Opinion
Civil Action No: 05-0812 Section: "S" (2).
July 15, 2005
ORDER AND REASONS
IT IS HEREBY ORDERED that the United States of America's motion to dismiss for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), is DENIED. (Document # 13.)
I. BACKGROUND
Elliott Muhammad had a balance of $596 in his account with Liberty Bank in New Orleans, Louisiana. On March 7, 8, and 9, 2005, Liberty Bank issued three notices indicating that five checks totaling $592.06 written on the account were being returned for insufficient funds. On March 11, 2005, Liberty's customer service department advised Muhammad that his funds were being held due to an electronic debit by the Internal Revenue Service.
Muhammad filed a pro se, in forma pauperis complaint and petition for writ of injunction against the United States of America, the Internal Revenue Service, and Liberty Bank. He alleges that he knows of no judgment or order, and he has not been served with notice of any order that any amount is owed to the United States or the Internal Revenue Service. He requests that the court enjoin the defendants from seizing the funds held by Liberty Bank. The United States filed a motion to dismiss for lack of subject matter jurisdiction, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure.
A default judgment was entered against Liberty Bank on May 18, 2005. The court denied Muhammad's motion for a temporary restraining order.
II. DISCUSSION
A. Legal standard
"Motions filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure allow a party to challenge the subject matter jurisdiction of the district court to hear a case." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). "Lack of subject matter jurisdiction may be found in any one of three instances: (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." Id. In a 12(b)(1) motion, the party asserting jurisdiction bears the burden of proof that jurisdiction does in fact exists. Id. "Ultimately, a motion to dismiss for lack of subject matter jurisdiction 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 plaintiff to relief." Id.
B. The Anti-Injunction Act of the Internal Revenue Code
The United States argues that the Anti-Injunction Act, 26 U.S.C. § 7421(a) of the Internal Revenue Code, precludes the court from exercising jurisdiction to enjoin the collection of a federal tax. The United States contends that no exception to § 7421 applies because Muhammad has not shown that under no circumstances would the Government succeed on the merits or that he is entitled to equitable relief based on irreparable injury and inadequacy of legal remedies. The United States contends that Muhammad's proper remedy is to challenge the procedural regularity of any tax collection by paying the liability and suing for a refund in the district court and by bringing an action for wrongful levy.
Section 7421(a) provides in relevant part:
(a) Tax.-Except as provided in Sections 6212(a) and (c), 6213(a), 6672(a), 6672(b), 6694(c), 7426(a) and (b)(1), and 7429(b), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.
Muhammad contends that the Anti-Injunction Act does not preclude jurisdiction over his claim because no tax has been assessed, and he does not seek to enjoin the assessment or collection of a tax. He argues that his claim is based on an illegal seizure of his property without a warrant, in violation of the Fourth Amendment of the Constitution and that he and has no other remedy to prevent the unlawful seizure of property. Muhammad argues that the Internal Revenue Service can issue a notice of deficiency, a levy or a jeopardy assessment, or it can obtain a warrant to collect a tax or seize his property. He contends that the Internal Revenue Service has no chance of prevailing based on this set of facts.
"The manifest purpose of § 7421(a) is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund." Enochs v. Williams Packing Navigation Co., 82 S.Ct. 1125, 1129 (1962). "[I]f it is clear that under no circumstances could the Government ultimately prevail, the central purpose of the Act is inapplicable and . . . the attempted collection may be enjoined if equity jurisdiction otherwise exists." Id. "Thus, in general, the Act prohibits suits for injunctions barring the collection of federal taxes when the collecting officers have made the assessment and claim that it is valid." Id. Further, the Anti-Injunction Act is applicable "not only to the assessment and collection of taxes, but to activities which are intended to or may culminate in the assessment or collection of taxes as well." Linn v. Chivatero, 714 F.2d 1278, 1287 (5th Cir. 1983).
Although Muhammad frames his arguments in terms of a fourth amendment violation for unlawful seizure of his property, the "fact that a constitutional violation is alleged does not mean that the Anti-Injunction Act does not apply." Linn, 714 F.2d at 1282. The court must first determine whether Muhammad's primary purpose of the lawsuit is to recover his property "or whether it is a suit to restrain the collection of taxes or the collection of information that would aid in the assessment of taxes." Id.
The government concedes that the following factual allegations in the complaint are assumed to be true and must be construed in the light most favorable to Muhammad:
Plaintiff spoke with a customer service representative at Liberty Bank and was informed that the funds in Plaintiff's account were being held pursuant to an electronic debit from the Internal Revenue Service (IRS). Plaintiff was not notified by the IRS of any levy on his account and is unaware of any judgment, order or notice that he has any federal tax liability due and owing. Plaintiff initiated this action seeking a permanent injunction to prevent the IRS from seizing the held funds and to require the IRS to release those funds.
Government's motion to dismiss at 2. The government does not address Muhammad's constitutional argument. The government argues that Muhammad's complaint fails to provide information regarding the underlying levy, but Muhammad argues that there has not been any levy of judgment concerning his tax liability.
Thus, the court concludes that the primary purpose of Muhammad's lawsuit is the recovery of his property that was unlawfully seized, not to restrain the collection of taxes. Because the fourth amendment aspect of the case is not governed by the Anti-Injunction Act, the court need not engage in a discussion of the exceptions to the Anti-Injunction Act. See Linn, 714 F.2d at 1283; Retirement Care Assoc. v. U.S/IRS, 3 F.Supp. 1434, 1441 (N.D. Ga. 1998) (quoting Linn and holding that the plaintiffs were attempting to prohibit illegal action by IRS agents, not to restrain the collection of taxes). Accordingly, the court may exercise jurisdiction over the case, and the government's motion to dismiss for lack of jurisdiction is denied.