United States District Court, S.D. Texas, Houston Division
MEMORANDUM, RECOMMENDATION AND ORDER
before the court is Respondent's Motion to Dismiss
(Doc. 4) and the response filed thereto. It is
RECOMMENDED that the motion be
action was filed on May 22, 2017, against the United States
of America challenging the Internal Revenue Service's
(“IRS”) statutory authority to administratively
summons the bank records of Petitioner Kenneth Davidson
(“Davidson”) from J.P. Morgan Chase National Bank
(“JPMorgan”), Wells Fargo Bank (“Wells
Fargo”), Bank of America and Comerica Bank
(“Comerica”). Davidson seeks to quash those
third-party administrative subpoenas on the grounds that he
has filed returns for tax years 2012-2016 and the IRS has not
made a showing that it needs the bank records to assess or
collect a tax liability.
19, 2017, the United States moved to dismiss this action,
arguing that the court lacks subject matter jurisdiction to
grant the relief requested because Davidson failed to file
the petition to quash within the statutory limitations period
and that Davidson failed to serve the United States in
conformity with the Federal Rules of Civil Procedure
(“Rules”). The United States also filed a
counterclaim against Davidson for enforcement of the
response, Davidson argues that the court has subject matter
jurisdiction because the United States waived sovereign
immunity through the provisions of 26 U.S.C. § 7609
(“Section 7609”), which allow a taxpayer to
challenge an administrative summons issued to a third-party
recordholder. Davidson further contends that any claimed
defects in service of process should be dismissed because the
United States has made an appearance by filing the present
to Rule 12, dismissal of an action is appropriate whenever
the court lacks subject matter jurisdiction. Fed.R.Civ.P.
12(b)(1), 12(h)(3). The party asserting jurisdiction bears
the burden of proof to show that jurisdiction does exist.
In re FEMA Trailer Formaldehyde Prods. Liab. Litig.,
646 F.3d 185, 189 (5thCir. 2011)(citing
Ramming v. United States, 281 F.3d 158, 161
(5th Cir. 2001)).
court may decide a motion to dismiss for lack of jurisdiction
on any of three bases: “(1) the complaint alone; (2)
the complaint supplemented by undisputed facts evidenced in
the record; or (3) the complaint supplemented by undisputed
facts plus the court's resolution of disputed
facts.” Ramming, 281 F.3d at 161 (citing
Barrera-Montenegro v. United States, 74 F.3d 657,
659 (5th Cir. 1996)). The court, in determining
whether it is properly vested with subject matter
jurisdiction, is “free to weigh the evidence and
resolve factual disputes in order to satisfy itself that it
has the power to hear the case.” Krim v.
pcOrder.com, Inc., 402 F.3d 489, 494 (5th
Cir. 2005)(quoting Montez v. Dep't of Navy, 392
F.3d 147, 149 (5th Cir. 2004)).
before the court is the United States' motion to dismiss
and its counterclaim for summons enforcement. The court first
determines whether it can exercise jurisdiction over the
petition to quash the summonses.
Motion to Dismiss for Lack of Subject Matter
well-settled that the United States cannot be sued unless it
waives its sovereign immunity in explicit and unequivocal
terms. See United States v. Dalm, 494 U.S. 596, 608
(1990); Wilkerson v. United States, 67 F.3d 112, 118
(5th Cir. 1995). “Where Congress has
statutorily waived the United State's sovereign immunity,
an action against the government will be strictly construed
and a court will lack subject matter jurisdiction over any
action that does not fit within the scope of the
Congressional waiver.” Taylor v. United
States, 292 Fed.Appx. 383, 385 (5th Cir.
2008)(citing Wilkerson, 67 F.3d at
to 26 U.S.C. §§ 7602-7613, the IRS has the
authority to summons a taxpayer and others to produce
documents relevant to the determination of a tax liability.
Section 7609 outlines the procedures to be used when the IRS
issues a summons to a third party for records or testimony
concerning the tax liability of a taxpayer. In such a case,
the taxpayer is also entitled to notice of the third-party
summons. See 26 U.S.C. § 7609(a)(1), (2). The
statute permits service by certified mail on third parties
and notice by certified mail to the taxpayer's last known
address. 26 U.S.C. 7603(b); 7609(a)(2).
receiving notice, the taxpayer has the right to initiate a
lawsuit to quash the third-party subpoena “not later
than the 20thday after the day such notice is
given in the manner provided in subsection (a)(2).”
See 26 U.S.C. § 7609(b)(2)(A). In
Taylor, the court recognized that this section is a
limited waiver of sovereign immunity and that ...