ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT ORDER DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

RONALD S.W. LEW, United States District Court

Before the Court is Defendant United States of America's Motion for Summary Judgment. This matter was scheduled to be heard on April 22, 2002, but was taken off calendar pursuant to Rule 78 of the Federal Rules of Civil Procedure for disposition based on the papers filed. For the reasons set forth below, the Court hereby GRANTS Defendant United States of America's Motion for Summary Judgment and DENIES Plaintiffs Solomon and Lily Tekle's Motion for Summary Judgment.

I. INTRODUCTION

Plaintiffs Solomon and Lily Tekle ("Plaintiffs") bring this action in propria personae against the United States of America ("Defendant") for unlawful tax assessment and improper tax collection allegedly conducted by the Internal Revenue Service ("IRS").

The Complaint alleges causes of action for: (1) Violation of 26 U.S.C. § 6212(a) (failure to timely issue Notice of Deficiency); (2) Violation of 26 U.S.C. § 6331(d) (failure to issue Notice of Intent to Levy); (3) Violation of 26 U.S.C. § 7433 (misconduct of IRS agents in connection with collection of taxes). Plaintiffs seek injunctive relief and damages.

Defendants now move the Court for summary judgment on the grounds that Plaintiffs' causes of action and prayer for injunctive relief all fail as a matter of law. Plaintiffs oppose the Motion and concurrently move for summary judgment.

II. BACKGROUND

In 1995, the IRS commenced an investigation of Plaintiffs. Plaintiffs claim that the IRS made a determination of income tax deficiency against them on March 20, 1998. According to Plaintiffs, since the IRS failed to send them a statutory deficiency notice within ninety days of the determination, they did not receive timely notice and were therefore denied the opportunity to challenge the deficiency in Tax Court without first having to pay the tax. Plaintiffs further claim that they do not have the means to raise the $859,427 tax due in order to bring a refund suit because Solomon Tekle is currently in prison. Lily Tekle and the children receive public assistance. (Compl. ¶¶ 9, 65-66.)

On March 23, 1998, IRS agents arrested Plaintiffs. plaintiffs were subsequently prosecuted and convicted of federal income tax evasion for tax years 1994 and 1995. Solomon Tekle was also convicted of drug trafficking and money laundering. (Id. ¶¶ 9, 13; Def.'s Mot. at 3, Ins. 8-9.)

In March 1999, pursuant to a court order, Plaintiffs' home was sold and the IRS seized the proceeds. (Id. ¶ 14, Ex. C.)

On May 5, 1999, the IRS made a jeopardy assessment against Plaintiffs in the amount of $716,166. (Compl. ¶ 15, Ex. D.)

On May 6, 1999, the IRS recorded a notice of federal tax lien in the amount of $716,166 against Plaintiffs' business, ST T, Inc., DBA Food Bargain Market ("Market"). On the same day, the IRS issued a notice of levy and levied on the proceeds from the sale of the Market. (Compl. ¶ 16, Ex. D) Plaintiffs claim that the IRS failed to provide them with ten days notice of intent to levy. (Id. ¶ 7.)

On May 7, 1999, Plaintiffs filed a letter requesting the IRS to stay enforcement of the jeopardy assessment and to review the amount of the assessment. On June 16, 1999, an IRS appeals officer determined that the jeopardy assessment action was reasonable under the circumstances and that the jeopardy assessment amount was correctly computed and appropriate. The IRS based its determination on the same information about unreported income used to prosecute Plaintiffs for tax evasion. (Id. ¶ 19, Ex. E.)

According to Plaintiffs, the IRS' failure to release the lien and levy on the Market has created extreme financial hardship on plaintiffs and their three minor children. plaintiffs claim that the loss of income has made them insolvent to the point of bankruptcy. (Id. ¶ 19, 66.) is On July 2, 1999, the IRS issued to Plaintiffs a notice of deficiency for tax years 1994 and 1995. (Request for Judicial Notice, Ex. C., Prior Complaint at 15, Ins. 14-17, Ex. 8 attached thereto.)

