Davidson v. United States, 149 F.3d 1190, 10th Cir. (1998)
Davidson v. United States, 149 F.3d 1190, 10th Cir. (1998)
Davidson v. United States, 149 F.3d 1190, 10th Cir. (1998)
JUN 9 1998
PATRICK FISHER
Clerk
KATHERINE DAVIDSON,
Petitioner-Appellant,
v.
UNITED STATES OF AMERICA,
No. 97-1244
(D.C. No. 97-K-158)
(District of Colorado)
Respondent-Appellee.
ORDER AND JUDGMENT
Utah v.
Babbitt , 53 F.3d 1145, 1148 (10th Cir. 1995). Finding no error, we affirm.
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
*
I. STATEMENT OF FACTS
The Internal Revenue Service (IRS) assessed federal income tax liability
against Sidney Davidson, Ms. Davidson's husband. IRS Officer Eileen Newman
conducted an investigation to locate assets to satisfy Mr. Davidsons tax liability.
In the course of her investigation, Ms. Newman discovered that in 1992, Mr.
Davidson had attempted to transfer his interest in his marital home to Ms.
Davidson. Ms. Newman accordingly issued a summons to Ms. Davidsons bank
to determine whether other such transfers had been attempted. In response to the
summons, she received documentation indicating that in 1996, Ms. Davidson
deposited a total of $51,126.85 into her account. Ms. Newman then issued a
second summons, the one at issue in this case. The second summons sought
information about the source of those deposits.
Upon learning that the IRS served the summons on a third-party
recordkeeper, i.e., her bank, Ms. Davidson filed this action in federal district
court, seeking to quash the summons. The government filed a motion to dismiss
for lack of subject matter jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(1). At a
hearing, the district court granted the government's motion.
II. DISCUSSION
When an IRS summons issued to a third-party recordkeeper requires the
Robertson filed a petition to quash the summons, arguing that she had no legal or
business relationship with the Sloans. Furthermore, she argued that the Sloans
did not hold any legal or equitable interest in her bank account. The government
filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the
summons was issued in aid of the collection of the Sloans tax liability. The
district court denied the government's motion. In so doing, the court interpreted
the in aid of the collection exception narrowly. That is, according to the
Robertson court, the IRS must give notice unless the
Id. at
706.
The district court distinguished
was not related to the taxpayers against whom liability had been assessed,
whereas in the case at bar, the petitioner is married to the taxpayer. Aplts App.
at 70. The district court instead relied on
served a summons on the plaintiffs bank, seeking bank records concerning the
plaintiff or her husband with respect to her husbands tax liability.
court noted that the government could establish that the summons was issued in
aid of the collection of plaintiff's husband's taxes.
court stated that it is manifest that plaintiff's bank records may produce relevant
information with regard to a possible commingling of her funds with her
husband's. Id. at *3.
Ms. Davidson argues that
community property state, whereas her case arose in a state where community
property laws are not in effect. Whether or not community property laws apply,
the fact remains that the statute does not require the IRS to give notice when it
issues a third-party recordkeeper summons in aid of the collection of the liability
of any person against whom an assessment has been made. 26 U.S.C.
7609(c)(2)(B)(i) (emphasis added). Here, the IRS was investigating whether a
taxpayer fraudulently transferred funds to his wife. We agree with the district
court that the summons was issued in aid of the collection of Mr. Davidsons
taxes and, therefore, that Ms. Davidson was not entitled to notice. Thus, the
district court did not have subject matter jurisdiction to consider her petition.
Ms. Davidson further argues that because the district court stated that she
had standing, the court really did not grant the government's motion to dismiss for
lack of subject matter jurisdiction, but, instead, denied her petition to quash on
the merits. From a reading of the transcript of the hearing, we think it is plain
that the district court simply misspoke when it stated that Ms. Davidson had
standing. See Aplts App. at 70 (I will say that I find that the petitioner does
have standing . . . .). From this statement, the district court was not implying
that Ms. Davidson was entitled to notice of the summons. The hearing was
clearly on the government's motion to dismiss for lack of subject matter
jurisdiction. Aplts App. at 60 (The motion to dismiss for lack of jurisdiction
must take precedence.) Moreover, at the close of the succinct motion hearing,
the court stated that the summons was issued in aid of collection, and, therefore,
no notice was required.
Id. at 70.
Although immediately after making this statement, the court said, The
petition to quash is denied, it is clear that what the court was doing was granting
the government's motion to dismiss the petition to quash.
counsel never asked for a clarification of the court's ruling. In fact, Ms.
Davidsons notice of appeal bears out the fact that counsel understood the court to
be granting the government's motion. The notice of appeal states that Ms.
Davidson appeals from a bench order granting the United States Motion to
Dismiss Petition to Quash.
dismissed for lack of subject matter jurisdiction and never reached the merits of
Ms. Davidsons case, we need not consider her second issue on appeal, namely,
whether the summons satisfied the good faith requirements set forth in
United
Robert H. Henry
Circuit Judge