Opinion
No. CIV 02-093-TUC-CKJ
June 27, 2002
Greg Olson, Pro Se, Tucson, Arizona.
Jennifer A. Giaimo, Washington, DC, Paul Kipp Charlton, Esq., Phoenix, Arizona
ORDER
Pending before the Court is Defendants' Motion to Dismiss (Doc. # 6). As set forth below, the Motion to Dismiss is GRANTED, this matter is DISMISSED WITH PREJUDICE as to Defendants Veronica Hernandez, Wiley Davis, United States Attorney, and John Ashcroft and WITHOUT PREJUDICE as to the United States, and the Clerk of the Court SHALL ENTER judgment accordingly.
Factual Procedural Background
On February 25, 2002, Plaintiff Greg Olson, proceeding pro se, filed a Complaint against Defendants Veronica Hernandez, Wiley Davis, United States Attorney, and John Ashcroft see a judicial review of the determination of the Internal Revenue Service ("IRS") Office of Appeals. See Doc. # 1. Plaintiff thereafter filed an Amended Complaint on March 25, 2002. see Doc. # 3. Apparently, Plaintiff is see judicial review of a Notice of Determination Concerning Collection Action(s) issued by the IRS and dated January 24, 2002. See Exhibit 3 to Doc. #3.
In 1998, Congress enacted 26 U.S.C. § 6330 as part of the IRS Restructuring and Reform Act of 1998, Pub.L. No. 105-206. This statute provides that prior to the issuance of an administrative tax levy, the IRS must provide the taxpayer with notice of an opportunity for a Collection Due Process ("CDP") hearing before the IRS Office of Appeals. See 26 U.S.C. § 63 30(a), (b). A taxpayer must request a hearing within 30 days of the date notice of a right to a hearing is provided. See 26 U.S.C. § 6330(a)(2), (a)(3)(B).
At a hearing conducted by an appeals office of the IRS Office of Appeals, the government is required to provide verification that all applicable law and administrative procedure requirements have been met. See 26 U.S.C. § 6330(c)(1). The taxpayer has the opportunity to raise any relevant issue relating to the unpaid tax or proposed levy. See 26 U.S.C. § 6330(c)(2)(A). The taxpayer can also raise challenges to the amount of the underlying tax liability if the taxpayer did not receive any statutory notice of deficiency or did not otherwise have an opportunity to dispute such tax liability. See 26 U.S.C. § 6330(c)(2)(B). Within thirty (30) days of the issuance of the determination by the appeals officer, the taxpayer may appeal the determination to the United States Tax Court, or if the Tax Court does not have jurisdiction of the underlying tax liability, to a United States District Court. See 26 U.S.C. § 6330(d)(1).
Plaintiffs Amended Complaint avers that he "did not file any 1040 tax returns for the years 1995, 1996, or 1997." Doc. # 3, p. 4. Plaintiff also avers that the IRS issued "two alleged `Notice of Deficiency' notices alleging [personal income] tax liabilities" for 1995-1997." Doc. # 3, p. 4-5. Plaintiff also attests to the fact that he received the required Notices of Intent to Levy from the IRS and that he requested an Appeals Consideration. See Doc. # 3, p. 5. Furthermore, attached to Plaintiffs Amended Complaint is a January 24, 2002 Notice of Determination Concerning Collection Action that informed Plaintiff that the proposed levy action to collect his personal income tax liabilities was appropriate. See Exhibit 3 to Doc. # 3.
Analysis
Defendants have moved that this Court dismiss this action for lack of subject matter jurisdiction, Fed.R.Civ.P. 12(b)(1), and failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6). In particular, Defendants argue as follows:
1. The only proper Defendant is the United States;
2. Plaintiff has failed to state a claim against the individually named Defendants in their individual capacities; and
3. This Court lacks subject matter jurisdiction over Plaintiffs claims as Plaintiff is required to see review in the United States Tax Court.
As set forth below, the Court finds Defendants' arguments persuasive and correct, and thus dismisses this action with prejudice against the individually named Defendants and without prejudice as to the United States.
A. Plaintiff Has Failed to State A Claim Upon Which Relief Can Be Granted Against the Individually Named Defendants.
In reviewing Defendants' Rule 12(b)(6) motion for Plaintiffs failure to state a claim, this Court must take all factual allegations in the Amended Complaint as true and construe them in the light most favorable to the nonmoving party. See Enesco Corp. v. Price/Costco, Inc., 146 F.3d 1083, 1085 (9th Cir. 1998). At this stage of the litigation, "[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." Hishon v. King Spalding, 467 U.S. 69, 73 (1984).
A suit against an IRS employee in his or her official capacity is essentially a suit against the United States. See Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985) citing Hutchinson v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982). Plaintiffs Amended Complaint and attachments allege that the individually named Defendants have failed to follow various procedures leading up to and including the issuance of the Notice of Determination. The challenged conduct of the Defendants falls squarely within their official capacities as employees of the IRS and thus provides no basis for the imposition of personal liability.
To the extent, Plaintiff might attempt to argue that his claims against the individually named defendants for violations of his constitutional rights are brought under Bivens v. Six Unknown Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388 (1971), such claims must also be dismissed. The United States Court of Appeals for the Ninth Circuit has refused to recognize a constitutional violation arising from the collection of taxes. See Wages v. Internal Revenue Service, 915 F.2d 1230, 1235 (9th Cir. 1990), cert. denied, 498 U.S. 1096 (1991). Furthermore, the remedies provided by Congress, particularly the right to sue the government for a refund of taxes, foreclose a damage action under Bivens. See id. See also McMillen v. United States Dep't of Treasury, 960 F.2d 187, 190-91 (1st Cir. 1991). Accordingly, Plaintiffs claims against the individually named Defendants should be dismissed, and such claims are properly construed as brought against the United States.
