Opinion
Civil Action No. H-02-721
December 9, 2002
MEMORANDUM AND ORDER
Pending before the court is Defendant United States of America's ("United States")Motion to Dismiss (#4). The United States, on behalf of the Commissioner of the Internal Revenue Service ("IRS"), seeks dismissal of Plaintiff William Kinzer's ("Kinzer") complaint challenging the IRS's disallowance of deductions for his children on his 1999 tax return. Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that dismissal is warranted.
I. Background
In his Original Complaint filed on February 26, 2002, Kinzer, proceeding pro se, asserts that he "need[s] some questions answered" regarding the disallowance by the IRS of deductions pertaining to his children because he failed to include their social security numbers on his 1999 federal income tax return (Form 1040A). Kinzer claims that the decision to obtain a social security number is voluntary under the Social Security Act and should be made by the individual. According to Kinzer, he is being penalized for "their not choosing a SS#." Kinzer maintains, "For me to get a number for them denys [sic] their freedom to choose and comits [sic] me to faud [sic]."
The United States seeks dismissal of Kinzer's complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The United States argues under Rule 12(b)(1) that the court lacks subject matter jurisdiction because Kinzer has failed to allege that he has satisfied the prerequisites for bringing what is essentially a tax refund action in district court and the United States has not otherwise waived its sovereign immunity. The United States asserts under Rule 12(b)(6) that Kinzer fails to state a claim upon which relief can be granted because the IRS is legally entitled to disallow any claimed credit or deduction for a child if the taxpayer fails to include the taxpayer identification (social security) number for that child. Kinzer has not responded to the United States' motion to dismiss.
II. Analysis
A. Dismissal for Lack of Subject Matter Jurisdiction under Rule 12(b)(1)
A motion to dismiss filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges the subject matter jurisdiction of the federal district court. See FED. R. Civ. P. 12(b)(1). "'A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.'" Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)). Federal courts are courts of limited jurisdiction and, absent jurisdiction conferred by statute or the Constitution, lack the power to adjudicate claims. See Stockman v. Federal Election Comm'n, 138 F.3d 144, 151 (5th Cir. 1998); Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996); Veldhoen v. United States Coast Guard, 35 F.3d 222, 225 (5th Cir. 1994). The burden of establishing federal jurisdiction rests on the party seeking to invoke it. See Stockman, 138 F.3d at 151; St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998); Boudreau v. United States, 53 F.3d 81, 82 (5th Cir. 1995), cert. denied, 516 U.S. 1071 (1996); Strain v. Harrelson Rubber Co., 742 F.2d 888, 889 (5th Cir. 1984); Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.), cert. denied, 449 U.S. 953 (1980). Indeed, "there is a presumption against subject matter jurisdiction that must be rebutted by the party bringing an action to federal court." Coury, 85 F.3d at 248 (citing Strain, 742 F.2d at 889).
"In ruling on a motion to dismiss for lack of subject matter jurisdiction, a court may evaluate (1) the complaint alone, (2) the complaint supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001), cert. denied, 534 U.S. 1127 (2002) (citing Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996)); accord Robinson v. TCI/US West Communications Inc., 117 F.3d 900, 904 (5th Cir. 1997); McAllister v. FDIC, 87 F.3d 762, 765 (5th Cir. 1996); Ynclan v. Department of Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991). Nevertheless, all uncontroverted allegations in the complaint must be accepted as true. See Den Norske Stats Oljeselskap As, 241 F.3d at 424; Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir.), cert. denied, 454 U.S. 897 (1981); Cloud v. United States, 126 F. Supp.2d 1012, 1017 (S.D.Tex. 2000), aff'd, 281 F.3d 158 (5th Cir. 2001), cert. denied, 122 S.Ct. 2665 (2002). Thus, when examining a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), unlike a motion to dismiss under Rule 12(b)(6), the district court is entitled to consider disputed facts as well as undisputed facts in the record. See Clark v. Tarrant County, 798 F.2d 736, 741 (5th Cir. 1986); Williamson, 645 F.2d at 413; Cloud, 126 F. Supp.2d at 1017.
It is well settled that "a district court has broader power to decide its own right to hear the case than it has when the merits of the case are reached." Williamson, 645 F.2d at 413. "Jurisdictional issues are for the court — not a jury — to decide whether they hinge on legal or factual determinations." Id. To determine whether jurisdiction exists, the court will generally resolve any factual disputes from the pleadings and the affidavits submitted by the parties. See Espinoza v. Missouri Pac. R.R. Co., 754 F.2d 1247, 1248 n. 1 (5th Cir. 1985). The court may also conduct an evidentiary hearing and "may hear conflicting written and oral evidence and decide for itself the factual issues which determine jurisdiction." Williamson, 645 F.2d at 413; see Menchaca, 613 F.2d at 511-12. The court must always be mindful, however, of "'"the first principle of federal jurisdiction,"'" which requires a federal court to dismiss an action whenever it appears that subject matter jurisdiction is lacking. Stockman, 138 F.3d at 151 (quoting Veldhoen, 35 F.3d at 225 (quoting HART WECHSLER, THE FEDERAL COURTS AND THE FEDERAL SYSTEM 835 (2d ed. 1973))).
