Opinion
Case No. 4:04CV1249.
October 22, 2004.
REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE
This matter is before the undersigned upon reference by the Honorable Peter C. Economus to supervise general pretrial matters and to submit a Report and Recommendation on all motions. ECF Dkt.#7. On July 2, 2004, Petitioners Linda Thompson-Penny and Frank Halfacre (Petitioners), through counsel, filed a cause of action to quash summonses issued by the Internal Revenue Service (IRS) to Fahey Banking Company, a third-party recordkeeper. ECF Dkt.#1. On August 24, 2004, Respondent United States of America (Respondent) filed a motion to dismiss Petitioners' petition to quash the summonses. ECF Dkt. #4. For the following reasons, the undersigned recommends that Court GRANT
Respondent's motion to dismiss Petitioners' petition to quash and dismiss the instant case. Id. I. FACTS AND PROCEDURAL HISTORY
On June 10, 2004, Steven Bauman, an IRS Revenue Officer, issued IRS summonses to Fahey Banking Company as third party recordkeeper in the matters of Petitioners as "potentially responsible individual[s] of Stop 26 Riverbend Production Inc." (Stop 26). ECF Dkt. #4, Exhibit #3. Officer Bauman indicates in his declaration (attached to Respondent's motion to dismiss) that he is conducting an investigation regarding collecting unpaid federal tax liabilities from Stop 26 for quarterly tax periods ending December 31, 2002, March 31, 2003, June 30, 2003, and September 30, 2003. ECF Dkt. #4, Exhibit #2. He further declares that he is investigating whether Percy Squire, the Chief Executive Officer of Stop 26, Linda Thompson-Penny, the Business Manager of Stop 26, Frank Halfacre, Chairman of the Board of Stop 26, William Cusack, an employee of Stop 26, and/or Mark Scott Litton, an employee of Stop 26, are responsible persons of Stop 26 pursuant to 26 U.S.C. § 6672 who willfully failed to collect, truthfully account for, or pay over the withheld federal income and employment taxes due and owing from Stop 26 for the quarterly periods in question. Id. Officer Bauman further states that he is investigating whether these individuals may have committed any offense in connection with the administration or enforcement of the internal revenue laws for those periods. Id.
The IRS summonses requested that Fahey Banking Company provide to Revenue Officer Bauman all corporate resolutions and all signature cards of Stop 26, in effect between October 1, 2002 and September 30, 2003. ECF Dkt. #4, Exhibit #3. The summonses further requested that Fahey Banking Company provide "copies of three checks written on each account per month, for the period October 1, 2002 and September 30, 2003." Id. Officer Bauman further states in his declaration that he mailed notices of the summonses by certified mail to Percy Squire, Linda Thompson-Penny, Frank Halfacre, William Cusack and/or Mark Scott Litton on June 10, 2004 on the same day that he issued the summonses to Fahey Banking Company. ECF Dkt. #4, Exhibit #2.
On July 2, 2004, Petitioners, through counsel Percy Squire, filed a petition to quash the IRS summonses. ECF Dkt. #1. Petitioners assert that the summonses seek information already in the IRS' possession, they were issued for the improper purpose of harassing Petitioners and are nothing more than a fishing expedition, they have no reasonable basis, and the requests for the copies of checks are vague, ambiguous and overbroad. Id. Petitioner Thompson-Penny also asserts that she furnished affidavits to Officer Bauman stating that she was not a responsible person of Stop 26 and she had no information regarding the documents requested in the summons. Id. Both Petitioners additionally complain that the IRS failed to give them timely notice of the summonses within the three days after the summonses were issued to a third party and that the reasonable notice provision of 26 U.S.C. § 7602(1)(c) was violated. Id.
On August 24, 2004, Respondent filed the instant motion to dismiss the above-captioned case due to this Court's lack of jurisdiction. ECF Dkt. #4. Respondent asserts that this Court lacks jurisdiction because the United States did not waive its sovereign immunity under 26 U.S.C. § 7609 and the limited waiver of immunity under that statute does not apply to the instant summonses because they were issued in aid of the collection of "an assessment made or judgment rendered against the person with respect to whose liability the summons is issued." Id. at 4-7, quoting 26 U.S.C. § 7609(c)(2)(D)(i). Respondent concludes that because Petitioners were not individuals entitled to notice of the summonses under the statute, they have no right to file petitions to quash the summonses. Id. Respondent further asserts that this Court lacks jurisdiction over this matter because Petitioners filed their petition to quash the summonses beyond the twenty-day limitations period required by 26 U.S.C. § 7609(b)(2)(A). Id. at 7-8.
