Miccosukee Tribe of Indians of Florida v. United States
| Decision Date | 12 July 2012 |
| Docket Number | CASE NO. 11-CV-23107-GOLD/GOODMAN [LEAD CASE] |
| Parties | MICCOSUKEE TRIBE OF INDIANS OF FLORIDA, Petitioner, v. UNITED STATES OF AMERICA, Respondent. |
| Court | U.S. District Court — Southern District of Florida |
ORDER GRANTING UNITED STATES' MOTION TO DENY PETITION TO QUASH
[ECF No. 10]; FINDINGS OF FACT AND CONCLUSIONS OF LAW; CLOSING CASE
This Cause is before the Court upon Respondent United States of America's ("Respondent" or "Government") Motion to Deny Petitions to Quash [ECF No. 10].1 Petitioner Miccosukee Tribe of Indians of Florida ("Petitioner" or "Tribe") filed a Response in opposition [ECF No. 13], and the Government filed a Reply [ECF No. 15]. On February 24, 2012, I held an evidentiary hearing [ECF No. 33]. The parties submitted their respective Proposed Findings of Fact and Conclusions of Law after the evidentiary hearing [ECF Nos. 35, 38, 42]. Having considered the parties' written submissions, witness testimony, and the applicable law, and being otherwise duly advised, I make the following findings of fact and conclusions of law and grant the Motion to Deny Petitions to Quash.
On August 29, 2011, the Tribe filed a Petition to Quash Summons to Morgan Stanley Smith Barney [ECF No. 1] in Case No. 11-cv-23107, seeking to quash a summons issued to Morgan Stanley Smith Barney ("Morgan Stanley") on August 9, 2011 for select documents encompassing calendar year 2010. That same day, the Tribe filed Petitions to Quash summonses (together with Morgan Stanley summons, "Summonses") issued to Citibank (South Dakota), N.A. ("Citibank") (Case No. 11-cv-23111), American Express Company ("American Express") (Case No. 11-cv-23129), and Wachovia Bank ("Wachovia") (Case No. 11-cv-23112) (together with Case No. 11-cv-23107, "2011 Cases"). At the Government's request, the 2011 Cases were transferred to me on the grounds that two prior cases—Miccosukee Tribe of Indians of Florida v. United States, Case No. 10-cv-23507-GOLD and Miccosukee Tribe of Indians of Florida v. United States, Case No. 10-cv-21332-GOLD)—are related to the 2011 Cases. [ECF No. 9]. I consolidated the 2011 Cases with lead case 11-cv-23107. [ECF No. 11].
In Case No. 10-cv-21332, I rejected the Tribe's argument that sovereign immunity barred the Internal Revenue Service's ("IRS") issuance of a summons to Morgan Stanley seeking production of records for the tax years 2006 through 2009 for accounts belonging to the Tribe's former chairman. [Case No. 10-cv-21332, ECF No. 25]. In Case No. 10-cv-23507,2 I extended this sovereign immunity analysis to IRS summonses issued on September 10, 2010 to Morgan Stanley, Citibank, AmericanExpress, and Wachovia, which sought the Tribe's records for tax years 2006 through 2009. [Case No. 10-cv-23507, ECF No. 52]. (The 2006 though 2009 summonses at issue in Case No. 10-cv-23507) are identical to the Summonses in the instant case, bar the tax year for which documents are requested.) I also concluded the 2006 through 2009 summonses were issued for a legitimate purpose and sought documents relevant to that purpose; the IRS was not in possession of all the materials requested in the summonses; and the IRS followed the proper administrative steps. I denied the Tribe's petitions to quash and enforced the summonses.
As stated above, in the instant proceeding, the United States filed on October 31, 2011 a Motion to Deny Petitions to Quash [ECF No. 10], and attached as an exhibit a Declaration of Revenue Agent James M. Furnas [ECF No. 10-1]. On the Tribe's Motion [ECF No. 19] and following a discovery conference, Magistrate Judge Jonathan Goodman permitted the Tribe to take an abbreviated, limited purpose deposition of Agent Furnas. The Tribe took Agent Furnas' deposition on January 25, 2012. [ECF Nos. 31 and 31-1]. On February 24, 2012, I held an evidentiary hearing with Agent Furnas as the parties' sole witness. [ECF Nos. 33, 34].
In its pleadings, the Tribe argues, as it has before, the Summonses are barred by the doctrine of sovereign immunity. The Tribe further contends the Summonses were filed for an improper purpose, seek documents that are not relevant to a proper purpose, and are overbroad, and the IRS failed to give notice to the individual tribal member taxpayers whose information is sought from third-party recordkeepers in the Summonses.
