Blackrock Financial Partners LLC et al v. United States of America et al

Filing 5

ORDER Denying Petition to Quash Summons and Dismissing Petition With Prejudice. Signed by District Judge Matthew F. Leitman. (Monda, H)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BLACKROCK FINANCIAL
PARTNERS, LLC, et al.
Plaintiffs,

Case No. 14-mc-51247
Hon. Matthew F. Leitman

v.
UNITED STATES OF AMERICA, et al.,
Defendant.
_________________________________/
ORDER DENYING PETITION TO QUASH SUMMONS
AND DISMISSING PETITION WITH PREJUDICE
Paul Mason, a Revenue Agent with the Internal Revenue Service, is
conducting an investigation of the tax liabilities of Hanna Karcho-Polselli. On July
9, 2014, Mason issued an administrative summons (the “Summons”) to JP Morgan
Chase Bank, N.A. (”Chase”). (A copy of the Summons is attached to ECF #4 as
Ex. A-2, Pg ID 49-51.) Mason issued the Summons pursuant to Section 7602 of
the Internal Revenue Code, 26 U.S.C. § 7602. The Summons directed Chase to
appear before Mason on July 21, 2014, and to provide information sufficient to
allow Mason to determine whether Chase kept or maintained records of business
transactions or affairs of Karcho-Polselli. The Summons did not ask for copies of
any records. Mason did not provide notice of the Summons to Karcho-Polselli.

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Chase has identified at least three accounts over which Karcho-Polselli had
signature authority.

Those accounts belong to the Petitioners in this matter:

Blackrock Financial Partner, LLC; Hotel Mortgage Funding, LLC; and Manhattan
Financial Advisors, LLC, DBA Quality Inn Near Universal DBA Comfort Inn.
Petitioners bring this action under Section 7609 of the Internal Revenue
Code, 26 U.S.C. § 7609, to quash the Summons. Petitioners allege that this Court
has subject matter jurisdiction pursuant to Section 7609 and the First, Fourth, Fifth,
Ninth, and Tenth Amendments to the United States Constitution.
In response to the Petition, Respondent United States of America argues that
this Court lacks subject matter jurisdiction because Section 7609 does not
authorize Petitioner’s action and because the United States has not otherwise
waived its sovereign immunity. Petitioners did not file a reply to the United
States’ response and have made absolutely no effort to refute any of the arguments
advanced by the United States. The Court agrees with the United States that there
is no basis for this action and that the Petition should not be quashed.
Petitioners are correct that Section 7609 does authorize actions to quash
administrative summonses. See 26 U.S.C. § 7609(b)(2)(A).

However, certain

types of summonses are expressly excluded from Section 7609, see 26 U.S.C. §
7609(c)(2), and the Section plainly does not authorize an action to quash the
classes of summonses that are excluded from its coverage.

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As relevant here, a summons “issued to determine whether or not records of
the business transactions or affairs of an identified person have been made or kept”
is specifically excluded from Section 7609. See 26 U.S.C. § 7609(c)(2)(C). The
Summons was issued solely to determine whether Chase made or kept records
related to Karcho-Polselli. Accordingly, the Summons falls outside of Section
7609, and Petitioners may not proceed under Section 7609.

Furthermore,

Petitioners have cited no authority for the proposition that their Petition is
authorized by any of the constitutional amendments they have identified.
In the alternative, the United States argues that even if the Petition is
authorized by Section 7609 or is otherwise permitted, the Petition should still be
denied because Petitioners have failed to show that it is improper or unlawful in
any way. The Court agrees. For the reasons set forth in detail in the Response of
the United States (see ECF #4 at 7-11, Pg ID 37-42) – reasons that Petitioners have
not even attempted to rebut – Petitioners have failed to establish any basis for
quashing the Summons.

The Court also sees no basis on which to grant

Petitioners’ request for discovery.

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Accordingly, IT IS HEREBY ORDERED that the Petition to Quash
Summons (ECF #1) is DENIED and DISMISSED WITH PREJUDICE.
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: December 9, 2014

I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on December 9, 2014, by electronic means and/or
ordinary mail.
s/Holly A. Monda
Case Manager
[phone]

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