Taitt v. Internal Revenue Service

Full title: DEBORAH TAITT, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant

Court: United States District Court, E.D. Michigan, Southern Division

Date published: Aug 2, 2004

Civil Action No, 04-CV-71092-DT (E.D. Mich. Aug. 2, 2004)

Opinion

Civil Action No, 04-CV-71092-DT.

August 2, 2004

OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

BERNARD FRIEDMAN, District Judge

This matter is before the court on plaintiff's motion to amend the complaint, pursuant to Fed.R.Civ.P. 15(a), as well as defendant's motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. (12)(b)(1) and 12(b)(6).

Plaintiff Deborah Taitt, who is proceeding pro se, alleges that defendant, the Internal Revenue Service (IRS), mishandled her personal audit and the audit of Smash Wrecking, Inc.¹ Those audits were for the tax years of 2000 and 2001 and were conducted in 2002.² At the time of the alleged misconduct, plaintiff was a corporate officer of Smash Wrecking, Inc., which has since been dissolved. Plaintiff's complaint consists of a list of the actions she took in order to review the findings of the audit with the examiner and the examiner's supervisor, including the numerous phone calls she made to the examiner and to various supervisors. Plaintiff contends that she had difficulty scheduling a meeting to discuss the audit findings and that when she did finally obtain the meeting, the information presented by the examiner was not the same information from the "30 day letter" she had received.³ Plaintiff also alleges that she filed a "Form 911" with the Taxpayers Advocate Department and that she was never contacted by anyone from that department regarding the form.⁴ Plaintiff believes that defendant has violated her constitutional rights to due process. For relief she seeks $285,000 in compensatory damages plus penalties and interest, $250,000 in punitive damages and court costs.

1 Plaintiff names the IRS as defendant. However, as Congress has not expressly authorized the Treasury Department or any of its divisions or bureaus to be sued, the proper defendant in this proceeding is the United States. See Blackmar v. Guerre, 342 U.S. 512, 514-15 (1952).

2 At issue was plaintiff's personal return for the year 2000 and the corporation's returns for 2000 and 2001.

3 Plaintiff does not explain what the "30 day letter" is, who it is from, or the contents.

4 The Taxpayer Advocate Service "is an IRS program that provides an independent system to assure that tax problems, which have not been resolved through normal channels, are promptly and fairly handled." Taxpayer Advocate available at http://www.irs.gov/advocate/article/0,, id=97392,00.html

Pursuant to Fed.R.Civ.P. 15(a), a motion for leave to amend the complaint should be granted "when justice so requires." Denial of such a motion may be appropriate when there is "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc . . ."Foman v. Davis, 371 U.S. 178, 182 (1962). See also Moore v. City of Paducah, 790 F.2d 557, 560 (6^th Cir. 1986). In the instant case, plaintiff seeks to add three IRS employees as defendants, substitute the United States for the IRS as a defendant, and add a claim challenging the correctness of the notices of deficiency (one as to the plaintiff and the other as to Smash Wrecking) which were issued in March 2004 for the 2000 tax year. Under the liberal standard articulated in Foman and subsequent cases, the court shall permit the requested amendment.

Nonetheless, the court must dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), as defendant argues.⁵ The United States, as a sovereign, is immune from suit unless it gives express consent to be sued.See United States v. Dalm, 494 U.S. 596, 608 (1990). Any waiver of such immunity must be unequivocally expressed and narrowly construed. See Lehman v. Nakshian, 453 U.S. 156, 151 (1981); United States v. Mitchell, 445 U.S. 535, 538 (1980).

5 Although defendant's motion is directed at the original complaint, "defendant(s) should not be required to file a new motion to dismiss simply because an amended pleading was introduced while their motion was pending. If some defects raised in the original motion remain in the new pleading, the court simply may consider the motion as being addressed to the amended pleading." 6 Wright, Miller Kanc, Federal Practice and Procedure § 1476, p. 558 (1990).

Defendant contends that the Federal Tort Claims Act (FTCA) does not function as a waiver of immunity in this suit. The FTCA "recognizes the general principle . . . that the United States should waive its historic defense of sovereign immunity and accept liability for the negligent conduct of government employees who are acting within the scope of their official duties, or the tortious activities of federal entities or other agencies that are performing governmental functions." 14 Wright, Miller Cooper, Federal Practice and Procedure § 3658, pp. 529-33 (1998). Though under 28 U.S.C. § 1346(b) the FTCA allows "civil actions on claims against the United States, for money damages," 28 U.S.C. § 2680(c) excepts from this waiver "any claim arising in respect of the assessment or collection of any tax." This exception "has been interpreted broadly by the courts to preclude suits for damages arising out of the allegedly tortious activities of IRS agents when those activities were in any way related to the agents' official duties." Capozzoli v. Tracey, 663 F.2d 654, 658 (5^th Cir. 1981). Accord Barrow v. United States, No. 97-1830, 1998 U.S. App. LEXIS 28341, at *4 (6^th Cir. Nov. 4, 1998). Therefore, in the instant case, plaintiff's claim for money damages is barred by sovereign immunity.

This court would also lack subject matter jurisdiction over any claim plaintiff may have for the "recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected." 28 U.S.C. § 1346(a)(1). While § 1346(a)(1) grants original jurisdiction to federal district courts over such claims, "Congress has conditioned its consent to be sued in such cases on taxpayer compliance with certain procedural prerequisites." United States v. Rochelle, 363 F.2d 225, 231 (5^th Cir. 1966). These procedural prerequisites are found in 26 U.S.C. § 7422(a) and provide that "a taxpayer must file a claim for refund and pay the full amount of the tax deficiency before he may challenge the correctness by a suit for refund in district court. If a taxpayer cannot pay the full amount of the deficiency he may litigate in the Tax Court of the United States." Martin v. Comm'r of Internal Revenue, 753 F.2d 1358, 1360 (6^th Cir. 1985). Since plaintiff has failed to allege that she has fulfilled the prerequisites set by § 7422(a), she may not challenge any assessments or taxes. Accordingly,

IT IS ORDERED that plaintiff's motion to amend the complaint is granted.

IT IS FURTHER ORDERED that defendant's motion to dismiss for lack of subject matter jurisdiction is granted.