The Government argues the Tribe is collaterally estopped from relitigating positions advanced in Case Nos. 10-cv-23507 and 10-cv-21332. Specifically, the Government notes the Summonses are identical (but for the time period of documents sought) to those considered in Case No. 10-cv-23507, and therefore the Tribe may not relitigate improper purpose, relevance, and overbreadth.3 The Government also contends the Summonses were issued for a legitimate purpose, the summoned data may be relevant to the IRS' investigation, the IRS does not possess the summoned information, and the IRS has substantially followed the administrative steps required by the Internal Revenue Code ("IRC"). As to notice, the Government argues the IRS need not provide notice to individual members of the Tribe because the Summonses name only the Tribe, and the Tribe was provided with notice.
As an initial matter, I decline to apply the doctrine of collateral estoppel to bar the instant litigation. "Collateral estoppel or issue preclusion forecloses relitigation of an issue of fact or law that has been litigated and decided in a prior suit." I.A. Durbin, Inc. v. Jefferson Nat. Bank, 793 F.2d 1541, 1549 (11th Cir. 1986). While there is persuasive precedent from other Circuits supporting the Government's position that collateral estoppel bars the instant suit, see, e.g., Benistar Emp'r Serv. Trust Co., 184 F. App'x 93 (2d Cir. 2006), I have not located, and the Government has not cited, binding precedent from the Eleventh Circuit applying collateral estoppel to summons enforcement proceedings. Moreover, although the Summonses are identical to the summonsesissued for tax years 2006 through 2009, the Tribe has raised in the instant proceeding unique facts going to bad faith and improper purpose that should be considered. See I.A. Durbin, Inc., 793 F.2d at 1549 (). Without binding precedent authorizing the application of collateral estoppel to summons enforcement proceedings, and noting there exists a unique factual basis for the Tribe's assertions in this case, I decline to apply collateral estoppel to the instant proceeding. See City of Riviera Beach v. That Certain Unnamed Gray, 649 F.3d 1259, 1274 (11th Cir. 2011) () (citation omitted); Dailide v. United States Atty. Gen., 387 F.3d 1335, 1341 (11th Cir. 2004) (). This makes no difference to the result though: as explained herein, I conclude the Summonses are enforceable and deny the Tribe's Petition to Quash the Summonses.
1. James M. Furnas is a duly commissioned Revenue Agent employed by the IRS. Declaration of Revenue Agent James M. Furnas [ECF No. 10-1] ("Furnas Decl.")
1. As a Revenue Agent, Agent Furnas is authorized to issue administrative summonses for documents and testimony in furtherance of civil tax examinations. Id.
2. Agent Furnas specializes in tribal government taxation. February 24, 2012 Evidentiary Hearing [ECF No. 24] ("Tr.") at 6:7-13.
3. In 2005, the IRS learned through a confidential informant of allegations that the Tribe regularly distributed payments to tribal members without reporting these distributions to the IRS. Furnas Decl. ¶ 4; Deposition of James Furnas [ECF No. 31-1] ("Furnas Dep.") at 19:19-21, 23:2-7; Tr. at 7:20-25.
4. As a result of these allegations, the IRS commenced an audit of the Tribe's gaming facility. Tr. 7:20-8:4.
5. Because of the information developed in the audit of the gaming facility, the IRS expanded the audit to include the tribal government and examined whether the Tribe was meeting its reporting and withholding obligations for tax years 2000 through 2005. See Furnas Decl. ¶ 5; Tr. at 9:9-11; see also Furnas Dep. at 19:17-20:4.
6. The 2000 through 2005 examination included (1) a review of cancelled checks, obtained as a result of third-party summonses to financial institutions, for payments made to tribal members and service providers, (2) a review of an extract of the Tribe's general ledger and partial check registers from the non-taxable distribution ("NTDR") account, provided voluntarily by the Tribe; and (3) a verification of the general ledger extract against bank records obtained through third-party record keeper summons. Furnas Dep. at 5:3-6:3; Tr. at 9:15-17, 10:8-10, 11:22-25, 59:5-60:18.
7. Through this examination, the IRS determined, for tax years 2000 through 2005, the Tribe failed to make required withholding on certain taxable payments ofAmerican Indian casino profits under 26 U.S.C. § 3402(r) and backup withholding under 26 U.S.C. § 3406, and also failed to file Forms 945 (Annual Return of Withheld Federal Income Tax) for that withholding. Furnas Decl. ¶ 5. In addition, the IRS determined several Forms 1099 MISC (Miscellaneous Income), required to report payments to members as well as payments of non-employee compensation to service providers, were not filed. Id.; see also Tr. at 17:6-12.
8. Agent Furnas discussed with the Tribe's counsel, Dexter Lehtinen and Guy Lewis, a potential global settlement for tax years 2000 through 2005 between the IRS and the Tribe wherein the Tribe would pay tax on behalf of tribal members and the IRS would then agree not to expand the examination to those members. Furnas Dep. at 25:22-5. The discussions were only in general...
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