Opinion
No. 6-151 / 05-0167
Filed March 29, 2006
Appeal from the Iowa District Court for Polk County, Arthur Gamble, Judge.
Elmer Scheckel appeals from the district court order which rejected his challenge to a distress warrant issued by the Iowa Department of Revenue and Finance. AFFIRMED.
Elmer Scheckel, Oelwein, pro se, for appellant.
Thomas J. Miller, Attorney General, and Marcia Mason, Assistant Attorney General, for appellee.
Considered by Zimmer, P.J., and Miller and Hecht, JJ.
Elmer Scheckel appeals from the district court order which rejected his challenge to a distress warrant issued by the Iowa Department of Revenue and Finance (Department). Scheckel's pleading challenged the validity of a debt for individual income taxes being collected by garnishment. We affirm the district court's ruling.
I. Background Facts Proceedings
Scheckel has a lengthy history as a tax protestor. He questions the authority of the Internal Revenue Service and the Department to collect taxes from him. The record indicates Scheckel did not file State income tax returns for calendar years 1994 through 1999. In November of 1998, the Department mailed a notice of assessment to Scheckel of the estimated income taxes due from him for calendar years 1994 and 1995 together with income and penalties. In April of 2001, the Department mailed a notice of assessment to Scheckel of the estimated taxes due from him for calendar years 1996 through 1999 together with interest and penalties. Both notices informed Scheckel that the assessments would become final in the absence of an appeal to the director of revenue in the manner prescribed within the relevant statutory period. Scheckel failed to appeal to the director by filing a timely administrative protest pursuant to Iowa Code section 422.28 (2001).
On October 22, 2003, the Department issued a distress warrant as part of an effort to collect delinquent state income taxes from Scheckel, and the Polk County Sheriff garnished Scheckel's wages for unpaid income taxes accrued. On November 25, 2003, Scheckel filed a pleading which he described as a "Resistance and Counter Claim of Distress Warrant filed by Iowa Department of Revenue and Finance against Elmer Scheckel," in the Polk County District Court. He requested that all money collected under this and "any other previous garnishments" be returned to him until "it is proven in court by a jury trial that the Defendant is liable" for the taxes. Among other things, Scheckel's pleading alleged the individual income taxes being collected by garnishment were imposed in violation of his constitutional rights.
The Department had issued two prior distress warrants seeking to garnish Scheckel's wages for unpaid taxes. Scheckel resigned from his job following a garnishment under the first distress warrant. After the Department garnished his pension under the second distress warrant, he filed a "Challenge of Distress Warrant filed by Iowa Department of Revenue And Finance against Elmer Scheckel for lack of subject matter jurisdiction and judicial process" in the Iowa District Court for Fayette County. That court denied Scheckel's challenge and concluded he had failed to exhaust his administrative remedies. Scheckel did not appeal the court's order. The Department issued a third distress warrant when it learned Scheckel had a new job.
The district court denied Scheckel's request for a jury trial and held a hearing on his pleading. The court treated the pleading as a motion to quash the garnishment issued to the defendant's employer by the Department pursuant to the distress warrant. The court overruled Scheckel's motion. It concluded that it lacked jurisdiction to review the tax assessments against the defendant because Scheckel had failed to exhaust his administrative remedies. The court also concluded that Scheckel's resistance to the collection of the tax liability was frivolous. Finally, the court noted that most of Scheckel's claims were barred by the doctrine of res judicata because they had been previously rejected in a similar challenge by Scheckel to a distress warrant issued by the Department to collect the same tax liability. Scheckel appealed, claiming the district court's ruling is illegal and void.
In his brief on appeal, Scheckel argues the district court did have jurisdiction to hear his case. He also advances a variety of constitutional theories in support of his challenge to the authority of the State to collect taxes from him. In response, the State argues we should affirm the district court's refusal to quash the garnishment.
II. Discussion
Because we find the issue dispositive, we first address Scheckel's argument that the district court had jurisdiction to hear his case and should not have concluded that he failed to exhaust his administrative remedies. We review the district court's ruling that it did not have jurisdiction to review the assessment of tax for the correction of errors at law. IES Utils. Inc. v. Iowa Dep't of Revenue Fin., 545 N.W.2d 536, 538 (Iowa 1996).
Scheckel now contends the district court had jurisdiction to hear his challenges under Iowa Code section 602.6306 (2003), relating to the jurisdiction given to the district courts, and section 602.5103, relating to the jurisdiction given to the court of appeals. Neither of the sections cited by Scheckel can be reasonably read to abrogate the requirement that administrative remedies must be exhausted prior to seeking judicial review of agency action.
Ordinarily, litigants are not permitted to bypass agency proceedings by bringing an original action in district court. Hagge v. Iowa Dep't of Revenue and Fin., 504 N.W.2d 448, 451 (Iowa 1993). The Iowa Administrative Procedure Act requires "litigants affected by the actions of state agencies to follow the rules as a prerequisite to obtaining proper access to the district court for judicial review." Iowa Code ch. 17A; IES Utils. Inc. at 538.
The issues Scheckel raised in his motion to quash, including his constitutional challenge of Iowa's income tax laws, relate directly to the pending tax assessments by the Department, so Scheckel was required to exhaust administrative remedies before seeking judicial review. See Shell Oil Co. v. Bair, 417 N.W.2d 425, 430 (Iowa 1987) (holding that even constitutional challenges of a statute should be initiated before the affected agency because these challenges are more effectively presented for judicial review with a record developed before the agency). We conclude the district court did not err in finding it lacked jurisdiction to review the Department's determination of the amount or validity of any tax liability which had been assessed. See Iowa Code §§ 17A.19(1) and 422.29 (2003).
Because we have concluded that Scheckel failed to exhaust his administrative remedies, we find it unnecessary to address the district court's other reasons for denying Scheckel's challenge to the distress warrant.
We note that on June 18, 2004, the federal district court dismissed a similar challenge by Scheckel to the validity of the federal income tax. The court found Scheckel's complaint "contains frivolous and groundless tax protestor rhetoric that has been rejected repeatedly by this and every other court that has considered it." Scheckel v. IRS, No. C03-2045 LRR (N.D. Iowa June 18, 2004).
We affirm the district court's order.