Opinion
No. 2:04cv01851-PHX-MHM.
July 6, 2005
ORDER
Plaintiff, Charlotte Broderick, proceeding pro se, filed this complaint in the United States District Court in the District of Arizona seeking "judicial review of a determination by the Defendants, [United States of America], from a collection due process hearing ("CDPH") under the provisions of 26 U.S.C. § 6330." (Doc. no. 1, Complaint ¶¶ 1, 2). Plaintiff contends that the Defendant refused to conduct a face to face hearing, the statutory default according to the Plaintiff. (id. at ¶¶ 8-10). Plaintiff further contends that substituting a face to face hearing with a telephone hearing should only be conducted at the request of the Plaintiff; however, the Defendant, deciding in advance that Plaintiff's claims were frivolous, determined that the Plaintiff was not entitled to a face to face hearing. (id. at ¶¶ 9-10). Plaintiff contends, that despite her objection to a telephone hearing, the Hearing Officer conducted an ex parte hearing on June 30, 2004 and issued a determination letter on August 5, 2004 stating that the Plaintiff declined the telephone hearing. (id. at ¶ 11). Plaintiff, however, asserts that she did not decline the telephone hearing, but, rather, objected to a change to that forum. (id. at ¶ 11).
Defendant has filed a motion to dismiss Plaintiff's Complaint, claiming that this Court lacks subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). (Doc. no. 7-9). Plaintiff has filed a response to Defendant's motion to dismiss and Defendant has filed a reply. (Doc. no. 12, 13). The Court has considered the parties' arguments and enters the following Order.
A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). When a question of the district court's jurisdiction is raised the court may inquire into the facts as they exist and may review extrinsic evidence to resolve factual disputes concerning the existence of jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1998). "Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy the burden of establishing subject matter jurisdiction." Savage v. Glendale Union High School, Distr. No. 205, 343 F.3d 1036, 1040 n. 2 (9th Cir. 2003) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989)).
In support of its motion to dismiss, Defendant has submitted the Declaration of John B. Snyder, III, Trial Attorney, Tax Division, Department of Justice. (Doc. No. 9). Mr. Snyder has attached to his Declaration documents relevant to the IRS appeals determination concerning Plaintiff's income tax liabilities. (Doc. No. 9, Exhibit A). The Court may consider this information on its determination of jurisdiction. On August 5, 2004, the IRS notified Plaintiff in a "Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330," sent via certified mail, that the IRS's decision, "that a levy by the Government is appropriate as it balances the Government's need to efficiently collect these tax underpayments," had been upheld. (id.). The "Summary of Determination," included with the letter, indicated that the matter at issue concerned tax underpayments for the years 1995 through 1997. (id.). The "Summary of Determination" explained that all applicable laws and procedures had been followed, that the Plaintiff had requested and was offered a CDPH, that a face to face hearing was not appropriate because Plaintiff did not raise any issues relevant to paying her tax liability, that Plaintiff declined a telephone hearing scheduled by the Settlement Officer, and that disputes to this determination must be filed with the United States Tax Court. (id.).
On September 3, 2004, Plaintiff filed her Complaint in this Court seeking review of the appeals determination. (Doc. no. 1, Complaint ¶ 1). Plaintiff indicates in the Complaint that this Court has jurisdiction and not the United States Tax Court because "the underlying tax liability is not in dispute and no deficiency procedures are otherwise implicated determining liability." (id. at ¶ 2).
Defendant contends that "when the proposed collection action at issue in a [CDPH] involves an income tax liability, as it does in this case, judicial review over any determination made lies with the United States Tax Court, not the District Court." (Doc. no. 8, p. 3). In support of this contention, Defendant relies on 26 U.S.C. § 6330(d)(1), a specific Treasury Regulation, which is quoted in Defendant's motion to dismiss, and Krugman v. Commissioner, 112 T.C. 230, n. 6 (1999). Defendant also relies on Bartschi v. Tracy, No. 00CV1548, 2001 WL 1338795, at *3 (D. Ariz. Sept. 5, 2001), to support its contention.
