Steeves v. Internal Revenue Service ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DEAN ALLEN STEEVES, Acting Case No.: 20cv978-LAB Trustee of Brother’s Keeper 12 Ministries ORDER DENYING AMENDED 13 PETITION; AND Plaintiff, 14 v. ORDER GRANTING MOTION TO 15 DISMISS INTERNAL REVENUE SERVICE 16 Defendant. 17 18 Plaintiff filed a motion to quash a May 6, 2020 I.R.S. summons on Wells 19 Fargo Bank, in connection with an investigation of Camp Noble, Inc. Because of a 20 scrivener’s error in the summons, Wells Fargo notified the I.R.S. that it would not 21 produce the requested information, though it was willing to comply with a summons 22 allowing it the appropriate time to respond. The government then withdrew the 23 May 6 summons. 24 On June 25, 2020, the I.R.S. issued a new summons to Wells Fargo, which 25 was served on Wells Fargo and mailed to Camp Noble, Inc. and Plaintiff Dean 26 Steeves that same day. 27 Because Steeves had suggested that Wells Fargo might not comply with the 28 May 6 summons, the Court on July 1 ordered his counsel to confirm whether the 1 motion was moot. On July 9, Steeves filed a response informing the Court that the 2 May 6 summons had been withdrawn, but that a new summons (the June 25 3 summons) had been issued. His response also included a request that the Court 4 treat the new subpoena as a revision of the previous subpoena, “subject to the 5 Court’s jurisdiction in this case.” (Docket no. 9 at 2:1–4.) He also requested an 6 extension until July 23 to submit his revised motion to quash, which he believed 7 would be timely. The Court by minute order permitted him to file his revised motion 8 by July 23. The Court did not, however, decide whether the revised motion he 9 intended to file would be timely or meritorious. Nor could it have decided the issue 10 of timeliness because Steeves’ response did not disclose when notice was mailed 11 to him. 12 The I.R.S. then filed a motion to dismiss the action as frivolous and for lack 13 of jurisdiction, and Steeves filed an opposition on August 31. But because it 14 appeared he might have filed it in haste while under the impression the deadline 15 was shorter than it actually was, the Court gave him leave to withdraw and amend 16 it. (Docket no. 20.) If he wanted to do so, however, he was to have filed a notice 17 by October 1; his decision not to file a notice by October 1 would be construed as 18 a decision to stand on the opposition as filed. (Id.) Steeves has not filed the 19 required notice, nor has he filed anything else. The Court therefore accepts his 20 August 31 opposition as giving his position on the motion to dismiss. 21 Discussion 22 Steeves’ amended motion to quash argues that the I.R.S. has no authority 23 to investigate Camp Noble, because it is “an unregistered Private Ministry/Church,” 24 which he argues is exempt not only from filing requirements and taxation, but also 25 exempt from I.R.S. scrutiny or inquiry. He supports Public Law 91-72, 83 Stat., 26 Sections 508(c)(1)(A) and 6033(a)(2)(A)(i) (i.e., 26 U.S.C. §§ 508(c)(1)(A) and 27 6033(a)(2)(A)(i)), and argues that these statutes mean the I.R.S. cannot inquire 28 into Camp Noble’s finances. His opposition reiterates these arguments. 1 In fact, these two sections merely exempt churches and certain other 2 religious bodies from the necessity of applying for recognition of their exempt 3 status under § 501(c)(3) and from requirements that they file tax returns. Nothing 4 in either statute suggests that a bank’s financial records concerning the financial 5 activity of a religious organization are exempt from investigation. 6 Steeves’ motion to quash also cites Bothke v. Fluor Eng’rs & Constructors, 7 713 F.2d 1405, 1414 (9th Cir. 1983) for the proposition that I.R.S. officers that 8 cannot conduct investigations until they first establish tax liability. Bothke does not 9 stand for this proposition, however. Rather, the portion of holding Steeves cites 10 deals with statutory authorization for levies on an allegedly delinquent taxpayer’s 11 property, which has not happened here. The I.R.S. has broad investigative 12 authority, including the authority to examine records or witnesses in order to 13 determine whether tax liability exists or to make a return where none has been 14 made. See 26 U.S.C. § 7602(a). 