Supreme Court Rejects Dynamo Holdings’ IRS Summons Case

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By Matthew Beddingfield

The U.S. Supreme Court rejected Dynamo Holdings LP’s petition asking it to decide whether the company was unfairly denied the opportunity to specify instances of bad faith pertaining to IRS summonses ( Dynamo Holdings LP v. United States, U.S., No. 16-358, cert. denied 1/9/17 ).

The Supreme Court, which rejected the company’s petition Jan. 9, ruled in 2014 that Dynamo Holdings had a right to a hearing in its challenge of Internal Revenue Service summonses if it could identify facts raising an inference of bad faith on the part of the government. The IRS is seeking information about Dynamo Holdings’ debt, including $34 million in company interest expenses.

In its petition for a second round at the high court, Dynamo Holdings argued that the district court and U.S. Court of Appeals for the Eleventh Circuit, on remand, denied without explanation its request to amend their submissions to meet the parameters set by the Supreme Court. The high court’s denial leaves open a legal procedure issue concerning a taxpayer’s ability to provide new allegations on remand to meet a new court standard.

Offensive to Justice

Dynamo Holdings said in its Sept. 19 petition that “the refusal of the district court to permit supplementation, and the sanctioning of that decision by the Eleventh Circuit, offend traditional notions of fair play and justice by not permitting a litigant, after the rules have changed in the middle of a case, to respond in accordance with new rules.”

Edward A. Marod of Gunster, Yoakley & Stewart P.A., who represented Dynamo Holdings, couldn’t be reached for comment. The IRS didn’t respond to a request for comment.

To contact the reporter on this story: Matthew Beddingfield in Washington at

To contact the editor responsible for this story: Meg Shreve at

For More Information

Additional information is available in Bloomberg BNA's Supreme Court Docket Watch: 2016-17 Term Tax Law Cases.

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