Opinion
1:02CV00284
January 17, 2003
MEMORANDUM OPINION
Petitioners Bobby Hicks and Delores Hicks ("Petitioners"), acting pro se, have filed a petition to quash the Internal Revenue Service ("IRS") summons pursuant to 26 U.S.C. § 7609 (b)(2)(A). Because Respondent United States of America ("Government") has established a prima facie case for enforcement of the summons and Petitioners have failed to meet their burden of proof, the court will deny Petitioners' petition to quash the IRS summons.
I. BACKGROUND
Petitioners are the trustees and beneficiaries of Hicks Enterprises Trust. The IRS is investigating Petitioners' and Hicks Enterprises Trust's tax liability for the 1998 and 1999 tax years. On March 28, 2002, Internal Revenue Service Agent Marvin Hedgepeth issued an administrative summons by mail to Roxboro Savings Bank. Revenue Agent Hedgepeth personally served attested copies of the IRS summons to Mac Wagstaff, the vice president of Roxboro Savings Bank. On March 30, 2002, Revenue Agent Hedgepeth provided notice to Petitioners and Hicks Enterprises Trust by certified mail. All three administrative summons were identical in content; they each requested the following information for examination within 32 days: "bank signature cards, statements of account, deposit items, credit memos, canceled checks, debit memos, financial statement[s], and loan applications." (Hedgepeth Decl. ¶ 5.)
Petitioners, as individuals, and as trustees for Hicks Enterprises Trust, filed a petition to quash the IRS summons on April 15, 2002. Initially, Petitioners served only Revenue Agent Hedgepeth and the summoned party on the notion that 26 U.S.C. § 7909 (b)(2)(B) was the only applicable service statute for a petition to quash an IRS summons. However, Petitioners contemporaneously served the United States Attorney General and the United States Attorney for the Middle District of North Carolina in attempting to comply with Rule 4 of the Federal Rules of Civil Procedure.
Petitioners claim that the summons is defective and unenforceable for a variety of reasons, including failure to issue the summons for a proper purpose and failure to provide notice of the summons to Petitioners and third parties. Petitioners have submitted a reply to the Government's response to their petition. Petitioners have not submitted any affidavits containing factually specific allegations against the Government.
The clerk of this court sent Petitioners a letter on June 21, 2002, indicating Petitioners' right to submit counter-affidavits with their reply.
For the Government, Revenue Agent Hedgepeth attested that the bank records requested by the IRS are not already in their possession, (Hedgepeth Decl. ¶ 9), and that the IRS has complied with all administrative steps mandated by the Internal Revenue Code. (Id. ¶ 10.) Additionally, Revenue Agent Hedgepeth declared that the United States Department of Justice has not issued a referral for Petitioners and Hicks Enterprises Trust in accordance with 26 U.S.C. § 7602 (d). (Id. ¶ 12.) The Government requests that this court deny Petitioners' petition for lack of personal jurisdiction, and in the alternative, because Petitioners have not shown that the IRS acted improperly in seeking to enforce the summons.
II. DISCUSSION
As an initial matter, this court must determine whether the Federal Rule of Civil Procedure concerning summons, Rule 4, applies to an administrative summons, and if so, whether Petitioners complied with Rule 4. Although an administrative summons does not involve the commencement of a civil action like a complaint, Rule 4's service requirements arguably apply here. See Alphin v. United States, 809 F.2d 236, 239 (4th Cir. 1987); Roebuck v. United States, 1997 WL 875661, at *4 (S.D. Iowa Dec. 23, 1997). But see Rich v. Cripe, 1997 WL 759617, at *5 (M.D. Tenn. Oct. 7, 1997). The text of Rule 4 does not mandate that service of an administrative summons, such as an IRS summons, must be effectuated in the same manner as a civil summons in a civil action. According to section 7609(b)(2)(B), when the notice attached to the IRS summons directs a petitioner to serve in compliance with Rule 4, then such compliance is necessary for the court to have personal jurisdiction over the United States. Vaughan v. United States, 2002 WL 1058118, at *1 (E.D.N.C. Apr. 11, 2002). Here, Petitioners were provided with notice in the IRS summons that compliance with Rule 4 was necessary to properly serve the United States. (Pet'rs' Reply United States' Resp. Pet. Quash Summons at 3.)
