Opinion
Case No. C2-00-993
May 1, 2001
MEMORANDUM AND ORDER
Plaintiff Ron Morrison, appearing pro se, filed suit against the United States Department of Agriculture ("USDA") and two of its employees, Steven L. Berk and John Gibbs, under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2671-2680. This matter is currently before the Court on Defendant United States' motion to dismiss. (Record at 11).
I. Background
Ron Morrison failed to pay income taxes for several years. He allegedly owed the Internal Revenue Service ("IRS") $117,844.90. In an attempt to collect that money, on January 30, 1997, the IRS issued a "Notice of Levy" to the Agricultural Stabilization Conservation Service ("ASCS") in Newark, Ohio. (Ex. C to Tort Claim attached to Pl.'s Compl.). Morrison, a farmer, had a USDA Production Flexibility Contract with ASCS and was entitled to certain payments under that contract. (Ex. B to Tort Claim). On or about September 15, 1997 and again on or about January 12 and 13, 1998, in response to that Notice of Levy, Steven Berk, the County Executive Director of the USDA Licking County Farm Service Agency ("FSA"), and John Gibbs, Claims Officer at the Ohio State FSA Office, turned money otherwise owed to Mr. Morrison over to the IRS.
On August 18, 1998, pursuant to the FTCA, Mr. Morrison filed a claim with the USDA against Berk and Gibbs for wrongfully turning his property over to the IRS. The USDA regulation governing claims based on negligence and wrongful acts or omissions states in pertinent part:
(a) Authority of the Department. Under the provisions of the Federal Tort Claims Act (FTCA), as amended, 28 U.S.C. 2671- 2680, and the regulations issued by the Department of Justice (DOJ) contained in 28 C.F.R. part 14, the United States Department of Agriculture (USDA) may, subject to the provisions of the FTCA and DOJ regulations, consider, ascertain, adjust, determine, compromise, and settle claims for money damages against the United States for personal injury, death, or property loss or damage caused by the negligent or wrongful act or omission of any employee of USDA while acting within the scope of his or her office or employment
(c) Determination of claims —
(1) Delegation of authority to determine claims. The General Counsel, and such employees of the Office of the General Counsel as may be designated by the General Counsel, are hereby authorized to consider, ascertain, adjust, determine, compromise, and settle claims pursuant to the FTCA . . .
(2) Disallowance of claims. If a claim is denied, the General Counsel, or his or her designee, shall notify the claimant, or his or her duly authorized agent or legal representative.7 C.F.R. § 1.51 (emphasis added).
In his claim, Morrison alleged that Berk and Gibbs "violated my right not to have property seized in payment of taxes unless I was made 'liable' by statue [sic] for the taxes claimed as provided by IRC 6331 (A)." (Tort Claim attached to Compl.). Morrison further claimed that the payments were turned over the IRS "without court order, without legal obligation, and without my permission." (Id.). Morrison also claimed that if these payments were an "administrative offset," they were wrongfully turned over to the IRS because the Department of Justice neither requested nor approved the payments, and there was no "judgment" in favor of the United States. See 7 C.F.R. § 792.7 (c)(1)(2). Morrison's major argument, however, was that the payments were turned over to the IRS in violation of 7 C.F.R. § 1403.7 (a)(5), which states that "IRS Notices of Levy . . . shall be honored in accordance with IRS statutes and regulations." He claims that IRS statutes and regulations apply only to "taxpayers," defined by statute as "any person subject to any internal revenue tax." 26 U.S.C. § 7701(a)(14). Morrison contends that because neither Berk, Gibbs, nor the IRS agent could identify the statute that imposed on him the type of tax identified in the Notice of Levy, he was not "subject to any internal revenue tax" and was therefore not a "taxpayer."
Based on this reasoning, Morrison claimed that Berk and Gibbs had "reasonable cause" to refuse to turn his money over to the IRS. The section of the IRS Code governing levies, 26 U.S.C. § 6332, states in pertinent part:
(a) Requirement. — Except as otherwise provided in this section, any person in possession of(or obligated with respect to) property or rights to property subject to levy upon which a levy has been made shall, upon demand of the Secretary, surrender such property or rights (or discharge such obligation) to the Secretary . . .
(d) Enforcement of levy. —
(1) Extent of personal liability. — Any person who fails or refuses to surrender any property or rights to property, subject to levy, upon demand by the Secretary, shall be liable in his own person and estate to the United States in a sum equal to the value of the property or rights not so surrendered, but not exceeding the amount of taxes for the collection of which such levy has been made, together with costs and interest . . .
(2) Penalty for violation. — In addition to the personal liability imposed by paragraph (1), if any person required to surrender property or rights to property fails or refuses to surrender such property or rights to property without reasonable cause, such person shall be liable for a penalty equal to 50 percent of the amount recoverable under paragraph (1). No part of such penalty shall be credited against the tax liability for the collection of which such levy was made.