On September 15, 2004, Petitioners filed a response to Respondent's motion to dismiss, arguing that the United States should be equitably estopped from asserting immunity because the instruction forms that accompanied the summonses and notices stated that noticed individuals could file a petition to quash and Petitioners relied upon those instructions. ECF Dkt. #5. Petitioners also counter that their petition to quash was not untimely filed because the twenty-day calculation began running on the date that notice was received, not the date that the notices were mailed. Id. Petitioners further assert that Rule 6 of the Federal Rules of Civil Procedure applies which allows them three additional days for service by mail. Id.
On October 4, 2004, Respondent filed a reply, asserting that Petitioners had no right to commence proceedings to quash the summonses because the IRS was not required to provide them with notice of the summons pursuant to 26 U.S.C. § 7609(b)(2)(A). Respondent indicates that Petitioners' mere receipt of the notice of summonses, whether sent to them erroneously or gratuitously, does not confer a right upon them to bring suit to quash the summonses because that right is only given to those entitled to notice under Section 7609. ECF Dkt. #6 at 2. Respondent further replies that Petitioners' timeliness arguments fail because 26 U.S.C. § 7609(b)(2)(A) specifically states that the person entitled to notice of a third-party summons must bring a proceeding to quash the summon no later than twenty days after notice is given. Id. at 3-4. Respondent also counters that Rule 6 of the Federal Rules of Civil Procedure does not apply to jurisdictional periods for bringing an action in district court. Id. at 4. II. LAW AND ANALYSIS A. SOVEREIGN IMMUNITY
Respondent first challenges the Court's jurisdiction by asserting that the United States has not waived its sovereign immunity to be sued under 26 U.S.C. § 7609. ECF Dkt. #5 at 4-7. "The United States, as sovereign, 'is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.'" United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953, 47 L.Ed.2d 114 (1976), quoting United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 769-770, 85 L.Ed. 1058 (1941). A Court cannot imply sovereign immunity by the United States and it must be unequivocally expressed in statutory text. Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 2096-2097 (1996) (citations omitted). "Moreover, a waiver of the Government's sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign." Id. (citations omitted).
A limited waiver of the sovereign immunity of the United States is expressed in 26 U.S.C. § 7609, the provision that governs IRS summonses issued to third-party recordkeepers such as Fahey Banking Company. 26 U.S.C. § 7609(b)(2)(A) states that "any person who is entitled to notice of a summons [to a third-party record keeper] under [§ 7609(a)] shall have the right to begin a proceeding to quash such summons." Accordingly, in order for Petitioners to have the right to petition to quash the summonses issued to Fahey Banking Company in this case, the Court must determine whether they were individuals entitled to notice of the IRS summonses. See Bancsi v. Pennington, 812 F.Supp. 759, 760-761 (N.D. Ohio 1992).
Section 7609(a) requires that the IRS serve notice to the individuals whose records they have summoned in a third-party summons. Those individuals are then entitled to petition this Court to quash the summons. 26 U.S.C. § 7609(b)(2). However, the IRS need not serve such notice where the third-party summons is issued in aid of the collection of "an assessment made or judgment rendered against the person with respect to whose liability the summons is issued." 26 U.S.C. § 7609(c)(2)(D)(i). If the IRS is not required to provide notice of a summons issued in the aid of collection, then no person can move to quash such a summons. Bancsi, 812 F.Supp. at 761. This Court then lacks jurisdiction to review a petition to quash a collection summons. Church of Human Potential, Inc. v. Vorsky, 636 F.Supp. 93, 94 (D.N.J. 1986).
In the instant case, IRS Revenue Officer Bauman states in his declaration that the summonses to Fahey Banking Company were issued partly in aid of the collection of the unpaid tax liability of Stop 26 as he was seeking to determine the officers of Stop 26 who could be potentially liable under 26 U.S.C. § 6672. Indeed, 26 C.F.R. § 301.7609-4(a)(2)(ii) provides that "[s]ummonses issued for the purpose of ascertaining responsible corporate employees or officers for the 100 percent penalty under section 6672, so as to assist in collecting the amount of withheld taxes which have been assessed against the corporation" are excluded from the Section 7609 procedures, including the notice requirement. While Officer Bauman also declares that he issued the summonses for other reasons in addition to the aid in collection reason, this does not defeat the application of the notification requirement exemption. Barmes v. United States, 199 F.3d 386, 388 (7th Cir. 1999) (notice exception applies to every summons issued in aid of collection even if the summons identifies additional purposes for the summons); but see Ip v. United States, 205 F.3d 1168 (9th Cir. 2000) (notice exception does not apply to every summons issued in aid of collection, but applies only where the assessed taxpayer has a recognized legal interest in the records summoned).