The Government argues that the court lacks personal jurisdiction over it because even if Rule 4 applies, it was not properly served with a copy of the petition and the civil summons pursuant to Rule 4. According to Rule 4(i), a copy of the summons and the complaint must be served upon the United States Attorney for the district in which the action is brought, and to the Attorney General of the United States at Washington, D.C. Petitioners concede that they failed to adequately serve the United States Attorney General and the United States Attorney for the Middle District of North Carolina when they filed their petition. Yet, in accordance with Rule 4(m), Petitioners perfected service of process by serving these individuals within the 120 day time period authorized by the rule. In addition, Rule 4(i)(3) allows "a reasonable time" to cure service of process on the United States. Therefore, Petitioners complied with Rule 4(i)(1) by timely serving the United States with a copy of the summons and petition.
The petition was filed on April 15, 2002, and service was perfected on June 19, 2002; less than 120 days from the filing date.
Having determined that the court has personal jurisdiction over the Government, the next issue is whether the summons should be enforced. To obtain enforcement of a summons, the government must establish a prima facie case of the following four prongs: (1) the investigation is being conducted for a legitimate purpose, (2) the inquiry may be relevant to that purpose, (3) the information sought is not already within the IRS' possession, and (4) the administrative steps required by the Internal Revenue Code have been followed. United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 255 (1964). The government may satisfy all of these elements with an affidavit of an agent involved in the investigation.Alphin v. United States, 809 F.2d 236, 238 (4th Cir. 1987)
After the government establishes its prima facie case, the burden shifts to the party challenging the summons to show that enforcement of the summons would be an abuse of the court's process. Id. The petitioner's burden in opposing enforcement of the summons is a heavy one. Specific facts alleged in the responsive pleadings, supported by affidavits, are necessary for the petitioner to succeed in opposing enforcement of the summons. Id. United States v. Garden State Nat'l Bank, 607 F.2d 61, 71 (3d Cir. 1979). The petitioner must present something beyond mere legal conclusions or memoranda of law to satisfy his or her burden. Hintz v. Internal Revenue Service, 879 F.2d 121, 127 (4th Cir. 1989), overruled on other grounds by, Church of Scientology of California v. United States, 506 U.S. 9, 15, 113 S.Ct. 447, 451 (1992). In the absence of an affidavit by the petitioner, the government's uncontested allegations must be accepted as true by the court without an evidentiary hearing. Id.
In applying the Powell court's four prong test to the case at hand, this court holds that the Government established a prima facie case for enforcement of the summons. Revenue Agent Hedgepeth, the agent in charge of the Hicks investigation, submitted an affidavit attesting that the legitimate purpose of the investigation was to determine the correct tax liability of Petitioners for the 1998 and 1999 tax years. (Hedgepeth Decl. ¶ 2.) In terms of the relevancy of the inquiry, Revenue Agent Hedgepeth stated that examination of the requested documents (bank signature cards, statements of account, for example) was necessary to properly investigate Petitioners' income tax liability. (Id. ¶ 5.) Revenue Agent Hedgepeth further stated that the bank records sought were not in the IRS' possession. (Id. ¶ 9.) Lastly, Revenue Agent Hedgepeth attested that all administrative steps required by the Internal Revenue Code had been taken by the IRS. (Id. ¶ 10.)
In response to this affidavit, Petitioners have not submitted any counter-affidavits although they were so advised by the clerk of court. Petitioners submitted a declaration in support of their reply to the Government's response to the petition to quash, but it did not contain factually specific allegations to contest the Government's prima facie case. Petitioners seek to quash the summons in this case based on mere legal conclusions and memoranda of law. In the absence of a factually specific affidavit to oppose the Government's prima facie case, Petitioners fail to satisfy their burden of proof. Therefore, this court must deny Petitioners' petition and enforce the IRS summons.
III. CONCLUSION
For the reasons set forth above, the court will deny Petitioners' Petition to Quash Summons.
A judgment in accordance with this memorandum opinion shall be filed contemporaneously herewith.