"Attacks on subject matter jurisdiction under FED. R. Civ. P. 12(b)(1) come in two forms: 'facial attacks' and 'factual attacks.'" Garcia v. Copenhaver, Bell Assocs., M.D.'s, PA., 104 F.3d 1256, 1260-61 (11th Cir. 1997) (citing Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990)); see Williamson, 645 F.2d at 412; Menchaca, 613 F.2d at 511. "'Facial attacks on the complaint "require the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion."'" Garcia, 104 F.3d at 1261 (quoting Lawrence, 919 F.2d at 1529 (quoting Menchaca, 613 F.2d at 511)); see Williamson, 645 F.2d at 412. When a facial attack is involved, as with a motion under Rule 12(b)(6), "[a] motion under 12(b)(1) should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle him to relief." Home Builders Ass'n of Miss., Inc., 143 F.2d at 1010 (citing Benton v. United States, 960 F.2d 19, 21 (5th Cir. 1992)).
"'"Factual attacks," on the other hand, challenge "the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered."'" Garcia, 104 F.3d at 1261 (quoting Lawrence, 919 F.2d at 1529 (quoting Menchaca, 613 F.2d at 511)); see Williamson, 645 F.2d at 413. "On a factual attack of subject matter jurisdiction, a court's power to make findings of facts and to weigh the evidence depends on whether the factual attack on jurisdiction also implicates the merits of plaintiffs cause of action." Garcia, 104 F.3d at 1261 (citing Lawrence, 919 F.2d at 1529). If the facts necessary to sustain jurisdiction do not implicate the merits of the plaintiff's cause of action:
"[T]he trial court may proceed as it never could under 12(b)(6) or FED. R. Civ. p. 56. Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction — its very power to hear the case — there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to plaintiffs allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims."Id. (quoting Lawrence, 919 F.2d at 1529 (quoting Mortensen v. First Fed. Say. Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977))).
1. Tax Recovery Actions
The United States Code section pertinent to federal district court jurisdiction of tax recovery actions is 28 U.S.C. § 1346(a)(1), which provides in relevant part:
(a) The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:
(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws. . . .28 U.S.C. § 1346(a)(1). This statute, however, must be read in conjunction with other statutory provisions which impose additional requirements on a taxpayer seeking relief in federal district court. See, e.g., United States v. Williams, 514 U.S. 527, 532-34 n. 7 (1995); United States v. Dalm, 494 U.S. 596, 601 (1990); PALA, Inc. Employees Profit Sharing Plan Trust Agreement v. United States, 234 F.3d 873, 877 n. 8 (5th Cir. 2000).
Under § 1346(a)(1), "[t]he United States has consented to be sued for taxes improperly assessed or collected, . . . but only if the plaintiff complies with the jurisdictional requirements set forth in 26 U.S.C. § 7422." Brashear v. United States, 138 F. Supp.2d 786, 789 (N.D.Tex. 2001). Section 7422(a) states in relevant part:
No suit prior to filing claim for refund. — 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 . . .26 U.S.C. § 7422(a). Thus, a federal district court generally has no jurisdiction of the matter until the taxpayer has paid the taxes assessed in full and filed a claim for a refund. See Brown v. United States, 890 F.2d 1329, 1346 (5th Cir. 1989); Smith v. Booth, 823 F.2d 94, 97 (5th Cir. 1987); Thomas v. United States, 755 F.2d 728, 729 (9th Cir. 1985). The Supreme Court has explicitly held that "§ 1346(a)(1), correctly construed, requires full payment of the assessment before an income tax refund suit can be maintained in a Federal District Court." Flora v. United States, 362 U.S. 145, 177 (1960).
Therefore, 28 U.S.C. § 1346 "provides federal district courts with jurisdiction to review an IRS determination only in the context of a tax refund suit brought by a taxpayer who has fully paid the assessment." Smith, 823 F.2d at 97 (citing Flora, 362 U.S. at 177); accord Pena v. United States, 883 F. Supp. 154, 156-57 (S.D.Tex. 1994), aff'd, 66 F.3d 320 (5th Cir. 1995). Hence, if a taxpayer chooses not to seek relief in tax court, before bringing suit in federal district court, he must satisfy "the prerequisites for such jurisdiction, which include filing an administrative claim for a refund, pursuant to 26 U.S.C. § 7422, and making full payment of all tax liability." Humphreys v. United States, 62 F.3d 667, 672 (5th Cir. 1995); see Commissioner v. Lundy, 516 U.S. 235, 251 (1996); Gustin v. United States Internal Revenue Serv., 876 F.2d 485, 488 (5th Cir. 1989); Zernial v. United States, 714 F.2d 431, 434 (5th Cir. 1983). "Failure to file a claim for a refund deprives the court of subject matter jurisdiction." Gustin, 876 F.2d at 488 (citing Zernial, 714 F.2d at 434). Otherwise, "the taxpayer would be barred from the District Court by the Flora full payment rule." Clark v. Campbell, 501 F.2d 108, 125 (5th Cir. 1974), cert. denied, 423 U.S. 1091 (1976).