The undersigned recommends that the Court decline to follow Ip because Ip involved facts where the petitioner had no outstanding tax liability and legal relationship to the taxpayer who had a tax assessment against him.
For the foregoing reasons, the undersigned recommends that the Court GRANT Respondent's motion to dismiss, dismiss Petitioners' petition to quash and dismiss the instant case. Because part of the purpose in issuing the third-party recordkeeper summonses was to aid in the collection Stop 26's tax liability by ascertaining the responsible corporate employees or officers under 26 U.S.C. § 6672, and that section is excluded from the procedures of 26 U.S.C. § 7609, including the notice procedures, Petitioners were not entitled to notice and therefore lack the right to petition to quash the summonses. Because the summonses were issued in aid of collection and are exempt from the notification requirement, the undersigned recommends that the Court find that Respondent has not waived its sovereign immunity to be sued in this case.
B. EQUITABLE ESTOPPEL
Petitioners assert that they relied upon the preprinted form accompanying the copy of the notice sent to them which stated that noticed individuals may file a petition to quash the summonses and outlined the steps to do so. ECF Dkt. #6. Petitioners cite Bridgeport Music, Inc. v. Diamond Time, LTD., 371 F.3d 883 (6th Cir. 2004) and Fisher v. Peters, 249 F.3d 433 (6th Cir. 2001) as support. They contend that Respondent is estopped from asserting a policy contrary to those instructions and thus Respondent is foreclosed from claiming that these procedures are inapplicable to Petitioners. Respondent asserts that the mere receipt of the notices by Petitioners does not confer a right under 26 U.S.C. § 7609 to move to quash the summonses when the statute itself excepts the necessity of notice to them. ECF Dkt. #6 at 2-3. Respondent also asserts that the caselaw cited by Petitioners is inapposite to the instant case and Petitioners cannot otherwise meet their heavy burden of showing that they would otherwise be entitled to equitable estoppal against Respondent. Id.
The undersigned recommends that the Court find that Petitioners' estoppel argument does not rise to the level to be used against the federal government in the instant case. First, "[t]he actions of the IRS cannot confer jurisdiction upon this court." Munsell v. United States, 651 F.Supp. 698, 700 (D. Nev. 1986). In Munsell, the IRS served a 26 U.S.C. § 7609 summons on Attorney Gewerter, as a third-party recordkeeper, requesting that he provide testimony and produce all books and records of Playtimes Unlimited, a company in which Gewerter and Munsell were partners. The IRS issued the summons in order to determine Munsell's compliance with the internal revenue laws from 1982 through 1984. The IRS erroneously served Munsell with a copy of the summons and he thereafter petitioned the Nevada District Court to quash the summons issued to Gewerter. Munsell asserted, inter alia, that since the IRS improperly served him notice of the summons, the IRS was estopped from denying that Gewerter was a third-party recordkeeper and that he was a party entitled to notice who may institute a proceeding to quash the summons. Munsell, 651 F.Supp. at 700.
The Nevada District Court held that:
The actions of the IRS cannot confer jurisdiction upon this court. Although Special Agent Gertsch may have provided notice of the summons to Munsell, unless Munsell is in fact a party entitled to notice as defined by 26 U.S.C. § 7609(a), he lacks standing to institute a proceeding to quash pursuant to 26 U.S.C. § 7609(b)(2) . . .Id. Other courts have also held that petitioners are not conferred procedural rights denied to them by statute just because the IRS mistakenly or gratuitously sent them notice of summons. See e.g., Reed v. United States, Civil No. F 83-272, 1984 WL 3225, 55 A.F.T.R.2d 85-458, 85-2 U.S.T.C. P 9597 (N.D. Ind. Nov. 30, 1984), unpublished.
Similarly, the IRS' action in providing notice to Petitioners in the instant case, whether done erroneously or gratuitiously, does not confer upon Petitioners the standing that they otherwise lack under 26 U.S.C. § 7609(a). Id. Officer Bauman's erroneous or gratuitous sending of notice to Petitioners does not confer jurisdiction upon this Court because Petitioners are not parties entitled to notice under the statute and they therefore lack standing to commence a proceeding to quash the summonses.
