1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 JAY A. GREEK, No. 2:20-cv-00278-KJM-KJN PS 12 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS BUT WITH LEAVE 13 v. TO AMEND 14 COMMISSIONER OF THE INTERNAL (ECF No. 10) REVENUE, 15 Defendant. 16
17 18 Presently before the court is defendant’s motion to dismiss plaintiff’s complaint. (ECF 19 No. 10.) Plaintiff filed an opposition. (ECF No. 13.) At the hearing on defendant’s motion, 20 plaintiff, who represents himself pro se in this matter, appeared and defendant appeared by 21 counsel, Nithya Senra and Isaac Hoening. For the reasons discussed below, defendant’s motion 22 to dismiss is GRANTED, but plaintiff is permitted leave to file an amended complaint. 23 I. BACKGROUND 24 The factual allegations contained in plaintiff’s complaint are difficult to decipher, but 25 plaintiff generally alleges the following. Plaintiff challenged the IRS’s request to have him file 26 taxes for the years 2014 through 2017. (ECF No. 1 at 2.) The IRS garnished plaintiff’s paycheck 27 (presumably due to taxes owed from 2014-2017). (Id.) Plaintiff allegedly never received a notice 28 of deficiency or a notice of determination regarding the amounts owed. (ECF No. 1 at 3.) 1 Plaintiff filed an administrative appeal, but did not attach the same, which was allegedly 2 favorable to him. (See ECF No. 1 at 2 (noting he received an administrative determination, which 3 stated “the garnishments of his checks would stop within 30 days and he has the letter”).) 4 Presumably these garnishments did not stop. Plaintiff prays the court review the IRS’s findings 5 and terminate the present garnishment. (ECF No. 1 at 8.) Similarly, in his opposition, plaintiff 6 states he will dismiss the present action if the United States “certify[ies] that they have removed 7 or will remove . . . the offending reports and information.” (ECF No. 13 at 3.) 8 Plaintiff’s argument, explained more fully in his opposition to defendant’s motion to 9 dismiss, appears to be that because he never signed a contract with the United States, the 10 Government has no authority to impose or collect taxes from him. (ECF No. 13 at 3 (plaintiff 11 would require the “strictest proofs of a contract”); 5 (defendant is unable to prove it “[is] a holder- 12 in-due course of any contract” between it and plaintiff); ECF No. 1 at 6 (plaintiff “is not 13 mentioned by name or in express or expressly implied contract”).) Plaintiff also argues his 14 method of accounting was incorrectly rejected by the IRS (ECF No. 1 at 1 (stating his “self- 15 assessment tall[ies] to not only zero” but perhaps below zero)), and that the Government violated 16 the Privacy Act, presumably due to listing plaintiff as a delinquent taxpayer. (See ECF No. 1 at 17 7.) 18 Plaintiff filed the present action on February 6, 2020, and the United States filed a timely 19 motion to dismiss, which is presently before the court. 20 II. LEGAL STANDARD 21 A motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) or 12(h)(3) 22 challenges the court’s subject matter jurisdiction. Federal district courts are courts of limited 23 jurisdiction that “may not grant relief absent a constitutional or valid statutory grant of 24 jurisdiction,” and “[a] federal court is presumed to lack jurisdiction in a particular case unless the 25 contrary affirmatively appears.” A–Z Int’l v. Phillips, 323 F.3d 1141, 1145 (9th Cir.2003) 26 (citations and quotation marks omitted); see also Fed. R. Civ. P. 12(h)(3) (“If the court determines 27 at any time that it lacks subject matter jurisdiction, the court must dismiss the action.”). 