Samuel Dyer Coriat v. USA

USCA11 Case: 23-11648 Document: 27-1 Date Filed: 12/04/2023 Page: 1 of 7
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 23-11648
Non-Argument Calendar
____________________
SAMUEL BARNABY DYER CORIAT
SHEYLA DYER CORIAT,
PIERO MARTIN DYER CORIAT,
Petitioners-Appellants,
versus
UNITED STATES OF AMERICA,
INTERNAL REVENUE SERVICE,
TRUIST BANK,
WELLS FARGO BANK, NA,
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2 Opinion of the Court 23-11648
Respondents-Appellees.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:22-cv-22788-RNS
____________________
Before WILLIAM PRYOR, Chief Judge, and BRASHER and ABUDU, Cir-
cuit Judges.
PER CURIAM:
The Dyer Coriat siblings—Samuel Barnaby, Sheyla, and
Piero Martin—natives and citizens of Peru, appeal the dismissal of
their petitions to quash summonses issued by the Internal Revenue
Service to their banking institutions in the United States. 26 U.S.C.
§ 7609(b). The Dyer Coriats argue that the district court erred in
dismissing their petitions and denying an evidentiary hearing to in-
vestigate whether the Service knew that the Peruvian government
had requested the information in bad faith. We affirm.
On August 23, 2022, the Dyer Coriats received notices of
summonses that the Service issued to their respective banks in the
United States. The Service issued the summonses after receiving
exchange-of-information requests from Peru’s National Superin-
tendence of Customs and Tax Administration under the Tax Infor-
mation Exchange Agreement of 1990 between the United States
and the Republic of Peru.
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23-11648 Opinion of the Court 3
The Peruvian Tax Administration stated that it was examin-
ing each sibling’s income tax in fiscal years 2016, 2017, and 2018
because each sibling had failed to declare taxes for income from
foreign sources for those fiscal years and failed to submit docu-
ments required to correct the inconsistencies. It stated that each
sibling owned a bank account at the banks and provided bank ac-
count numbers. It explained that, to determine if the Peruvian tax-
payers had complied with their tax obligations, it was requesting
reports of the bank account statements for these three years
“where [each sibling] appears as a direct owner, or jointly . . . , or
through intermediary entities, or as beneficial ownership, at the
[named] financial entity” and reports of the “benefits obtained, and
the withholding tax applied in the United States to [each sib-
ling] . . . regarding the bank account.”
A week after receiving the summonses, the Dyer Coriats
filed petitions to quash the summonses on three grounds. Id. They
asserted that the Service failed to identify a legitimate good-faith
purpose and failed to comply with standards for issuing valid sum-
monses, United States v. Powell, 379 U.S. 48 (1964). They argued that
the summonses violated the tax treaty by seeking “private infor-
mation which is precluded under Peruvian law without the Peru-
vian government complying with certain conditions precedent,”
under the Peruvian Constitution. And they asserted that the sum-
monses “fail[ed] to identify the kind of investigation against
[them].”
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After the district court consolidated their petitions, the Ser-
vice moved to dismiss the petitions for failure to state a claim.
Fed. R. Civ. P. 12(b)(6). The Service argued that it had acted in
good faith, and the tax treaty obliged the Service to issue sum-
monses on behalf of Peru without considering Peruvian law. The
Service argued that it complied with the Powell factors and issued
the summonses only after determining that the request was valid.
The Service also argued that, because it acted in good faith, it was
irrelevant whether the Peruvian Administration also acted in good
faith. The Service attached to its motion declarations from Tina
Masuda and Floyd Penn of the Service’s Exchange of Information
Program regarding the process the Service followed to issue the
summonses.
The Dyer Coriats responded and agreed that the Service
“ha[d] made its prima facie case for enforcement of the summons
[under Powell] by filing a sworn affidavit by the investigating
agent.” But they maintained that the Peruvian Administration
acted in bad faith, and the Service knew about the “long history of
criminal corruption within Peru’s government.” The Dyer Coriats
requested an evidentiary hearing to prove that the tax treaty “only
permits Peru to request bank information if it complies with its
Constitution” and argued that they could establish that the Service
had issued the summonses for an improper purpose. They attached
articles about corruption within the Peruvian government.
