United States District Court, D. New Mexico
HIGH DESERT RELIEF, INC., a New Mexico Nonprofit Corporation, Petitioner,
UNITED STATES OF AMERICA, through its agency the INTERNAL REVENUE SERVICE, Defendant.
MEMORANDUM OPINION AND ORDER
CHRISTINA ARMIJO, Chief United States District Judge
MATTER is before the Court on Petitioner's
Motion to Stay Further [Enforcement] of March 31, 2017 Order
on Petition to Quash [Doc. 30]. The Court, having
ordered an expedited response and reviewed the same, has
reviewed the submissions, the relevant law, and is otherwise
fully informed in the premises. The Court hereby
DENIES the Motion.
March 31, 2017, the Court issued a Memorandum Opinion and
Order dismissing Petitioner's two Petitions to
Quash IRS summonses. [Doc. 28] The same date, the Court
issued an Order Enforcing Summons directed to My
Bank. [Doc. 29] On April 11, 2017, Petitioner High Desert
Relief filed its Motion to Stay Further [Enforcement] of
March 31, 2017 Order on Petition to Quash. [Doc. 30]
High Desert argues that our Tenth Circuit Court of Appeals
recently held oral argument in The Green
Solution Retail, Inc. v. United States of America, et.
al., Case No. 16-1281, and, according to
Petitioner's counsel (the same counsel representing Green
Solution, a Colorado marijuana dispensary), based on the
questions posed by the panel at oral argument,  “there is a
substantial likelihood the Tenth Circuit will find no
delegation of authority” from Congress to the IRS for
the IRS to investigate a potential violation of
“federal drug laws.” [Doc. 30, ¶ 5] The
United States opposes Petitioner's Motion. [Doc.
32');">32] The United States argues that Petitioner failed to meet
its burden of showing that a stay pending appeal is
appropriate. [Doc. 32');">32, p. 2] Inter alia, the United
States argues that the sole issue before the Court of Appeals
in Green Solution is a different issue than that
raised here. In Green Solution, the issue is whether
the district court had the “jurisdiction to grant Green
Solution an injunction preventing the IRS from investigating
if Green Solution has violated the CSA [Controlled Substances
Act].” [Doc. 32');">32, p. 4]
to the parties' briefing, on May 2, 2017, our Tenth
Circuit issued its decision in Green
Solution. The Court held that the Anti-Injunction
Act deprives federal courts of jurisdiction over Green
Solution's suit to “enjoin the Internal Revenue
Service (IRS) and related parties from investigating Green
Solution's business records.” Green Solution
Retail, Inc. v. United States, __ F.3d __, No. 16-1281,
2017 WL 1573816, *1 (10th Cir. May 2, 2017). Next, the Court
rejected Green Solution's argument that the
Anti-Injunction Act did not apply because “the IRS was
acting outside its authority in investigating whether Green
Solution trafficked in a controlled substance, which [Green
Solution] claims is a criminal investigation properly carried
out by the United States Attorney.” Id. *8.
The Court reasoned:
[Section] 280E has no requirement that the Department of
Justice conduct a criminal investigation or obtain a
conviction before § 280E applies. See Alpenglow
Botanicals, LLC v. United States, No.
16-cv-00258-RM-CBS, 2016 WL 7856477, at *4 (D. Colo. Dec. 1,
2016) (unpublished) (“If Congress had wanted such an
investigation to be carried out or conviction to be obtained,
then it could easily have placed such language in §
280E.”). Instead, the IRS's obligation to determine
whether and when to deny deductions under § 280E, falls
squarely within its authority under the Tax Code. See I.R.C.
§ 6201(a) (authorizing and requiring the IRS “to
make the inquiries, determinations, and assessments of all
taxes . . . imposed by this title”); I.R.C. §
7602(a) (authorizing the IRS to “examine any books,
papers, records, or other data which may be relevant or
material to” “determining the liability of any
person for any internal revenue tax”); see also
United States v. Clarke, 134 S.Ct. 2361, 2364 (2014)
(holding the IRS “has broad statutory authority to
summon a taxpayer to produce documents or give testimony
relevant to determining tax liability”). Thus, the AIA
is implicated here.8
Id. In footnote 8, the Court stated:
To the extent Green Solution argues the IRS exceeded its
authority under the Internal Revenue Code, we lack subject
matter jurisdiction to consider the merits of the argument.
We decide here only that the IRS's efforts to assess
taxes based on the application of § 280E fall within the
scope of the AIA.
Id. n.8. In sum, the Court did not decide the issue
raised here, except to the extent necessary to decide whether
it had jurisdiction. To that extent, it rejected the argument
that the IRS lacks the authority to investigate and make
determinations required by Section 280E.
Tenth Circuit's decision in Green Solution moots
the present Motion.
the Court hereby DENIES AS MOOT
Petitioner's Motion to Stay Further [Enforcement] of
March 31, 2017 Order on Petition to Quash.