Hanna v. Internal Revenue Services (IRS)

• Court: District Court, S.D. California
• Decided: September 20, 2024
• Docket: 3:24-cv-00515
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 RIMON HANNA, Case No.: 3:24-cv-00515-RBM-KSC 12 Plaintiff, ORDER:

13 v. (1) GRANTING PLAINTIFF’S 14 INTERNAL REVENUE SERVICE (IRS), MOTION FOR LEAVE TO and DOES 1 through 10, inclusive, PROCEED IN FORMA PAUPERIS 15

Defendants. 16 (2) DISMISSING COMPLAINT ON SCREENING PURSUANT TO 28 17 U.S.C. § 1915(e)(2)(B)(ii) 18 [Doc. 2] 19 20 21 On March 18, 2024, Plaintiff Rimon Hannah (“Plaintiff”) brought this action against 22 the Internal Revenue Service (“IRS”) and Does 1 through 10 by filing a complaint 23 (“Complaint”). (Doc. 1.) Along with his Complaint, Plaintiff filed a Motion for Leave to 24 Proceed in Forma Pauperis (“IFP Motion”) pursuant to 28 U.S.C. § 1915. (Doc. 2.) 25 The Court finds this matter suitable for determination without oral argument 26 pursuant to Civil Local Rule 7.1(d)(1). For the reasons discussed below, Plaintiff’s IFP 27 Motion (Doc. 2) is GRANTED and Plaintiff’s Complaint (Doc. 1) is DISMISSED. 28 /// 1 I. BACKGROUND 2 A. Plaintiff’s Complaint1 3 At the beginning of his Complaint, Plaintiff explains he is seeking damages under 4 Internal Revenue Code § 7433, which “authorizes the filing of a damages action against 5 the government in federal district court when, in connection with the collection of a tax, 6 any officer or employee of the IRS recklessly, intentionally, or negligently disregards any 7 provision of the Internal Revenue Code or the related Treasury Regulations.” (Doc. 1 at 8 1.) 9 Plaintiff’s first and only cause of action is for a tax refund for the year 2017. (Id. ¶¶ 10 6–15.) Plaintiff explains he “filed TIMELY his Amended tax return and filed with the IRS 11 his 1040X for the tax year of 2016, 2017 and 2018 which were mailed on April 17, 2021, 12 and received by the IRS on April 20, 2021.” (Id. ¶ 6.) Plaintiff “amended his returns to 13 reflect his self-employment as an UBER driver, to include increase of earning and to claim 14 self-employment expenses.” (Id. ¶ 7.) The “IRS processed Plaintiff’s 1040X for the tax 15 year of 2016 and issued refund of $815.29.” (Id. ¶ 8.) The “IRS processed Plaintiff’s 16 1040X for the tax year of 2018 and issued refund of $2557.00.” (Id. ¶ 9.) The “IRS 17 processed Plaintiff’s 1040X for the tax year of 2017, and should have issued refund of 18 $1069.00.” (Id. ¶ 10.) Instead, the IRS withheld “Plaintiff's refund for the tax year of 19 2016, and the tax year of 2018 and kept outstanding balance of $2 ,234.04 for the tax year 20 of 2017.” (Id. ¶ 11.) 21 “Plaintiff was forced to issue a payment to the IRS in the amount of $1539.00 to 22 keep his account in good standing with the IRS and to avoid collection.” (Id. ¶ 12.) 23 “Plaintiff include[s] a print out of Account Transcript indicating all of the applied credits, 24 interest which has been charged and also reduced/ removed credit of the amount of 25 $1,931.00.” (Id. ¶ 13.) 26

27 1 The Court’s summary of the Plaintiff’s Complaint in this section does not reflect the 28 1 Plaintiff spoke with a manager at his local IRS office who “revie[we]d the file that 2 and determined[:] (a) 2017 amended return was filed timely, (b) all of the expenses and 3 credits should have been allowed.” (Id. ¶ 14.) The manager “contacted the supervisor of 4 the IRS office in Fresno where the decision was made, Plaintiff was promised a correction 5 to be made within couple of weeks, but until the day of filing this complaint, there is no 6 correction was ever made.” (Id.) On June 29, 2022, Plaintiff served the IRS a Notice to 7 Sue, and the IRS responded in November 2022 rejecting and disallowing the Plaintiff to 8 claim his expenses. (Id. ¶ 15.) In his damages and relief requested section of the 9 Complaint, Plaintiff seeks release of $815.29 for tax year 2016, release of $1,069.00 for 10 tax year 2017, release of $2,557.00 for tax year 2018, and the reverse of penalties and 11 interest charged in his favor. (Id., Damages and Relief Requested.) Plaintiff attaches 12 Exhibits A–J in support of his Complaint. (Id. at 6–45.) 13 II. LEGAL STANDARD 14 A motion to proceed IFP presents two issues for the Court’s consideration. First, the 15 Court must determine whether an applicant properly shows an inability to pay the 16 $4052 civil filing fee required by this Court. See 28 U.S.C. §§ 1914(a), 1915(a). To that 17 end, an applicant must also provide the Court with a signed affidavit “that includes a 18 statement of all assets[,] which shows inability to pay initial fees or give security.” CivLR 19 3.2(a). Second, § 1915(e)(2)(B)(ii) requires the Court to evaluate whether an applicant’s 20 complaint sufficiently states a claim upon which relief may be granted. See Lopez v. Smith, 21 203 F.3d 1122, 1127 (9th Cir. 2000) (“1915(e) not only permits but requires a district court 22 to dismiss an in forma pauperis complaint that fails to state a claim.”). “[T]he sua sponte 23 screening and dismissal procedure is cumulative of, not a substitute for, any subsequent 24 Rule 12(b)(6) motion that the defendant may choose to bring.” Teahan v. Wilhelm, 481 25

