Opinion
Civil No. 03-74280.
June 25, 2004
OPINION AND ORDER
Plaintiff's complaint appears to raise the following issues: first, that Defendant violated an order of this Court by misapplying funds; and second, that Plaintiff's due process rights were violated in the course of the Collection Due Process hearing Plaintiff received on August 19, 2003. (First Amended Compl. ¶ 10, ¶ 14.) The government moves to dismiss this suit for two reasons: it argues that this Court has no subject matter jurisdiction over the suit because sovereign immunity has not been waived, and alternatively, argues the case is moot. For the reasons below, I GRANT the motion to dismiss.
FACTUAL BACKGROUND
Plaintiff argues that the Internal Revenue Service (IRS) wrongfully decided that his 1998 federal tax return was frivolous. In 2001, I issued an order that the tax refund for 1994 owed to Plaintiff by Defendant would be paid to Defendant, but that a check of $512.00 would be made payable to Plaintiff but sent to my chambers pending the resolution of the question of a penalty for the 1998 tax return issue. Lozon v. Internal Revenue Service, Case No. 00-72698 (E.D. Mich. Sept. 6, 2001). On November 7, 2003, I issued an order that applied the $512.00 to the penalty assessed against Plaintiff following the determination that the 1998 tax return was frivolous. Lozon v. Internal Revenue Service, Case No. 00-72698 (E.D. Mich. 2003).
Plaintiff alleges in his complaint that the IRS has violated my order of November 2003 by applying the funds to tax liabilities other than the penalty for the filing of the frivolous 1998 tax return. On February 2, 2004, the IRS sent Plaintiff a letter confirming that the full amount had been applied against the specified penalty, resulting in a credit balance of $12 for that year. (First Amended Compl., Ex. 6.) The letter then stated that the $12 credit had been applied to other tax liabilities pursuant to 26 U.S.C. ¶ 6402(a). (Id.) It is the application of this $12 that plaintiff argues is a violation of my order of November 7, 2003.
The plaintiff's due process complaints regarding the hearing are as follows: that he was not allowed to record the hearing; that he was not given valid notice of the hearing; and that the IRS failed to supply him with requested information regarding the IRS employees who assessed their penalty and their authority to do so.
ANALYSIS
A. Subject Matter Jurisdiction: $12 Credit
Defendant argues that Plaintiff cannot recover because the government only consents to a waiver of its sovereign immunity when a plaintiff has filed a claim for a refund, and Plaintiff has failed to file such a claim. 26 U.S.C. § 7422. Plaintiff does not offer evidence that he has filed such a claim. Neither my Order of September 6, 2001 nor my Order of November 7, 2003 specified what was to be done with any remaining credit after application of the $512 to the penalty. Therefore, I find that because Defendant's actions are not in direct violation of my Orders and because Plaintiff has not fulfilled the requirements for a waiver of sovereign immunity, I do not have jurisdiction to decide this claim.
2. Due Process Claim
The government argues that sovereign immunity and mootness bar the due process claim. However, the suits against the government for violations of Constitutional rights may proceed under 42 U.S.C. § 1983 if plaintiff states all the elements of a claim under that Act, so the government's argument about sovereign immunity must be considered in light of the elements of a § 1983 claim. In addition, the case is not moot. Defendant argues that the tax liability has been satisfied in full, no collection activity is forthcoming, and therefore, there is no longer any case or controversy regarding collection of the penalty. However, if Plaintiff's due process rights were violated in the process of collecting that penalty, the fact that the penalty was successfully collected would not make the Constitutional issue moot. See, e.g., G.M. Leasing Corp. v. United States, 429 U.S. 338 (1977) (Court ruled in a case claiming violation of Fourth Amendment rights during successful seizure of assets tax collection activity).
Here, Plaintiff has not set forth in his pleadings any indication that he is suing officials of the IRS in their individual capacities, and therefore, must produce evidence of a policy or custom that directly caused such a violation to state a claim under ¶ 1983. See, e.g., Wells v. Brown, 891 F.2d 591 at 592 (6th Cir. 1989); Monell v. Dep't of Soc. Servs., 436 U.S. 658, 691 (1978); Gregory v. Shelby County, Tenn., 220 F. 3d 433, 422 (6th Cir. 2000). Plaintiff fails to produce such evidence. In fact, Plaintiff's complaint repeatedly cites IRS regulations that he alleges were not followed, apparently arguing that doing so would have prevented the Constitutional violation. Given this, Plaintiff has failed to state a claim that can succeed against the IRS in its official capacity, and has also failed to state a claim that can succeed against IRS officials in their individual capacity, since the Complaint fails to give the needed notice to individual defendants.
CONCLUSION
For the reasons stated above, Defendant's Motion to Dismiss is GRANTED.