28 When a party brings a facial attack to subject matter jurisdiction, that party contends that the 1 allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate 2 the existence of jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 3 2004). In a Rule 12(b)(1) motion of this type, the plaintiff is entitled to safeguards similar to 4 those applicable when a Rule 12(b)(6) motion is made. See Sea Vessel Inc. v. Reyes, 23 F.3d 5 345, 347 (11th Cir. 1994); Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). The 6 factual allegations of the complaint are presumed to be true, and the motion is granted only if the 7 plaintiff fails to allege an element necessary for subject matter jurisdiction. Savage v. Glendale 8 Union High Sch. Dist. No. 205, 343 F.3d 1036, 1039 n.1 (9th Cir. 2003); Miranda v. Reno, 238 9 F.3d 1156, 1157 n.1 (9th Cir. 2001). Nonetheless, district courts “may review evidence beyond 10 the complaint without converting the motion to dismiss into a motion for summary judgment” 11 when resolving a facial attack. Safe Air for Everyone, 373 F.3d at 1039. 12 “Sovereign immunity is an important limitation on the subject matter jurisdiction of 13 federal courts. The United States, as sovereign, can only be sued to the extent it has waived its 14 sovereign immunity. The Supreme Court has frequently held that a waiver of sovereign 15 immunity is to be strictly construed, in terms of its scope, in favor of the sovereign.” Vacek v. 16 United States Postal Serv., 447 F.3d 1248, 1250 (9th Cir. 2006) (internal citations and 17 punctuation marks omitted). “The bar of sovereign immunity cannot be avoided merely by 18 naming officers and employees of the United States as defendants.” Hutchinson v. United States, 19 677 F.2d 1322, 1327 (9th Cir. 1982). 20 III. DISCUSSION 21 The Government raises multiple arguments for dismissal and, in the alternative, requests 22 that plaintiff file a more definite statement pursuant to Federal Rule of Civil Procedure 12(e). As 23 outlined below, defendant’s motion is GRANTED. However, plaintiff is granted leave to file an 24 amended complaint. 25 A. Improperly named defendant 26 As an initial matter, the United States should be the sole defendant in this tax-dispute 27 action. The IRS is a federal agency within the federal government, which cannot be sued except 28 as authorized by Congress. Blackmar v. Guerre, 342 U.S. 512, 514 (1952). Where taxpayers are 1 authorized to sue regarding matters related to the IRS, the United States is generally the proper 2 party defendant. Devries v. I.R.S., 359 F. Supp. 2d 988, 991 (E.D. Cal. 2005). While plaintiff 3 disputes this point, he offers no authority contrary to this general rule. Accordingly, the 4 Commissioner of the Internal Revenue is dismissed from this case and the United States is 5 substituted as the sole defendant in this action. 6 B. Deficiency and determination notices should be before the Tax Court 7 The heart of plaintiff’s complaint appears to be concerning issues that should be before 8 the United States Tax Court,1 as he is attempting to challenge a tax deficiency notice.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 JAY A. GREEK, No. 2:20-cv-00278-KJM-KJN PS 12 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS BUT WITH LEAVE 13 v. TO AMEND 14 COMMISSIONER OF THE INTERNAL (ECF No. 10) REVENUE, 15 Defendant. 16
17 18 Presently before the court is defendant’s motion to dismiss plaintiff’s complaint. (ECF 19 No. 10.) Plaintiff filed an opposition. (ECF No. 13.) At the hearing on defendant’s motion, 20 plaintiff, who represents himself pro se in this matter, appeared and defendant appeared by 21 counsel, Nithya Senra and Isaac Hoening. For the reasons discussed below, defendant’s motion 22 to dismiss is GRANTED, but plaintiff is permitted leave to file an amended complaint. 23 I. BACKGROUND 24 The factual allegations contained in plaintiff’s complaint are difficult to decipher, but 25 plaintiff generally alleges the following. Plaintiff challenged the IRS’s request to have him file 26 taxes for the years 2014 through 2017. (ECF No. 1 at 2.) The IRS garnished plaintiff’s paycheck 27 (presumably due to taxes owed from 2014-2017). (Id.) Plaintiff allegedly never received a notice 28 of deficiency or a notice of determination regarding the amounts owed. (ECF No. 1 at 3.) 1 Plaintiff filed an administrative appeal, but did not attach the same, which was allegedly 2 favorable to him. (See ECF No. 1 at 2 (noting he received an administrative determination, which 3 stated “the garnishments of his checks would stop within 30 days and he has the letter”).) 