The opinion of the court was delivered by: Mukasey, District Judge.
Petitioner David Gilmartin, who has not filed a tax return
since at least 1989 (Declaration of Alice Wong ("Wong Decl.") ¶
2), petitions to quash 11 subpoenas served by respondent
Internal Revenue Service ("IRS") on various financial and other
entities that are also named as respondents. The subpoenas would
compel production of documents that could provide information
relating to Gilmartin's "income, expenditures, assets and
liabilities for the relevant years, as well as evidence relevant
to his outstanding liabilities." (Wong Decl. ¶ 4)
Gilmartin contends that the IRS is misusing the subpoenas
because it has already decided to prosecute him criminally, and
the IRS is authorized to issue the subpoenas in question only if
no such decision has been made. He also seeks discovery in aid
of that contention. For the reasons set forth below, the
petitions are denied in all respects.
Of the summonses in question, the court lacks jurisdiction to
deal with four. As to two — those served on Equifax and Trans
Union — the court lacks jurisdiction because Gilmartin's motion
According to the affidavit of Alice Wong, which Gilmartin does
not challenge in this respect, both summonses were issued on
June 21, 2001, and the same day Wong sent Gilmartin notice of
both. (Wong Decl. ¶¶ 8, 9) Both required compliance by July 23,
2001. (Id.) Under 26 U.S.C. § 7602, the Internal Revenue
Service ("IRS") is authorized to issue administrative summonses
to collect information relevant to determining a taxpayer's
liability for taxes, unless the case has been referred to the
Justice Department for investigation by a grand jury, or unless
the Justice Department has made a request for taxpayer
information for the purpose of conducting such an investigation.
26 U.S.C. § 7602(a), (d)(1)(2). Under
26 U.S.C. § 7609(a)(1)-(3), and (c), the IRS was obligated to notify
Gilmartin of the summonses in question because Trans Union and
Equifax are third-party recordkeepers within the meaning of
26 U.S.C. § 7603(b), and Gilmartin could seek to quash subpoenas on
such entities; moreover, such notice had to be sent within three
days of service and not later than 23 days before the date fixed
for compliance. The notice here was timely. Therefore, if
Gilmartin wished to quash the summonses
he was required to commence a proceeding to do so "not later
than the 20th day after . . . notice is given in the manner
provided in subsection (a)(2)." 26 U.S.C. § 7609(b)(2)(A).
Gilmartin petitioned to challenge these subpoenas on July 23,
2001, 32 days after notice. Because the 20-day requirement
defines the extent of the government's waiver of sovereign
immunity, that requirement must be strictly construed, and the
court lacks jurisdiction over petitions filed after the
deadline. See Villella v. United States, No. 99 Civ. 3975,
2000 WL 968773, at *1 (S.D.N.Y. July 12, 2000), and cases cited
The court lacks jurisdiction as well over the petition to
quash the summonses on two other entities — Pfizer, Inc. and
Texas Christian University — albeit for a different reason. As
noted above, the statute permits a taxpayer to challenge a
summons on a third-party recordkeeper. This feature of the
statute arises from Congress's recognition of "the taxpayer's
need to protect privacy interests potentially invaded by the
summons." Upton v. I.R.S., 104 F.3d 543, 546 (2d Cir. 1997),
and it represents a waiver of the usual immunity that protects
the United States and its agencies from suit, id. at 545. By
the explicit terms of the statute, if a summoned entity is not a
third-party within the meaning of the statute, the taxpayer has
no right to notice of the summons or to intervene to quash it.
26 U.S.C. § 7609(c)(2)(E)(i)-(ii). Neither Pfizer nor Texas
Christian fits the definition.
The Pfizer summons was served on June 18, 2001, with
compliance required by July 16, 2001. The Texas Christian
summons was served on July 26, 2001, with compliance required by
August 13, 2001. Gilmartin was not notified of either summons.
(Wong Decl. ¶¶ 7, 17; Ex. A, K) Pfizer was summoned because it
allegedly pays consulting fees to Gilmartin; Texas Christian was
summoned as an academic institution, and was asked to provide
Gilmartin's academic records. (Id.) The statute defines ten
categories of entities that are "third-party recordkeepers."
26 U.S.C. § 7603(b)(2)(A)-(J). These include banks and credit
unions, consumer reporting agencies, persons extending credit
through the use of credit cards or similar devices, securities
brokers, attorneys, accountants, barter exchanges, regulated
investment companies, enrolled agents and owners or developers
of computer software source code (as elsewhere defined). The
characteristics of such entities have been described as follows:
Congress intended that a third-party
recordkeeper would "`be a person engaged in making
or keeping the records involving transactions of
other persons.'" [citations omitted] Third-party
records have been defined as "those containing data
about transactions between the taxpayer and parties
other than the [third-party recordkeeper]."
However, when the administrative summons seeks
records that pertain to transactions between the
summoned recordkeeper and the taxpayer under
investigation (and that do not concern the type of
credit transactions contemplated by § 7609), the
taxpayer does not have the right to notice, the
right to intervene or the right to initiate a suit
to prevent disclosure. For instance, an employer is
not considered a third-party recordkeeper in its
relationship to an employee. See United States v.
Bass, 784 F.2d 1282, 1285-86 (5th Cir. 1986);
Ponsford v. United States, 771 F.2d 1305, 1308
(9th Cir. 1985).
Upton, 104 F.3d at 546-47.
The government does not dispute the court's jurisdiction to
hear Gilmartin's challenge to the remaining summonses, although
it does dispute his claim that they are in any way improper. In
order to allow the IRS to oversee effectively a system of
taxation that relies on self-reporting, Congress gave the IRS a
"broad mandate to investigate and audit persons who may be
liable for taxes." United States v. Bisceglia, 420 U.S. 141,
145, 95 S.Ct. 915, 43 L.Ed.2d 88 (1975) (internal quotation
marks omitted). To fulfill that mandate, Congress gave the IRS
the authority to "summon the person liable for tax . . . or any
other person . . . to appear before the Secretary . . . and to
produce . . . books, papers, records, or other data."
26 U.S.C. § 7602(a)(2). In order to exercise this broad grant ...