here - Fuerst Ittleman David & Joseph, PL

Case 3:10-mc-00024-GEB Case: 11-1612 Document: -DEA Document 003110561288 25 Filed Page: 01/07/11 68 Date Page Filed: 15 06/13/2011
of 17 PageID: 479
(February 2, February 3) that they were under investigation for their tax liability for tax years
2000–2004. (See Compl. Exs. C, D.) The Government also cites Thompson v. United States,
2008 WL 4279474 (S.D. Tex. Sept. 11, 2008) for the proposition that a taxpayer’s controlled
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business entities need not receive advance notice, but this case does not appear to address the
notice required by IRC §7602(c) for a taxpayer’s wholly-owned corporations, where those
corporations were also “taxpayers” under investigation. See id. at *6–7 (addressing taxpayer’s
argument that he had not received sufficient advance notice of third-party contact, and noting that
the IRS complied with the notice requirements of IRC § 7609).
The Court is not persuaded that contemporaneous notice of Ferrous Miner and BABP
under IRC § 7609 suffices, because Ferrous Miner and BABP are currently “taxpayers” under
investigation, and the summonses sought documents from third-parties that would be relevant to
an assessment of their tax liabilities. One of the motivating purposes for IRC § 7602(c) was
Congress’s concern that IRS contacts with third-parties “may have a chilling effect on the
taxpayer’s business and could damage the taxpayer’s reputation in the community. Accordingly,
. . . taxpayers should have the opportunity to resolve issues and volunteer information before the
IRS contacts third parties.” S. Rep. No. 105-174, at 77 (1998); see also United States v. Jillson,
No. 99-Civ-14223, 1999 WL 1249414, at *3 (S.D. Fla. Oct. 28, 1999). To permit advance
notice of one taxpayer to satisfy the advance-notice requirements with regard to other taxpayers
under investigation, even where those taxpayers are entities wholly-owned by the taxpayer under
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The Government also cites Phillips v. United States, 178 F.3d 1295 (6th Cir. 1999) (per
curiam, unpublished decision), for this proposition, but this case did not consider the effect of the
recently-passed advance-notice requirement, see Pub.L. No. 105-206, § 3417, 112 Stat. 685, 757
(1998), now codified at IRC § 7602(c).
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