823 F.3d 746 (2nd Cir. 2016), 15-2078-cv, Haber v. United States

Docket Nº:15-2078-cv
Citation:823 F.3d 746
Opinion Judge:Gerard E. Lynch, Circuit Judge :
Party Name:JAMES HABER, Petitioner-Appellant, v. UNITED STATES OF AMERICA, SIGNATURE BANK CORPORATION, Respondents-Appellees. [*]
Attorney:JASPER G. TAYLOR III (Richard L. Hunn, Katherine D. Mackillop, Felice B. Galant, on the brief), Norton Rose Fulbright U.S. LLP, Houston, TX and New York, NY, for Petitioner-Appellant. DOMINIKA TARCZYNSKA (Benjamin H. Torrance, on the brief), for Preet Bharara, United States Attorney for the South...
Judge Panel:Before: CALABRESI, LYNCH, and LOHIER, Circuit Judges.
Case Date:May 20, 2016
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 746

823 F.3d 746 (2nd Cir. 2016)

JAMES HABER, Petitioner-Appellant,

v.

UNITED STATES OF AMERICA, SIGNATURE BANK CORPORATION, Respondents-Appellees. [*]

No. 15-2078-cv

United States Court of Appeals, Second Circuit

May 20, 2016

         Argued January 29, 2016

         Petitioner-appellant James Haber appeals from the district court's dismissal of his suit seeking to quash an Internal Revenue Service (" IRS" ) summons served on Signature Bank Corporation seeking documents and testimony about the assets held by his wife, Jill Haber. The district court correctly concluded that it lacked jurisdiction over the suit because the challenged summons was issued " in aid of the collection of . . . an assessment." 26 U.S.C. § 7609(c)(2)(D). We also reject Haber's contention that the IRS lacked authority to issue an administrative summons because a criminal referral to the Department of Justice was in effect, id. § 7602(d), as the criminal referral of Haber had been terminated prior to the issuance of the summons. Finally, we conclude that the district court did not abuse its discretion in denying Haber's request for jurisdictional discovery.

         JASPER G. TAYLOR III (Richard L. Hunn, Katherine D. Mackillop, Felice B. Galant, on the brief), Norton Rose Fulbright U.S. LLP, Houston, TX and New York, NY, for Petitioner-Appellant.

         DOMINIKA TARCZYNSKA (Benjamin H. Torrance, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Respondent-Appellee United States of America.

         Before: CALABRESI, LYNCH, and LOHIER, Circuit Judges.

          OPINION

         Gerard E. Lynch, Circuit Judge

         In this case, we consider a number of challenges raised by the petitioner-appellant, James Haber, to an administrative summons issued by the Internal Revenue Service (" IRS" ). The district court (Laura Taylor Swain, Judge ) granted the government's motion to dismiss Haber's petition for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), and denied Haber's request for jurisdictional discovery. For the reasons set forth below, we AFFIRM the decision of the district court.

         BACKGROUND

         The IRS issued an approximately $25 million penalty against Haber and his company, The Diversified Group Incorporated (" DGI" ), pursuant to 26 U.S.C. § 6707,[1] in connection with their alleged failure to register tax shelters in violation of 26 U.S.C. § 6111.2 Haber and DGI paid $18,370 and $15,500, respectively, toward that assessment, and concurrently filed refund claims with the IRS. The IRS denied their refund claims and filed a federal tax lien against Haber for the unpaid balance of the penalty. In response, Haber contested the penalty by requesting a Collection Due Process (" CDP" ) hearing pursuant to 26 U.S.C. § 6320, which has been stayed pending Haber's ongoing litigation.

         Haber and DGI then filed suit in the Court of Federal Claims, arguing that the penalty was erroneously assessed, seeking injunctive relief against the IRS's collection efforts, and requesting a refund of the partial payment. The court dismissed the suit for lack of subject matter jurisdiction because Haber and DGI had failed to pay the full penalty before commencing the suit and did not fall into any of the exceptions to the full payment rule. Diversified Grp., Inc. v. United States, 123 Fed.Cl. 442 (2015). An appeal of that decision is pending before the United States Court of Appeals for the Federal Circuit. Diversified Grp., Inc. v. United States, No. 16-1014 (Fed. Cir. Oct. 6, 2015) .

         Concurrently with that ongoing litigation, an IRS Revenue Officer began conducting an investigation to locate assets to satisfy the unpaid penalty. According to the Revenue Officer, her investigation " suggest[ed] that [Haber] may have access to, and use of, a bank account or bank accounts held in the name of Jill Haber [Haber's wife] at Signature Bank, and that such account or accounts may be held in the name of Jill Haber to shield them from the IRS." J.A. 33 ¶ 6. She further asserted that assets held by Jill Haber " as the nominee or alter-ego or transferee of [Haber]" may be used " to satisfy the 26 U.S.C. § 6707 penalty liability of [Haber]." J.A. 34 ¶ 7. The Revenue Officer confirmed with the IRS Criminal Investigation Division that it had closed its investigation of Haber and that there were no other pending criminal investigations of Haber, and informed Haber's representative of this information.

         The Revenue Officer then served the administrative summons at issue in this case on Signature Bank Corporation. That summons was captioned " [i]n the matter of James Haber," and sought testimony and documents " for any and all accounts that Jill Haber ha[d] signatory [authority] for" from January 1, 2013 to the date of the summons. J.A. 23. No penalties had been assessed against Jill Haber. The summons stated that the IRS sought " data relating to the tax liability or the collection of the tax liability or for the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws concerning [James Haber]." J.A. 23.

         Haber petitioned the district court to quash the summons, arguing among other things that the IRS was precluded from issuing the summons by an outstanding criminal referral in his case. The government moved to dismiss the petition for lack of subject matter jurisdiction on the ground that this summons falls into a category for which the United States has not waived its sovereign immunity, specifically, a summons " issued in aid of the collection of . . . an assessment." 26 U.S.C. § 7609(c)(2)(D). In a declaration attached to the government's motion to dismiss, the Revenue Officer declared that the summons was to " aid in the collection of [Haber's] . . . liability for a penalty" and that " [t]he IRS has already made an assessment against [Haber] for this liability, which currently is approximately $25,000,000." J.A. 32-33 ¶ 3. Further, the Revenue Officer attested that " [t]he sole purpose of [her] investigation is to locate assets to satisfy [Haber's] existing assessed federal tax liability, and not to determine additional federal tax liabilities of [Haber] or any other person or entity." J.A. 33 ¶ 4.

         Haber sought jurisdictional discovery to establish that the summons did not fall within the exception to the United States's waiver of sovereign immunity for proceedings to quash third-party summonses. 26 U.S.C. § 7609(b), (c)(2). Haber served the government with a request for production of documents and noticed the deposition of the Revenue Officer who was conducting the investigation into Haber's assets and who had served the summons.

         In response to Haber's petition, the government produced three documents regarding the termination of the IRS's criminal referral of Haber to the Department of Justice (" DOJ" ): a supplemental declaration from the Revenue Officer explaining the steps she took to confirm that there were no pending criminal investigations...

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