Summary
holding that the Tax Court, not the District Court has jurisdiction over a taxpayer's challenge to both a collection determination and the underlying liability
Summary of this case from Miller v. Internal Revenue ServiceOpinion
Civil Action No. 01-2220
October 10, 2002
OPINION
Plaintiff commenced this action seeking redress for defendant's alleged failure to produce certain requested material in conjunction with a collection due process ("CDP") hearing held pursuant to 26 U.S.C. § 6330. Presently before the court is defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Plaintiff has filed two briefs in opposition to the motion, and the matter is ripe for disposition. For the reasons set forth below, the motion will be granted.
On March 29, 2001, the Internal Revenue Service ("IRS") issued to plaintiff a" Notice of Intent to Levy" under 26 U.S.C. § 6331 (d) for income taxes assessed for years 1996, 1998 and 1999. See Plaintiff's Verified Complaint at ¶ 1; exhibit C to Declaration of Settlement Officer Mark A. Kennedy attached to defendant's memorandum of law in support of its motion to dismiss (Doc. 15). The notice also advised plaintiff of his right under 26 U.S.C. § 6330 to a CDP hearing before an officer of defendant's appeals office. Plaintiffs complaint at ¶ 2; exhibit C to Kennedy declaration. On April 23, 2001, plaintiff requested a CDP hearing and asked the appointed settlement officer to produce specific information and supporting legal authority at the hearing. Plaintiffs complaint at ¶ 3; exhibit D to Kennedy declaration. In response the settlement officer produced "a computerized printout of" the applicable tax assessments and identified the statutes and federal regulations authorizing (1) the assessment, (2) notice and demand and (3) lien and levy supporting defendant's collection actions. Plaintiffs complaint at ¶¶ 4 5; Kennedy declaration at ¶ 8. Plaintiff elected not to appear at the scheduled CDP hearing and instead submitted a "Declaration of Truth" in support of his position. Exhibit G and ¶¶ 10 11 of Kennedy declaration. As permitted under 26 U.S.C. § 6330 (c)(2)(A)(ii), plaintiff raised various challenges to the appropriateness of the collection action initiated by defendant. See exhibit G to Kennedy declaration. After considering plaintiffs submission, settlement officer Kennedy certified that all applicable legal and procedural requirements for defendant's proposed collection action had been met as required by 26 U.S.C. § 6320 (c) 6330(c)(1). Plaintiff's complaint at ¶ 7; Kennedy declaration at ¶ 12. Settlement officer Kennedy further concluded that plaintiffs submission did not raise a meritorious challenge to the correctness or amount of the tax liability in question and further determined that the notice of federal tax lien filed by defendant adequately balanced the need for efficient collection of federal taxes with the public policy that defendant's collection actions be no more intrusive than necessary. Kennedy declaration at ¶¶ 15 16. On October 26, 2001, settlement officer Kennedy forwarded to plaintiff a "Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330" and advised plaintiff that if he disputed the determination set forth therein, he was required to "file a petition with the United States Tax Court for a redetermination within 30 (thirty) days from the date of this letter." Exhibit H to Kennedy declaration. Plaintiff filed the instant action in this court on November 26, 2001.
In its motion to dismiss, defendant contends this court is without jurisdiction to hear plaintiffs appeal from the determination made at the CDP hearing, and any further relief sought by plaintiff is barred by the Anti-Injunction Act codified at 26 U.S.C. § 7421. Defendant specifically asserts that 26 U.S.C. § 6330 (d)(1) vests jurisdiction over plaintiffs appeal in the United States Tax Court, and as a result this court is without jurisdiction to act on plaintiffs complaint. Plaintiff argues in his briefs in opposition to defendant's motion that (A) the Anti-Injunction Act does not apply where "all regulations were not properly followed by the IRS" and (B) his appeal to this court is proper because he has raised various challenges to the legal authority under which defendant has acted and the regulatory actions which defendant has undertaken to implement that legal authority. See, e.g., Plaintiff's First Brief in Opposition (Doc. 11) at p. 2; exhibit G to Kennedy declaration.
The Anti-Injunction Act provides in pertinent part:
Except as provided in [specified sections of the Internal Revenue Code] no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.26 U.S.C. § 7421 (a).
This court's jurisdiction over the proceedings below is governed by 26 U.S.C. § 6330, which provides in pertinent part:
(1) Judicial review of determination. — The person may, within 30 days of a determination under this section, appeal such determination —
(A) To the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter); or
(B) If the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States.26 U.S.C. § 6330 (d)(1). Thus, under this statutory scheme the court has jurisdiction to review the proceedings below only if the United States Tax Court does not have jurisdiction over the "underlying tax liability." 26 U.S.C. § 6330 (d); Hickey v. United States, 2002 WL 471789 (D. Nev., February 14, 2002); Accord True v. Commissioner of Internal Revenue, 108 F. Supp.2d 1361 (M. D. Fla. 2000) ("a claimant is required to bring a Section 6330 appeal in the Tax Court, as along as the Tax Court has jurisdiction of the underlying tax liability").
