Kalra v. United States
| Decision Date | 23 April 2013 |
| Docket Number | Case No. 12-CV-3154 |
| Parties | BIKRAMJIT SINGH KALRA, Plaintiff, v. UNITED STATES OF AMERICA, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff Bikramjit Singh Kalra has filed a petition to quash an Internal Revenue Service ("IRS") summons that seeks his financial information from a third-party bank. Defendant United States of America ("the Government") has moved to dismiss Kalra's Petition, pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). For the reasons stated below, the Government's Motion is denied.
The following summary of operative facts is drawn from the petition, the parties' briefs, and the parties' exhibits.1 The Government asserts the following: Kalra is the subject of an investigation by the Indian tax authorities ("ITA") concerning his tax liability in that country. (Def.'s Mem. in Supp. of Mot. to Dismiss ("Def.'s Mem.") at 1.) Pursuant to a treaty between the United States and India, the ITA requested that the IRS obtain Kalra's relevant financial information located in the United States. (Id.) In response to the ITA's request, IRS TaxSpecialist Daniel B. Groscost served an administrative summons on third-party Bank of America ("BofA") regarding any accounts held by Kalra. (Id.; see also Def.'s Mem. Exh. 1A.)
According to the summons, Groscost also mailed a notice of the summons to Kalra to an address in India provided by the ITA. (Id.; see also Def.'s Mem. Exh. 1A.) The date of the summons to BofA is identified as "March XXth, 2012," and there is no date or signature listed for the notice of the summons sent to Kalra.2
The summons at issue requested BofA to furnish copies of documents pertaining to all accounts controlled or under the signatory authority of Kalra, for the period April 1, 2000 through December 31, 2011. (Def.'s Mem. Exh. 1A.) Kalra claims that, in or around mid-April of 2012, he received a copy of the summons directly from BofA. (Pl.'s Resp. at 1.) According to Kalra, he never received the notice mailed to him at the India address, and, upon receiving the notice, he immediately contacted his attorneys. On April 27, 2012, Kalra filed the instant petition to quash the IRS summons to BofA under 28 U.S.C. § 7609. (Id.) In his petition, Kalra alleged that he is a resident of the United States, that he has filed taxes in the United States with a United States address, and that he does not owe taxes in India. (Pl.'s Pet. ¶¶ 5-6.)
The Government has moved to dismiss Kalra's petition under Fed. R. Civ. P. 12(b)(1) and Fed. R. Civ. P. 12(b)(6). Kalra filed a response brief in opposition. The Government has not filed a reply brief.
Fed. R. Civ. P. 12(b)(1) permits a defendant to move for dismissal on the ground that the court lacks subject-matter jurisdiction. In considering the motion, "a district court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff." Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). The district court also "may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject-matter jurisdiction exists." Id. (internal citations omitted). However, the nonmoving party (the plaintiff) carries the burden of proving that the court has jurisdiction over its claims. United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003) (en banc).
Although the Government fails to mention Fed. Rule 12(b)(1) in its supporting memorandum, it appears the Government is challenging subject-matter jurisdiction based on sovereign immunity. Under the doctrine of sovereign immunity, the United States cannot be sued without its consent, and any consent given limits the scope of the court's jurisdiction. See United States v. Dalm, 494 U.S. 596, 608 (1990). When Congress provides conditions waiving sovereign immunity, "those conditions must be strictly observed and exceptions thereto are not to be lightly implied." Bartley v. United States, 123 F.3d 466, 468 (7th Cir. 1997) (quoting Block v. North Dakota, 461 U.S. 273, 287 (1983)).
A petition to quash an IRS summons qualifies as a suit against the United States and, therefore, requires a waiver of sovereign immunity. Barmes v. United States, 199 F.3d 386, 388 (7th Cir. 1999). Such a waiver is provided under 26 U.S.C. § 7609(b)(2), which permits apetition to quash by any person who "is entitled to notice of a summons under subsection (a)." See also Stratton v. United States, 34 F. Supp. 2d 1096, 1097 (N.D. Ind. 1998) () (quoting Davidson v. United States, No. 97-1244, 1998 WL 339541, *1 (10th Cir. Jun. 9, 1998)). However, the petition must be filed "not later than the 20th day after such notice is given in the manner provided in subsection [7609](a)(2)." 26 U.S.C. § 7609; Riggs v. United States, 575 F. Supp. 738, 741 (N.D. Ill. 1983).
