Tilley v. United States

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
March 9, 2005
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-10703
Summary Calendar
THOMAS E. TILLEY,
Plaintiff-Appellant,
versus
UNITED STATES OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Texas
3:03-CV-769-D
Before WIENER, BENAVIDES, and STEWART, Circuit Judges.
PER CURIAM:*
Thomas E. Tilley challenges the district court’s denial of his petition to quash an Internal
Revenue Service (IRS) summons that was directed to a third-party recordkeeper in possession of
information pertaining to his tax liability for the years 2000 and 2001. Tilley argues that the IRS
failed to comply with certain administrative prerequisites that he believes were necessary to
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
“properly” effectuate the summons. We reject his contention and hold that the district court’s denial
of the petition to quash the IRS summons must be affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
The IRS initiated an investigation related to Tilley’s tax liabilities from the years 2000 and
2001. As such, it was necessary for the IRS to issue a third-party summons to First Horizon Home
Loan (First Horizon), a company located in Dallas, Texas, that was in possession of some documents
pertaining to Tilley’s tax records.1 Thereafter, Tilley objected to First Horizon’s receipt of the
summons and moved to quash it via this action.
The parties proceeded before a magistrate judge who recommended that the motion be denied
upon his finding that the summons that was issued to First Horizon was consistent with the purposes
of the Internal Revenue Code. Additionally, the magistrate judge observed that the IRS had
jurisdiction to issue the summons and that the purposes underlying it were legitimate. The judge also
noted that the purpose of the summons was simply to secure Tilley’s pertinent tax information and
that the means chosen by the IRS to issue the summons comported with the relevant federal statutory
procedures. Accordingly, the magistrate directed First Horizon to provide all germane information
related to Tilley’s tax liabilities from the relevant years in question. The district court adopted the
magistrate’s recommendation and this appeal followed.
DISCUSSION
A. Standard of Review
In our consideration of the denial of the petition to quash the summons, the magistrate judge’s
1
In addition, a copy of the summons was also mailed to Tilley’s personal residence in Chapel
Hill, North Carolina.
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factual findings, as adopted by the district court, are reviewed under the clearly erroneous standard.
See Mazurek v. United States, 271 F.3d 226, 229 (5th Cir. 2001). Thereafter, we evaluate whether
a prima facie case has been established pursuant to the factors articulated by the Supreme Court in
United States v. Powell, 379 U.S. 48 (1964). The Powell court stated that in order for the IRS to
enforce a summons, it must demonstrate that: (1) the basis for the underlying investigation is
legitimate, (2) the investigation’s relevancy causally relates to that basis, (3) the IRS does not already
possess the information being sought, and (4) the administrative procedures established by the
Internal Revenue Code have been adhered to. Id. at 58. In Mazurek, we recognized that the burden
on the United States to establish a prima facie case pursuant to the governing Powell factors is de
minimus, given that, for example, a “simple affidavit” from the IRS agent issuing the summons will
suffice. 271 F.3d at 231. Conversely, if the United States successfully establishes a prima facie case,
the party seeking to quash the summons bears the more daunting burden of either refuting “any of
the Powell factors, or [ ] demonstrating that the enforcement of the summons would result in an
abuse of the court’s process.” Id.
B. Analysis
Tilley asserts that the IRS failed to comply with the administrative prerequisites established
by 26 U.S.C. § 7609 et seq., the statutory provision which governs the procedures for the issuance
of third-party summonses. This argument apparently takes the position that the IRS failed to comply
with its own administrative procedures. Specifically, Tilley argues that neither First Horizon nor
himself were served with an attested copy of the summons, maintaining that § 7609 et seq., at least
implicitly, mandates such attestation.
Tilley’s argument derives from what he perceives to be the interplay between § 7609(a)(2)
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and § 7603(a). Section 7609(a)(2) provides in relevant part that notice for a third-party summons
will be sufficient if it served in a manner consistent with § 7603. In turn, § 7603 provides that a
general summons must be served by means of “an attested copy delivered in hand to the person to
whom it is directed, or at his last and usual place of abode.” 26 U.S.C. § 7603(a) (emphasis added).
Accordingly, Tilley argues that §7609 incorporated § 7603, and therefore, the third-party summons
issued to First Horizon was ineffectual as it bore no attestation.
Several courts have considered averments similar to those proffered by Tilley in this matter.
In Conder v. United States, 17 F.3d 1331 (10th Cir. 1994) the Tenth Circuit held that §7609 was
not intertwined with § 7603. The Conder panel found that, inter alia, §7609's mention of §7603 was
simply alluding to the fact that the taxpayer whom the third-party summons related would receive
sufficient notice of the summons if it were personally served, or, if a copy was left at the individual’s
last and usual place of residence. Id. at 1333. Courts in the Ninth and Sixth Circuit, relying
principally on the reasoning employed in Conder, have held similarly. See, e.g., Kondik v. United
States, 81 F.3d 655 (6th Cir. 1996); Fortney v. United States, 59 F.3d 117 (9th Cir. 1995). We too
believe that Conder’s interpretation comports with the original understanding of § 7609.
Tilley avers that the Eighth Circuit’s decision in United States v. Mimick, 952 F.2d 230 (8th
Cir. 1992), which held that §7609 did indeed incorporate an attestation requirement, should be found
to constitute persuasive aut hority. We however disagree, and assuming arguendo that §7609 did
mandate that an IRS summons to a third-party requires attestation, this circuit has long recognized
that we will refrain from requiring strict adherence to the technical niceties of the Internal Revenue
Code as a predicate to enforcing an IRS summons. See United States v. Bank of Moulton, 614 F.2d
1063, 1066 (5th Cir. 1980). Instead, our determination regarding whether an IRS summons will be
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enforced turns on the degree to which the objecting party would be prejudiced by the IRS’s alleged
failure to comply with its own administrative procedures, particularly as it pertains to the issuance
of a summons. Id.
Accordingly, we hold that the denial of the petition to quash the third-party summons was
appropriate, and therefore must be affirmed.
AFFIRMED.
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