Moreover, equitable estoppel is generally not available against the government. Housing Authority of Elliot County v. Bergland, 749 F.2d 1184, 1190 (6th Cir. 1984). The traditional elements required to invoke equitable estoppel are a definite misrepresentation by one party, intended to induce some action in reliance, and which does reasonably induce action in reliance by another party to his detriment. United States v. Guy, 978 F.2d 934, 937 (6th Cir. 1992), citing Heckler v. Community Health Services, 467 U.S. 51, 59, 104 S.Ct. 2218, 2223, 81 L.Ed.2d 42 (1984); United States v. Varani, 780 F.2d 1296, 1304 (6th Cir. 1986). "In order to assert estoppel against the government, a private party must at least demonstrate that the traditional elements of an estoppel are present." Guy, 978 F.2d at 938, citing Heckler, 467 U.S. at 61. Additionally, the reliance on the government's misrepresentation "must have been reasonable in that the party claiming the estoppel did not know nor should it have known that its adversary's conduct was misleading." Id., citing Wilber National Bank v. United States, 294 U.S. 120, 124-125, 55 S.Ct. 362, 79 L.Ed. 798 (1935). The United States Supreme Court had held that:
If, at the time when he acted, such party had knowledge of the truth, or had the means by which with reasonable diligence he could acquire the knowledge so that it would be negligence on his part to remain ignorant by not using those means, he cannot claim to have been misled by relying upon the representation or concealment.Heckler, 467 U.S. at 59, n. 10. "Estoppel is an affirmative defense and the burden of proof is on the person asserting it." Banks v. C.I.R. 345 F.3d 373, 387 (6th Cir. 2003), quoting Crosley Corp. v. United States, 229 F.2d 376 (6th Cir. 1956) (citing Helvering v. Brooklyn City R.R. Co., 72 F.2d 274, 275 (2nd Cir. 1934)).
Petitioners in the instant case assert that Respondent should be equitably estopped from denying that they can file a petition to quash the summonses because they relied upon the preprinted form attached to the notices which contained instructions for filing a petition to quash an IRS summons and stated that "if you object to the summons, you are permitted to file a lawsuit in the United States district court." ECF Dkt. #5, Exhibit A. Petitioners rely on Bridgewater Music, 371 F.3d at 890, and Fisher, 249 F.3d at 444, in support of their assertion.
Neither case cited by Petitioners is factually similar to the case at bar. Bridgewater Music involved non-governmental parties and the Court holding that the defendant copyright clearance company was not equitably estopped from asserting a limitations defense to a contributory infringement claim by plaintiff's owner. Fisher involved a governmental defendant, but the Court held that the plaintiff could not assert equitable estoppel claim against the acting secretary of the United States Air Force on her employment discrimination and harassment claims because plaintiff had the opportunity to pursue remedies through military and was not barred by the military statute of limitations.
These cases both involved equitable estoppel holdings, but the one most relevant of the two is the Fisher case as it involved a governmental defendant. In Fisher, the Sixth Circuit Court of Appeals rejected the plaintiff's argument that the defendant should be estopped from arguing that her claims were non-justiciable military claims because when she pursued the military channels for her claims, the defendant argued that the military lacked jurisdiction and she had to seek civilian remedies. 249 F.3d at 444. The Court held that, "[n]otions of waiver and estoppel cannot confer on a court of the United States the jurisdiction to decide a claim." Id. [citations omitted]. The Court held that barring the defendant from arguing justiciability on a non-justiciable claim was conferring jurisdiction where it did not exist. Id. Nevertheless, the Court then proceeded to review the case as if estoppel was available on the issue of jurisdiction. Id.
The Fisher Court held that "[t]he Government may not be estopped on the same terms as any other litigant." 249 F.3d at 444, quoting Heckler, 467 U.S. at 60. The Court also cautioned that a party attempting to estop the government bears a very heavy burden. Id., citing Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Comp. Programs, 976 F.2d 934, 937 (5th Cir. 1992); Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 422(1990) (which noted that the United States Supreme Court has reversed every finding of estoppel against the government that had come before it). The Sixth Circuit also required that "[a]t the very minimum, some affirmative misconduct by a government agent is required as a basis of estoppel." Fisher, 249 F.3d at 444, citing Guy, 978 F.2d at 938 (citations omitted). The Fisher Court quoted the Fifth Circuit's holding in Ingalls Shipbuilding, Inc. that an individual seeking to apply equitable estoppel against the government must establish not only the traditional elements of estoppel, but also, "'more than mere negligence, delay, inaction, or failure to follow an internal agency guideline.'" Fisher, 249 F.3d at 444-445, quoting Ingalls Shipbuilding, Inc., 976 F.2d at 938 (citations omitted). Applying the law that it had presented, the Fisher Court found that the plaintiff did not meet the elements in order to apply equitable estoppel because she still had military channels available to her in which to pursue her claims and the statute of limitations to submit those claims had not expired. Id. at 445.
