Opinion
CAUSE NO. 00 C 3878
March 29, 2001
MEMORANDUM AND ORDER
Defendant moves this Court to dismiss Plaintiffs Petition to Quash a Summons of the Internal Revenue Service ("IRS") (doc. #2-1), or, alternatively, for summary judgement (doc. #2-2). Plaintiff claims that the summons issued against U.S. Bank on June 5, 2000, in the IRS's matter against him is vague and overly broad and demands production of documents that the IRS may already have in its possession. Plaintiff also claims that the IRS violated the Internal Revenue Code ("Code") by failing to provide him with notice that it was contacting U.S. Bank, a third party. For the reasons noted herein, Defendant's motion for summary judgment is GRANTED.
BACKGROUND
On June 26, 2000, Plaintiff, an individual, filed a notice of filing a petition to quash the summons of the IRS issued against U.S. Bank to produce documents with respect to three separate suits against him. On August 25, 2000, Defendant, the United States of America, moved to dismiss the petition, or alternatively, for summary judgment because it alleged that there was no legitimate basis to quash the summons. In addition to its motion, Defendant submitted a statement of material facts in compliance with Local Rule 56.1 and an affidavit of Frank Kessler, an IRS revenue agent ("Kessler"). On September 19, 2000, Plaintiff filed a response to Defendant's motion to dismiss/summary judgment. Although Plaintiff included his affidavit and a motion to strike or disregard the Kessler affidavit with his response, he failed to file a separate statement of material facts as required by Local Rule 56.1.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate if, after drawing all reasonable inferences in favor of the nonmoving party, the court concludes there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Juarez v. Ameritech Mobile Communications, Inc., 957 F.2d 317, 320 (7th Cir. 1992). The party moving for summary judgment has the initial burden of submitting affidavits and other evidentiary material to show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Brooks v. Sheahan, No. 98 C 5522, 1999 WL 1080451, 4 (N.D. Ill. Nov. 23, 1999). A genuine issue of material fact exists when "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Brooks, at 4 Once the moving party has sustained the initial burden, the opposing party may not rest upon the mere allegations or denials of the pleadings, but instead must come forward with specific evidence, by affidavits or as otherwise provided in Rule 56, showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324.
In the Northern District of Illinois, the moving party must file a Local Rule 56.1(a) statement of undisputed facts supported by affidavits, if any, and other materials. L.R. 56.1(a). In response, each party opposing the motion must file a Rule 56.1(b) statement of contested facts, also supported by affidavits and other materials, responding to each numbered paragraph in the Rule 56.1(a) statement and setting forth any additional facts requiring denial of the motion. L.R. 56.1(b). If an opposing party fails to file such a statement, "[A]ll materials set forth in the statement required of the moving party will be deemed admitted," Id. A district court may strictly apply Rule 56.1(b) and consider a party who fails to submit such a statement as having admitted the uncontroverted facts alleged in the opposing party's Rule 56.1(a) statement. Stewart v. McGinnis, 5 F.3d 1031, 1035 n. 6 (7th Cir. 1993); Recometa v. Glaxo, Inc., No. 94 C 7518, 1996 WL 296644, 1 (N.D. Ill. May 31, 1996).
In this case, Defendant filed a Rule 56.1(a) statement of facts with its motion for summary judgment. Plaintiff failed to file a Rule 56.1(b) statement of material facts with his response. Therefore, all material facts set forth in Defendant's statement of facts are deemed admitted.
ANALYSIS
An IRS summons is generally enforceable if the investigation underlying the summons has a legitimate purpose, the information sought may be relevant to that purpose, the information is not already in the IRS's hands, and the IRS has followed the statutory steps for issuing a summons. United States v. Powell, 379 U.S. 48, 57 (1964); 2121 Arlington Heights Corp. v. I.R.S., 109 F.3d 1221, 1224 (7th Cir. 1997). The Seventh Circuit has held that this test "isn't much of a hurdle." 2121 Arlington Heights, 109 F.3d at 1224. "The government typically makes that showing through the affidavit of the revenue agent conducting the audit." Id. The dispositive question in each case is whether the IRS is pursuing its authorized purpose in good faith. United States v. LaSalle Nat'l Bank, 437 U.S. 298, 2366 (1978).
In this case, Plaintiff failed to allege specific facts to lead this Court to conclude that there is any genuine issue for trial that the IRS failed any part of the Powell test. Under section 7602 of the Internal Revenue Code ("Code"), any information which may be relevant or material to an IRS inquiry may be summoned. 26 U.S.C. § 7602(a) (2000). The documents included in this summons are certainly relevant to the matters involving Plaintiff. Also, Plaintiff offers no basis on which to assert that the IRS had the summoned documents in its possession. Finally, Plaintiff failed to allege specific facts that the IRS did not act in good faith.
Plaintiff further alleges that the IRS violated section 7609(b) by failing to provide him with notice that it had contacted a third party for documents. This argument also fails. The IRS contacted U.S. Bank with regard to the summons in October 1997. Section 7609(c), which requires advance notice to taxpayers before third parties may be contacted, was not added to the Code until 1998. P.L. 105-206, § 3417(a) (1998). Furthermore, Public Law 105-206 specifically provided that section 7609(c) would be effective 180 days after July 22, 1998, not retroactively. Id. Therefore, the IRS did not violate section 7609(b) by contacting U.S. Bank pursuant to its investigation of Plaintiff in 1997.
Finally, Plaintiff also moved to strike or disregard the affidavit of Frank Kessler and the United States Statement of Facts predicated upon it. Under Federal Rule 56(e), affidavits shall be made on personal knowledge, set forth facts as would be admissible in evidence, and show that the affiant is competent to testify to the matters stated in the affidavit. Fed.R.Civ.P. 56(e). According to his affidavit, Kessler is an IRS revenue agent and was assigned to assist with an audit investigation of Plaintiff. In the opinion of this Court, his affidavit is sufficiently based upon personal knowledge, set forth admissible facts, and shows that Kessler would be competent to testify. Therefore the affidavit is acceptable under Rule 56.
CONCLUSION
Defendant's motion for summary judgment (doc. #2-2) is GRANTED. Because the motion for summary judgment has been granted, it is not necessary to address the motion to dismiss (doc. #2-1) and it is denied as moot. Also, Plaintiffs motion to strike Kessler's affidavit (doc. #5) is DENIED.