Pflum v. U.S.

Decision Date29 November 1993
Citation125 F.3d 862
Parties-6755, 97-2 USTC P 50,745, 97 CJ C.A.R. 2179 NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of
CourtU.S. Court of Appeals — Tenth Circuit

Before BRORBY, LOGAN, and HENRY, Circuit Judges.

ORDER AND JUDGMENT *

HENRY, Circuit Judge.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R.App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.

Contending, among other things, that he is not a person liable for or subject to federal income taxes, plaintiff-appellant David Pflum filed three separate petitions in the United States District Court for the District of Kansas attempting to quash three summonses issued to third-party recordkeepers by the Internal Revenue Service (IRS) under the authority of 26 U.S.C. § 7602. One of the summonses was directed to a Kansas financial institution; the other two were directed at financial institutions located in California. Plaintiff argued that he was not afforded proper notice of the issuance of the summonses.

Finding that it lacked subject matter jurisdiction under the provisions of 26 U.S.C. § 7609(c)(2)(B)(i) because the summonses were issued in aid of the collection of an assessed tax liability, the district court dismissed each of plaintiff's petitions with prejudice. We affirm in part and reverse and remand in part.

The IRS may issue a summons to any person having possession, custody, or care of papers relevant to another's tax liability except when the matter has been referred to the Justice Department for criminal prosecution. See 26 U.S.C. § 7602. A proceeding to quash such a summons can be brought in federal district court under the auspices of 26 U.S.C. § 7609(b)(2), with jurisdiction proper in the district where the summoned person resides or is found, see 26 U.S.C. § 7609(h)(1). However, a court has no subject matter jurisdiction over such a proceeding if the summons was issued "in aid of the collection of [ ] the liability of any person against whom an assessment has been made or judgment rendered." 26 U.S.C. § 7609(c)(2)(B)(i).

Finding that each summons represented an attempt to collect on plaintiff's 1989 federal tax liability, the district court concluded that plaintiff's action was barred by 26 U.S.C. § 7609(c)(2)(B)(i). Because the district court concluded that "no district court would have jurisdiction to consider Pflum's petition," it dismissed all three petitions with prejudice for lack of subject matter jurisdiction. See R. tab 15 at 7 n. 5. On appeal, petitioner argues that the district court erred in concluding that the summonses were issued only to aid the collection of an assessed tax and that it was further error for the district court to dismiss with prejudice the petitions relative to the summonses directed to the California financial institutions.

We begin by noting that the district court was without jurisdiction to dismiss with prejudice the petitions relative to the California summonses. Section 7609(h)(1) of title 26 of the United States Code states:

Jurisdiction.--The United States district court for the district within which the person to be summoned resides or is found shall have jurisdiction to hear and determine any proceeding brought under subsection (b)(2) [a proceeding to quash]....

This statute is not merely a venue statute, but is jurisdictional in nature. See Deal v. United States, 759 F.2d 442, 443-44 (5th Cir.1985) (citing Masat v. United States, 745 F.2d 985 (5th Cir.1984)). A dismissal with prejudice "is a complete adjudication of the issues presented by the pleadings." Smoot v. Fox, 340 F.2d 301, 303 (6th Cir.1964). Because the district court was without subject matter jurisdiction to render an adjudication concerning the California summonses, see Deal, 759 F.2d at 443-44; Dennis v. United States, 660 F.Supp. 870, 873 (C.D.Ill.1987); Maikranz v. United States, 612 F.Supp. 590, 592 (S.D.Ind.1985); Dial v. United States, 599 F.Supp. 475, 476 (S.D.Tex.1984); Bilodeau v. United States, 577 F Supp. 234, 235 (D.N.H.1983), the court's dismissal with prejudice of plaintiff's petitions regarding the California summonses is void. See United States v. 51 Pieces of Real Property, Roswell, N. M., 17 F.3d 1306, 1309 (10th Cir.1994); see also V.T.A., Inc. v. Airco, Inc., 597 F.2d 220, 224 (10th Cir.1979). While we are sensitive to the effort by the district court to serve the ends of judicial efficiency, it must be kept in mind that "[t]he jurisdiction of the federal courts is carefully guarded against expansion by judicial interpretation or by prior action or consent of the parties," American Fire & Cas. Co. v. Finn, 341 U.S. 6, 17-18 (1951). We therefore reverse the district court's dismissal with prejudice of the petitions relative to the California summonses and remand with instructions to dismiss those petitions without prejudice.

Turning to the merits of the petition to quash the Kansas summons, plaintiff attempts to establish that...

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3 cases
  • Kaminski v. United States
    • United States
    • U.S. District Court — District of Minnesota
    • April 7, 2022
    ...... and collection efforts.' ” (quoting Hibbs v. Winn, 542 U.S. 88, 101 (2004)); accord Pflum v. United States, 125 F.3d 862 (10th Cir. 1997) (table. decision). . . 5. . . And it is not clear that the ......
  • HP Distribution, LLC v. Internal Revenue Serv., Case No. 16-0219
    • United States
    • U.S. District Court — District of Kansas
    • October 11, 2017
    ......Kan. Jan. 4, 1999); Renoe v. United States et. al., No. 98-212-KHV (D. Kan. Oct. 14, 1998) (motion voluntarily withdrawn by movants); Pflum v. United States, No. 97-4029-RDR (D. Kan. Aug. 19, 1997), aff'd on merits by 125 F.3d 862 (10th Cir. 1997); Ewy v. United States, No. 94-2342-KHV ......
  • Stratton v. U.S., CIV. 1:98cv218.
    • United States
    • U.S. District Court — Northern District of Indiana
    • December 11, 1998
    ...that dual purpose summons are also excepted from the notice provisions. The government relies on Pflum v. United States, 125 F.3d 862 (Table, unpublished opinion), 80 A.F.T.R.2d 97-6755, 97-2 U.S. Tax Cas. (CCH) ¶ 50,745 (10th Cir.1997), wherein the Court Turning to the merits of the petiti......

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