On June 10, 1999, plaintiffs filed a civil action in this Court against the Commissioner of Internal Revenue alleging unlawful taxation and illegal assessment ("Prior Complaint"). This Court granted the Commissioner's motion to dismiss that action for lack of subject matter jurisdiction. The Ninth Circuit affirmed the dismissal.

On December 26, 2001, Plaintiffs filed the instant action. Like the Prior Complaint, Plaintiffs allege that the 1994 and 1995 income tax assessments were unlawful and that the IRS' collection actions were procedurally improper. Plaintiffs seek: (1) an order enjoining the IRS from collecting past due taxes, interest, and penalties; (2) the return of proceeds from the sale of their Market business, $8,142 taken from their home, $1,200 bond on their van which the IRS later seized, any allowable interest; and (3) money damages under 26 U.S.C. § 7433 for alleged IRS employee misconduct for failure to provide timely notice.

III. DISCUSSION

A. Legal Standard: Summary Judgment

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A genuine issue is one in which the evidence is such that a reasonable fact-finder could return a verdict for the non-moving party. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). The evidence, and any inferences based on underlying facts, must be viewed in a light most favorable to the opposing party. Diaz v. Am. Tel. Tel., 752 F.2d 1356, 1358 n. 1 (9th Cir. 1985).

Where the moving party has the burden of proof at trial — the plaintiff on a claim for relief or the defendant on an affirmative defense — the movant must establish "all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (9th Cir. 1986); Selnick V. Turner Entm't Co., 990 F. Supp. 1180, 1183 (C.D. Cal. 1997). "The crucial question for the court is whether there is a 'genuine issue' of fact concerning any essential element of the claim on which judgment is being sought." Fontenot, 780 F.2d at 1195.

Where the moving party does not have the burden of proof at trial on a dispositive issue, the moving party may meet its burden for summary judgment by showing an "absence of evidence" to support the non-moving party's case. Celotex v. Catrett, 477 U.S. 317, 325 (1986).

The non-moving party, on the other hand, is required by Rule 56(e) to go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial. Id. at 324. Conclusory allegations unsupported by factual allegations, however, are insufficient to create a triable issue of fact so as to preclude summary judgment. Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993) (citing Marks v. Dep't of Justice, 578 F.2d 261, 263 (9th Cir. 1978)). A non-moving party who has the burden of proof at trial must present enough evidence that a "fair—minded jury could return a verdict for the [opposing party] on the evidence presented." Anderson, 477 U.S. at 255.

The moving party has no burden to negate or disprove matters on which the opponent will have the burden of proof at trial. In fact, the moving party need not produce any evidence at all on those matters. Celotex, 477 U.S. at 323.

Upon a showing that there is no genuine issue of material fact as to a particular claim or defense, the court may grant summary judgment in the party's favor "upon all or any part thereof." Fed.R.Civ.P. 56(b).

In ruling on a motion for summary judgment, the Court's function is not to weigh the evidence, but only to determine if a genuine issue of material fact exists. Anderson, 477 U.S. at 249.

B. Defendant's Request for Judicial Notice

The Court hereby GRANTS Defendant's request for judicial notice of: (1) a copy of the Civil Docket Sheet for ST T, Inc., dba Food Bargain Market; Solomon Tekle; and Lily Tekle v. Commissioner of Internal Revenue, CV 99-5962 RSWL (C.D. Cal.); (2) a copy of Plaintiff's Prior Complaint with exhibits; and (3) Plaintiffs' Opposition, with exhibits, to Commissioner's motion to dismiss. The documents contain relevant adjudicative facts which are not subject to reasonable dispute in that they are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed.R.Evid. 201(b).

