long history of
       criminal corruption within Peru’s government.” The Dyer Coriats
       requested an evidentiary hearing to prove that the tax treaty “only
       permits Peru to request bank information if it complies with its
       Constitution” and argued that they could establish that the Service
       had issued the summonses for an improper purpose. They attached
       articles about corruption within the Peruvian government.
              A magistrate judge issued a report and recommendation
       that the motion to dismiss be granted. The magistrate judge ruled
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       23-11648               Opinion of the Court                          5

       that the declarations by Service agents contained the necessary in-
       formation to establish a prima facie case for the enforcement of the
       summonses and that the Dyer Coriats failed to present evidence
       that would support “even a slight inference” that the Service acted
       in bad faith. Because the Service’s prima facie case was undisputed
       and unrebutted, the magistrate judge found that an evidentiary
       hearing was unnecessary. The Dyer Coriats objected that there was
       “significant evidence” that the Service did not issue the summonses
       in good faith and that an evidentiary hearing was needed to estab-
       lish whether the summonses were overbroad as to Piero’s bank
       records and would result in the production of irrelevant docu-
       ments.
              The district court adopted the report and recommendation,
       granted the motion to dismiss, and denied an evidentiary hearing.
       The district court determined that the Service acted in good faith.
       The district court ruled that the Dyer Coriats lacked standing to
       challenge the summonses as overbroad and that, even if they had
       standing, it would decline to address the challenge because it was
       raised for the first time in their objections despite having sufficient
       time to raise it in their response to the motion to dismiss.
              We review an order enforcing a summons by the Service for
       clear error. Presley v. United States, 895 F.3d 1284, 1288 (11th Cir.
       2018). To enforce a summons, the Service must establish that the
       investigation will be conducted pursuant to a legitimate purpose,
       the inquiry will be relevant to that purpose, the information sought
       is not already in the Service’s possession, and it has taken the
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       6                       Opinion of the Court                    23-11648

       administrative steps necessary to issue a summons. Powell, 379 U.S.
       at 57–58. If the Service satisfies its burden by presenting the affida-
       vit of the agent who issued the summons, the burden shifts to the
       petitioner to disprove one of the four elements of the government’s
       prima facie case or to persuade the district court that enforcement
       would constitute an abuse of process. Id. at 58.
               The Dyer Coriats argue that the district court erred in deny-
       ing them an evidentiary hearing to determine whether the Service
       knew that the Peruvian Administration made its request in bad
       faith, but we disagree. The Supreme Court has instructed that a
       “bare allegation of improper purpose does not entitle a taxpayer to
       examine [Service] officials.” United States v. Clarke, 573 U.S. 248, 249
       (2014). Instead, discovery or an evidentiary hearing is warranted
       only when the taxpayers “can point to specific facts or circum-
       stances plausibly raising an inference of bad faith” by the Service.
       Id. at 254. “Naked allegations of improper purpose are not enough:
       The taxpayer must offer some credible evidence supporting his
       charge.” Id. Because the Dyer Coriats failed to allege facts giving
       rise to a plausible inference of improper motive by the Service and
       instead pointed only to the history of corruption within the Peru-
       vian government, they failed to establish that an evidentiary hear-
       ing was needed to examine the Service agents, who they conceded
       established their prima facie case. See id.; Powell, 379 U.S. at 58; Pres-
       ley, 895 F.3d at 1289 (We “may inquire as to only whether the [Ser-
       vice] issued a summons in good faith” (emphasis added, internal
       quotation marks omitted)).
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       23-11648               Opinion of the Court                         7

               Regarding their challenge to the scope of the summonses,
       the Dyer Coriats argue that they realized that the summonses were
       overbroad a few days before filing their objections, so the district
       court should have considered their argument. But we discern no
       error. The Dyer Coriats did not present this challenge to the mag-
       istrate judge, so the district court had broad discretion to refuse to
       consider it. See Williams v. McNeil, 557 F.3d 1287 (11th Cir. 2009).
       And even if the Dyer Coriats had timely raised that argument, they
       failed to explain how they had standing to do so. See Sapuppo v. All-
       state Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014).
             We AFFIRM the dismissal of the Dyer Coriats’ petitions to
       quash the summonses.