Alizadeh v. MUFG Union Bank et al, No. 2:2023mc00122 - Document 14 (E.D. Cal. 2023)
Court Description: FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Allison Claire on 05/26/23 RECOMMENDING that the 1 Motion to Quash be denied and this case closed. Referred to Judge Dale A. Drozd; Objections due within 21 days after being served with these findings and recommendations. (Licea Chavez, V)
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Alizadeh v. MUFG Union Bank et al Doc. 14 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ABE ALIZADEH, 12 13 14 15 16 No. 2:23-mc-00122 DAD AC Plaintiffs, v. FINDINGS AND RECOMMENDATIONS MUFG UNION BANK N.A., UNITED STATES OF AMERICA, et al., Defendants. 17 18 This matter is before the court on plaintiff’s motion to quash a service of summons issued 19 by the United States Revenue Officer David Barbearo (“IRS”) to MFUG Union Bank (“Union”). 20 ECF No. 1. The parties appeared before the court for a hearing on May 24, 2023. ECF No. 13. 21 Upon consideration of the arguments and briefing, the undersigned concludes that the motion 22 must be denied and the case closed because plaintiff lacks standing and the court lacks 23 jurisdiction to quash the summons. 24 I. 25 Relevant Background Plaintiff filed this miscellaneous case to quash an IRS summons on March 20, 2023. ECF 26 No. 1. On or about February 9, 2023 plaintiff received by mail a copy of a subpoena that was 27 sent to his bank, Union, which was issued January 25, 2023 and which was served on Union on 28 January 31, 2023. ECF No. 1-1 at 5-6. The summons was issued by the IRS to Union Bank “in 1 Dockets.Justia.com 1 the matter of Abe Alizadeh.” Id. The summons notes on its face that pursuant to IRC 2 7609(c)(2)(D), it is exempt from notice requirements pertaining to third party summonses, and 3 that pursuant to 12 USC § 3413(c) and 26 USC § 7609(j), it is also exempt from the notice 4 requirements of the Right to Financial Privacy Act. Id. 5 II. 6 Analysis Plaintiff asserts that the summons should be quashed because it was issued in retaliation 7 for his requesting a Collection Due Process or Equivalent Hearing in February of 2023, and that it 8 is overbroad and issued for an improper purpose. ECF No. 1 at 5-6. The court does not reach 9 these arguments on the merits because plaintiff lacks standing to bring the motion and the court 10 lacks jurisdiction to consider it. 11 A. Plaintiff Lacks Standing to Challenge the Summons 12 The United States is immune from suit unless there is a valid waiver of sovereign 13 immunity. Valdez v. United States, 56 F.3d 1177, 1179 (9th Cir. 1995). The only statute that 14 provides federal courts with jurisdiction to quash an IRS summons is 26 U.S.C. § 7609, making it 15 the exclusive method by which a taxpayer can challenge an IRS summons. See Ponsford v. 16 United States, 771 F.2d 1305, 1309 (9th Cir. 1985); Viewtech, Inc. v. United States, 2009 WL 17 3378990, at *1 (S.D. Cal. Oct. 16, 2009), aff’d, 653 F.3d 1102 (9th Cir. 2011). Congress “has 18 authorized and required’ the IRS ‘to make the inquires, determinations, and assessments of all 19 taxes’ the Internal Revenue Code imposes.” United States v. Clarke, 573 U.S. 248, 249-50 20 (2014) (quoting 26 U.S.C. § 6201(a)). In keeping with that mandate, “Congress has endowed the 21 IRS with expansive information-gathering authority.” United States v. Arthur Young & Co., 465 22 U.S. 805, 816 (1984). “[T]he centerpiece of that congressional design,” id. at 816, is 26 U.S.C. § 23 7602, which grants the IRS “broad latitude to issue summonses ‘[f]or the purpose of ascertaining 24 the correctness of any return, making a return where none has been made, determining the 25 liability of any person for any interest revenue tax . . . , or collecting any such liability.” Clarke, 26 573 U.S. at 250 (quoting 26 U.S.C. § 7602(a)) (emphasis added). This summons authority is 27 construed broadly in favor of the IRS. See United States v. Euge, 444 U.S. 707, 714-15 (1980). 28 //// 2 1 Under 26 U.S.C. § 7609(a), the IRS generally must give notice to the taxpayer and other 2 persons identified in the summons (other than the person summoned) when it issues a summons 3 to a third party. Under 26 U.S.C. § 7609(b)(2)(A), the persons entitled to notice may petition to 4 quash the summons in an appropriate district court. There are, however, several statutory 5 exceptions to the notice requirement. 