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Zarcone v. U.S.

United States District Court, N.D. California
Aug 4, 2004
No. C 04-01428 WHA (N.D. Cal. Aug. 4, 2004)

Opinion


MICHAEL ZARCONE, Plaintiff, v. UNITED STATES OF AMERICA, Defendant. No. C 04-01428 WHA United States District Court, N.D. California. August 4, 2004

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND VACATING HEARING

WILLIAM HASKELL ALSUP, District Judge.

INTRODUCTION

On April 12, 2004, plaintiff Michael Zarcone filed a complaint against the IRS. He requests that the Court require the IRS to accept his $50,000 offer in compromise to settle a tax liability of approximately three million dollars, and to release the tax lien against him. Because this Court does not have the jurisdiction to grant the relief requested, defendant's motion to dismiss is GRANTED.

STATEMENT

Plaintiff Michael Zarcone is president and sole owner of three corporations which provide long-term care facilities for disabled children. Plaintiff presides over the operation of these corporations, two of which owe the government employment tax liabilities of approximately three million dollars. Between April and June of 2001, the IRS assessed two trust fund recovery penalties pursuant to 26 U.S.C. 6672 for the taxable periods ending on December 31, 1996, and March 31, 2000, against the plaintiff (Compl. Exh. A). These assessments were based on the systematic nonpayment of employment taxes by plaintiff's two corporations, Progressive Subacute Care Pharmacy and Scribbles and Giggles, Inc.

On August 9, 2001, plaintiff submitted an offer in compromise to settle his tax liability of approximately three million dollars (Compl. ¶ 10). On August 15, 2001, the IRS filed a tax lien against the plaintiff, based on his tax liabilities as assessed between April and June of 2001, totaling $2,952,994.87 (Weill Decl. Ex. 1). On August 20, 2001, in response to the IRS Notice of Federal Tax Lien Filing, the plaintiff filed a request for a Collection Due Process (CDP) hearing (Compl. ¶ 6). Consequently, the CDP hearing process took place in the form of at least two face-to-face meetings, and extensive written and telephonic correspondence (Compl. ¶ 8). On March 11, 2004, an IRS appeals officer sent a notice of determination to plaintiff, rejecting the plaintiff's offer in compromise of $50,000 and sustaining the filing of the tax lien. The determination concluded that all legal and administrative procedural requirements had been met in the plaintiff's case, and that the decision to file a tax lien fairly balanced the goals of efficient tax collection and minimal intrusion on the plaintiff. Additionally, the IRS determined that plaintiff had accrued additional liabilities beyond the periods for which he was assessed, and that plaintiff would likely default on those additional assessments as well (Compl. Exh. A).

In the complaint, plaintiff alleges that the IRS acted arbitrarily and unreasonably when it (1) filed the tax lien notice without considering the offer in compromise filed by plaintiff, and (2) terminated the CDP hearing process without notice, thereby depriving plaintiff the opportunity to support his position. Plaintiff's requests for relief include requiring the IRS to accept his offer in compromise, and to release its tax lien against plaintiff. In this instant motion to dismiss, defendant argues that the complaint should be dismissed because the Court lacks jurisdiction to force defendant to accept plaintiff's offer in compromise or to release the tax lien.

ANALYSIS

Defendant cites the Anti-Injunction Act to argue that the Court lacks jurisdiction to grant the relief which plaintiff requests. The Act provides, in part, 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. Defendant contends that the Act applies here because plaintiff's requests - compel the IRS to accept his offer in compromise and release the tax lien - require the Court to provide injunctive relief. In response, plaintiff argues that the Act is not applicable because he does not seek to enjoin the assessment and collection of taxes by the IRS. Plaintiff's argument is wrong. By requesting a release of his tax lien and forcing the IRS to accept his offer, plaintiff is indeed asking the Court to enjoin the assessment and collection of his tax liability of three million dollars. Actions to enjoin the assessment and collection of taxes by the IRS are limited by the Anti-Injunction Act, 26 U.S.C. 7421. Elias v. Connett, 908 F.2d 521, 523 (9th Cir. 1990). Thus, the Anti-Injunction Act applies here.

There are several statutory exceptions to the Act. Plaintiff, however, does not qualify for an exception. The section which plaintiff cites - 26 U.S.C. 6330(d)(1)(B) - is not within the listed exceptions to the Act. 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. Elias, 908 F.2d 521 at 523. Accordingly, this order holds that the Court does not have jurisdiction to grant plaintiff's requests.

The Act lists fourteen exceptions by section number as follows: 6015(e), 6212(a) and (c), 6213(a), 6225(b), 6246(b), 6330(e)(1), 6331(i), 6672(c), 6694(c), 7426(a) and (b)(1), 7429(b), and 7436. 26 U.S.C. 7421.

CONCLUSION

For the foregoing reasons, defendant's motion to dismiss is GRANTED. The hearing is also thereby VACATED.

IT IS SO ORDERED.


Summaries of

Zarcone v. U.S.

United States District Court, N.D. California
Aug 4, 2004
No. C 04-01428 WHA (N.D. Cal. Aug. 4, 2004)
Case details for

Zarcone v. U.S.

Case Details

Full title:MICHAEL ZARCONE, Plaintiff, v. U.S., Defendant

Court:United States District Court, N.D. California

Date published: Aug 4, 2004

Citations

No. C 04-01428 WHA (N.D. Cal. Aug. 4, 2004)