Opinion
Case No. 04-4255-CV-C-NKL.
March 7, 2005
ORDER
Pending before the Court is the United States of America's ("USA") Motion to Dismiss John J. Sanderson's ("Sanderson") Counterclaim [Doc. # 20]. For the reasons set forth below, the Court will grant USA's Motion.
I. Background
Sanderson owes approximately $70,805.19 in unpaid federal tax liabilities to the Internal Revenue Service ("IRS"), although Sanderson disputes that he owes these liabilities. Sanderson is also a former public school employee and he has a pension fund that is administered by the Public School Retirement System of Missouri ("PSRS").
In September 2004, the IRS served a "Notice of Levy on Salary, Wages, and Other Income" on PSRS. The Levy ordered PSRS to turn over to the IRS a portion of Sanderson's pension fund balance to remedy his unpaid tax liabilities. The Levy demanded payment of $70,805.19. See Ex. A to PSRS Complaint [Doc. # 1].
A few days later in September 2004, Sanderson sent a letter to PSRS notifying them that he disputed the IRS Levy and instructing PSRS not to comply with the Levy. Sanderson threatened to commence litigation against PSRS and seek a million dollars in damages if PSRS complied with the Levy. See Ex. B to PSRS Complaint [Doc. # 1]. Sanderson also contacted the IRS and demanded a hearing on the Levy. See Ex. C to PSRS Complaint [Doc. # 1].
PSRS subsequently filed the instant interpleader action wherein it requests that the Court resolve the dispute between the IRS and Sanderson and release PSRS of its potential liability to both parties. Sanderson answered PSRS's Complaint and submitted his Counterclaim against USA; USA subsequently filed its pending Motion.
II. Discussion
Sanderson's counterclaim alleges the following claims: (1) negligence against the IRS wherein Sanderson seeks monetary relief; (2) declaratory and injunctive relief finding that Sanderson does not owe the taxes that the IRS seeks; (3) declaratory and injunctive relief to determine what tax return is lawfully required; (4) enforcement of promissory note; (5) tortious interference of contract; and (6) request for the appointment of a United States Attorney to represent Sanderson [Doc. # 12].
A. Sanderson's Claim for Negligence
Although Sanderson's claim is difficult to understand, it appears that he is attempting to sue the IRS for negligence and obtain monetary relief against the IRS. Sanderson generally alleges that he was not given notice of a tax lien that was filed in Howell County, Missouri, and that the IRS has negligently failed to provide him with information regarding his tax liabilities.
In its Motion, USA concedes that it has waived sovereign immunity for monetary damages against the IRS where "any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of [the Internal Revenue Code], or any regulation promulgated under [the Internal Revenue Code]." 26 U.S.C. § 7433. However, to pursue monetary damages against USA under this section, a plaintiff must first establish that the plaintiff has exhausted the applicable administrative procedures.
Under the applicable administrative procedures, a plaintiff who seeks monetary damages against the IRS must first submit a written claim to the IRS's Area Director that contains the following: (1) contact information; (2) the grounds for the claim; (3) a description of the injuries incurred by the taxpayer filing the claim; (4) the dollar amount of the claim with substantiating documentation; and (5) the signature of the taxpayer. C.F.R. § 301.7433-1(e). Subsection (d) of section 301.7433-1 states that a civil lawsuit cannot be filed against the IRS until one of the following events has occurred: (1) a decision is rendered by the agency; (2) six months has passed since the plaintiff filed the administrative claim; or (3) the plaintiff has filed the administrative claim and less than six months remain in the applicable statute of limitations. Id. at (d).
In response to USA's Motion, Sanderson submits a long series of correspondences that he has had with the IRS regarding his allegedly overdue taxes. However, Sanderson has never submitted a written claim to the IRS wherein he alleges damages for their negligence arising out of the events that he describes in Count I of his Counterclaim. Although he has been in contact with the IRS, he has not submitted a formal claim for the affirmative relief that he now seeks. Because he has failed to exhaust his administrative remedies, Count I of his Counterclaim for damages must be dismissed.
B. Sanderson's Claims for Declaratory Relief
Sanderson seeks declaratory relief in Counts II and III of his Counterclaim. Sanderson requests that the Court declare that (1) he has satisfied his 1996 through 2000 federal tax liabilities, and (2) he is not required to file a Form 1040. As USA points out in its Motion, the Court does not have jurisdiction to issue declaratory relief "with respect to Federal taxes." 28 U.S.C. § 2201(a). Although the statute contains an exception to this general rule, the exception applies only to section 7428 of the Internal Revenue Code, which concerns not-for-profit entities, and that section is not at issue in this dispute. Id. Accordingly, the Court does not have jurisdiction to issue declaratory relief on Sanderson's claims.
C. Sanderson's Claim to Enforce Promissory Note
Sanderson's Counterclaim also requests that the Court force the IRS to accept "bearer notes" for his allegedly unpaid taxes. USA is immune from suit unless it consents to be sued. Miller v. Tony and Susan Alamo Foundation, 134 F.3d 910, 915 (8th Cir. 1998). USA has not consented to be sued because there is no statute that authorizes a taxpayer to compel the IRS to accept bearer notes as payment for federal tax liabilities. Accordingly, USA is immune from suit on Sanderson's claim to enforce promissory note.
D. Sanderson's Claim for Tortious Interference with Contract
Sanderson also seeks to pursue a claim against the IRS for tortious interference with contract because the IRS purportedly interfered with Sanderson's employment contract with the Bakersfield School District ("Bakersfield") when it allegedly ordered Bakersfield to disregard the W-4 form that Sanderson submitted to Bakersfield.
USA enjoys sovereign immunity, unless it waives the immunity and consents to be sued. Sanderson's claim for tortious interference with contract is a claim for relief arising out of a tort. USA has waived its immunity for tort actions via the Federal Tort Claims Act ("FTCA"), but it contains an explicit exception that maintains sovereign immunity for "[a]ny claim arising in respect of the assessment or collection of any tax. . . ." 28 U.S.C. § 2680(c); Jones v. United States, 16 F.3d 979 (8th Cir. 1994) (affirming dismissal of tort claims against the IRS and its employees). Therefore, USA has not waived its sovereign immunity with respect to actions involving the collection of taxes and Sanderson may not maintain his claim against USA for tortious interference with an employment contract.
E. Sanderson's Claim for Appointment of Attorney
Sanderson also seeks a writ ordering a United States Attorney to represent him in this matter. Sanderson's request is identical to his previous request for appointment of a federal attorney [Doc. # 9], which this Court denied in another Order.
The Court will grant USA's Motion to Dismiss in its entirety.
III. Conclusion
Accordingly, it is hereby
ORDERED that USA's Motion to Dismiss Sanderson's Counterclaim [Doc. # 20] is GRANTED. Sanderson's Counterclaim is dismissed with prejudice.