6 Relevant here, 26 U.S.C. § 7609(c)(2)(D) provides that the notice requirement does not 7 apply to any summons “issued in aid of the collection of (i) an assessment made or judgment 8 rendered against the person with respect to whose liability the summons is issued; or (ii) the 9 liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i).” 10 The Ninth Circuit has interpreted the notice exception in 26 U.S.C. § 7609(c)(2)(D)(i) to mean 11 that in the collection context, a person (other than the summoned party) need not receive notice 12 under § 7609(a) that the IRS has summoned the person’s records if the person is “the assessed 13 taxpayer, a fiduciary or transferee of the taxpayer,” or the assessed taxpayer had “some legal 14 interest or title in the object of the summons.” Viewtech, 653 F.3d at 1105 (citing Ip v. United 15 States, 205 F.3d 1168, 1175-76 (9th Cir. 2000)). 16 Here, Revenue Officer Barbearo issued the summons to Union bank “in aid of the 17 collection of” Mr. Alizadeh’s previously assessed federal tax liabilities for tax years 2014 through 18 2018. See Barbearo Decl., ¶¶ 6, 7, 14, 16-18. Mr. Alizadeh – the assessed taxpayer – is the party 19 bringing the motion to quash. ECF No. 1; Barbearo Decl., ¶ 6. The summons thus falls under the 20 notice exception set forth in 26 U.S.C. § 7609(c)(2)(D). See Viewtech, 653 F.3d at 1106 (stating 21 that the § 7609(c)(2)(D) inquiry is “straightforward” when the assessed taxpayer is the person 22 bringing the petition to quash). Mr. Alizadeh therefore was not entitled to notice, and because he 23 was not entitled to notice of the summons under 26 U.S.C. § 7609(c)(2)(D), he cannot bring a 24 proceeding to quash it under 26 U.S.C. § 7609(b). See 26 U.S.C. §§ 7609(a), (b)(2)(A), 25 (c)(2)(D); Viewtech, 653 F.3d at 1106 (holding that an assessed taxpayer lacked standing to 26 quash a summons issued in aid of collection of his taxes). 27 28 At the May 24 hearing, counsel for plaintiff was unable to distinguish this case from Viewtech. Because it is indisputable that Mr. Alizadeh is an assessed taxpayer, and that assessed 3 1 taxpayers lack standing to challenge a summons related to collection, it is clear that plaintiff lacks 2 standing to bring this motion to quash. 3 B. The Motion is Untimely 4 There is a second, independent reason that the motion must be denied. A person entitled 5 to notice of an IRS summons may institute a proceeding to quash the summons in the United 6 States district court for the district in which the summoned person resides or is found. 26 C.F.R. 7 § 301.7609-4(b). “In order to institute a proceeding to quash a summons the notified person 8 must, not later than the 20th day following the day the notice of the summons was served on or 9 mailed to such notified person… [f]ile a petition to quash[…]” 26 U.S.C. § 7609(b)(2)(A); see 10 Mollison v. United States, 568 F.3d 1073, 1076 (9th Cir. 2009). The twenty-day filing 11 requirement of 26 U.S.C. § 7609(b)(2)(A) is jurisdictional and “is a condition precedent to the 12 waiver of sovereign immunity.” Ponsford, 771 F.2d at 1309. 13 Even if Mr. Alizadeh had standing to bring a motion to quash, the court would lack 14 jurisdiction due to untimeliness. The IRS mailed a copy of the summons to Mr. Alizadeh on or 15 around February 2, 2023. Barbearo Decl., ¶ 15. The last day for Mr. Alizadeh to institute a 16 proceeding to quash the summons was February 22, 2023. However, Mr. Alizadeh filed his 17 Petition to Quash on March 20, 2023, twenty-six days late. Because late filing deprives the court 18 of jurisdiction, Ponsford, supra, the motion to quash must be summarily denied. 19 III. 20 21 Conclusion Because plaintiff lacks standing and the court lacks jurisdiction to hear, IT IS HEREBY RECOMMENDED that plaintiff’s motion to quash (ECF No. 1) be DENIED and this case closed. 22 These findings and recommendations are submitted to the United States District Judge 23 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within twenty-one days 24 after being served with these findings and recommendations, any party may file written 25 objections with the court and serve a copy on all parties. Id.; see also Local Rule 304(b). Such a 26 document should be captioned “Objections to Magistrate Judge’s Findings and 27 Recommendations.” Failure to file objections within the specified time may waive the right to 28 //// 4 1 appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez 2 v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991) 3 DATED: May 26, 2023 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5
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