Alexander Abraham, James R. Abraham, Miriam Abraham, Otto Abraham Trust, Peter Dehaas, Frederick Frank, Arthur Fried, Meryl Gallatin, Evelyn Gollomp, Fred Graber, Edmond A. Hajim, F. Warren Hellman, George Heyman, Jr., Allan B. Hunter, Bernard Laterman, David Leinbach, Arthur Magill, Paul Manheim, William H. Osborn, Andrew G.C. Sage, William Taft, Stuart Travis, Arthur Weigner, Sidney Winters v. United States of America and James R. Borowski

Citations: 740 F.2d 2; 54 A.F.T.R.2d (RIA) 5742; 1984 U.S. App. LEXIS 20383Docket: 1442

Court: Court of Appeals for the Second Circuit; July 18, 1984; Federal Appellate Court

Combined Opinion AnalysisCombined Opinion SummaryCombined Opinion Original

Narrative Opinion Summary

This case involves an appeal to the United States Court of Appeals for the Second Circuit by 24 petitioners, including directors and customers of Lehman Trading, contesting a dismissal by the District Court for the Southern District of New York. The appeal challenges the dismissal of their petition to quash IRS summonses directed at Lehman Brothers Kuhn Loeb Inc. for a tax audit of its parent company. The petitioners argued that the IRS failed to provide required notice and opportunity to contest the summonses per 26 U.S.C. § 7609. The District Court, however, ruled it lacked subject matter jurisdiction, interpreting § 7609(a)(4)(A) as exempting notice requirements for summonses directly served on the entity under investigation—in this instance, Lehman Trading, which filed a consolidated tax return with its parent company. The Court of Appeals affirmed the lower court's decision, emphasizing the jurisdictional limitations in challenging IRS actions concerning corporate tax probes, thus upholding the interpretation that notice provisions do not apply in such contexts.

Legal Issues Addressed

Jurisdiction over IRS Summons Challengessubscribe to see similar legal issues

Application: The court determined that it lacked subject matter jurisdiction to hear the petition to quash IRS summonses issued to Lehman Brothers Kuhn Loeb Inc. because the summonses were directly related to the tax liability of the entity being investigated.

Reasoning: The District Court found it lacked subject matter jurisdiction, interpreting § 7609(a)(4)(A) to imply that the notice provisions do not apply to summons served directly on the entity whose tax liability is being investigated.

Notice Requirements under 26 U.S.C. § 7609subscribe to see similar legal issues

Application: The court found that the notice requirements outlined in 26 U.S.C. § 7609 were not applicable in this case as the summons was served directly on Lehman Trading, which was the entity under investigation for tax purposes.

Reasoning: The petitioners argued that the summonses were improperly issued without the required notice and opportunity to challenge, as outlined in 26 U.S.C. § 7609.