The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
Order Granting Government's Motion Petitioners, to Dismiss Petition to Quash IRS Summons [Doc. No. 5]
Petitioners Philip Donald Stambaugh and Ecco Alice Whipple Stambaugh petition the Court for an order quashing an administrative summons issued by the Internal Revenue Service and served upon third party record keepers Jackson National Life Insurance Company, Dreher Law Firm, and Lennar Associates Management, LLC. The summonses were issued by the IRS in furtherance of its investigation of Petitioners' income tax liability for the 2004 tax year.
Respondent has filed a motion to dismiss the petition, arguing the Court lacks subject matter jurisdiction because the petition was not filed within 20-days after notice was given as required by 26 U.S.C. § 7609(b)(2).*fn1 Petitioners have filed an opposition to the motion to dismiss and Respondent has filed a reply.
Upon review, the Court finds the motion appropriate for submission without oral argument and the January 12, 2009 hearing is VACATED. Respondent's motion to dismiss is GRANTED.
The IRS is conducting an examination regarding Petitioners' federal income tax liability for the 2004 tax year. [Declaration of IRS Revenue Agent Lorraine Arellano ("Arellano Decl."), ¶ 3.] As part of its investigation, on September 15, 2008, Revenue Agent Arellano issued third-party summonses to Lennar Associates Management, LLC, Jackson National Life Insurance Company, and Dreher Law Firm. [Arellano Decl., ¶¶ 4-9, Exhibits A-C.] In accordance with 26 U.S.C. § 7609, the Revenue Agent sent notice of the summonses to Petitioners' last known address via certified mail on September 15, 2008. [Arellano Decl., ¶10, Exhibit D.]
Petitioners filed their motion to quash the administrative summonses on October 21, 2008. Respondent filed a motion to dismiss the petition on November 17, 2008.
Respondent moves to dismiss the petition under Fed. R. Civ. P. 12(b)(1) for lack of jurisdiction. The United States is immune from suit unless there is a valid waiver of sovereign immunity. Valdez v. United States, 56 F.3d 1177, 1179 (9th Cir. 1995). Section 7609(b) is the exclusive method by which a taxpayer can challenge a summons issued by the IRS to a third-party recordkeeper. Ponsford, 771 F.2d 1305, 1309 (9th Cir. 1985). The procedures for filing a petition to quash are set forth in § 7609(b) as follows:
(A) 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). In any such proceeding, the Secretary may seek to compel compliance with the summons.
Pursuant to subsection (b)(2)(A), the petition to quash must be filed within 20 days after notice of the summons is given to the taxpayer. This 20-day period is jurisdictional, and the court must dismiss a petition not filed within that time period. Ponsford, 771 F.2d at 1309; Clay v. United States, 199 F.3d 876, 879 (6th Cir. 1999); Faber v. United States, 921 F.2d 1118, 1119 (10th Cir. 1990). Petitioners filed their petition to quash on October 21, 2008, 36 days after the government sent notice of the summons to them by certified mail at their last known address on September 15, 2008. Thus, on its face, the petition appears untimely.
In opposition to the government's motion to dismiss, Petitioners argue the 20-day time period under § 7609(b)(2)(A) did not begin to run until they received notice of the summonses on October 7, 2008.*fn2 The 20-day time period under § 7609(b)(2)(A), however, begins to run on the date that notice of the summons is mailed to the taxpayer, not the date on which it is received. Berman v. United States, 264 F.3d 16, 18-19 (1st Cir. 2001); Clay, 199 F.3d at 878; Stringer v. United States, 776 F.2d 274, 275-76 (11th Cir. 1985); 26 C.F.R. § 301.7609-4(b)(2) (requiring that proceeding to quash a summons be instituted "not later than the 20th day following the day the notice of the summons was served on or mailed to such person"). Section 7609(a)(2) provides that notice given to a taxpayer is "sufficient" if it "is mailed by certified or registered mail to the last known address of such person, or, in the absence of a last known address, is left with the person summoned." That subsection further provides that notice is "sufficient" upon such mailing "even if such person or fiduciary is then deceased, under a legal disability, or no longer in existence." This language evidences an intent to relieve the government of the obligation to provide actual notice to the taxpayer. Berman, 264 F.3d at 19.
The 20-day time period within which Petitioners could have filed a petition to quash under § 7609 began to run on September 15, 2008, the date the IRS sent the notice to them by certified mail. Their petition to quash, filed 36 days later on October 21, 2008, was untimely. There has been no ...