Opinion
Case No: CV99-416-N-EJL
August 25, 2000
ORDER ADOPTING REPORT AND RECOMMENDATION
On July, 24, 2000, Chief United States Magistrate Judge Larry M. Boyle issued his Report and Recommendation in this matter. Pursuant to 28 U.S.C. § 636 (b)(1), the parties had ten days in which to file written objections to the Report and Recommendation. Plaintiff requested and this Court granted an extension of time for Plaintiff to file his objections. Plaintiff filed his objection on August 10, 2000. Defendant filed its response to Plaintiff's objection on August 16, 2000.
Pursuant to 28 U.S.C. § 636 (b)(1) this Court may accept, reject, or modify, in whole or in part, the findings and recommendations made by the magistrate. The Court has conducted a de novo review of the record in order to rule upon the objections of the Plaintiff.
The magistrate judge recommends Defendant's motion to dismiss for failure to state a claim upon which relief can be granted and to deny Plaintiff's motion for summary judgment. Plaintiff objects to the magistrate's finding that no assessment is required and to the cases cited by the magistrate judge.
Plaintiff seeks a refund for an alleged overpayment of his 1997 federal income taxes. On June 18, 1999, the Internal Revenue Service (IRS) sent Plaintiff a Notice of Deficiency for the 1997 tax year in the amount of $116,825 and a $12,636 penalty. On September 20, 1999, Plaintiff filed this action for a refund in the amount of $53,645.85. Plaintiff's Form 1040 states no income for 1997, yet his W-2 and 1099 forms show income of at least $333,361 in 1997.
A motion to dismiss should not be granted "unless it appears beyond doubt that Plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994). All allegations of material fact in the complaint are taken as true and construed in the light most favorable to the non-moving party. See, Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir.), cert. denied, 506 U.S. 909 (1992).
Generally, the Court may not consider any material beyond the pleadings in ruling on a motion to dismiss under Federal Rule of Civil Procedure 12 (b)(6). See, Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir.), cert. denied, 114 S.Ct. 2704 (1994). If materials outside the pleadings are considered, the motion is converted to a motion for summary judgment governed by Rule 56. See, Jacobsen v. AEG Capital Corp., 50 F.3d 1493, 1496 (9th Cir. 1995).
But as Branch makes clear, there are times when documents other than the pleadings can be considered without converting a motion to dismiss into a motion for summary judgment. "[D]ocuments whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss." Branch, 14 F.3d at 453.
Plaintiff carries the burden of establishing he is entitled to a refund. Lewis v. Reynolds, 284 U.S. 281 (1932) (taxpayer must establish overpayment before he is entitled to refund). Plaintiff has not refuted the IRS notice of deficiency and the underlying supporting documents for the finding of income of 331,361. Instead, Plaintiff claims absent an assessment by the IRS, Plaintiff is entitled to a full refund of the federal taxes withheld by his employer and listed on his W-2 form in the amount of $53,645.85. This argument fails on three grounds.
First, the Internal Revenue Code requires taxpayers to pay income tax and to file a tax return. 26 U.S.C. § 1, 6012. Section 6151 requires the amount of taxes to be owed be paid without an assessment, notice or demand.
Second, based on the pleadings and the fact that Plaintiff has not refuted the IRS' calculation of income earned, the facts do not support Plaintiff's contention he is entitled to a refund. Rather, the facts support a finding Plaintiff owes additional money to the IRS for taxes not paid.
Third, Plaintiff's premise that an assessment is required before any tax is owed is incorrect. The Court adopts the reasoning of the court inSimson v. United States, 56 F. Supp.2d 1193 (D. Or. 1999) to explain why an assessment is not required before taxes are owed. "[C]ourts have construed § 6151 to mean that regardless of when taxes are actually assessed, the taxes are considered `due and owing and constitute a liability — as of the date the tax return for the specified period is required to be filed.'" Id. at 1194. In Medina v. Offord Finance Inc., 205 B.R. 216, 221 n. 13 (B.A.P. 9th Cir. 1996) interpreted § 6151 as providing that taxes are due and payable on the due date of the return, not the date of assessment. The reason for this interpretation is obvious. The government does not have the manpower or time to assess every taxpayer before taxes are due. Instead, taxpayers are required to file tax returns by certain deadlines for income earned. If a taxpayer fails to file or files an inaccurate return, the IRS may end up assessing a tax, but the IRS need not assess the tax owed when the taxpayer's return is due. The Plaintiff's argument in this particular case is frivolous based upon the well-settled law. Plaintiff's claim of no income based upon the 1099 forms and his W-2 with wages earned is frivolous. Plaintiff's claim for a refund based on the record in this matter is without merit. Plaintiff's objections are denied and the motion to dismiss for failure to state a claim upon which relief can be granted is granted.
Because the Court finds the Report and Recommendation of Judge Boyle to be well founded in law, the Court hereby accepts in their entirety, and adopts as its own, the findings and conclusions made by Judge Boyle. Acting on the recommendation of Judge Boyle, and this Court being fully advised in the premises,
IT IS HEREBY ORDERED:
1. Defendant's Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6) (Docket No. 5) is GRANTED.
2. Because the Court grants the Motion to Dismiss, Plaintiff's Motion for Summary Judgment (Docket No. 13) is DENIED.