Hunkler v. United States of America et al

Filing 11

REPORT AND RECOMMENDATIONS: The U.S. unopposed 03/11/2014 10 motion for leave to file a sur-reply to petitioner's objection is GRANTED. The Magistrate Judge RECOMMENDS that petitioner Dennis J. Hunklers 11/19/2013 petition to quash the Internal Revenue Services third party summons 1 be DENIED - objections due w/in fourteen (14) days. Signed by Magistrate Judge Mark R. Abel on 04/08/2014. (sr1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

Dennis J. Hunkler,

:
Petitioner

United States of America, et al.,
Respondent

Civil Action 2:13-mc-00040

:

v.

:

Judge Watson

:

Magistrate Judge Abel

:

Report and Recommendation
This matter is before the Magistrate Judge on petitioner Dennis J. Hunkler’s
November 19, 2013 petition to quash the Internal Revenue Service’s third party
summons (doc. 1). The United States’ unopposed March 11, 2014 motion for leave to
file a sur-reply to petitioner’s objection (doc. 10) is GRANTED.
Background. On November 6, 2013, Revenue Agent Timothy O’Boyle of the
Internal Revenue Service (“IRS”) issued an IRS summons to Huntington National Bank
to appear on December 6, 2013 to give testimony and produce for examination records
relative to the financial transactions of Dennis J. Hunkler. Hunkler seeks to quash that
summons arguing that (1) the IRS failed to timely notify him of the summons as
required 26 U.S.C. § 7609(a)(1); (2) the IRS failed to provide advance notice that contact
would be made with third parties; (3) the summons was issued while a referral for
criminal prosecution was pending in violation of 26 U.S.C. § 7602(d)(2)(A); (4) the IRS
1

failed to act in good faith as required by United States v. Powell, 379 U.S. 48 (1964); (5)
and the IRS will violate banking laws and his right to privacy in causing his records to
be turned over to the IRS.
Arguments of the Parties. The United States argues that this Court should deny
the petition on its merits because petitioner has not met his burden of proof. Under
United States v. Powell, 379 U.S. 48 (1964), the United States must show that the
investigation is conducted pursuant to a legitimate purpose, that the information
sought is not already within the IRS’s possession, and that the required administrative
steps have been followed. The United States maintains that it is not seeking
enforcement of the underlying summons. As a result, it does not have to establish a
Powell prima facie case, and the burden shifts to the petitioner to establish a valid defense
to the summons.
In the alternative, the United States also argues that it has established the four
factors required by United States v. Powell. The IRS is conducting an examination to
determine the correct federal income tax liabilities of petitioner for the 2008 and 2010
income tax periods and to determine if Hunkler committed any violation of the internal
revenue law in connection with those taxable years. The information sought from
Huntington National Bank may be relevant to determining Hunkler’s correct income
and tax liabilities for the taxable years under investigation, and this information is not
already in the possession of the IRS. Finally, the United States maintains that the IRS has

2

followed all of the steps required by the Internal Revenue Code for the issuance of the
summons.
The United States argues that petitioner has failed to meet his burden of proof to
demonstrate substantial facts showing that the enforcement of the summons would be
an abuse of the court’s process. The United States maintains that the notice was timely
filed under 26 U.S.C. § 7609(a)(1). Petitioner was provided with notice that third parties
would be contacted when Revenue Agent O’Boyle mailed him Letter 3164-C
Publication 1 and Notice 609 on January 28, 2013. Petitioner’s argument that the
summons was issued while a referral for criminal prosecution to the Department of
Justice is pending is without merit because there is no Department of Justice referral in
effect for the 2008 and 2010 income tax years. The United States further argues that
petitioner has not suffered a violation of any legally cognizable privacy or constitutional
right related to the summons enforcement proceedings.
The United States further argues that this Court lacks subject matter jurisdiction
because Hunkler failed to comply with 26 U.S.C. § 7609(b)(2)(B). The United States
maintains that petitioner has failed to show that he served a copy of the petition upon
the summoned party, Huntington National Bank, by registered or certified mail within
twenty days of the notice of the summons as required, making the petition subject to
dismissal for lack of subject matter jurisdiction. The United States maintains that the
Court should dismiss the Internal Revenue Service and Revenue Agent Timothy