(e) Effect of honoring levy. — Any person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made who, upon demand by the Secretary, surrenders such property or rights to property (or discharges such obligation) to the Secretary (or who pays a liability under subsection (d)(1)) shall be discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment.26 U.S.C. § 6332 (emphasis added). The applicable regulation governing penalties for failure to comply with a Notice of Levy states, "[t]he penalty . . ., is not applicable in cases where bona fide dispute exists concerning the amount of the property to be surrendered pursuant to a levy or concerning the legal effectiveness of the levy." 26 C.F.R. § 301.6332-1(b)(2) (emphasis added).
Mr. Morrison claimed that because no one had been able to identify which statute imposed an income tax on him, a bona fide dispute existed concerning the legal effectiveness of the levy and Berk and Gibbs committed a "wrongful act" by complying with the Notice of Levy against his wishes. Morrison also claimed that the IRS statutes governing notices of levy apply only to taxing activity under Title 27 of the United States Code, which governs only the enforcement of Alcohol, Tobacco and Firearms. Since he was not involved in any taxing activity related to Title 27, he claimed that Berk and Gibbs committed a wrongful act and negligently turned his property over to the IRS. Morrison demanded the return of all payments sent to the IRS, and a directive that all future payments be sent to him until Berk and Gibbs presented him with a court order or a directive from the Department of Justice, or until they could identify the statutory basis for the imposition of the income tax.
On September 2, 1999, the USDA denied Mr. Morrison's tort claim. On January 27, 2000, he requested reconsideration. In a letter dated February 29, 2000, Steven Reed, Assistant Regional Attorney for the USDA, informed Morrison that his request had again been denied, but if he was dissatisfied with the disposition of his claim, he could "file suit in an appropriate United States District Court no later than six (6) months from the date of this letter." Morrison filed suit under the FTCA on August 29, 2000, against Berk, Gibbs, and the USDA. He again claims that Berk and Gibbs committed a wrongful act by turning his property over to the IRS, and again seeks to have all monies returned to him.
On October 26, 2000, this Court determined that the United States was the only proper defendant in this action, and dismissed the claims against Berk and Gibbs. See 28 U.S.C. § 2679 (d)(1). Defendant United States has now filed a motion to dismiss Plaintiff's complaint, claiming that: (1) the United States was not properly served; (2) the United States has not waived its sovereign immunity; and (3) the complaint is based on a frivolous allegation and therefore fails to state a claim upon which relief can be granted.
II. Discussion
A. Proper Service
Defendant first claims that the complaint should be dismissed because Plaintiff failed to effect proper service as required by Fed.R.Civ.P. 4(i)(1), and this Court therefore lacks jurisdiction. Specifically, Defendant claims that Plaintiff failed to serve the Attorney General of the United States in Washington, D.C. However, the record shows that Janet Reno, the Attorney General of the United States at the time the complaint was filed, was in fact served by certified mail on September 5, 2000, approximately one week after the complaint was filed. The Court therefore finds no basis for dismissing the complaint on this ground.
B. Sovereign Immunity
Defendant next contends that the United States has not waived its sovereign immunity and this Court therefore has no subject matter jurisdiction. In the Federal Tort Claims Act, the United States waived sovereign immunity and permitted certain suits to be filed against it for torts committed by federal officers. However, under 28 U.S.C. § 2680 (c), claims "arising in respect of the assessment or collection of any tax" are specifically exempted from the FTCA. See Fishburn v. Brown, 125 F.3d 979 (6th Cir. 1997) (holding that court lacked subject matter jurisdiction because the FTCA waiver of immunity did not extend to suits arising from wrongful conduct in connection with the collection of taxes); Plant v. IRS, 943 F. Supp. 833 (N.D. Ohio 1996) (holding that § 2680(c) barred tax protestor's tort claims); Akers v. United States, 539 F. Supp. 831 (D. Conn. 1982) (holding same).
Morrison points to Mr. Reed's statement in his February 29, 2000 letter which specifically invites Morrison to file suit within six months if he is dissatisfied with the denial of his tort claim. However, Mr. Reed provides no statutory basis for his invitation, and his statement does not constitute a waiver of sovereign immunity. The law is clear that the United States has not waived its sovereign immunity for tort claims connected with the collection of taxes. This Court therefore lacks subject matter jurisdiction over Plaintiff's claim and his complaint must be dismissed pursuant to Fed.R.Civ.P. 12(b)(1). Having determined that it lacks subject matter jurisdiction, the Court need not address Defendant's final argument concerning the frivolous nature of Plaintiff's complaint.
III. Conclusion
Since 28 U.S.C. § 2680 (c) explicitly exempts claims arising from tax collection efforts from the Federal Tort Claims Act's waiver of sovereign immunity, this Court lacks subject matter jurisdiction over Plaintiff's claim. Defendant's motion to dismiss (Record at 11) is therefore GRANTED and Plaintiff's claim is DISMISSED WITH PREJUDICE.