F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUN 9 1998
TENTH CIRCUIT
PATRICK FISHER
Clerk
KATHERINE DAVIDSON,
Petitioner-Appellant,
v. No. 97-1244
(D.C. No. 97-K-158)
UNITED STATES OF AMERICA, (District of Colorado)
Respondent-Appellee.
ORDER AND JUDGMENT *
Before HENRY , Circuit Judge, HOLLOWAY , Senior Circuit Judge, and
LUCERO , Circuit Judge.
Petitioner Katherine Davidson appeals the district court's grant of the
government’s motion to dismiss for lack of subject matter jurisdiction. “We
review the question of a district court’s subject matter jurisdiction de novo . . . .”
Fostvedt v. United States , 978 F.2d 1201, 1202 (10th Cir. 1992). Likewise, we
review de novo the district court’s interpretation of a federal statute. Utah v.
Babbitt , 53 F.3d 1145, 1148 (10th Cir. 1995). Finding no error, we affirm.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
I. STATEMENT OF FACTS
The Internal Revenue Service (“IRS”) assessed federal income tax liability
against Sidney Davidson, Ms. Davidson's husband. IRS Officer Eileen Newman
conducted an investigation to locate assets to satisfy Mr. Davidson’s tax liability.
In the course of her investigation, Ms. Newman discovered that in 1992, Mr.
Davidson had attempted to transfer his interest in his marital home to Ms.
Davidson. Ms. Newman accordingly issued a summons to Ms. Davidson’s bank
to determine whether other such transfers had been attempted. In response to the
summons, she received documentation indicating that in 1996, Ms. Davidson
deposited a total of $51,126.85 into her account. Ms. Newman then issued a
second summons, the one at issue in this case. The second summons sought
information about the source of those deposits.
Upon learning that the IRS served the summons on a third-party
recordkeeper, i.e., her bank, Ms. Davidson filed this action in federal district
court, seeking to quash the summons. The government filed a motion to dismiss
for lack of subject matter jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(1). At a
hearing, the district court granted the government's motion.
II. DISCUSSION
When an IRS summons issued to a third-party recordkeeper requires “the
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production of any portion of records made or kept of the business transactions or
affairs of any person . . . who is identified in the description of the records
contained in the summons,” then the person identified is entitled to notice of the
summons. 26 U.S.C. § 7609(a)(1). The IRS, however, is not required to give
notice of the summons if
(B) it is in aid of the collection of--
(i) the liability of any person against whom an assessment has
been made or judgment rendered, or
(ii) the liability at law or in equity of any transferee or
fiduciary of any person referred to in clause (i).
26 U.S.C. § 7609(c)(2). A person has the right to bring a proceeding to quash a
summons only if he or she is entitled to notice. 26 U.S.C. § 7609(b)(2). Thus, if
a summons is issued in aid of collection, no notice is required, and the district
court does not have subject matter jurisdiction over a petition to quash the
summons.
The government argues, and the district court agreed, that the summons was
issued “in aid of the collection of” Mr. Davidson’s unpaid assessed tax liability.
Ms. Davidson, on the other hand, argues that the trial court construed the “in aid
of the collection” exception too broadly because she herself has no tax liability,
and the account was in her name alone. In support of her position, she cites
Robertson v. United States , 843 F. Supp. 705 (S.D. Fla. 1993).
In Robertson , the IRS issued a summons to Ms. Robertson’s bank in
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connection with the tax liability of a couple named Sloan. Id. at 705. Ms.
Robertson filed a petition to quash the summons, arguing that she had no legal or
business relationship with the Sloans. Furthermore, she argued that the Sloans
did not hold any legal or equitable interest in her bank account. The government
filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the
summons was issued in aid of the collection of the Sloans’ tax liability. The
district court denied the government's motion. In so doing, the court interpreted
the “in aid of the collection” exception narrowly. That is, according to the
Robertson court, the IRS must give notice unless “the taxpayer whose tax liability
has been assessed has a recognizable interest in the records summoned.” Id. at
706.