As in Fisher, if equitable estoppel did apply to cases involving the Court's jurisdiction, the undersigned recommends that the Court find that Petitioners have not met their heavy burden of establishing the elements of equitable estoppel or of showing that theirs is a case which requires the limited application of equitable estoppel to the federal government. First, Petitioners fail to show evidence of any affirmative misconduct on the part of the government. Fisher, 249 F.3d at 444, citing Guy, 978 F.2d at 938. The undersigned doubts that an erroneously or gratuitously sent form with preprinted instructions for filing a petition to quash the summonses constituted affirmative misconduct or a misrepresentation. However, even stretching to presume that this preprinted form did constitute affirmative misconduct or a misrepresentation, Petitioners cannot show that the government intended to induce their reliance upon the preprinted form, especially when they were not entitled to notice under the statute. Guy, 978 F.2d at 937. Moreover, Petitioners cannot establish that their reliance on the government's "misrepresentation" in the form was reasonable as Petitioners had the means by which they could have, with reasonable diligence, acquired the knowledge relating to their ability to file a petition to quash. Heckler, 467 U.S. at 59, n. 10; Guy, 978 F.2d at 938. In fact, the form instructions that accompanied the copies of the notices sent to Petitioners referred to 26 U.S.C. § 7609 and stated that "the relevant provisions of the Internal Revenue Code are enclosed with this notice." ECF Dkt. #6, Exhibit A. Finally, Petitioners fail to show anything more than negligence or courtesy on the part of the government is serving them with a copy of the summonses. Fisher, 249 F.3d at 444-445, quoting Ingalls Shipbuilding, Inc., 976 F.2d at 938.
For these reasons, the undersigned recommends that the Court reject Petitioners' request to apply equitable estoppel to the instant case.
C. TIMELINESS
Even presuming that Petitioners were entitled to notice under the statute, or assuming that they were entitled to equitable estoppel against Respondent for relying upon the notice, Petitioners cannot overcome the hurdle of establishing that they timely filed their petition to quash the summonses. In his declaration, Officer Bauman stated that he had issued the summonses to Fahey Banking Company on June 10, 2004 and he also sent notices to Petitioners by certified mail on June 10, 2004. ECF Dkt. #4, Exhibit #2. Petitioners filed the instant petition to quash with this Court on July 2, 2004. ECF Dkt. #1.
Respondent moves the Court to dismiss the instant case because Petitioners have not timely filed their petition to quash with the Court within the twenty days of the date that the notice was sent to them pursuant to 26 U.S.C. § 7609. ECF Dkt. #4 at 7-8. Petitioners respond that the twenty-day period begins to run from the date that they received the notice, not the date that the notice was mailed. ECF Dkt. #5. Petitioners also assert that Rule 6 of the Federal Rules of Civil Procedure applies to extend the twenty-day time period by three days for service by mail. Id.
The undersigned recommends that the Court GRANT Respondent's motion to dismiss Petitioners' petition and the instant case based upon untimeliness. Petitioners are incorrect in asserting that the twenty-day period within which to file a petition to quash a summons begins to run on the date that they received the notice. 26 U.S.C. § 7609 provides that a person entitled to notice of a third-party summons "shall have the right to bring 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)." 26 U.S.C. § 7609(b)(2)(A) (emphasis added). Notice is sufficient pursuant to 26 U.S.C. § 7609(a)(2) if, on or before the third day after the summons is issued, the notice is mailed by registered or certified mail to the last known address of such person, or in the absence of a last known address, is left with the person summoned. The Sixth Circuit Court of Appeals has explicitly held that, "according to the statute [ 26 U.S.C. § 7609], 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." Shisler v. U.S., 199 F.3d 848, 850 (6th Cir. 1999). In Clay v. United States, the Sixth Circuit held that
The jurisdiction of a district court to hear a proceeding to quash a third-party recordkeeper summons is based on 26 U.S.C. § 7609(h). A proceeding to quash is, in effect, a civil suit against the United States. It is fundamental that the United States, as sovereign, is immune from suit without its consent. United States v. Dalm, 494 U.S. 596, 608, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990); Lehman v. Nakshian, 453 U.S. 156, 160, 101 S.Ct. 2698, 69 L.Ed.2d 548 (1981); United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). The "terms of its consent to be sued in any court determine that court's jurisdiction to entertain the suit," and "[a] statute of limitations requiring that a suit against the Government be brought within a certain time period is one of those terms." Dalm, 494 U.S. at 608, 110 S.Ct. 1361. Moreover, any waiver of the United States' immunity from suit must be unequivocal. United States Dep't of Energy v. Ohio, 503 U.S. 607, 615, 112 S.Ct. 1627, 118 L.Ed.2d 255 (1992); United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976).