The United States Tax Court is an Article I court with limited jurisdiction to "rule on deficiencies assessed by the government on taxpayers." Crawford v. Commissioner of Internal Revenue, 266 F.3d 1120, 1122 (9th Cir. 2001); 26 U.S.C. § 7441. Not withstanding its limited jurisdiction, the Tax Court exercises federal judicial authority in a manner similar to the federal district courts and it may address issues raising statutory/regulatory and constitutional claims. Crawford, 266 F.3d at 1123 ("we have previously held that Tax Courts, which are Article I courts, have jurisdiction to consider constitutional questions in the context of deciding deficiencies."); Rager v. Commission of Internal Revenue, 775 F.2d 1081, 1083 (9th Cir. 1985) (same).
The Tax Court has jurisdiction to hear plaintiffs appeal, and therefore, this court lacks jurisdiction by operation of § 6330(d)(1)(B). Plaintiff's complaint seeks relief as a result of a § 6330 CDP hearing held in conjunction with a proposed levy by the IRS. The collection process was initiated as a consequence of alleged income tax deficiencies on plaintiffs prior federal returns. Plaintiff concedes that at least part of the alleged deficiencies constitute income tax liability. See Plaintiff's First Brief in Opposition (Doc. 11) at p. 1. "This is precisely the kind of claim over which the Tax Court has jurisdiction." Hickey, supra, at p. 2 (citing Krugman v. Commissioner of Internal Revenue, 112 T.C. 230, 236 n. 6 (1999) ("the Tax Court has jurisdiction to review determinations under § 6330 relating to proposed levies.")); Lunsford v. Commissioner of Internal Revenue, 117 T.C. 159, 161 (2001) (recognizing the jurisdiction of the Tax Court over § 6330 determination arising from proposed levy to collect unpaid income taxes); Moore v. Commissioner of Internal Revenue, 114 T.C. 171, 175 (2000) (same). Accordingly, this court lacks statutory jurisdiction to entertain plaintiffs request for relief from the proceedings below.
The relief sought by plaintiff also is barred the Anti-Injunction Act. Plaintiff in effect requests this court to enter an order that essentially would enjoin the IRS from assessing or collecting the alleged deficiencies from plaintiff. The Act prohibits the maintenance of a "suit for the purpose of restraining the assessment or collection of any tax", and the statutory bar "equally [is] applicable to activities which are intended or may culminate in the assessment or collection of taxes."Dickens v. United States, 671 F.2d 969, 971 (6th Cir. 1982). In passing the Act Congress sought to withdraw jurisdiction from state and federal courts to entertain suits seeking orders that essentially would prohibit the collection of federal taxes. As a practical consequence, the "Act thus insulates the collection of taxes in most cases from judicial intervention, and requires that the legal right to disputed sums be determined in a suit for refund." Flynn v. United States, 786 F.2d 586, 588 (3d Cir. 1986).
Plaintiff seeks an order that prevents defendant from taking "further collection actions against" plaintiff unless defendant provides certain requested forms and identifies supporting "legislative regulations." Plaintiffs verified complaint at p. 3. The relief sought by plaintiff in his verified complaint thus clearly falls within the purview of the Act. Under these circumstances further proceedings on plaintiffs complaint are barred by § 6330(d)(1) and the Anti-Injunction Act.
The record likewise fails to contain any basis to warrant equitable jurisdiction under the judicially-created exception to the Anti-Injunction Act recognized in Enochs v. Williams Packing and Navigation Co., 370 U.S. 1 (1962). A taxpayer must meet two independent requirements before injunctive relief can be pursued under the exception. First, the facts and law when examined in the light most favorable to the government must indicate that the government can not prevail on the merits. Flynn, 786 F.2d at 589. Second, because Williams Packing did not alter the prerequisite for equitable relief, the record must contain an independent basis for the court to exercise its jurisdiction over the matter. Id. Plaintiff's complaint fails to contain facts that would satisfy either requirement.
Notwithstanding this court's lack of jurisdiction over plaintiffs complaint, plaintiff has an adequate remedy available to him even at this juncture because § 6330 provides that if the Court determines that an appeal has been filed in the wrong forum, the taxpayer has 30 (thirty) days after that determination to file the appeal in the correct court. 26 U.S.C. § 6330 (d)(1).
For the reasons set forth above, defendant's motion to dismiss will be granted. An appropriate order will follow.