Opinion
1:00CV01241
April 10, 2001
Charles Ray Waters, Sr. [COR LD NTC] [PRO SE] Wilksboro, NC, attorney for plaintiff.
John W. Stone, Jr. [COR LD NTC], Office of U.S. Attorney, Greenboro, NC, Dara B. Oliphant [COR LD NTC] U.S. Department of Justice Tax Division, attorneys for defendant.
ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This motion comes before the Court on defendant's motion to dismiss. That motion has been responded to and is ready for decision.
The docket sheet also lists a "Motion to Proceed" as being ready for decision. Although plaintiff did file such a document, it is actually a response to defendant's motion to dismiss rather than a separate motion.
Facts and Claims
The basic facts, as alleged in plaintiff's complaint, are as follows. Plaintiff admits that he has been convicted for tax evasion in federal court and that he was imprisoned for twenty-one months for that offense. He also indicates that there is some form of federal tax liability outstanding against him. However, he claims that he is not a "taxpayer" as defined in the Internal Revenue Code and that the hourly wages he earns are "property" rather than "taxable income." Therefore, he concludes that his wages cannot be taxed unless defendant produces a "liability document." He states that, because no such document has been produced, defendant's attempts prosecute him for tax violations or to assess taxes and penalties based on the wages that he earns are improper under the Internal Revenue Code and violate the Fifth Amendment of the United States Constitution.
At one point plaintiff does set out a laundry list of alleged misdeeds by the Internal Revenue Service including fraud, embezzlement, extortion robbery. theft, perjury, and various other crimes. He does not appear to be raising any additional causes of action with these allegation and, in any event, has not met even the most basic standards for pleading them.
As for relief, plaintiff requests that defendant produce "the document making plaintiff liable and subject to a tax." If this is not done, plaintiff requests that the Court order that he receive a presidential pardon, have all of his tax liabilities for the years 1978-1994 removed, have costs and fines levied against him deleted, be compensated tax free for $500,000 in lost earnings, be paid $23,000,000 for the alleged abuse that he has suffered at the lands of defendant, and be paid punitive damages as the Court determines appropriate. He also asks that defendant be forced to acknowledge that he is a non-taxpayer under the Internal Revenue Code and cease and desist from further contact with him.
Defendant agrees that plaintiff has been the subject of both criminal tax evasion and civil tax liability proceedings. It also agrees that he has not prevailed in any of these prior proceedings. However, defendant claims that plaintiff is a taxpayer earning taxable income and that he is subject to the tax liabilities previously assessed against him. Defendant asks that the suit be dismissed because (1) the United States has not consented to plaintiff's suit, (2) the suit is barred by res. judicata, (3) parts of plaintiff's relief are barred by the Anti-Injunction Act, 26 U.S.C. § 7421 (a), and (4) the complaint fails to state a claim upon which relief can be granted.
Discussion
This case is before the Court on defendants' motion to dismiss all of plaintiffs' claims pursuant to Fed.R.Civ. p. 12(b)(1) and (6). A motion under Fed.R.Civ.P. 12(b)(1) challenges a court's subject matter jurisdiction. In deciding such a motion, the burden will be on the plaintiff to show that subject matter jurisdiction is present. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982) Also, a court may consider evidence outside the pleadings without converting the motion into one for summary judgment. Id.
Courts may dismiss for lack of subject matter jurisdiction on any one of three different bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.Clark v. Tarrant County, Texas, 798 F.2d 736 (5th Cir.), reh'g denied, 802 F.2d 455 (5th Cir. 1986)
The standards applicable to Rule 12(b)(1) motions have been summarized by the Eleventh Circuit in Garcia v. Copenhaver, Bell Associates, M.D.'s. P.A., 104 F.3d 1256, 1260-61 (11th Cir. 1997):
We begin by observing that it is extremely difficult to dismiss a claim for lack of subject matter jurisdiction. Simanonok v. Simanonok, 787 F.2d 1517, 1519 (11th Cir. 1986) . Attacks on subject matter jurisdiction under Fed.R.Civ. p. 12(b)(1) come in two forms: "facial attacks" and "factual attacks." Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990) Facial attacks on the complaint "require[d] the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion." Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990) (quoting Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980), cert. denied, 449 U.S. 953, 101 S.Ct. 358, 66 L.Ed.2d 217 (1980) (citing Mortensen v. First Fed. Sav. Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977) . "`Factual attacks', on the other hand, challenge `the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered.'" Id.
. . . On a factual attack of subject matter jurisdiction, a court's power to make findings of facts and to weigh the evidence depends on whether the factual attack on jurisdiction also implicates the merits of plaintiff's cause of action. Lawrence 919 F.2d at 1529. If the facts necessary to sustain jurisdiction do not implicate the merits of plaintiff's cause of action, then:
[T]he trial court may proceed as it never could under 12(b)(6) or Fed.R.Civ.P. 56. Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction — its very power to hear the case — there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.
Lawrence, 919 F.2d at 1529 (quoting Mortensen v. First Fed. Say. Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)
Because defendants' attack on plaintiff's claims is a facial attack, the Court will not consider evidence outside the pleadings in reaching its decision.