A magistrate judge issued a report and recommendation
that the motion to dismiss be granted. The magistrate judge ruled
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23-11648 Opinion of the Court 5
that the declarations by Service agents contained the necessary in-
formation to establish a prima facie case for the enforcement of the
summonses and that the Dyer Coriats failed to present evidence
that would support “even a slight inference” that the Service acted
in bad faith. Because the Service’s prima facie case was undisputed
and unrebutted, the magistrate judge found that an evidentiary
hearing was unnecessary. The Dyer Coriats objected that there was
“significant evidence” that the Service did not issue the summonses
in good faith and that an evidentiary hearing was needed to estab-
lish whether the summonses were overbroad as to Piero’s bank
records and would result in the production of irrelevant docu-
ments.
The district court adopted the report and recommendation,
granted the motion to dismiss, and denied an evidentiary hearing.
The district court determined that the Service acted in good faith.
The district court ruled that the Dyer Coriats lacked standing to
challenge the summonses as overbroad and that, even if they had
standing, it would decline to address the challenge because it was
raised for the first time in their objections despite having sufficient
time to raise it in their response to the motion to dismiss.
We review an order enforcing a summons by the Service for
clear error. Presley v. United States, 895 F.3d 1284, 1288 (11th Cir.
2018). To enforce a summons, the Service must establish that the
investigation will be conducted pursuant to a legitimate purpose,
the inquiry will be relevant to that purpose, the information sought
is not already in the Service’s possession, and it has taken the
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administrative steps necessary to issue a summons. Powell, 379 U.S.
at 57–58. If the Service satisfies its burden by presenting the affida-
vit of the agent who issued the summons, the burden shifts to the
petitioner to disprove one of the four elements of the government’s
prima facie case or to persuade the district court that enforcement
would constitute an abuse of process. Id. at 58.
The Dyer Coriats argue that the district court erred in deny-
ing them an evidentiary hearing to determine whether the Service
knew that the Peruvian Administration made its request in bad
faith, but we disagree. The Supreme Court has instructed that a
“bare allegation of improper purpose does not entitle a taxpayer to
examine [Service] officials.” United States v. Clarke, 573 U.S. 248, 249
(2014). Instead, discovery or an evidentiary hearing is warranted
only when the taxpayers “can point to specific facts or circum-
stances plausibly raising an inference of bad faith” by the Service.
Id. at 254. “Naked allegations of improper purpose are not enough:
The taxpayer must offer some credible evidence supporting his
charge.” Id. Because the Dyer Coriats failed to allege facts giving
rise to a plausible inference of improper motive by the Service and
instead pointed only to the history of corruption within the Peru-
vian government, they failed to establish that an evidentiary hear-
ing was needed to examine the Service agents, who they conceded
established their prima facie case. See id.; Powell, 379 U.S. at 58; Pres-
ley, 895 F.3d at 1289 (We “may inquire as to only whether the [Ser-
vice] issued a summons in good faith” (emphasis added, internal
quotation marks omitted)).
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23-11648 Opinion of the Court 7
Regarding their challenge to the scope of the summonses,
the Dyer Coriats argue that they realized that the summonses were
overbroad a few days before filing their objections, so the district
court should have considered their argument. But we discern no
error. The Dyer Coriats did not present this challenge to the mag-
istrate judge, so the district court had broad discretion to refuse to
consider it. See Williams v. McNeil, 557 F.3d 1287 (11th Cir. 2009).
And even if the Dyer Coriats had timely raised that argument, they
failed to explain how they had standing to do so. See Sapuppo v. All-
state Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014).
We AFFIRM the dismissal of the Dyer Coriats’ petitions to
quash the summonses.