4 Presumably these garnishments did not stop. Plaintiff prays the court review the IRS’s findings 5 and terminate the present garnishment. (ECF No. 1 at 8.) Similarly, in his opposition, plaintiff 6 states he will dismiss the present action if the United States “certify[ies] that they have removed 7 or will remove . . . the offending reports and information.” (ECF No. 13 at 3.) 8 Plaintiff’s argument, explained more fully in his opposition to defendant’s motion to 9 dismiss, appears to be that because he never signed a contract with the United States, the 10 Government has no authority to impose or collect taxes from him. (ECF No. 13 at 3 (plaintiff 11 would require the “strictest proofs of a contract”); 5 (defendant is unable to prove it “[is] a holder- 12 in-due course of any contract” between it and plaintiff); ECF No. 1 at 6 (plaintiff “is not 13 mentioned by name or in express or expressly implied contract”).) Plaintiff also argues his 14 method of accounting was incorrectly rejected by the IRS (ECF No. 1 at 1 (stating his “self- 15 assessment tall[ies] to not only zero” but perhaps below zero)), and that the Government violated 16 the Privacy Act, presumably due to listing plaintiff as a delinquent taxpayer. (See ECF No. 1 at 17 7.) 18 Plaintiff filed the present action on February 6, 2020, and the United States filed a timely 19 motion to dismiss, which is presently before the court. 20 II. LEGAL STANDARD 21 A motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) or 12(h)(3) 22 challenges the court’s subject matter jurisdiction. Federal district courts are courts of limited 23 jurisdiction that “may not grant relief absent a constitutional or valid statutory grant of 24 jurisdiction,” and “[a] federal court is presumed to lack jurisdiction in a particular case unless the 25 contrary affirmatively appears.” A–Z Int’l v. Phillips, 323 F.3d 1141, 1145 (9th Cir.2003) 26 (citations and quotation marks omitted); see also Fed. R. Civ. P. 12(h)(3) (“If the court determines 27 at any time that it lacks subject matter jurisdiction, the court must dismiss the action.”). 28 When a party brings a facial attack to subject matter jurisdiction, that party contends that the 1 allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate 2 the existence of jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 3 2004). In a Rule 12(b)(1) motion of this type, the plaintiff is entitled to safeguards similar to 4 those applicable when a Rule 12(b)(6) motion is made. See Sea Vessel Inc. v. Reyes, 23 F.3d 5 345, 347 (11th Cir. 1994); Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). The 6 factual allegations of the complaint are presumed to be true, and the motion is granted only if the 7 plaintiff fails to allege an element necessary for subject matter jurisdiction. Savage v. Glendale 8 Union High Sch. Dist. No. 205, 343 F.3d 1036, 1039 n.1 (9th Cir. 2003); Miranda v. Reno, 238 9 F.3d 1156, 1157 n.1 (9th Cir. 2001). Nonetheless, district courts “may review evidence beyond 10 the complaint without converting the motion to dismiss into a motion for summary judgment” 11 when resolving a facial attack. Safe Air for Everyone, 373 F.3d at 1039. 12 “Sovereign immunity is an important limitation on the subject matter jurisdiction of 13 federal courts. The United States, as sovereign, can only be sued to the extent it has waived its 14 sovereign immunity. The Supreme Court has frequently held that a waiver of sovereign 15 immunity is to be strictly construed, in terms of its scope, in favor of the sovereign.” Vacek v. 16 United States Postal Serv., 447 F.3d 1248, 1250 (9th Cir. 2006) (internal citations and 17 punctuation marks omitted). “The bar of sovereign immunity cannot be avoided merely by 18 naming officers and employees of the United States as defendants.” Hutchinson v. United States, 19 677 F.2d 1322, 1327 (9th Cir. 1982). 