The district court distinguished Robertson by noting that Ms. Robertson
was not related to the taxpayers against whom liability had been assessed,
whereas in the case at bar, the petitioner is married to the taxpayer. Aplt’s App.
at 70. The district court instead relied on Serafine v. United States , No. C-81-
1572-WTS, 1981 WL 1791 (N.D. Cal. Apr. 30, 1891). In Serafine , the IRS
served a summons on the plaintiff’s bank, seeking bank records concerning the
plaintiff or her husband with respect to her husband’s tax liability. Id. at *1. The
plaintiff brought an action to enjoin the enforcement of the summons. The
government moved to dismiss, and the district court granted the motion. The
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court noted that the government could establish that the summons was issued in
aid of the collection of plaintiff's husband's taxes. Id. at *2. Furthermore, the
court stated that “it is manifest that plaintiff's bank records may produce relevant
information with regard to a possible commingling of her funds with her
husband's.” Id. at *3.
Ms. Davidson argues that Serafine is inapposite because that case arose in a
community property state, whereas her case arose in a state where community
property laws are not in effect. Whether or not community property laws apply,
the fact remains that the statute does not require the IRS to give notice when it
issues a third-party recordkeeper summons “in aid of the collection of the liability
of any person against whom an assessment has been made.” 26 U.S.C. §
7609(c)(2)(B)(i) (emphasis added). Here, the IRS was investigating whether a
taxpayer fraudulently transferred funds to his wife. We agree with the district
court that the summons was issued in aid of the collection of Mr. Davidson’s
taxes and, therefore, that Ms. Davidson was not entitled to notice. Thus, the
district court did not have subject matter jurisdiction to consider her petition.
Ms. Davidson further argues that because the district court stated that she
had standing, the court really did not grant the government's motion to dismiss for
lack of subject matter jurisdiction, but, instead, denied her petition to quash on
the merits. From a reading of the transcript of the hearing, we think it is plain
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that the district court simply misspoke when it stated that Ms. Davidson had
standing. See Aplt’s App. at 70 (“I will say that I find that the petitioner does
have standing . . . .”). From this statement, the district court was not implying
that Ms. Davidson was entitled to notice of the summons. The hearing was
clearly on the government's motion to dismiss for lack of subject matter
jurisdiction. Aplt’s App. at 60 (“The motion to dismiss for lack of jurisdiction
must take precedence.”) Moreover, at the close of the succinct motion hearing,
the court stated that the summons was issued in aid of collection, and, therefore,
no notice was required. Id. at 70.
Although immediately after making this statement, the court said, “The
petition to quash is denied,” it is clear that what the court was doing was granting
the government's motion to dismiss the petition to quash. Id. Ms. Davidson’s
counsel never asked for a clarification of the court's ruling. In fact, Ms.
Davidson’s notice of appeal bears out the fact that counsel understood the court to
be granting the government's motion. The notice of appeal states that Ms.
Davidson appeals “from a bench order granting the United States’ Motion to
Dismiss Petition to Quash.” Id. at 74. Because the district court correctly
dismissed for lack of subject matter jurisdiction and never reached the merits of
Ms. Davidson’s case, we need not consider her second issue on appeal, namely,
whether the summons satisfied the good faith requirements set forth in United
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States v. Powell , 379 U.S. 48 (1964).
Finally, Ms. Davidson argues that because the court’s ruling was, in
actuality, a ruling on the merits, we must remand her case for the district court to
enter findings of fact pursuant to Fed. R. Civ. P. 52(a). According to Rule 52(a),
“[i]n all actions tried upon the facts without a jury . . . the court shall find the
facts specially and state separately its conclusions of law thereon . . . .” We have
already determined that the court did not rule on the merits, but, instead, granted
the government's motion to dismiss for lack of subject matter jurisdiction.
“Findings of fact and conclusions of law are unnecessary on decisions of motions
under Rule 12 . . .” with exceptions not relevant here. Fed. R. Civ. P. 52(a).
Thus, the district court was not required to enter findings of fact.
For the foregoing reasons, we AFFIRM the judgment of the district court.
Entered for the Court,
Robert H. Henry
Circuit Judge
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