2. Jurisdictional Prerequisites Have Not Been Met
In the case at bar, Kinzer makes the following allegations in his complaint:
On form 1040A of 1999 the I.R.S. did not allow deductions of children due to no SS#. Under the SS Act it is voluntary thus the decision should be made by those individuals. Appications [sic] for individual taxpayer identification numbers were made twice and rejected due to no SS#. Senator Phil Grahm [sic] talked to the appropiate [sic] athorities [sic] and assured me I would receive [sic] those numbers for tax purposes. This did not happen. Since then I have been filing and they deny them as citizens and penalize me for their not choosing a SS#[.] For me to get a number for them denys [sic] their freedom to choose and comits [sic] me to faud [sic]. I need some questions answered.
By questioning the disallowance of deductions for his children, Kinzer's underlying purpose in this suit appears to be to contest his federal income tax assessment. Kinzer, however, has not satisfied the jurisdictional prerequisites by showing that he paid his tax for 1999 and then filed an administrative claim for a refund prior to bringing this lawsuit. Kinzer must comply with the jurisdictional requirements set forth in 26 U.S.C. § 7422. In his complaint, Kinzer fails to set forth any viable grounds upon which this court may exercise its jurisdiction, as required by the Federal Rules of Civil Procedure. See FED. R. Civ. P. 8(a). Accordingly, the court lacks subject matter jurisdiction of this action challenging the IRS's alleged disallowance of deductions pertaining to Kinzer's children.
B. Dismissal for Failure to State a Claim Under Rule 12(b)(6)
A motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests only the formal sufficiency of the statement of a claim for relief. It is not a procedure for resolving contests about the facts or the merits of a case. See 5A CHARLES A. WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 1356, at 294 (1990). In ruling on such a motion, the court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in the plaintiffs favor. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000); Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999); Brown v. Nationsbank Corp., 188 F.3d 579, 585 (5th Cir. 1999), cert. denied, 530 U.S. 1274 (2000); Indest v. Freeman Decorating, Inc., 164 F.3d 258, 261 (5th Cir. 1999); Jefferson v. Lead Indus. Ass'n, Inc., 106 F.3d 1245, 1250 (5th Cir. 1997); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
"'A motion to dismiss under rule 12(b)(6) "is viewed with disfavor and is rarely granted."'" Collins, 224 F.3d at 498 (quoting Lowrey v. Texas A M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser Aluminum Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983))). "'A court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (quoting Hishon v. King Spalding, 467 U.S. 69, 73 (1984)); see Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Collins, 224 F.3d at 498; Brown, 188 F.3d at 585; Jefferson, 106 F.3d at 1250; Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). "'The question therefore is whether, in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief.'" Shipp v. McMahon, 234 F.3d 907, 911 (5th Cir. 2000), cert. denied, 532 U.S. 1052 (2001) (quoting 5A CHARLES A. WRIGHT ARTHUR R. MILLER, supra, § 1357, at 332-36); accord Collins, 224 F.3d at 498.
"'In order to avoid dismissal for failure to state a claim, however, a plaintiff must plead specific facts, not mere conclusory allegations.'" Collins, 224 F.3d at 498 (quoting Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994)). The court will "not accept as true conclusory allegations or unwarranted deductions of fact.'" Id. (quoting Tuchman, 14 F.3d at 1067). Thus, "'conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.'" Jefferson, 106 F.3d at 1250 (quoting Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993)); accord Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995); see Tuchman, 14 F.3d at 1067. "'[T]he complaint must contain either direct allegations on every material point necessary to sustain a recovery . . . or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial.'" Campbell, 43 F.3d at 975 (quoting 3 CHARLES A. WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 1216, at 156-59 (1990) (footnote omitted)). "'[A] statement of facts that merely creates a suspicion that the pleader might have a right of action' is insufficient." Id. (quoting 3 CHARLES A. WRIGHT ARTHUR R. MILLER, supra, § 1216, at 163 (footnote omitted)). "'Dismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief. . . .'" Id. (quoting 2A JAMES W. MOORE ET AL., MOORE's FEDERAL PRACTICE § 12.07 [2.-5], at 12-91 (1995) (footnote omitted)). "The court is not required to 'conjure up unpled allegations or construe elaborately arcane scripts to' save a complaint." Id. (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir. 1988)).