3

O’Boyle from this proceeding because a petition to quash summons proceedings seek
relief against the United States.
In his reply in support of his motion to quash, Hunkler argues that the IRS has
not complied with the Internal Revenue Code in order to make a Powell prima facie case.
According to Hunkler, the IRS failed to periodically provide him with a record of
persons contacted by the Secretary with respect to the determination of his tax liability.
Hunkler maintains that his failure to request such a list does not obviate the IRS’s clear
duty under 26 U.S.C. § 7602(c)(2). Hunkler also maintains that he properly served his
petition on the Huntington National Bank. Plaintiff further argues that Revenue Agent
O’Boyle is a proper party to this case because he failed to follow IRS procedures in the
issuance of the summon which is the cause of these proceedings.
In its sur-reply, the United States maintains that petitioner has misinterpreted the
plain language of 26 U.S.C. § 7602(c)(2) and seeks to place a greater burden on the IRS
with respect to third party summons than what is plainly required by the Internal
Revenue Code. By his own admission, Hunkler has never requested such a list from the
IRS and that the IRS has informed him of every summons at issue in this and related
cases. According to the United States, the IRS clearly followed the statutory guidelines
in issuing the summons to Huntington National Bank, and it has met its burden of
providing appropriate notice to the petitioner as set forth in Revenue Agent O’Boyle’s
declaration.

4

Discussion. The Secretary of the Treasury is authorized to issue administrative
summonses for the examination of books and records and to take the testimony of
persons under oath to ascertain “the correctness of any return, making a return where
none has been made, determining the liability of any person for any internal revenue
tax or the liability at law or in equity of any transferee or fiduciary of any person in
respect of any internal revenue tax, or collecting any such liability.” 26 U.S.C. § 7602(a).
Under specified conditions, a person identified in an IRS summons has the right to
begin a proceeding to quash such summons. 26 U.S.C.A. § 7609(b)(2)(A).
As the person (other than the person summoned) identified in the notice of the
summons, Hunkler was entitled to notice “within 3 days of the day on which such
service is made, but no later than the 23rd day before the day fixed in the summons as
the day upon which such records are to be examined.” 26 U.S.C. § 7609(a)(1). On
November 6, 2013, Revenue Agent O’Boyle sent a copy of the summons issued to
Huntington National Bank to petitioner via certified mail. See doc. 6-3. Although
petitioner asserts that the notice was not timely, he does not provide any basis for this
assertion.
Petitioner has failed to meet his burden of proof to demonstrate that the
enforcement of the summons would be an abuse of the court’s process. The notice was
timely filed under 26 U.S.C. § 7609(a)(1). Petitioner was provided with notice that third
parties would be contacted when Revenue Agent O’Boyle mailed him Letter 3164-C
Publication 1 and Notice 609 on January 28, 2013. Petitioner has not produced any
5

evidence showing that a referral for criminal prosecution to the Department of Justice is
pending for the 2008 and 2010 income tax years. Plaintiff specifically relies on section
7602(c) of Title 26 of the United States Code, which states:
Notice of contact of third parties.-(1) General notice.--An officer or employee of the Internal Revenue
Service may not contact any person other than the taxpayer with respect
to the determination or collection of the tax liability of such taxpayer
without providing reasonable notice in advance to the taxpayer that
contacts with persons other than the taxpayer may be made.
(2) Notice of specific contacts.--The Secretary shall periodically provide to
a taxpayer a record of persons contacted during such period by the
Secretary with respect to the determination or collection of the tax
liability of such taxpayer. Such record shall also be provided upon
request of the taxpayer.
26 U.S.C. § 7602(c). Petitioner’s reliance on Section 7602(c)(2) is also without merit. As
previously noted, plaintiff received notice with respect to the summons issued to
Huntington National Bank. Petitioner acknowledges that he has never requested notice
pursuant to Section 7602(c)(2). Any failure by the United States to provide a record of
persons contacted does not demonstrate that the United States failed to follow the
proper procedures in the issuance of the summon which is the cause of these
proceedings.
Conclusion. For the reasons stated above, the Magistrate Judge RECOMMENDS
that petitioner Dennis J. Hunkler’s November 19, 2013 petition to quash the Internal
Revenue Service’s third party summons (doc. 1) be DENIED.

6

If any party objects to this Report and Recommendation, that party may,
within fourteen (14) days, file and serve on all parties a motion for reconsideration by
the Court, specifically designating this Report and Recommendation, and the part
thereof in question, as well as the basis for objection thereto. 28 U.S.C. §636(b)(1)(B);
Rule 72(b), Fed. R. Civ. P.
The parties are specifically advised that failure to object to the Report and
Recommendation will result in a waiver of the right to de novo review by the District
Judge and waiver of the right to appeal the judgment of the District Court. Thomas v.
Arn, 474 U.S. 140, 150-152 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981);
United States v. Sullivan, 431 F.3d 976, 984 (6th Cir. 2005); Miller v. Currie, 50 F.3d 373,
380 (6th Cir. 1995). Even when timely objections are filed, appellate review of issues not
raised in those objections is waived. Willis v. Sullivan, 931 F.2d 390, 401 (6th Cir. 1991).

s/Mark R. Abel
United States Magistrate Judge

7