B. This Court Lacks Subject Matter Jurisdiction Over Plaintiffs Remaining Claims.
Defendants have also moved to dismiss the Amended Complaint for lack of subject matter jurisdiction. See Rule 12(b)(1), Fed.R.Civ.P. In considering such a motion, this Court is not restricted to the face of the pleadings, but may review evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction. See Federal Deposit Ins. Corp. v. Nichols, 885 F.2d 633, 635-36 (9th Cir. 1989).
It is well-established that the United States as a sovereign is immune from suit unless it has consented to be sued. See United States v. Dalm, 494 U.S. 596, 608 (1990). A waiver of sovereign immunity must be explicit and is strictly construed in favor of the United States. See id. The party suing the United States bears the burden of establishing a waiver of immunity. See Cominotto v. United States, 802 F.2d 1127, 1129 (9th Cir. 1986).
Because Plaintiffs suit is, as noted above, against the United States, the Court lacks jurisdiction unless sovereign immunity has been explicitly waived by statutory consent to jurisdiction. In the Amended Complaint, Plaintiff invokes 26 U.S.C. § 6330 and 5 U.S.C. § 706. In his response brief, Plaintiff also invokes 28 U.S.C. § 1361.
Plaintiff relies upon 26 U.S.C. § 6330 as the basis for this Court's subject matter jurisdiction and as a waiver of sovereign immunity. Defendants argue that exclusive jurisdiction rests with the United States Tax Court because Plaintiff is, in essence, see judicial review of a determination involving his income tax liability. Title 26 U.S.C. § 6330(d)(1) provides that within 30 days of the determination by the appeals office, the taxpayer may see judicial review of the determination by filing a petition with the Tax Court or"if the Tax Court does not have jurisdiction of the underlying tax liability, " to the appropriate federal district court.
Here, Plaintiff challenges the adverse Notice of Determination issued by the Appeals Office following a CDP hearing, which found that the proposed levy action to collect certain of Plaintiffs income tax liabilities was appropriate. While Plaintiffs challenge focuses somewhat upon claimed procedural irregularities, the underlying action rests upon Plaintiffs income tax liabilities. Section 6330(D)(1), Treasury Regulations § 301.6330-1T(F)(2) Q A F3, and the case law make clear that jurisdiction is dependent upon the underlying tax liability, not whether the claims are characterized as procedural or substantive. When the IRS' proposed levy involves an underlying income tax liability, judicial review over a determination made in a CDP hearing lies in the United States Tax Court, not the district court. See Bartschi v. Tracy, 88 A.F.T.R.2d 2001-6223, *3 (D. Ariz. 2001) and cases cited therein. See also Krugman v. Commissioner, 112 T.C. 230, 236 n. 6 (1999). Thus, since the tax liabilities at issue are income taxes, the United States Tax Court has exclusive jurisdiction.
While Defendants do not raise the timeliness of Plaintiffs Complaint in their motion, the Court notes that Plaintiff did not file his original Complaint in this Court until 32 days after the IRS' January 24, 2002 determination. Since the thirty-day statutory period for filling is jurisdictional and cannot be extended, this Court also arguably lacks jurisdiction to hear an appeal under § 6330(d) because Plaintiffs appeal was not timely filed. See 26 U.S.C. § 6330(d)(1) (providing a thirty day limit to file an appeal); McCune v. CIR, 115 T.C. 114, 116 (T.C. 2000) (holding that the thirty day filing period is jurisdictional and cannot be extended); and Goza v. CIR, 114 T.C. 176, 182 (T.C. 2000) (holding that a court's jurisdiction to hear an appeal under § 6330(d) is contingent on a timely petition for review being filed). However, as Defendants have not requested dismissal on this ground, the Court does not rely upon it in[cont] reaching its decision.
Furthermore, Plaintiffs reliance on the Administrative Procedure Act ("APA"), 5 U.S.C. § 702, and the federal mandamus statute, 28 U.S.C. § 1361, in support of a waiver of sovereign immunity is without merit. The APA does waive the government's sovereign immunity in certain limited instances; however, the APA does not provide an independent basis for subject matter jurisdiction in district courts. See Tucson Airport Authority v. General Dynamics Corp., 136 F.3d 641, 645 (9th Cir. 1998). Accordingly, the APA cannot provide this Court with subject matter jurisdiction. See Gallo Cattle Co. v. United States Dep't of Agriculture, 159 F.3d 1194, 1198 (9th Cir. 1998) and Hughes v. United States, 953 F.2d 531, 537 (9th Cir. 1992). Similarly, Plaintiffs invocation of 28 U.S.C. § 1361 is also futile because that statute does not waive the government's sovereign immunity. See Smith v. Grimm, 534 F.2d 1346, 1352 n. 9 (9th Cir. 1976) and Lonsdale v. United States, 919 F.2d 1440, 1444 (10th Cir. 1990).
For the reasons discussed above, Plaintiffs claim for judicial review of the IRS determination is dismissed for lack of subject matter jurisdiction. Conclusion
Pursuant to 26 U.S.C. § 6330(d)(1)(B), Plaintiff may be entitled to file his appeal with the United States Tax Court within thirty (30) days from the dae of this Order.
Accordingly, IT IS HEREBY ORDERED that:
1. Defendants' Motion to Dismiss (Doc. # 6) is GRANTED;
2. This matter is DISMISSED WITH PREJUDICE as to Defendants Veronica Hernandez, Wiley Davis, United States Attorney, and John Ashcroft and WITHOUT PREJUDICE as to the United States; and
3. The Clerk of the Court SHALL ENTER JUDGMENT accordingly.