Assuming, arguendo, that the court had subject matter jurisdiction of this case, Kinzer's claim challenging the IRS's disallowance of deductions for his children on his 1999 federal income tax return because he did not furnish their social security numbers is without legal basis. Indeed, Internal Revenue Code § 24(e), which pertains to child tax credit, provides:
Identification requirement. — No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year.26 U.S.C. § 24(e). Additionally, under Internal Revenue Code § 151, in order to obtain an exemption for a dependent child, a taxpayer identification number ("TIN") must be provided on the return:
Identifying information required. — No exemption shall be allowed under this section with respect to any individual unless the TIN of such individual is included on the return claiming the exemption.26 U.S.C. § 151(e).
Section 7701(a)(41) of the Internal Revenue Code defines TIN for purposes of the Code to mean "the identifying number assigned to a person under section 6109." 26 U.S.C. § 7701(a)(41). Section 6109 provides that the Social Security account number issued to an individual is the identifying number of the individual, except as otherwise specified under the applicable regulations. See 26 U.S.C. § 6109(d). Under the regulations, an individual who is required to furnish a TIN must use his or her social security number unless the individual is not eligible to obtain a social security number. See 26 C.F.R. § 301.6109-1(a)(1)(ii)(A)-(B). Citizens of the United States are eligible to obtain Social Security numbers. See 20 C.F.R. § 422.104(a)(1), 422.107. The regulations additionally provide that "[a]ny individual who is duly assigned a social security number or who is entitled to a social security number will not be issued an IRS individual taxpayer identification number." 26 C.F.R. § 301.6109-1(d)(4) (emphasis added).
Here, Kinzer does not contend that his children are ineligible to obtain social security numbers. Instead, he maintains that for him to request a social security number on their behalf denies their "freedom to choose" whether to obtain a number and commits him to "f[r]aud." There is no authority, however, for Kinzer's position. "Congress has 'the power to condition, limit, or deny deductions in arriving at the net income it chooses to tax.'" Burns v. McGill, No. 3:98-1150, 1999 WL 1090818, at *7 (M.D.Tenn. 1999) (quoting Labay v. Commissioner of Internal Revenue, 55 T.C. 6, 14 (1970), aff'd, 450 F.2d 280 (5th Cir. 1971)). "Indeed, dependency exemptions are allowed as a matter of legislative grace." Id. Hence, Kinzer is not required to obtain social security numbers or other identification numbers for his children, but without such numbers, he is not entitled to claim deductions or exemptions from his taxes on account of his children. As one court has explained: "Section 6109(e) is not mandatory. Rather, § 6109(e) offers a trade-off: a parent can obtain the number and receive the deduction, or a parent can refuse to obtain a number and . . . forego the deduction." Spencer v. Brady, 700 F. Supp. 601, 603 (D.D.C. 1988) (involving § 151(e)'s predecessor statute, 26 U.S.C. § 6109(e), subsequently repealed); accord Furlow v. United States, 55 F. Supp.2d 360, 363 (D.Md. 1999).
The required submission of social security numbers serves several governmental interests, such as effectively tracking claimed dependency exemptions and thereby detecting erroneous or fraudulent claims, ensuring that there is a person in existence to support the claimed exemption, and implementing the federal tax system in a uniform way. See Miller v. Commissioner of Internal Revenue, 114 T.C. 511, 516-17 (2000). In fact, the validity of the mandatory use of social security numbers has been upheld over various objections. See Bowen v. Roy, 476 U.S. 693, 707-08 (1986) (holding that statutory requirement that recipients must provide social security numbers in order to receive federal welfare assistance does not violate the Free Exercise Clause); Miller, 114 T. C. at 516-17 (upholding § 151(e) against challenges under the Free Exercise Clause of the First Amendment to the Constitution and the Religious Freedom Restoration Act of 1993); Burns, 1999 WL 1090818, at *78 (denial of claimed dependency exemptions under § 6109(e) do not violate parents' equal protection rights under the Fourteenth Amendment or Civil Rights Act of 1964); Spencer, 700 F. Supp. at 603 (finding that § 6109(e) is not mandatory but rather, offers parents the option of obtaining a social security number and receiving a deduction, or refusing to obtain a number and foregoing the deduction). Kinzer has provided no persuasive reason for the court to revisit any of these decisions. In sum, because 26 U.S.C. § 151(e) establishes an absolute requirement that a TIN be reported for any individual for whom an income tax exemption is claimed under § 151, Kinzer fails to state a cause of action upon which relief can be granted.
IV. Conclusion
Accordingly, the United States's Motion to Dismiss is GRANTED, and Kinzer's Original Complaint is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.