Opinion
Civil Action No. 3:99-CV-1083-BC
June 14, 2000
MEMORANDUM OPINION AND ORDER
Before the Court is Respondent's Renewed Motion to Dismiss Petition, filed February 17, 2000. For the reasons that follow, Respondent's motion is GRANTED.
I. Background
This action arises from Respondent's ("the Government's") investigation into the potential federal income tax liability of Petitioner Family Care Trust ("the Trust") for the year 1995. In furtherance of that investigation, on April 9, 1999, the Government served third-party summonses on Compass Bank and North Dallas Bank and Trust ("the Banks") requesting the production of bank statements, loan applications, financial statements, and related records pertaining to the Trust for the year under investigation. (Resp.'s Renewed Mot. at 3.)
The Trust filed this action on May 14, 1999, seeking to quash those summonses on the grounds that they are defective and unenforceable because, inter alia, the Government failed to provide timely notice of the summonses to the Trust as required by the Internal Revenue Code. (Pet. at 3-4.) The Government filed a motion to dismiss under Fed.R.Civ.P. 12(b)(1) asserting a factual attack on the Trust's petition which, if substantiated with proper evidence, would negate subject matter jurisdiction. Because such evidence was omitted from the Government's memorandum, this Court denied the motion. (Memorandum Opinion and Order, filed Feb. 1, 2000.)
The Government has now filed a renewed motion to dismiss that supplies the evidence that was missing from the original motion to dismiss. Specifically, the Government has submitted evidence that substantiates the date that the required notice of the third-party summonses to the Banks was given to the Trust. As will be discussed more fully below, the Government's evidence establishes that the Trust's petition to quash summons was untimely and therefore, this Court lacks subject matter jurisdiction.
II. Legal Standards
A. Subject Matter Jurisdiction
The Government's motion to dismiss under Rule 12(b)(1) challenges the subject matter jurisdiction of this Court. A case must be dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case. See Home Builders Ass'n v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998).
The relevant statutory provision that purportedly confers subject matter jurisdiction over this action is 26 U.S.C.A. § 7609(b)(2)(A). Section 7609(b)(2)(A) waives sovereign immunity for the limited purpose of permitting a person who is entitled to notice of a summons to initiate a proceeding to quash the summons. See 26 U.S.C.A. § 7609(b)(2)(A) (West Supp. 2000). The proceeding to quash must be initiated no later than the twentieth day after the notice is given in the manner provided by § 7609(a)(2). See 26 U.S.C.A. § 7609(b)(2)(A). Section 7609(a)(2) allows notice to be given by certified or registered mail to the last known address of the person entitled to the notice. See 26 U.S.C.A. § 7609(a)(2). Hence, in this case, if the petition to quash was not initiated within twenty days after notice of the summons was sent by certified or registered mail to the Trust, then petition is untimely and the Court lacks subject matter jurisdiction.
B. Rule 12(b)(1) Motion to Dismiss
The Fifth Circuit recognizes a distinction between a "facial" attack and a "factual" attack upon a complaint under Rule 12 (b)(1). See Patterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981). If a defendant files a Rule 12(b)(1) motion, the attack is presumptively facial and the Court need look only to the sufficiency of the allegations in the complaint, which are presumed to be true. See Patterson, 644 F.2d at 523. If, on the other hand, the defendant supports the motion with affidavits, testimony, or other evidentiary materials, then the attack is factual and the burden shifts to the plaintiff to prove subject matter jurisdiction by a preponderance of the evidence by also submitting facts through some evidentiary method. See Patterson, 644 F.2d at 523.
III. Analysis
The Government asserts that the Court lacks subject matter jurisdiction because the Trust failed to commence the proceedings to quash summons within twenty days of notice as required by § 7609. (Resp.'s Renewed Mot, to Dismiss at 1.) The Government alleges that notice was given on April 9, 1999 when the IRS agent conducting the investigation sent notice to the Trust via certified mail. (Resp.'s Renewed Mot. to Dismiss at 4.) The agent's declaration attesting to this fact is attached to the renewed motion. (Hartman Decl. ¶ 5.) Attached to the declaration is a photocopy of a receipt for certified mail that is date-stamped "April 9, 1999." (Hartman Decl. Ex. B.) Based on this date, the Trust's right to initiate proceedings to quash expired on April 29, 1999.
The Trust filed its petition to quash on May 14, 1999, approximately two weeks after twenty days had expired. By presenting evidence that the Trust's filing was untimely, the Government has established that subject matter jurisdiction is lacking. The burden now shifts to the Trust to submit facts that show by a preponderance of the evidence that the Court does have subject matter jurisdiction. See Patterson, 644 F.2d at 523.
The Trust has failed to meet this burden. In response to the Government's evidence, the Trust objects that the date stamp on the certified mail receipt "does not appear to be an official stamp of the U.S. Post Office." (Pl.'s Add'l Resp. at 2.) The Trust also complains that the Government failed to include agent's log of mailing. (Pl.'s Add'l Resp. at 2.) The Trust claims that, because of these alleged insufficiencies, it is unable to refute the Government's claim that the notice was mailed on April 9, 1999 and requests the Court grant it leave to take additional discovery. (Pl.'s Add'l Resp. at 2.)
The Court finds these objections meritless. The Trust has offered no reason to suspect that the agent's declaration, upon which the Court relies, is untruthful, nor does the Trust offer evidence that the notice was not mailed on April 9, 1999.
In fact, the Court notes that the return receipt indicates notice of the summons was received by the Trust on April 13, 1999 — thirty-one days before the Trust filed its petition. (Hartman Decl. Ex. E.)
In sum, the Trust has failed to establish by a preponderance of the evidence that this Court has subject matter jurisdiction over its petition to quash summons. Accordingly, the Government's Renewed Motion to Dismiss is GRANTED.
SO ORDERED.