Kalra's petition was filed on April 27, 2012. (Def.'s Mem. at 2-3.) The Government argues the petition should be dismissed as untimely. The Government claims, based on Groscost's unsworn and undated statement, that Kalra was mailed notice at the India address on March 29, 2012, and that under the statute, Kalra had twenty days from March 29, 2012 to file his petition (April 18, 2012). In response, Kalra argues that the IRS failed to follow the notification procedures set forth in 26 U.S.C. § 7609(a)(2) and that, consequently, the twenty-day clock never began ticking. Kalra further asserts that he filed his petition as soon as possible after receiving the notice from BofA.
26 U.S.C. § 7609(a)(1) requires that the IRS give notice to the taxpayer whose financial records are sought from a third-party. 26 U.S.C. § 7609(a)(2) provides that such notice is sufficient if it is mailed by certified or registered mail to the last known address of the taxpayer3 The notice must include: (1) a copy of the summons and (2) an explanation of the taxpayer's right to sue to quash the summons. 26 U.S.C. § 7609(a)(1).
In this case, it appears, based on several reasons, that the notice requirements of 26 U.S.C. § 7609(a)(2) were not met. First, the summons's certificate of service is defective. Section Four of the certificate, which pertains to service on Kalra and states "this certificate is made to show compliance with IRC Section 7609," is both unsigned and undated. (Def.'s Mem. Exh. 1A at 2.) The section of the certificate regarding service to BofA is also undated, although it is signed. Second, the actual summons is undated and instead states that it was issued on the "xxth" day of March, 2012. (Id. at 1.) Third, the Government has failed to provide a certified or registered mail receipt showing that the summons was, in fact, mailed to Kalra.
Faced with such defects, the Government submitted the "affidavit" by Groscost, referred to above, in which he states that he sent a copy of the summons to Kalra by registered mail. (See Def.'s Mem. Exh. 1). However, Groscost's purported affidavit also is defective. His "affidavit" lacks any sort of jurat, seal, or other type of certification by a notary public that his statement was actually sworn. Instead, underneath Groscost's signature, there is a blank notary signature block. According to Black's Law Dictionary, an affidavit is a "voluntary declaration of facts written down and sworn by the declarant before an officer authorized to administer oaths." BLACK'S LAW DICTIONARY 66 (9th ed. 2009); see also Pfeil v. Rogers, 757 F.2d 850, 859 (7th Cir. 1985) (Pfeil) () (internal quotation and citation omitted). As Groscost's statement lacks any note that it was sworn before someone who is authorized to administer an oath, it is not a sworn affidavit.
Furthermore, Groscost's statement does not qualify as an unsworn declaration under 28 U.S.C. § 1746 because it lacks a specific date. In Pfeil, 757 F.2d at 859, addressing a summary judgment motion, the Seventh Circuit cautioned that an affidavit should still beconsidered if it complied with 28 U.S.C. § 1746, which permits unsworn declarations if such declarations are signed and dated.4 In this case, lacking both a specific date and a notary public's certification, Groscost's statement does not qualify as either a sworn affidavit or as an unsworn declaration under 28 U.S.C. § 1746. Consequently, Groscost's statement is stricken. See, e.g., Davis v. Wells Fargo Bank, 685 F. Supp. 2d 838, 842 (N.D. Ill. 2010) (); Knights v. Williams, 2005 WL 1838427, No. 02-C-5017 (N.D. Ill. July 28, 2005, at *3 () (quoting Pfeil, 757 F.2d at 859); Counts v. Kraton Polymers, U.S. L.L.C., 260 Fed. Appx. 825, 829 (6th Cir. Ohio 2008) ().
Based on the current record, the evidence is insufficient to show that the IRS complied with the notice requirements of 26 U.S.C. § 7609(a)(2). In instances where the IRS has failed to provide the notice required by 26 U.S.C. § 7609(a)(2), courts will then examine whether the petitioner suffered prejudice as a result of the failure to give notice. Where there was no harm to the petitioner, courts have refused to quash the summons. See, e.g., Sylvestre v. United States, 978 F.2d 25, 27-28 (1st Cir. 1992) (...
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