Because any exercise of a court's jurisdiction over the United States depends on the United States' consent, the waiver of sovereign immunity in regard to 26 U.S.C. § 7609 must be strictly construed. Ponsford, 771 F.2d at 1309. The wording of the statute is clear and unambiguous. Stringer, 776 F.2d at 275. The plain language of section 7609(b)(2)(A) mandates that motions to quash must be filed within twenty days from the date notice is given. Subsection (a)(2) states that notice is "sufficient" or "given" on the date notice is mailed by the IRS by certified or registered mail to the taxpayer under investigation. Id. As the court in Faber stated, "The government's waiver of sovereign immunity ends — and thus jurisdiction ends — when the twenty-day limitation period has run." 921 F.2d at 1119. See also Callahan v. Schultz, 783 F.2d 1543, 1545 (11th Cir. 1986) (government's consent to sue requires strict compliance with twenty-day rule).199 F.3d 876, 879 (6th Cir. 1999). Based upon the clear wording of the statute, as well as the Sixth Circuit caselaw, the undersigned recommends that the Court find that the twenty-day period for filing a petition to quash the IRS summons began to run on June 10, 2004, the date that Officer Bauman mailed or "gave" the notices to Petitioners by certified mail. Petitioners therefore had until June 30, 2004, twenty days later, in which to file their petition to quash the summonses. However, Petitioners assert that Rule 6 of the Federal Rules of Civil Procedure applies to extend the twenty-day time period for filing a petition to quash an IRS summons by three additional days for service by mail. ECF Dkt. #5. Rule 6(e) of the Federal Rules of Civil Procedure provides in relevant part that:
Whenever a party has the right or is required to do some act or take some proceedings within a prescribed period after the service of a notice or other paper upon the party and the notice or paper is served upon the party under Rule 5(b)(2)(B), (C), or (D), 3 days shall be added to the prescribed period.FED. R. CIV. P. 6(e). Petitioners contend that their petition is therefore timely filed because it
was filed after the twenty-day time period but before the twenty-three day time period which
Based upon the foregoing, Petitioners had until June 30, 2004, twenty days from the June the date that Officer Bauman mailed the notices to them, in which to file their petition to quash the summonses. Petitioners filed the petition to quash the summonses with the Court on July 2, 2004, just beyond the expiration of the twenty-day period. The undersigned therefore recommends that the Court GRANT Respondent's motion to dismiss Petitioners' petition to quash the summonses and the instant case.
includes the three-day extension under Rule 6(e). ECF Dkt. #5. The Sixth Circuit Court of Appeals has clearly held that Rule 6(e) does not apply to extending the twenty-day time period for an individual to file a petition to quash an IRS third-party recordkeeper summons. Clay, 199 F.3d at 880. Clay, the Court found that applying Rule 6 of the Federal Rules of Civil Procedure to 26 U.S.C. § 7609(b)(2)(A) would "contravene the express language" of 26 U.S.C. § 7609, which requires the filing within twenty days [n]otwithstanding any other law or rule of law. Id. at 880, quoting 26 U.S.C. § 7609(b)(2)(A) (emphasis added). The Clay Court also ruled that Rule 6(e) did not apply to 26 U.S.C. § 7609(b)(2)(A) because Rule 6(e) expressly states that it only applies to "parties." Clay, 199 F.3d at 880. The Court found that Rule 6(e) therefore cannot apply until after a suit is commenced in federal court by the filing of the petition to quash the summons because a taxpayer is not a party until that time. Id. The Court also stated that Rule 82 of the Federal Rules of Civil Procedure bars the application of Rule 6(e) to 26 U.S.C. § 7609(b)(2)(A) because Rule 82 mandates that the Federal Rules of Civil Procedure "not be construed to extend or limit the jurisdiction of the United States district courts." Id. III. CONCLUSION AND RECOMMENDATION