Opinion
Case No. 01-73161
May 1, 2002
I. Introduction and Background
This is a tort action brought by Plaintiff Ronald Pritchett (Pritchett) against Defendants the United States of America and the Internal Revenue Service (IRS). Pritchett says that an employee of the IRS, Earline Vaughn (Vaughn) gained access to his income tax return forms and fraudulently increased his reported annual income by $240,000.00 for the tax years of 1993, 1994 and 1995. Pritchett says that the IRS relied on these altered income tax returns and started collection actions against him. In his first amended complaint, Pritchett alleges that the IRS negligently failed to supervise Vaughn, authorized Vaughn to fraudulently manipulate his tax forms, failed to prevent Vaughn's actions and failed to proceed with a criminal prosecution of Vaughn.
Before the Court is the IRS's motion to dismiss Pritchett's first amended complaint for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). Pritchett asserts that this Court has jurisdiction over his claims under the Federal Tort Claims Act, 28 U.S.C. § 2671, et seq. (FTCA). The IRS argues that the Court lacks jurisdiction over Pritchett's claims because his claims arise "in respect of the assessment or collection of . . . tax." Id. at § 2680 (Excepting from the FTCA, "any claim arising in respect of the assessment or collection of any tax or customs duty. . . .").
Pritchett has filed a response to the IRS's motion. Subsequently, Pritchett filed a motion to amend his first amended complaint. In the proposed second amended complaint, Pritchett alleges the following claims: (1) violation of the FTCA; (2) violation of 26 U.S.C. § 7431; (3) violation of 26 U.S.C. § 7433; (4) violation of the Privacy Act of 1974, 5 U.S.C. § 552 (A); and (5) intentional infliction of emotional distress.
Under 26 U.S.C. § 7430, "if any officer or employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States."
Under 26 U.S.C. § 7433, "If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the [IRS] recklessly or intentionally, or by reason of negligence disregards any provision of this title . . . such taxpayer may bring a civil action for damages against the United States in a district court of the United States."
For the reasons that follow, Pritchett's motion to amend the first amended complaint by the filing of a second amended complaint will be granted. To expedite consideration of the government's defenses the Court will consider the government's arguments against Counts I and V of the second amended complaint which embody the claims alleged in the first amended complaint. The IRS's motion to dismiss will be granted as to Count I (violation of the FTCA) and Count V (intentional infliction of emotional distress) of the second amended complaint.
II. Standard of Review
A motion to dismiss for lack of subject matter jurisdiction is based either on a facial attack or a factual attack. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). If subject matter jurisdiction is facially attacked, the Court takes all material allegations in the complaint as true and construes them in a light most favorable to the non-moving party. Id. If, however, there is a challenge to the factual existence of subject matter jurisdiction, "no presumptive truthfulness applies to the factual allegations, and the court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Id.
The IRS is attacking the factual existence of subject matter jurisdiction over Pritchett's claims.
III. Analysis A. Subject Matter Jurisdiction under the Federal Tort Claims Act
Under the FTCA, Congress waived sovereign immunity for actions in tort brought against the United States. 28 U.S.C. § 2671 et seq. However, claims "arising in respect of the assessment or collection of any tax" are excepted from this waiver. Id. at § 2680(c). Accordingly, this Court lacks subject matter jurisdiction over the claims that arise out of the assessment or collection of a tax. Id.; Hall v. United States, 704 F.2d 246 (6th Cir. 1983).
Pritchett argues that his claims are not excepted from the waiver of sovereign immunity under the FTCA because the claims do not arise out of the legitimate assessment or collection of tax. Pritchett argues that the IRS attempted to collect tax from him based on Vaughn's fraudulent alterations of his income tax forms. However, the FTCA exception for claims arising from the assessment or collection of tax applies even when the assessment or collection of tax is not legitimate. Jones v. United States, 16 F.3d 979 (8th Cir. 1994) (holding that the FTCA exception applied and deprived the court of subject matter jurisdiction even though IRS was reckless when conducting investigation into possible tax evasion); Weiner v. IRS, 986 F.2d 12 2d 1993) (holding that the FTCA exception applied when the IRS imposed unauthorized levies against the plaintiff because of a computer error); Perkins v. United States, 55 F.3d 910 (4th Cir. 1995) (holding that the FTCA exception applied when an IRS agent was reckless in ordering the removal of seized property from a mine causing the death of the plaintiff's spouse).
In Weiner v. IRS, the plaintiff asserted a claim against the IRS for imposing unauthorized levies against the plaintiffs pension fund and bank accounts. 986 F.2d 12 (2nd Cir. 1993). The levies were imposed as a result of an IRS computer error and the plaintiff was not given proper notice of the levies. Id. Further, the IRS did not return funds obtained through the wrongful levies despite notice of the error for two and a half years. Id. The Weiner court reasoned that even though the levies were unauthorized and resulted from an IRS computer error, the FTCA exception applied because the claim arose with respect to the assessment of tax. Id. at 13. Similar to the plaintiff in Weiner, Pritchett attempts to avoid the FTCA exception by claiming that the tax collection by the IRS was unauthorized through an error on the part of the IRS. In Weiner the error was created by a problem with the IRS computer system and in this case the error was created by an IRS employee. Consequently, even though the IRS pursued collection efforts against Pritchett based on the fraudulent tax income forms, Pritchett's claims fall under the FTCA exception because his claims arose out of the assessment or collection of tax. Therefore, the Court lacks subject matter jurisdiction over them.
IV. Conclusion
Accordingly, Pritchett's motion to amend the first amended complaint is GRANTED. The IRS's motion to dismiss Count I and Count V for lack of subject matter jurisdiction is GRANTED and the Counts are DISMISSED. The government shall answer or otherwise plead to Counts II, III and IV of the second amended complaint.