Opinion
No. C01-1334P
June 24, 2002
ORDER GRANTING SUMMARY JUDGMENT FOR DEFENDANT AND DENYING PLAINTIFF'S MOTION TO RECONSIDER
Pending before the Court is defendant's motion to dismiss and/or for summary judgment. Dkt. No. 25. Also pending before the Court is plaintiff's motion to reconsider a prior Order denying plaintiff's request for ex parte declaratory judgment. Dkt. No. 32. Having considered all pleadings filed by the parties, and having reviewed the record as a whole, the Court ORDERS as follows:
1. The Court construes defendant's motion as a motion for summary judgment.
2. Defendant's motion for summary judgment is GRANTED.
3. Plaintiff's motion to reconsider is DENIED.
FACTS
This litigation arises from a dispute between plaintiff and defendant regarding the amount of taxes which plaintiff owes to the government for the years 1998 and 1999. Plaintiff filed tax returns for both of these years, and included with each of his tax returns a W-2 form showing income earned in the amount of approximately $60,000.00 for each year. Patterson Decl. Exs. C, D, E, and F. Although plaintiff made no effort to hide the fact that he had been paid wages during the relevant time periods, he indicated on his income tax returns that his income was "0."Id. at Exs. C, D. Plaintiff requested a refund of all income tax withheld from his wages during the years 1998 and 1999. The Internal Revenue Service ("IRS") assessed a civil penalty against plaintiff for the filing of frivolous tax returns. Id. at Exs. I, J.
On November 20, 2000, the IRS sent a notice to plaintiff informing him of its intention to file a levy in order to collect on the outstanding civil penalties. Id. at Ex. A. The notice sent to plaintiff included information regarding the right to an appeal hearing. Id. Plaintiff timely requested a Collection Due Process Appeals Hearing. Id. at Ex. B. Plaintiff appeared and presented his objections to the imposition of the tax levy. Complaint Ex. C. On August 7, 2001, the IRS denied plaintiff's appeal and issued a Notice of Determination. Id. at Ex. A. Plaintiff timely filed a petition with this Court seeking review of the IRS appellate ruling. In his complaint, plaintiff challenges the validity of the Collection Due Process Hearing conducted by the IRS. Specifically, plaintiff asks the Court to set aside the determination of liability imposed following that heating.
ANALYSIS
1. Conversion of Rule 12(b)(6) motion to Rule 56(c) motion
In support of its motion to dismiss, defendant has submitted the IRS administrative file associated with plaintiff's outstanding tax obligations. See Patterson Decl. When matters outside the complaint are presented in support of a Rule 12(b)(6) motion, the Court must treat the motion as though it were brought under Rule 56(c). Fed.R.Civ.P. 12(b). The Court thus construes defendant's motion as a motion for summary judgment. As such, the Court considers whether the evidence submitted "show that there is no genuine issue of material fact" and that defendant "is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).
2. Plaintiff has failed to state any cognizable claim.
The facts underlying this litigation are not in dispute. The parties agree that plaintiff filed a tax return which failed to report taxable income, despite the fact that his W-2 forms clearly established that he had earned wages. The parties agree that plaintiff exercised his right to a Collection Due Process Appeals Hearing. Finally, the parties agree that the hearing resulted in a ruling against plaintiff.
Plaintiff is quite candid about his position that he owes no income tax to the government. See Opposition Mem. Although plaintiff's briefing challenges the lawfulness of the IRS' tax-collection process in general, his Complaint is directed only to the lawfulness of the Collection Due Process Appeals Hearing. See, generally, Complaint. Plaintiff's challenges to the validity of the Collection Due Process Appeals Hearing are frivolous and are without merit. They must fail as a matter of law.
Plaintiff argues that the Collection Due Process Appeals Hearing was unlawfully convened because he did not receive proper notice of the assessment of the penalties and demand for payment. At the hearing, the appeals officer noted that IRS computer records indicated that all administrative procedures with regard to the frivolous return penalty assessments were met. The hearing officer was entitled to rely on IRS records in concluding that the correct administrative procedures had been followed. See Davis v. Commissioner, 115 T.C. 35, 40 (2000).
Plaintiff further contends that each IRS employee who has taken any action with respect to his tax liability must demonstrate delegation of such authority by the Secretary of Treasury. This argument is wholly without merit.
In support of his position, plaintiff relics on the United States Supreme Court case Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947). The Merrill case involved a group of farmers who purchased insurance from the Federal Crop Insurance Corporation ("the Corporation"). The Corporation was a "wholly Government-owned entity, created by the Federal Crop Insurance Act, as an agency of and within the Department of Agriculture." 332 U.S. at 381. The Corporation erroneously issued insurance to the farmers notwithstanding the fact that the applicable regulations barred the sale. Id. at 382. The Court found that the farmers were not entitled to payment after their crops failed, notwithstanding the fact that the farmers had relied on the Corporation's erroneous representation that the insurance was valid. In so ruling, the Court noted that "[w]hatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority." Id. at 384.
Plaintiff relies on this language from Merrill for the proposition that he was obligated to demand proof that authority was properly delegated to each IRS employee involved with the Collection Due Process Appeals Hearing. See Complaint ¶ 12 n. 5. Plaintiff's reliance on Merrill is completely misplaced. The case does not speak to the authority of an agency to delegate, nor does it address the issue of whether an administrative hearing is rendered invalid because a participant requests delegation information and that information is not provided. In fact, delegation orders need not be published to be effective. See, e.g., United States v. Saunders, 951 F.2d 1065, 1068 (9th Cir. 1991) (Holding that delegation orders simply shift responsibilities internally and have "no legal impact on, or significance for, the general public.").
Finally, plaintiff contends that the Notice of Determination issued subsequent to the Due Process Appeals Hearing was invalid because it was not issued pursuant to any IRS implementing regulation. This argument, too, is frivolous. While 26 U.S.C. § 7805 (a) vests the Commissioner with the authority to promulgate regulations, that statute does not "require the promulgation of regulations as a prerequisite to the enforcement each and every provision of the [tax] code." Granse v. United States, 892 F. Supp. 219, 224-25 (D. Minn. 1995); see also E.I. duPont de Nemours Co. v. Commissioner, 41 F.3d 130, n. 20 (3rd Cir. 1994).
In sum, plaintiff has presented no authority to demonstrate that the Collection Due Process Appeals Hearing was conducted in an unlawful manner, nor that the resulting Notice of Determination was improperly issued. Because there are no genuine issues of material fact, and because defendant is entitled to judgment as a matter of law, the Court GRANTS defendant's motion for summary judgment.
3. Plaintiff's motion for reconsideration
Plaintiff has brought a motion for reconsideration of the Court's prior Order denying plaintiff's request for ex parte declaratory judgment. "Motions for reconsideration are disfavored." Local Rule CR 7(h)(1). Such motions will be denied absent a showing of either manifest error in the Court's prior ruling or a showing of new facts or legal authority.Id. Having reviewed the prior Order, the Court finds no manifest error. In his motion to reconsider, plaintiff has failed to establish the existence of new facts or new legal authority. Plaintiff's motion is therefore DENTED.
CONCLUSION
1. The Court construes defendant's motion as a motion for summary judgment.
2. Defendant's motion for summary judgment (Dkt. No. 25) is GRANTED.
3. Plaintiff's motion to reconsider (Dkt. No. 32) is DENIED.
The clerk of the Court is directed to distribute a copy of this Order to all counsel of record and to plaintiff.