15 In short, Steeves’ arguments have no basis in law, and are frivolous. 16 Furthermore, the government’s motion provides evidence that Camp Noble 17 is in fact a for-profit defense contractor doing business as 3-D Marketing and is 18 registered as a California corporation. The supporting evidence shows that Camp 19 Noble has been contracting and receiving payments, including checks from the 20 U.S. Department of Defense, from 2006 through this year. The government also 21 provides evidence that Camp Noble filed federal tax returns in 2009 and 2010. 22 Steeves’ opposition does not address this, but merely reasserts that Camp Noble 23 is the integrated auxiliary of a church. 24 The Court need not reach the merits, however, because the government’s 25 motion shows that Steeves did not comply with jurisdictional requirements. See 26 Steel Co. v. Citizens for a Better Environ., 523 U.S. 83, 93–94 (1998) (holding that 27 courts are obligated to confirm their own jurisdiction before reaching the merits). 28 Ordinarily the United States’ sovereign immunity would deprive the Court of 1 jurisdiction. See F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994). The United States 2 has waived its immunity to a limited extent under 26 U.S.C. § 7609, which 3 authorizes a motion to quash an I.R.S. summons. But when the government 4 waives its immunity and consents to be sued, limitations and conditions placed on 5 that waiver must be strictly observed. Soriano v. United States, 352 U.S. 270, 276 6 (1957). This requires, among other things, strict compliance with notice 7 requirements and deadlines. See Mollison v. United States, 568 F.3d 1073, 1075– 8 77 (9th Cir. 2009) (analyzing whether movant had complied with § 7609’s formal 9 requirements, such that the district court could exercise jurisdiction over the motion 10 to quash). Jurisdiction is presumed to be lacking, until the party invoking it (here, 11 Steeves) establishes it. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 12 375, 378 (1994). 13 The government’s motion points out that a motion to quash must be filed 14 within 20 days after notice of the summons is mailed to the taxpayer or other 15 notified person. See § 7609(a)(2) and (b)(2)(A); Ponsford v. United States, 771 16 F.2d 1305, 1309 (9th Cir. 1985). The relevant date is the date notice was mailed 17 or otherwise served, not the date it was received. See § 7609(a)(2). The 18 government’s motion cites evidence that the notice was mailed on June 25, 2020. 19 (See Docket no. 15-2 (Declaration of Revenue Agent), ¶¶ 31, 32.) Steeves 20 therefore had until July 15 to file his motion to quash. 21 The government’s motion addresses the possibility that when it granted 22 Steeves’ request for more time to file an amended motion (Docket no. 9), the Court 23 intended to extend the statutory 20-day time limit. That was not the Court’s intent, 24 nor did the Court have authority to extend the time limit. See Soriano, 568 F.3d at 25 1075 (holding that courts must not imply exceptions to conditions on waiver of 26 sovereign immunity). Steeves could not have reasonably expected the Court to 27 calculate the deadline for him. See Jacobsen v. Filler, 790 F.2d 1326, 1364–65 28 (9th Cir. 1986) (observing that it is not the role of a trial court to intervene by 1 ||correcting a litigant’s mistakes). And in any event, the Court could not have 2 ||calculated the deadline because Steeves’ request did not disclose the date the 3 ||notice was mailed to him. The request merely suggested that if he filed it by the 4 ||deadline he requested, it would be timely. 5 Steeves’ opposition does not address this jurisdictional defect, which 6 ||amounts to a concession of this point. See, e.g. Johnson v. Macy, 145 F. Supp. 3d 7 ||907, 918 (C.D. Cal. 2015) (treating failure to address opponent’s argument in 8 || opposition as a concession of that claim). He has not met his burden of establishing 9 || jurisdiction. See Kokkonen, 511 U.S. at 378. 10 Conclusion and Order 11 For these reasons, Defendant’s motion to dismiss is GRANTED. 12 ||The amended motion to quash (Docket no. 11) is DENIED for lack of jurisdiction, 13 ||and this action is DISMISSED WITHOUT LEAVE TO AMEND. 14 15 IT IS SO ORDERED. 16 Dated: October 6, 2020 7 Laud A Gum 18 Honorable Larry Alan Burns 19 Chief United States District Judge 20 21 22 23 24 25 26 27 28