Plaintiff, however, asserts that this is a case of first impression in this Circuit and "in order to resolve the matter, it is necessary to determine whether the claims involving the alleged income tax assessments involve the underlying tax liability." (Doc. no. 12, p. 2). Plaintiff views 26 U.S.C. § 6330(c)(2)(b) as a section which defines the term "underlying tax liability." (id.). Plaintiff reasons that "underlying tax liability" only involves how much is owed and is separate from any procedural aspects of 26 U.S.C. § 6330. (id.). Applying this definition to 26 U.S.C. § 6330, and using techniques of statutory construction, Plaintiff contends that since she "is not challenging how much is owed, and is only challenging the procedural regularity, the District Court and not the Tax Court has jurisdiction." (id. at p. 4).
Defendant, in response to Plaintiff's argument, contends that this is not a case of first impression as there are numerous cases in the Ninth Circuit dealing with this same issue. (Doc. no. 13, p. 2). Defendant has referred the Court toBartschi, 2001 WL 1338795, to support this claim. Furthermore, Defendant contends that Plaintiff is "confus[ing] the scope of the [CDPH] with the limits of the Court's jurisdiction to review [CDPH]." (Doc. no. 13, p. 2).
In True v. Commissioner, 108 F. Supp. 2d 1361, 1364 (M.D. Fla. 2000), the district court held that a "claimant is required to bring a § 6330 appeal in the Tax Court, so long as the Tax Court has jurisdiction of the underlying tax liability." Because the tax liabilities in True were income tax liabilities, the district court ruled that it lacked jurisdiction and that the Tax Court had jurisdiction.
Similarly, in the instant case, the underlying tax liabilities involve income tax liabilities. Therefore, the Tax Court has jurisdiction over the judicial review sought by the Plaintiff. Such a ruling is in accordance with other decisions made in this District.
In Bartschi, the district court held that jurisdiction, under 26 U.S.C. § 6330, "is dependent upon the underlying tax liability, not whether the claims are characterized as procedural or substantive. 2001 WL 1338795, at *3. When the IRS's proposed levy involves an underlying income tax liability, judicial review over a determination made in a [CDPH] lies in the United States Tax Court, not the district court." Id. The district court inBartschi granted a motion to dismiss for lack of subject matter jurisdiction because the fact that the Plaintiff was challenging a procedural regularity of the assessment, and not the underlying tax liability, did not provide jurisdiction to the district court. Id.
Similarly, in this case, the Plaintiff claims that she is only challenging a "procedural regularity." (Doc. no. 12, Response pg. 4). However, a procedural argument does not provide for jurisdiction outside of the United States Tax Court for a challenge to an IRS assessment under 26 U.S.C. § 6330.
And, while Plaintiff contends that her interpretation of 26 U.S.C. § 6330 (Doc. no. 12, Response pg. 4) is correct, other case law does not support her argument:
While it is arguable that Congress only intended, while drafting § 6330, to grant the United States Tax Court jurisdiction over the calculus of IRS assessments regarding income tax liability, . . . following such a rationale would do no more than allow a plaintiff a second opportunity to litigate United States Tax Court decisions by simply redrafting their complaints to allege that it was the procedure followed and not the determination of the IRS that caused the injury. Generally accepted notions of res judicata cannot be so easily circumvented, no matter how careful the word-smithing.Sepp v. Tracy, No. CIV.00-1724-PHX-SMM, 2002 WL 741644, at *2 (D. Ariz. Mar 4, 2002).
Pursuant to 26 U.S.C. § 6330(d)(1), where, as here, a court determines that the appeal was to an incorrect court, the appeal may be filed with the correct court within 30 days after the court's determination.
Accordingly,
IT IS ORDERED that Defendant's motion to dismiss Plaintiff's Complaint for lack of subject matter jurisdiction (Doc. no. 7) is granted.
IT IS FURTHER ORDERED that Plaintiff's Complaint and action are dismissed for lack of subject matter jurisdiction.
IT IS FURTHER ORDERED that pursuant to 26 U.S.C. § 6330, Plaintiff shall have 30 days from the filing date of this Order to file her appeal with the appropriate court.