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KELLOGG v. ROSSOTTI

April 11, 2003

KENDRICK BANGS KELLOGG, PETITIONER,
v.
CHARLES O. ROSSOTTI, THE COMMISSIONER OF INTERNAL REVENUE; AND JULIE WILSON, SPECIAL AGENT, RESPONDENTS.



The opinion of the court was delivered by: Barry Moskowitz, District Judge

ORDER RE: ORDER TO SHOW CAUSE WHY SECOND AMENDED PETITION SHOULD NOT BE GRANTED; DENYING UNITED STATES' MOTION TO DISMISS; GRANTING UNITED STATES' MOTION FOR SUMMARY ENFORCEMENT; AND DENYING PETITIONER'S MOTION FOR ENLARGEMENT OF TIME AS MOOT
I. INTRODUCTION

On January 9, 2003, Petitioner Kendrick Bangs Kellogg filed a petition to quash seventeen summonses issued by the Internal Revenue Service ("IRS") on December 17, 2002, which seek financial and other records pertaining to Kellogg from third parties.*fn1 Kellogg simultaneously filed a motion to enlarge the time to file his petition. On January 13, 2003, Kellogg amended his petition to challenge four additional summonses issued by the IRS on January 2, 2003.*fn2 On January 30, 2003, Kellogg once more amended his petition to quash two additional summonses issued by the IRS on January 16, 2003.*fn3

The Court issued an order to show cause why Kellogg's Second Amended Petition (the "Petition") should not be granted, In response, the United States filed a motion to dismiss in part and for summary enforcement of the summonses in part.*fn4

On March 26, 2003, the Court held a hearing on the order to show cause, Kellogg's motion for enlargement of time, and the United States' motion. After the hearing, Kellogg and the United States filed supplemental papers relating to how and when the summonses were served on Kellogg. For the reasons discussed below, the United States' motion to dismiss is DENIED, the United States' motion for summary enforcement is GRANTED and Kellogg's motion for enlargement of time is DENIED AS MOOT.

II. DISCUSSION

A. The Seventeen Summonses Issued on December 17, 2002

The Government initially argued that Kellogg's Petition, as it relates to the seventeen summonses issued on December 17, 2002, must be dismissed because it is untimely. However, the Government was mistaken as to the date of service. Kellogg was served on December 20, 2002, via UPS second day delivery, not on December 19, 2002, via certified mail as originally asserted by the Government. (Supp. Willson Decl., ¶¶ 4-5.)

26 U.S.C. § 7609(b)(2)(A) provides that "any person who is entitled to notice of a summons . . . 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)." (Emphasis added.) Notice is given within the meaning of section 7609(b)(2)(A) on the date that the notice is mailed not the date that notice was received. Stringer v. United States, 776 F.2d 274, 275-76 (11th Cir. 1985); Berman v. United States, 264 F.3d 16, 19 (1st Cir. 2001).

Using the service date of December 20, 2002 to calculate the twenty day period, Kellogg's Petition was filed on time (on the 20th day). The Government concedes that Petitioner timely filed his Petition as to all 23 summonses.

Accordingly, the Court denies the Government's motion to dismiss. The Court also denies Kellogg's motion for enlargement of time as moot.

B. Enforcement of the Summonses

To establish a prima facie case validating the summonses at issue, the IRS must show (1) the investigation has a legitimate purpose; (2) the material sought is relevant to that purpose; (3) the IRS is not already in possession of the material sought; and (4) the IRS has complied with the applicable administrative requirements. United States v. Powell, 379 U.S. 48, 57-58 (1964); United States v. Blackman, 72 F.3d 1418-22 (9th Cir. 1995). The IRS need only make a minimal showing with regard to these elements. Blackman, 72 F.3d at 1422. After the IRS makes its prima facie case, a "heavy burden" falls upon the person seeking to quash the summons to disprove the IRS's assertions. Id. The taxpayer must allege specific facts and evidence to support his allegations of bad faith or improper purpose. Crystal v. United States, 172 F.3d 1141, 1144 (9th Cir. 1999).

The Government has made out a prima facie case. The purpose of Special Agent Willson's investigation is to determine Kellogg's correct federal individual income tax liability for years 1998, 1999, 2000, 2001, and 2002 and to determine whether Kellogg has violated any provisions of the Internal Revenue Code or any other laws. (Willson Decl., ¶ 2.) This investigation is legitimate pursuant to 26 U.S.C. § 7602, which permits the IRS to issue summonses for purposes of determining the liability of any person for any internal revenue tax.

The material sought is relevant to the purpose of the investigation. Willson explains, "The summonses seek financial documents and information related to Kellogg, his spouse, and several entities, in which, I determined, based on my investigation, ...


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