Opinion
Case No. CV-S-03-0926-KJD (RJJ).
April 20, 2003
ORDER
Presently, the Court has before it Defendant's Motion to Dismiss and for Summary Judgment (#5). Plaintiff filed a response in opposition as well as a Motion for Leave to Amend Plaintiff's Caption and Complaint (#6, 7). The Defendant opposed Plaintiff's motion (#8).
I. Background.
It appears that in his complaint Plaintiff alleges that the Internal Revenue Service ("IRS") failed to follow the proper procedures in making assessments against him and therefore the collection actions taken with regard to the assessments are wrongful. The IRS sent Plaintiff a notice informing him of its intent to levy the outstanding tax liabilities assessed against him for his 1997, 1998, and 1999 tax years and the civil penalties assessed against him for his 1997, 1998 and 2000 tax years. Included with the notice was information informing the Plaintiff of his right to request a Due Process Appeals Hearing, which the Plaintiff timely requested.
The collection activity with respect to the civil penalty assessments are frivolous return penalties the IRS assessed against Plaintiff for the 1997, 1999, and 2000 tax years. For these tax years, Plaintiff filed federal income tax returns with zeroes on all lines which reflected amounts of income earned or taxes due. However, attached to these returns were W-2 Forms indicating that Plaintiff received income for these years. The Plaintiff also attached form documents setting forth arguments as to why Plaintiff does not owe federal income taxes. According to the attached form document, Plaintiff has no income tax liability because there is no statutory income tax liability that applies to him and wages do not constitute income. Courts, however, have found this position to be patently without merit. See Sisemore v. United States, 797 F.2d 268, 270 (6th Cir 1986); Newman v. Comm'r, 83 T.C.M. (CCH) 1757 (2002). Accordingly, the IRS assessed a $500 penalty for each tax year pursuant to 26 U.S.C. § 6702.
On April 25, 2003, the IRS held the requested CDP Hearing, which Plaintiff attended. Subsequently, on July 2, 2003, Plaintiff was sent two separate "Notice of Determination Concerning Collection Action Under Section 6320 and/or 6330." One concerned Plaintiff's income tax liabilities for his 1997, 1998, and 1999 tax years and the other concerned his civil penalties for his 1997, 1998, and 2000 tax years. The Notices of Determination informed Plaintiff of the matters considered at the appeals hearing and the conclusion that a levy would be appropriate. The Notice concerning the income tax liabilities informed Plaintiff of his right to dispute the IRS's determination by filing a petition with the United States Tax Court for a redetermination within 30 days from the date of the notice. The Notice concerning the civil penalties informed Plaintiff of his right to dispute the IRS's determination by filing a petition with the United States District Court for a redetermination within 30 days from the date of notice. Plaintiff filed the instant complaint on August 1, 2003. In his complaint, he is seeking review of both Notices of Determination.
II. Analysis.
In reviewing a Rule 12(b)(6) motion, the Court "must construe the complaint in the light most favorable to the plaintiff and must accept all well-pleaded factual allegations as true." Swarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Review is limited to the contents of the complaint. See Sprewell v. Golden State Warriors, 231 F.3d 520, 527 (9th Cir. 2000). A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims that would entitle him to relief. See id. at 528. If matters outside the pleadings are considered, the court should treat the motion as one for summary judgment. See Fed.R.Civ.P. 12(c).
Summary judgment may be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Fed.R.Civ.P. 56(c), Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The evidence, as well as all justifiable inferences drawn from it, must be viewed in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment shall be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." See Celotex, 477 U.S. at 322.
First, the Court finds that it lacks jurisdiction to review the Notice of Determination concerning the Plaintiff's tax liabilities for the tax years 1997, 1998, and 1999. If a tax payer is challenging a tax liability before paying the deficiency, he must file a timely petition with the tax court.See Scar v. Comm'r, 814 F.2d 1363, 1366 (9th Cir. 1987). Because the underlying collection activity in the Notice of Determination involved income taxes, jurisdiction over the petition for judicial review lies with the United States Tax Court. See Foster v. United States, 89 A.F.T.R.2d 2002-2927 (D. Nev. 2002). Therefore, to the extent Plaintiff's complaint seeks review of his 1997, 1998, and 1999 tax liabilities, the Court must dismiss it for lack of jurisdiction.
