Haber v. United States
823 F.3d 746
| 2d Cir. | 2016Background
- The IRS assessed approximately $25 million in penalties under 26 U.S.C. § 6707 against James Haber and his company for alleged failure to register tax shelters; partial payments and refund claims were made and denied.
- Haber and DGI sued in the Court of Federal Claims seeking refund and injunctive relief; that suit was dismissed for lack of jurisdiction for failure to pay the full penalty; an appeal was pending.
- A Revenue Officer served an administrative summons on Signature Bank seeking documents and testimony about accounts for which Jill Haber had signatory authority, stating the summons concerned James Haber and was for locating assets to satisfy the assessed penalty.
- The Revenue Officer declared the summons was issued solely to aid collection of the existing assessment and confirmed no active criminal investigation existed; DOJ/USA letters reflected termination/closure of criminal inquiries.
- Haber petitioned in district court to quash the summons and sought jurisdictional discovery (including deposing the Revenue Officer); the government moved to dismiss for lack of subject-matter jurisdiction under sovereign-immunity exceptions and for a protective order.
- The district court dismissed for lack of jurisdiction and denied jurisdictional discovery; the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the United States waived sovereign immunity for a suit to quash a third-party summons issued “in aid of collection” | Haber: summons was not truly in aid of collection because ongoing litigation prevents actual collection; thus § 7609(c)(2)(D) exception shouldn't apply | Government: IRS had made an assessment and the summons was issued to locate assets to satisfy that assessment; § 7609(c)(2)(D) removes waiver for summonses in aid of collection regardless of imminence of collection | Held: summons was issued in aid of collection; sovereign immunity bars the suit to quash; court lacks jurisdiction |
| Whether a DOJ criminal referral barred issuance of the summons under § 7602(d) | Haber: prior DOJ referral remained in effect, so IRS lacked authority to issue summons | Government: DOJ/USA letters terminated/closed the referral/investigations before the summons was issued | Held: letters sufficiently terminated the referral; no plausible allegation that a referral was in effect when summons issued |
| Whether Haber was entitled to jurisdictional discovery (including deposition of Revenue Officer) to contest purpose/authority of summons | Haber: record contains circumstantial inconsistencies and credibility issues that plausibly infer improper motive or pretext, warranting discovery | Government: Revenue Officer’s sworn declaration and DOJ letters establish collection purpose and lack of criminal referral; Haber’s allegations are speculative and conclusory | Held: denial of jurisdictional discovery not an abuse of discretion; Haber failed to show discovery likely to produce facts establishing jurisdiction |
Key Cases Cited
- Upton v. I.R.S., 104 F.3d 543 (2d Cir. 1997) (review of waiver and preliminary assessment of summons purpose)
- United States v. Clarke, 134 S. Ct. 2361 (U.S. 2014) (standard for questioning IRS agent and limits on inquiry into summons enforcement)
- Makarova v. United States, 201 F.3d 110 (2d Cir. 2000) (plaintiff bears burden to show waiver of sovereign immunity)
- Hibbs v. Winn, 542 U.S. 88 (U.S. 2004) (definition of assessment as official recording of liability)
- Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140 (2d Cir. 2011) (courts should allow jurisdictional discovery when facts supporting jurisdiction are plausible)
- United States v. Millman, 765 F.2d 27 (2d Cir. 1985) (taxpayer entitled to evidentiary hearing upon substantial preliminary showing of abuse)