Opinion
Civil Action No.: SA 02-CV-104-EP
June 12, 2002
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
On February 4, 2002, the plaintiff; Jeffery C. Gardner, filed an action for the refund of erroneously held private earnings. While Gardner did not include a prayer in his complaint, the filings and briefs indicate the plaintiff also seeks injunctive relief; a declaration as to his right not to be subject to federal income tax, damages in the amount of $32,000.00 for emotional distress, and compensation in the amount of $1096.25 for expenses associated with his claim. The defendant, the United States, moved to dismiss the plaintiffs complaint under Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim upon which relief can be granted. See FED. R. Civ. P. (12)(b).
Standard of Review
The district court analyzes a motion to dismiss under Rule 12(b)(1) under the same judicial standard as a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6). See Marsaw v. Trailblazer Health Enterprises L.L. C., No. Civ.A. G-01-633, 2002 XVL 507535, at *2 (S.D. Tex. Mar. 28, 2002). In a motion to dismiss under Rule 12(b)(6), the district court will view the plaintiffs complaint and allegations as true in a light most favorable to the non-moving party, so long as the complaint is devoid of conclusory allegations or legal conclusions presented as factual conclusions. Id. at 3; Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993); NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
Defendant's Motion to Dismiss
The defendant asks the Court to dismiss the plaintiffs complaint for lack of subject matter jurisdiction. Dismissal for lack of subject matter jurisdiction is proper when the claim is "so insubstantial, implausible, foreclosed by prior decision of this Court, or otherwise completely devoid of merit as not to involve a federal controversy." Western Trans. Co. v. Couzens Warehouse, Distrib., 695 F.2d 1033, 1037 (7th Cir. 1982) (citing Oneida Indian Nation of New York v. County of Oneida, 414 U.S. 661 (1974)). The district courts have original jurisdiction over any civil action against the United States for the recovery of any internal revenue tax that is allegedly erroneously or illegally assessed or collected according to internal revenue laws. See 28 U.S.C. § 1346(a)(1). Before bringing such a suit, a plaintiff must first file a claim with the Internal Revenue Service. Otherwise, the district court has no jurisdiction over the case. See United States v. Dalm, 494 U.S. 596, 601-602 (1990). Specifically, section 7422(a) of the Internal Revenue Service Code (the Code) provides that:
No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.26 U.S.C.A. § 7422(a). In particular, the Code requires a claimant to claim a "credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later. . . ." 26 U.S.C. § 6511(a). In the instant case, the plaintiff has not filed a claim for refund of the earnings he seeks, but instead asserts that income taxes were erroneously taken. Consequently, the plaintiff has not satisfied the pre-requisite administrative remedies by filing federal income taxes for the years covered by his complaint. As a result, the plaintiffs claim for a refund of taxes is appropriately dismissed under Rule 12(b)(6) for failing to state a claim for which relief can be granted. Even if the plaintiff had filed for a refund under the Code, however, the Court would still lack jurisdiction over the plaintiffs request for declaratory and injunctive under 26 U.S.C.A. § 7421(a) and 28 U.S.C.A. § 2201.
Section 7421(a) of the Anti-Injunction Act (the Act) states that no person can bring suit for the purposes of restraining an assessment or collection of any tax. See 26 U.S.C. § 7421. A taxpayer's recourse once taxes have been assessed and collected is to pay the tax in full and bring suit for a refund. See Jones v. United States, 889 F.2d 1448, 1449-50 (5th Cir. 1989). Although the Act set forth exceptions, the plaintiff has not claimed that any of the exceptions apply. Until the party seeking the injunction asserts an exception, the district court has no jurisdiction to consider the action. See Blech v. United States, 595 F.2d 462, 466 (9th Cir. 1979).
Although the plaintiff seeks a declaratory judgment as to his legal relation to the United States to determine his duty to pay federal income taxes, such a declaration is barred by the Declaratory Judgment Act. See 28 U.S.C. § 2201. The only exceptions to this bar are cases involving federal taxes other than declarations concerning the status of non-profit organizations. 28 U.S.C.A. § 2201(a). In a factually similar case, a taxpayer seeking recovery of income taxes and a declaratory judgment appealed the portion of the district court's order striking his complaint for declaratory judgment. See Carmichael v. United States, 245 F.2d 676 (5th Cir. 1957). On appeal, the United States Court of Appeals for the Fifth Circuit determined "[t]he statute setting out the declaratory judgment remedy, 28 U.S.C.A. § 2201, specifically excepts controversies with respect to federal taxes," and that the district court did not have jurisdiction to determine taxpayers status. Id. at 677. Similarly, the Court of Appeals for the Ninth Circuit held that "Title 28 United States Code, Section 2201, makes it clear that there is no jurisdiction in this court to declare the rights and other legal relations of plaintiffs . . . or their rights with respect to federal taxes." Mitchell v. Ridell, 402 F.2d 842 (9th Cir. 1968). Because the plaintiff seeks a declaration that he is not subject to federal income tax, his request for a declaratory judgment is appropriately dismissed.
Conclusion
Because the plaintiff has not complied with the pre-requisite elements for a refund action under 28 U.S.C.A. § 1346(a), and because the Court lacks jurisdiction to grant declaratory judgment or injunctive relief in a case involving federal income taxes, the Court GRANTS the defendant's motion to dismiss (docket entry # 6). Accordingly, the Court DENIES Gardner's motion for damages (docket entry #7) as moot and DISMISSES this cause.