20 III. DISCUSSION 21 The Government raises multiple arguments for dismissal and, in the alternative, requests 22 that plaintiff file a more definite statement pursuant to Federal Rule of Civil Procedure 12(e). As 23 outlined below, defendant’s motion is GRANTED. However, plaintiff is granted leave to file an 24 amended complaint. 25 A. Improperly named defendant 26 As an initial matter, the United States should be the sole defendant in this tax-dispute 27 action. The IRS is a federal agency within the federal government, which cannot be sued except 28 as authorized by Congress. Blackmar v. Guerre, 342 U.S. 512, 514 (1952). Where taxpayers are 1 authorized to sue regarding matters related to the IRS, the United States is generally the proper 2 party defendant. Devries v. I.R.S., 359 F. Supp. 2d 988, 991 (E.D. Cal. 2005). While plaintiff 3 disputes this point, he offers no authority contrary to this general rule. Accordingly, the 4 Commissioner of the Internal Revenue is dismissed from this case and the United States is 5 substituted as the sole defendant in this action. 6 B. Deficiency and determination notices should be before the Tax Court 7 The heart of plaintiff’s complaint appears to be concerning issues that should be before 8 the United States Tax Court,1 as he is attempting to challenge a tax deficiency notice. 9 Plaintiff has two options to challenge an alleged deficiency: (a) filing a petition in the Tax Court 10 challenging the deficiency pursuant to 26 U.S.C. § 6213; or (b) paying the tax, applying for a 11 refund credit, and, if the refund is not allowed, suing in a federal district court for recovery of the 12 alleged overpayment. Boyton v. United States, 566 F.2d 50, 52-53 (9th Cir. 1977); accord Byers 13 v. Comm’r, 740 F.3d 668, 671 (D.C. Cir. 2014) 14 Regarding the first option, while the Tax Court has jurisdiction to review notices of 15 deficiency and notices of determination, see 26 U.S.C. § 6213(a), and while federal courts of 16 appeals have jurisdiction to review Tax Court decisions, 26 U.S.C. § 7482, there is no cause of 17 action allowing a taxpayer to directly challenge a notice of deficiency or notice of determination 18 in federal district court. Plaintiff’s sole statement about filing suit with the Tax Court is that the 19 “IRS is exploiting loopholes to prevent review by the tax court.” (ECF No. 1 at 6.) This 20 allegation is clearly insufficient. There is no indication that plaintiff filed anything with the Tax 21 Court or that plaintiff has met the filing deadlines for initiating such a claim, see 26 U.S.C. 22 § 6213(a), and even if he did meet these requirements this court would not be the proper venue 23 for such an appeal, see 26 U.S.C. § 7482. Accordingly, this court does not have jurisdiction to 24 hear plaintiff’s claim challenging the deficiency notice. 25 C. Plaintiff cannot proceed on a claim for a tax refund 26 To the extent plaintiff is seeking a refund, the second option above, this court does not 27 1 The court explicitly does not find or hold that plaintiff has met the timing or jurisdictional 28 requirements to be before the Tax Court based on his present claim. 1 have jurisdiction, as plaintiff has failed to plead that he has paid the tax assessments at issue. In 2 fact, it appears that plaintiff’s complaint asserts the exact opposite. 3 A taxpayer must pay the full amount of an income tax deficiency before he or she may 4 challenge its correctness by filing suit for a refund. Flora v. United States, 357 U.S. 63, 78 5 (1958); Ryskamp v. Comm’r, 797 F.3d 1142, 1151 (D.C. Cir. 2015). Unless a plaintiff complies 6 with this condition precedent, the district court does not have jurisdiction to hear the case. Id. 7 Plaintiff appears to concede that he has not paid the assessment by noting that he believes 8 his assessments should be zero dollars and that he still owes $87,255.76. (See ECF No. 1 at 1.) It 9 is obvious from plaintiff’s complaint, therefore, that plaintiff has not paid the tax deficiencies at 10 issue. Thus, the court lacks subject matter jurisdiction regarding plaintiff’s claim to the extent he 11 alleges that he is entitled to a refund. 