Opinion
CASE NO. 1:03 CV 1346
November 5, 2003
MEMORANDUM OF OPINION AND ORDER
On July 10, 2003, a complaint was filed in this court bypro se plaintiff Sherri Tenpenny. Upon initial review, the court notified the plaintiff that there were no facts alleged in the complaint which could be construed to set forth a valid federal claim for relief. She was ordered to file an amended complaint setting forth a valid claim within 15 days of the court's July 23, 2003 order, or the complaint would be subject to dismissal. Catz v. Chalker, 142 F.3d 279 (6th Cir. 1998); Tingler v. Marshall, 716 F.2d 1109, 1112 (6th Cir. 1983). A Motion for Enlargement of Time to File an Amended Complaint was filed by Ms. Tenpenny on August 7, 2003. The court granted the motion and extended the plaintiff's deadline to file an amended complaint until September 8, 2003.
Ms. Tenpenny timely filed a "First Amended Complaint" on September 8, 2003 against the United States of America, asserting federal jurisdiction under 28 U.S.C. § 1331, 1340, and 1346, as well as under 26 U.S.C. § 7433. She seeks $1,000,000.00 in damages from the United States based on the unauthorized seizure of her property by an agent of the Internal Revenue Service (I.R.S.). The matter is now before the court.
Inresponse to I.R.S. Notices of Levy, dated March 5, 2001, April 10, 2001, April 27, 2001 and other undisclosed dates, served upon Key Bank, McDonald Investments, Inc., Sky Bank, and Van Kampen Investor Service, Inc., property belonging to Ms. Tenpenny was seized by or on behalf of the I.R.S. She maintains that the assessments upon which the Notices of Levy were executed are void. As the basis for her assertion, Ms. Tenpenny states that the I.R.S. issued Notices of Deficiency "to a person who was alleged to have been a non-filer. The authority to issue a Notice of Deficiency when no return is filed was repealed with the enactment of the 1954 Internal Revenue Code." (Am. Compl. at 2.) She argues, in the alternative, that "the supplemental assessment was not properly recorded and the assessment list was not transmitted in accordance with the provisions of 26 U.S.C. § 6204." (Am. Compl. at 2.)
Ms. Tenpenny claims that the property which the I.R.S. seized is not subject to levy by Notice of Levy. She contends that the "property [was not] in the possession of any officer or agency of the United States prior to the seizure of the property. Revenue Officer Thomas Spencer failed to serve a Notice of Seizure after seizing or causing the seizure of the property." (Am. Compl. at 2.) Further, prior to seizing her property, Mr. Spencer did not obtain "the Director's warrant for distraint." At the time he seized or caused her property to be seized, Mr. Spencer allegedly should have known that there was a defective assessment and that he was required to serve a Notice of Seizure and to obtain the Warrant for Distraint from the Director. In support of her position, Ms. Tenpenny elaborates "[t]hat at a minimum the Revenue Officer Spencer failed to adequately verify the validity of the assessment or to verify his authority and the procedures for making or causing the seizure and thus, acted negligently in making the seizure of the Plaintiff's property or causing the seizure." (Am. Compl. at 3.)
As a matter of law, the Internal Revenue Code does not require a Notice of Seizure or a Warrant of Distraint to accompany a Notice of Levy. "[L]evy may be made by serving a notice of levy on any person in possession of or obligated with respect to, property or rights to property subject to levy, including receivables, bank accounts, evidences of debt, securities, and salaries, wages, commissions, or other compensation." 26 C.F.R. § 301.6331-1(a)(1). No judicial intervention is necessary. United States v. National Bank of Commerce, 472 U.S. 713, 719-20 (1985). The constitutionality of this procedure is settled. Id. at 721; Phillips v. Commissioner, 283 U.S. 589, 595 (1931); see G.M. Leasing Corp. v. United States, 429 U.S. 338. 352. n. 18 (1977).
It is Ms. Tenpenny's position that the Revenue Officer knew the assessment was invalid, but acted upon the belief that the Notice of Levy would be honored by the named third parties without question. She claims that the defendant's actions deprived her of property in excess of $500,000.00 in violation of her right to due process under the Fifth Amendment.
Standard of Review
A pro se litigant's pleadings are to be construed liberally and held to a less stringent standard than formal pleadings drafted by lawyers. See Haines v. Kerner, 404 U.S. 519, 520-21 (1972); see also Estelle v. Gamble, 429 U.S. 97, 106 (1976). While a court should make a reasonable attempt to read the pleadings to state a valid claim on which the plaintiff could prevail, despite the plaintiff's failure to cite proper legal authority or her confusion of various legal theories, see Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991), this standard does not mean thatpro se plaintiffs are entitled to take every case to trial. See Pilgrim v. Litflefield, 92 F.3d 413, 416 (6th Cir. 1996). Indeed, courts should not assume the role of advocate for the pro se litigant See Hall, 935 F.2d at 1110.
