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DENNIS v. UNITED STATES

May 22, 1987

STEPHEN W. DENNIS, PETITIONER,
v.
UNITED STATES OF AMERICA AND BERNARD J. COLEMAN, SPECIAL AGENT OF THE INTERNAL REVENUE SERVICE, RESPONDENTS.



The opinion of the court was delivered by: Mills, District Judge:

  OPINION ORDER

A question of IRS summonses.

They are valid and must stand.

Dennis brings this action under the Internal Revenue Code, 26 U.S.C. § 7609(b)(2)(A), to quash six Internal Revenue Service ("IRS" or "Service") summonses issued during an investigation of his federal income tax liabilities for the calendar years 1981, 1982, and 1983.

After the Government moved to dismiss, Dennis demanded discovery by way of interrogatories and requests to produce. Following his motion to compel responses, the Government sought a protective order. Dennis — who appears pro se — then filed a memorandum setting forth his positions both on discovery and the merits. Argument ensued before U.S. Magistrate Charles H. Evans, who ruled in favor of the Government on the discovery matters.

The Magistrate also recommended that the district court allow the motion to dismiss. His able recommendations are hereby adopted and the Government's motion to dismiss is consequently allowed. Before launching into our analysis, a short review of the facts is in order.

I.

Bernard Coleman is a duly commissioned special agent of the Service's Criminal Investigation Division, with a post of duty in Springfield, Illinois. In his capacity as a special agent, Coleman investigated Dennis' federal tax liabilities for the taxable years 1981, 1982, and 1983.

Pursuant to the investigation, and in accordance with 26 U.S.C. § 7602, between the dates of April 9 and July 30, 1985, inclusive, the IRS issued a summons to Millikin National Bank, Decatur, Illinois; First Federal Savings and Loan Association, Tuscola, Illinois; Credit Bureau of Decatur, Inc.; Monroe Savings Bank of Rochester, New York; Illinois Bell Telephone Company, Chicago, Illinois; and Teleconnect, Cedar Rapids, Iowa. Each summons directed the named to appear before him (or another designated officer of the Service) on a specified date to testify and produce for examination the books, papers, records and other data set forth in the document. Dennis timely filed an amended petition seeking to quash the summonses.

In that petition, Dennis contends the Internal Revenue Service is guilty of "institutional bad faith" by identifying him as a tax protestor and by conducting an investigation to determine his correct federal tax liabilities and ascertain whether he committed any evasive acts in violation of the Code. Moreover, he asserts the summonses issued to the banks and credit bureau are unreasonable in that they are "overly broad and vague and constitute a "fishing expedition'." Dennis also maintains the summonses to Illinois Bell and Teleconnect are neither relevant nor necessary and infringe upon his First Amendment rights under the Privacy Act. Continuing into Part VII of his petition, Dennis alleges that "he is being deprived of the right to an impartial grand jury." Part VIII states that he is not a person subject to the authority of § 7602 of the Internal Revenue Code. Finally, in Part IX he insists that the use of the summons is a "form of fraud and deceptive practices of falsely labeling and calling a subpoena duces tecum a "summons.'" These contentions lead him to the erroneous conclusion that the Court should not enforce the summonses.

The Government moves to dismiss the action for failure to state a claim upon which the Court may grant relief. Fed.R. Civ.P. 12(b)(6). Additionally, the Government maintains the district court is without jursidiction to quash three out-of-district summonses since the United States has not waived its sovereign immunity with respect to an action seeking to quash summonses issued to out-of-district entities.*fn1

II.

Agent Coleman derives his power from § 7601(a) of Title 26. That provision directs the Secretary of the Treasury (or his delegate) to make inquiries into the tax liability of every person who may be liable to pay any Internal Revenue tax. To aid in an investigation, § 7602(a) and (b) authorize the examination of records, issuance of summonses, and taking of testimony for the purposes of: (1) "ascertaining the correctness of any return," (2) "making a return where none has been made," (3) "determining the liability of any person for any internal revenue tax," and/or (4) "inquiring into any offense connected with the administration or enforcement of the internal revenue laws." United States v. Euge, 444 U.S. 707, 710-11, 100 S.Ct. 874, 877-78, 63 L.Ed.2d 141 (1979); United States v. LaSalle Nat'l Bank, 437 U.S. 298, 308, 98 S.Ct. 2357, 2363, 57 L.Ed.2d 221 (1978); United States v. Particle Data, lnc., 634 F. Supp. 272, 276-77 (N.D.Ill. 1986).

In seeking to quash the summonses in question, Dennis attempts to take advantage of § 7609(b)(2)(A), a provision which expressly waives the sovereign immunity of the United States. It permits the taxpayer (or other person entitled under § 7609(a)(1) to notice of a summons), upon complying with the conditions of the ...


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