26 27 2 In addition to the $350 statutory fee, civil litigants must pay an additional administrative fee of $55. See 28 U.S.C. § 1914(a). The additional $55 administrative fee does not apply 28 1 F.Supp.2d 1115, 1119 (S.D. Cal. 2007). 2 III. DISCUSSION 3 A. Motion to Proceed IFP 4 An applicant need not be completely destitute to proceed IFP, but he must adequately 5 prove his indigence. Adkins v. E.I. DuPont de Nemours & Co., 335 U.S. 331, 339–40 6 (1948). An adequate affidavit should “allege[] that the affiant cannot pay the court costs 7 and still afford the necessities of life.” Escobedo v. Applebees, 787 F.3d 1226, 1234 (9th 8 Cir. 2015) (citing Adkins, 335 U.S. at 339); see also United States v. McQuade, 647 F.2d 9 938, 940 (9th Cir. 1981) (an adequate affidavit should state supporting facts “with some 10 particularity, definiteness and certainty”). No exact formula is “set forth by statute, 11 regulation, or case law to determine when someone is poor enough to earn IFP status.” 12 Escobedo, 787 F.3d at 1235. Consequently, courts must evaluate IFP requests on a case- 13 by-case basis. See id. at 1235–36 (declining to implement a general benchmark of “twenty 14 percent of monthly household income”); see also Cal. Men’s Colony v. Rowland, 939 F.2d 15 854, 858 (9th Cir. 1991) (requiring that district courts evaluate indigency based upon 16 available facts and by exercise of their “sound discretion”); Venable v. Meyers, 500 F.2d 17 1215, 1216 (9th Cir. 1974). 18 Plaintiff filed an IFP Motion in which he declares he is unable to pay the costs of 19 these proceedings. (Doc. 2 at 1.) Plaintiff explains he is employed at Uber Technology. 20 (Id.) However, Plaintiff also explains his driving license is currently suspended for a 21 medical reason so he is disqualified from working at the moment. (Id.) Plaintiff’s gross 22 and take-home wages are $810.00 per month and he has no other income in the past 12 23 months. (Id.) Plaintiff has $700.00 in cash, a checking account, or a saving account, and 24 owns a 2004 BMW 325I valued at $1,000. (Id. at 2.) 25 Plaintiff explains his current monthly rent is $2,170 and is overdue, and that he has 26 other monthly expenses totaling $750. (Id.) Plaintiff has a wife and son depending on his 27 support, but he did not explain how much he contributes to their support. (See id.) Plaintiff 28 has debts or financial obligations in the amount of $800. (Id.) Plaintiff explains he makes 1 the minimum payment of $25 on these debts and will do so until he gets his driving license 2 reinstated and returns to work. (Id.) Plaintiff also attaches a document titled Reporting 3 Changes for Cash Aid and CalFresh from the California Department of Social Services 4 explaining that, as of March 2024, his family (2 individuals) receives CalWORKS and 5 CalFresh but does not specify the amount. (Id. at 3.) 6 The Court determines Plaintiff’s monthly income is $810 and his monthly expenses 7 are at least $2,995. Considering the information in application, the Court finds that Plaintiff 8 has sufficiently shown an inability to pay the $405 filing fee pursuant to § 1915(a). Thus, 9 Plaintiff’s IFP Motion is GRANTED. 10 B. Screening under 28 U.S.C. 1915(e) 11 As discussed above, every complaint filed pursuant to the IFP provisions of 28 12 U.S.C. § 1915 is subject to a mandatory screening by the Court under § 1915(e)(2)(B). 13 Lopez, 203 F.3d at 1127. Under that sub-provision, the Court must dismiss complaints that 14 are frivolous or malicious, fail to state a claim on which relief may be granted, or seek 15 monetary relief from defendants who are immune from such relief. See 28 U.S.C. § 16 1915(e)(2)(B); see also Calhoun v. Stahl, 254 F.3d 845, 845 (9th Cir. 2001) (affirming that 17 “the provisions of 28 U.S.C. § 1915(e)(2)(B) are not limited to prisoners”). 