26 U.S.C. § 7433In order to state a valid claim against any defendant, a complaint must set forth facts which, if true, would support a recovery under some recognized cause of action. With regard to claims filed pursuant to § 7433, the statute provides:
If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.26 U.S.C. § 7433(2003). A valid claim under section 7433 must assert facts showing that an officer or employee of the I.R.S. has disregarded a provision of the Internal Revenue Code in connection with the collection of federal taxes. See e.g. Shaw v. United States, 20 F.3d 182, 184 (5th Cir. 1994) (even if I.R.S. improperly assessed tax liability against taxpayer, taxpayer had no claim under section 7433 in the absence of proof of improper collection procedures);Williams v. United States, No. 97-5820, 1998 WL 537579, at * 4 (6th Cir. Aug.7, 1998) ("The scope of [§] 7433 is limited to unauthorized collection actions and does not extend to determinations of liability."); Bouquett v. United States, No. 96-4239, 1998 WL 69842, at *2 (6th Cir. Feb. 10, 1998) (section 7433 "does not provide taxpayers a cause of action for allegedly improper assessment of amounts of taxes"); see also Diasz v. United States, 997 F. Supp. 547, 549-50 (D.Vt. 1997) (section 7433 applied only to improper collection practices, and did not bestow federal district court with jurisdiction over taxpayers' claims for abatement of interest assessed by IRS).
Parts of Ms. Tenpenny's amended complaint contain no more than bald assertions that the defendant violated certain provisions of the Internal Revenue Code. While she does aver, moreover, that a revenue officer of the I.RS. intentionally disregarded certain provisions of the Tax Code when he proceeded to seize property in which she claims an interest or ownership, she does not assert facts supporting that averment. Even liberally construed, accordingly, plaintiff's complaint arguably is subject to dismissal because it contains no more than unsupported legal assertions, which this Court is not required to accept as true. The Court need not decide whether Ms. Tenpenny's legal conclusions regarding the IRS's collection activities are sufficient to state a claim, however, because Ms. Tenpenny has failed to allege a critical prerequisite to this court's subject matter jurisdiction.
The Supreme Court has cautioned federal courts not to decide a cause of action based on the doctrine of "hypothetical jurisdiction" before resolving whether the court has Article III jurisdiction.Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998)("Without jurisdiction, court cannot proceed at all in any cause; jurisdiction is power to declare law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing cause.") (citation omitted).
A suit under section 7433 is jurisdictionally barred unless the claimant has exhausted available administrative remedies. Venen v. United States, 38 F.3d 100, 103 (3d Cir. 1994) (failure to correctly petition I.R.S. for relief is failure to exhaust administrative remedies, even if IRS does not inform taxpayer of proper procedures); Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir. 1992). The statute specifically provides that "[a] judgment for damages shall not be awarded under subsection (b) unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service." 26 U.S.C. § 7433(d)(1). Because the statute expressly mandates exhaustion, this court is without authority to waive it. See Williams v. United States, No. 97-5820, 1998 WL 537579, *5 (6th Cir. Aug. 7, 1998) (where plaintiff claimed futility excused failure to exhaust, court lacked the authority to waive the exhaustion requirement of section 7433(d)(1) and dismissal was appropriate) (citing McCarthy v. Madigan, 503 U.S. 140, 144 (1992) (superseded by statute); see also Tornichio v. United States, 263 F. Supp.2d 1090, 1098-99 (N.D. Ohio 2002).
The district court noted that "section 7433 only provides limited waiver of sovereign immunity. Specifically, the United States has not waived its sovereign immunity unless the taxpayer exhausts available administrative remedies; the failure to exhaust available administrative remedies is a jurisdictional bar to suits under § 7433."Tornichio, 263 F. Supp.2d at 1098-99 (citations omitted).
Thus, as a prerequisite to filing a § 7433 action, a taxpayer must exhaust all administrative remedies within the I.R.S. See Conforte, 979 F.2d at 1377; Information Resources. Inc. v. United States, 950 F.2d 1122. 1127-28 n. 4 (5th Cir. 1992);see also Fishburn v. Brown, 125 F.3d 979, 982 (6th Cir. 1997.) The amended complaint does not contain any allegation, reference or assertion that Ms. Tenpenny complied with this jurisdictional prerequisite. Consequently, this court lacks subject matter jurisdiction over her § 7433 claim.
Based on the foregoing, Ms. Tenpenny's amended complaint is dismissed without prejudice for failing to exhaust her administrative remedies pursuant to 26 U.S.C. § 7433. The court certifies, pursuant to 28 U.S.C. § 1915(a)(3), that an appeal from this decision could not be taken in good faith.
28 U.S.C. § 1915(a)(3) provides:
An appeal may not be taken in forma pauperis if the trial court certifies that it is not taken in good faith.
IT IS SO ORDERED.