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) cannot succeed "`unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'"Republican Party of North Carolina v. Martin, 980 F.2d 943, 952 (4th Cir.), cert. denied, 510 U.S. 828, 114 S.Ct. 93, 126 L.Ed.2d 60 (1993),quoting Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Further, the Court must assume that the allegations in the complaint are true and construe them in the light most favorable to plaintiff. Id.
No Consent to Be Sued
Defendant's first argument in favor of dismissal is that defendant has not consented to plaintiff's suit. Such consent is necessary under the doctrine of sovereign immunity because the United States can be sued only when it has consented to the suit. United States v. Nordic Village Inc., 503 U.S. 30, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992). Although the complaint names the Commissioner of Internal Revenue as defendant, plaintiff's suit is, of course, actually one against the United States. Any waiver of sovereign immunity must be explicit and must be strictly construed in favor of the government. Id. at 34.
Here, plaintiff has cited no statute allowing his suit against the government based on defendant's alleged misinterpretation and misapplication of the Internal Revenue Code. Although, as defendant admits, certain parts of the Revenue Code do allow for procedures to challenge the assessment or collection of taxes or to seek a refund, plaintiff has neither followed those procedures here, nor cited another statute allowing the type of suit he is bringing. He essentially seeks to relitigate issues already decided against him in his past legal wranglings with the Internal Revenue Service. Overall, plaintiff has listed no statutory basis for his suit, and, to the extent that he relies on the Internal Revenue Code to establish the basis for his suit, it should be dismissed.
Failure To State A Claim
Defendant also argues that the portion of plaintiff's claim that is based on the Fifth Amendment of the United States Constitution should be dismissed. He hinges this portion of his motion to dismiss on plaintiff's failure to state a claim upon which relief can be granted.
The Fifth Amendment states in pertinent part that a person shall not be "deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." Defendant reads plaintiff's complaint to state a claim that his wages (property) have been taken without due process. Although this is one possible interpretation of plaintiff's somewhat cryptic complaint, another, perhaps more likely, reading is that plaintiff is claiming that his property has been taken without just compensation. In any event, under either reading of his complaint, plaintiff has not stated a claim upon which relief can be granted.
To the extent that plaintiff is alleging a deprivation of due process, plaintiff himself admits that he has had criminal hearings concerning his failure to pay taxes. He does not even begin to explain in his complaint how these hearings were deficient so as to raise due process concerns. Further, defendant points out that plaintiff's civil tax liability has been established through proceedings before the United States Tax Court which were affirmed by the Fourth Circuit Court of Appeals. Waters v. C.I.R., Docket No. 23924-97, (T.C. April 12, 1999) (unpublished), aff'd, 199 F.3d 1329 (4th Cir. October 26, 1999) (table) (unpublished) . These documents establish his tax liability. Again, the complaint does not allege that these proceedings were deficient in a manner that deprived plaintiff of due process. The complaint and the judicial record in the case clearly demonstrate that plaintiff has not stated a due process claim upon which relief can be granted.
Any claim which plaintiff is raising regarding a deprivation of property without compensation also fails. Assuming purely for the sake of argument that the Fifth Amendment could be interpreted to prevent an income tax, plaintiff still cannot prevail because, well after the passage of the Fifth Amendment, the United States Constitution was further amended to clearly allow Congress to levy an income tax. The Sixteenth Amendment authorizes Congress to "collect taxes on incomes, from whatever source derived. . . ." Pursuant to the mandate of the Sixteenth Amendment, Congress has passed the Internal Revenue Code. Under this Code, wages do constitute income. C. I. R. v. Glenshaw Glass Co., 348 U.S. 426, 429, 75 S.Ct. 473, 475-476, 99 L.Ed. 483 (1955) . Therefore, plaintiff cannot claim that the taxation of his wages is an improper deprivation of property under the Fifth Amendment. His remaining claim fails and his complaint should be dismissed in its entirety. In a similar situation where the plaintiffs were challenging the validity and constitutionality of the income tax and the action of federal employees to collect the tax, the Ninth Circuit approved dismissal on the ground of failure to state a cause of action. Wishman v. Wiley, 83 F.3d 430, 1996 WL 183551 (9th Cir. April 12, 1996) (Table, Text in Westlaw, No. 95-35369) see also Amon v. United States, 514 F. Supp. 1293 (D. Colo. 1981) (the definition of income is broad).
As noted previously, defendant also raises arguments based on res judicata and The Anti-Injunction Act. Defendant might well prevail as to these arguments. If so, they would provide additional reasons for dismissing at least portions of plaintiff's complaint. However, because the two arguments discussed fully above result in the dismissal of plaintiff's entire complaint, consideration of defendant's remaining argument is unnecessary.
IT IS THEREFORE ORDERED that the Clerk make a docket notation that plaintiff's "Motion to Proceed" (docket no. 12) is actually a response to defendant's motion to dismiss rather than a separate motion.
IT IS RECOMMENDED that defendant's motion to dismiss (docket no. 7) be granted and that Judgment be entered dismissing this action.
JUDGMENT
For the reasons set out in an Order filed contemporaneously with this Judgment,
IT IS ORDERED AND ADJUDGED that defendant's motion to dismiss (docket no. 7) is granted, and that this action be, and the same hereby is, dismissed.