18 1. Failure to State a Claim 19 “The standard for determining whether a plaintiff has failed to state a claim upon 20 which relief can be granted under § 1915(e)(2)(B)(ii) is the same as the Federal Rule of 21 Civil Procedure 12(b)(6) standard for failure to state a claim.” Watison v. Carter, 668 F.3d 22 1108, 1112 (9th Cir. 2012). Rule 12(b)(6) requires a complaint to “contain sufficient 23 factual matter, accepted as true, to state a claim to relief that is plausible on its face.” 24 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). While the 25 Court “ha[s] an obligation where the petitioner is pro se, particularly in civil rights cases, 26 to construe the pleadings liberally and to afford the petitioner the benefit of any doubt,” 27 Hebbe v. Pliler, 627 F.3d 338, 342 & n.7 (9th Cir. 2010) (citing Bretz v. Kelman, 773 F.2d 28 1026, 1027 n.1 (9th Cir. 1985)), it may not “supply essential elements of claims that were 1 not initially pled[,]” Ivey v. Bd. of Regents of the Univ. of Alaska, 673 F.2d 266, 268 (9th 2 Cir. 1982). 3 Plaintiff appears to raise a claim for damages under 26 U.S.C. § 7433(a). That 4 provision provides in part “[i]f, in connection with any collection of Federal tax with 5 respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly 6 or intentionally, or by reason of negligence, disregards any provision of this title, or any 7 regulation promulgated under this title, such taxpayer may bring a civil action for damages 8 against the United States in a district court of the United States.” 26 U.S.C. § 7433(a). 9 “Section 7433 creates a private right of action only for tax collection activity that violates 10 some provision of the Revenue Code or the regulations promulgated thereunder.” Shwarz 11 v. United States, 234 F.3d 428, 433 (9th Cir. 2000). “In order to make out a claim under 12 section 7433(a), a claimant must demonstrate that an employee of the IRS violated a 13 specific section of the Internal Revenue Code or Treasury Regulations in collecting taxes 14 from the claimant.” Kennar v. Kelly, Civil No. 10cv2105-AJB(WVG), 2011 WL 2116997, 15 at *7 (S.D. Cal. May 27, 2011) (citing Miller v. United States, 66 F.3d 220, 222 (9th Cir. 16 1995)). “[A] taxpayer cannot seek damages under § 7433 for improper assessment of 17 taxes.” Miller, 66 F.3d at 223 (quoting Shaw v. United States, 20 F.3d 182, 184 (5th Cir. 18 1994)). 19 Plaintiff’s claim concerns the alleged improper collection and holding of taxes 20 allegedly subject to refund. However, he fails to specify which provision of the Internal 21 Revenue Code or regulations promulgated thereunder the Defendants allegedly 22 disregarded and how they did so recklessly or intentionally, or by reason of negligence. 23 See 26 U.S.C. § 7344(a); Kenner v. Kelly, Case No. 11-cv-1538 DMS (WVG), 2018 WL 24 1726440, at *4 (S.D. Cal. Apr. 10, 2018) (dismissing § 7433 claim where “Plaintiffs have 25 failed to plead the IRS violated a statute or regulation as required under § 7433”); 26 Scharringhausen v. United States, 686 F. Supp. 2d 1069, 1073 (S.D. Cal. 2009) (“To state 27 a claim under § 7433, a plaintiff must allege that the IRS violated an Internal Revenue 28 Code provision or a Treasury Regulations.”) (citing Shwarz, 234 F.3d at 433–34). 1 Accordingly, the Court determines Plaintiff has not adequately stated a claim upon which 2 relief can be granted. Thus, the Court DISMISSES Plaintiff’s Complaint. (Doc. 1.) 3 IV. CONCLUSION 4 Based on the foregoing considerations, the Court GRANTS Plaintiff’s IFP Motion 5 (Doc. 2) but DISMISSES Plaintiff’s Complaint (Doc. 1). Given Plaintiff’s pro se status, 6 the Court will give Plaintiff an opportunity to amend his Complaint in accordance with the 7 above. Any first amended complaint must be filed on or before October 11, 2024. 8 IT IS SO ORDERED. 9 DATE: September 20, 2024 10 _____________________________________ HON. RUTH BERMUDEZ MONTENEGRO 11 UNITED STATES DISTRICT JUDGE 12

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