C. Defendant Is Entitled to Summary Judgment

1. Plaintiffs' Claims for Injunctive Relief

The district court has original jurisdiction of any civil action arising under the Internal Revenue Code. See 28 U.S.C. § 1340. However, actions to enjoin the assessment and collection of taxes by the IRS are narrowly limited by the Anti-Injunction Act ("Act"), 26 U.S.C. § 7421. Cool Fuel, Inc. v. Connett, 685 F.2d 309, 313 (9th Cir. 1982). In pertinent part, the Act states that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person[.]" 26 U.S.C. § 7421(a). However, there are several statutory exceptions and one judicial exception to the Act. See 26 U.S.C. § 6212(a), (c), 6213(a), 6672(b), 6694(c), 7426(a), (b)(1), 7429(b) (statutory exceptions); Bob Jones Univ. v. Simon, 416 U.S. 725, 736-37 (1974) (judicial exception).

The district court must dismiss for lack of subject matter jurisdiction any suit that does not fall within one of the exceptions to the Act. Jensen v. IRS, 835 F.2d 196, 198 (9th Cir. 1987). Thus, once a taxpayer satisfies one of the exceptions to the Act, he is no longer jurisdictionally barred from seeking an injunction. Id. In addition to satisfying an exception to the Act, the taxpayer must also allege sufficient grounds for equitable relief. See id.; Elias v. Connett, 908 F.2d 521, 523 (1990).

The Court concludes that Plaintiffs are jurisdictionally barred from seeking an injunction because they do not satisfy an exception to the Act. Since Plaintiffs fail to show that the government cannot ultimately prevail on the merits, the judicial exception does not apply here. Id., 908 F.2d at 525. The Court, therefore, turns to the relevant statutory exceptions.

26 U.S.C. § 7429 provides for judicial review of the reasonableness of a jeopardy assessment or levy and the appropriateness of the assessment amount. 26 U.S.C. § 7429(b)(1), (g). After administrative review of the jeopardy assessment, the taxpayer may bring a civil action against the United States in district court within 90 days after (a) the date of the administrative determination or (b) the 16th day after the taxpayer's request for administrative review (whichever is earlier). Id. § 7429(b)(1).

Here, Plaintiffs requested an administrative review of the jeopardy assessment on May 7, 1999. The IRS made its determination on June 16, 1999. Thus, Plaintiffs were required to seek judicial review by August 23, 1999, or soon thereafter. Plaintiffs filed their Prior Complaint on June 10, 1999, against the Commissioner of the IRS. Because Plaintiffs sued an improper defendant, this Court dismissed the Prior Complaint for lack of subject matter jurisdiction. The Ninth Circuit later affirmed the dismissal.

Since Plaintiffs did not file the instant action until December 26, 2001, they are foreclosed from seeking judicial review of the reasonableness of the jeopardy assessment and the appropriateness of the assessment amount. For these reasons, the Court finds that Plaintiffs do not satisfy the statutory exception of Section 7429(b).

The Court also finds that Plaintiffs do not meet the statutory exceptions of Sections 6212(a) and 6213(a). Section 6212(a) authorizes the IRS to send a notice of deficiency to the taxpayer. Section 6213(a) generally provides that no assessment of a tax deficiency and no levy or proceeding in court for its collection can be made, begun, or prosecuted until a notice of deficiency has been mailed to the taxpayer. Assessments pursuant to Section 6861 (jeopardy assessments of income, estate, gift, and certain excise taxes) are specifically excluded from the general procedure under Section 6213. 26 U.S.C. § 6861(a). Furthermore, Section 6331 allows the IRS to make a levy upon a person's salary, wages, or other property without pre-collection notice when the IRS has made a jeopardy assessment. 26 U.S.C. § 6861(d)(3).

