KIMBERLY BASEHART GAETANO; RICHARD GAETANO v. UNITED STATES OF AMERICA - Articles

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KIMBERLY BASEHART GAETANO; RICHARD GAETANO v. UNITED STATES OF AMERICA

Posted by: Tanja Trezise on Apr 9, 2021

Court: 6th Circuit Court (Published Opinions)

Attorneys 1: ON BRIEF: Joseph Falcone, JOSEPH FALCONE, P.C., Southfield, Michigan, for Appellants.

Attorneys 2: ON BRIEF: Elissa Hart-Mahan, Joan I. Oppenheimer, DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.

Judge(s): GUY, DONALD, and MURPHY, Circuit Judges

Court Appealed: United States District Court for the Eastern District of Michigan at Detroit

RALPH B. GUY, JR., Circuit Judge. The Internal Revenue Service (IRS) issued a summons to a point-of-sale systems provider, seeking records related to Richard and Kimberly Gaetano and their cannabis businesses. Alleging the summons was issued in bad faith, the Gaetanos brought this action to quash the summons under 26 U.S.C. § 7609. The district court dismissed the action for lack of subject-matter jurisdiction because the Gaetanos lacked standing.

On appeal, the Government argues that § 7609 only waives the United States’ sovereign immunity to allow taxpayers to bring an action to quash certain third-party IRS summonses. As a matter of first impression, we conclude that the immunity waiver in § 7609 is subject to the statute’s exceptions. One of those exceptions applies because the summons here was issued by an IRS criminal investigator “in connection” with an IRS criminal investigation and the summoned party is not a third-party recordkeeper. See 26 U.S.C. § 7609(c)(2)(E). Without a statutory waiver of the United States’ sovereign immunity, subject-matter jurisdiction cannot obtain. Accordingly, we affirm.

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