12 D. Plaintiff cannot seek damages 13 To the extent plaintiff is seeking damages, he has not satisfied the jurisdictional 14 prerequisite of exhausting administrative remedies. Although Section 7433 provides for a waiver 15 of sovereign immunity in some circumstances, the court must first determine that a taxpayer 16 “exhausted the administrative remedies available to such plaintiff within the Internal Revenue 17 Service.” 26 U.S.C. § 7433(d)(1); Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir. 18 1993). The Ninth Circuit has reaffirmed the principle that under Section 7433 a plaintiff must 19 “allege facts sufficient to show that he pursued an administrative claim before filing his action.” 20 Joseph v. United States, 517 F. App’x 543 (9th Cir. 2013). 21 Plaintiff’s conclusory statement that he filed an administrative complaint “to the point of 22 exhaustion” and letters attached to his complaint that he allegedly sent to the IRS do not cure this 23 deficiency. Accordingly, to the extent plaintiff is alleging damages premised on Section 7433, 24 plaintiff’s complaint fails to contain sufficient facts to give this court jurisdiction. 25 E. Anti-Injunction Act 26 Plaintiff’s complaint is also barred to the extent he is seeking an injunction to prevent the 27 IRS from collecting the taxes allegedly owed. The Anti-Injunction act states that “no suit for the 28 purpose of restraining the assessment or collection of any tax shall be maintained in any court by 1 any person.” 26 U.S.C. § 7421(a). The Act exists to “permit the United States to assess and 2 collect taxes alleged to be due without judicial intervention.” Enochs v. Williams Packing & 3 Nav. Co., 370 U.S. 1, 7 (1962). While there are numerous exceptions to the Act, see 26 U.S.C. 4 § 7421(a), none apply to the facts contained in plaintiff’s complaint, and plaintiff does not direct 5 the court to any exception in his opposition. Thus, plaintiff’s request to enjoin the United States 6 cannot proceed. 7 G. Privacy Act 8 Plaintiff’s passing reference to the Privacy Act2 similarly does not provide this court with 9 jurisdiction. The Privacy Act does not apply to determinations of potential tax liabilities. See 10 England v. Comm’r, 798 F.2d 350, 352 (9th Cir. 1986) (holding that a district court properly 11 dismissed a claim that was premised on the Privacy Act because the claim had “a direct 12 relationship to the determination of . . . his tax liability” and was therefore precluded by 26 U.S.C. 13 § 7852(e)). Plaintiff’s claim under the Privacy Act accordingly fails. 14 IV. CONCLUSION 15 For the reasons set forth above, plaintiff’s complaint is dismissed. However, because it is 16 unclear whether leave to amend would be futile at this stage, the court will allow plaintiff to file 17 an amended complaint if he finds that he can do so in compliance with the authority cited above.3 18 //// 19 //// 20 //// 21 //// 22 //// 23 //// 24 2 Plaintiff does not cite to a statute, but presumably he is referring to 5 U.S.C. § 552a. 25
3 At the hearing on this matter, counsel for defendant informed the court that he would provide 26 plaintiff with the contact information of someone who can inform plaintiff of how much he owes 27 and for what reasons (i.e. back taxes, frivolous returns, etc.). Counsel also stated he could provide plaintiff with an account transcript for the relevant tax years. Counsel shall file a 28 declaration with the court by August 13, 2020, attesting that this information has been provided. MASE 2 VVVMELOCINGIVITINGIN RAVUUTIOCEE LO POMOC MORE TWH er FP OYyet EO
1 Accordingly, IT IS HEREBY ORDERED that: 2 1. Defendant’s motion to dismiss (ECF No. 10) is GRANTED. 3 2. Within 45 days from the date of this order plaintiff shall file an amended 4 | complaint; failure to file an amended complaint within that time will result in a recommendation 5 | of dismissal of this action. 6 3, Defendant shall file a declaration, as outlined above, by August 13, 2020. 7 IT IS SO ORDERED. 8 | Dated: August 3, 2020 Fens Arn 10 KENDALL J. NE UNITED STATES MAGISTRATE JUDGE 11 12 278.lta 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28