Second, as to the Notice of Determination concerning the civil penalties, the only genuine issue before this Court is whether the IRS Appeals Office met all requirements of applicable law and administrative procedures when making its determination that the collection action against Plaintiff should continue unrestricted. A review of the complaint and moving papers indicates that the Defendant met all the administrative collection actions set forth in 26 U.S.C. § 6330: (1) Plaintiff timely received a notice of levy and requested a CDP Hearing; (2) Plaintiff attended his CDP Hearing with an appeals officer who had no prior involvement with the subject tax liability; (3) the Appeals Office obtained Form 4340 from the IRS which serves as verification that the requirements of any applicable laws or administrative procedures were met; (4) Plaintiff raised no relevant issues or appropriate defenses pertaining to the proposed collection action and offered no feasible collection alternatives; (5) at the Hearing, Plaintiff challenged the liability for the penalty and whether the return filed was frivolous, arguments determined to be without merit by the appeals officer; and (6) in the final determination, the appeals officer stated that he took into consideration all required statutory elements.
In both his complaint and opposition to Defendant's motion to dismiss, Plaintiff raised the same meritless arguments that other individuals have previously raised before this Court in challenging the assessment of the frivolous return penalty. For example, these arguments typically include: (1) the IRS's failure to produce evidence of any delegated authority from the Secretary of Treasury to the various IRS employees invalidates the letters and notices these employees sent; (2) the IRS never produced a document supporting imposition of the penalties at issue; (3) no Treasury Department regulation requires that an individual pay the penalties at issue; (4) no statute establishes an underlying liability for the income tax to which the penalties relate; (5) Plaintiff never received the required statutory Notice and Demand for payment with regard to the penalties at issue; and (6) the IRS failed to produce the verification from the Secretary of Treasury that the requirement of any applicable law or administrative procedure have been met in accordance with 26 U.S.C. § 6330. For the reasons stated in the Orders dismissing these other cases, Plaintiff's arguments in his complaint and opposition are patently meritless. See Carrillo v. United States, No. CV-S-02-0353-KJD (LRL), Order (#14) dated March 12, 2003, at 5-7; Wahl v. United States, No. CV-S-02-0239-KJD (RJJ), Order (#14) dated Jan. 31, 2003, at 7-9; Carini v. United States, No. CV-S-02-0169-KJD (RJJ), Order (#11) dated Dec. 2, 2002, at 5-7; Caldwell v. United States, CV-S-02-0045-KJD (PAL), Order (#16) dated Feb. 5, 2003, at 5-7; Ordunez v. United States, No. CV-S-02-0033-KJD (LRL), Order (#23) dated Feb. 3, 2003, at 4-7; Samlaska v. United States, No. CV-S-01-1237-KJD (PAL), Order (#17) dated July 31, 2002, at 6-8; Waller v. United States, No. CV-S-01-1190-KJD (PAL), Order (#11) dated Aug. 6, 2002, at 4-7; Blanchard v. United States, No. CV-S-01-1083-KJD (RJJ), Order (#16) dated July 31, 2002, at 5-7; Haas v. United States, No. CV-S-01-0905-KJD (RJJ), Order (#11) dated July 24, 2002, at 5-7.
Finally, in his opposition, Plaintiff seeks to amend his complaint by adding individual IRS employees as defendants. A review of the exhibits attached to Plaintiff's complaint reveals that these individual IRS employees either signed official IRS forms or were involved in the Collection Due Process Hearing that Plaintiff was afforded pursuant to 26 U.S.C. § 6330. The Court finds that the claims against these officials arise out of actions taken in their official capacities, and thus are essentially claims against the United States. See Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). Moreover, the only proper defendant in a damages action brought pursuant to § 7433(a) is the United States and not any individual federal employee. See Kersting v. United States, 818 F. Supp. 297, 302-03 (D. Haw. 1992). Accordingly, Plaintiff's motion to amend is futile.
III. Conclusion.
The Court lacks jurisdiction to review Plaintiff's tax liabilities for the 1997, 1998, and 1999 tax years. The Defendant properly followed the requirements of all applicable laws and administrative procedures when assessing the frivolous return penalty and then determining the collection action should continue unrestricted. Additionally, the Plaintiff's arguments raised in his complaint and opposition to Defendant's motion are purely meritless, such that had the Defendant moved for Rule 11 sanctions this Court would have freely granted them.
Accordingly, IT IS HEREBY ORDERED that Defendant's Motion to Dismiss and for Summary Judgment (#5). is GRANTED.