Under Section 6861(a), if the IRS believes that the assessment or collection of a deficiency will be jeopardized by delay, it is authorized to make an immediate assessment without following the procedures required for an ordinary assessment. Miller v. United States, 66 F.3d 220, 222 (9th Cir. 1995). However, the IRS must send the taxpayer a notice of deficiency within 60 days after making the jeopardy assessment. 26 U.S.C. § 6861(b).

Here, Plaintiffs admit that on May 5, 1999, the IRS made a jeopardy assessment against them and sent them a "Notice of Jeopardy Assessment and Right of Review." (Compl. ¶ 15, Ex. D.) On July 2, 1999, within 60 days after making the jeopardy assessment, the IRS issued a notice of deficiency. (Request for Judicial Notice, Ex. C., Prior Complaint at 15, Ins. 14-17, Ex. 8 attached thereto.) Thus, Defendant's evidence shows that the IRS timely issued a notice of deficiency which gave Plaintiffs 90 days to file a petition with the Tax Court for pre-payment redetermination of their tax obligation. 26 U.S.C. § 6213. plaintiffs give no reasons for their failure to timely petition the Tax Court. Accordingly, the Court GRANTS Defendant's Motion for Summary Judgment as to Plaintiffs' first claim for failure to timely issue a notice of deficiency and second claim for is failure to timely issue a notice of intent to levy.

Furthermore, since Plaintiffs do not satisfy the narrow statutory exceptions of the Anti-Injunction Act, the Court therefore DENIES Plaintiffs' Motion for Summary Judgment, in particular, their request for injunctive relief to enjoin the IRS from further collection action and for full return of the proceeds from sale of their property.

2. Plaintiff a' Claim for Money Damages

The "Taxpayer Bill of Rights" allows a taxpayer to sue the United States in district court if, in connection with any collection of federal tax, any IRS officer or employee negligently, recklessly, or intentionally disregards any IRS provision or regulation. 26 U.S.C. § 7433(a). Collection actions include notice and demand for payment and filing of notice of tax lien. Miller, 66 F.3d at 222. The assessment or tax determination part of the process, even if improper, is not an act of collection and therefore not actionable under Section 7433. Id. Furthermore, the taxpayer must exhaust all administrative remedies and bring the action within two years after the date the right of action accrues. 26 U.S.C. § 7433(d).

Here, the body of Plaintiffs' Complaint identifies as a defendant the IRS. It also identifies as defendants the Commissioner of the Internal Revenue Service; Michael Gallo, IRS agent; Rudy Carpio, IRS agent; F. Stevens, IRS Revenue Officer; and Michael Glyer, IRS Appeals Officer (the "IRS Employees"). Since the IRS is not an entity subject to suit, it is hereby DISMISSED. Lake v. IRS, No. CV-F-91-302REC, 1991 WL 336919, at *3 (E.D. Cal. Oct. 31, 1991) (citing Krouse v. United States Gov't Treas. Dept. IRS, 380 F. Supp. 219, 221 (C.D. Cal. 1974)).

As to the IRS Employees, the parties dispute whether they have been properly served. Even if service was proper, Plaintiffs have failed to show that the IRS Employees committed tortious misconduct in connection with the collection of Plaintiffs' taxes, supra. Moreover, Plaintiffs' right of action accrued, at the latest, when they received the IRS appeals officers' administrative determination on June 16, 1999. Since they did not file the instant action until December 26, 2001, their claim against the IRS Employees is time—barred.

For these reasons, the Court GRANTS Defendant's Motion for Summary Judgment as to Plaintiffs' third claim for IRS employee misconduct.

IV. CONCLUSION

The Court concludes that there are no triable issues of material fact and that Defendant United States is entitled to judgment as a matter of law on Plaintiffs' first claim for failure to timely issue notice of deficiency, second claim for failure to timely issue notice of intent to levy, and third claim for IRS employee misconduct. Accordingly, the Court hereby GRANTS Defendant's Motion for Summary Judgment and DENIES Plaintiffs' Motion for Summary Judgment.

IT IS SO ORDERED.