Opinion
No. CV-F-02-5597 REC DLB
October 18, 2002
ORDER GRANTING MOTION TO DISMISS.
On September 23, 2002, the court heard defendant's Motion to Dismiss. Upon due consideration of the written and oral arguments of the parties and the record herein, the court grants the motion to dismiss as set forth below.
I. BACKGROUND INFORMATION
On May 21, 2002, Plaintiffs William Fabricius and Catherine Fabricius (together "Fabricius"), proceeding in pro per, filed in this Court their "Complaint for Damages and Request That This Court Set Aside an Invalid Collection Due Process" Determination' Lawlessly Issue Pursuant to 26 U.S.C. § 6330. The United States subsequently filed a motion to dismiss for lack of subject—matter jurisdiction on July 24, 2002. Plaintiffs filed a "motion" for the court not to dismiss along with their opposition brief on September 4, 2002. The United States Reply Memorandum was filed on September 12, 2002. This motion was heard on September 23, 2002. The plaintiffs filed on October 16, 2002 a "Reply Memorandum." Such a filing is neither appropriate nor timely under Local Rule 78-230 and will not be considered by the court.
This is clearly not a motion, but rather an opposition to the motion, and will be treated as such.
II. LEGAL STANDARD
The United States may only be sued to the extent it has consented to suit. United States v. Dalm, 494 U.S. 596 (1990). Any waiver by the United States of its sovereign immunity cannot be implied but must be unequivocally expressed, and such waivers must be strictly construed in favor of the sovereign. Library of Congress v. Shaw, 478 U.S. 310, 318 (1986). Where there is a lack of consent to suit by the United States, dismissal of the action for lack of subject-matter jurisdiction is required. See United States v. Mitchell, 463 U.S. 206 (1983); Gilbert v. Da Grossa, 756 F.2d 1455 (9th Cir. 1985).
III. ANALYSIS
The plaintiffs' arguments are unclear and difficult to follow, both in the complaint and opposition memorandum. They describe their claim as follows: "The entire claim in Plaintiff's [sic] Compliant [sic] against the Internal Revenue Service (IRS) of the United States Government with regards to the tax at issue, [sic] is that the IRS did not follow Applicable Law and Administrative Procedures in open violation of the law that the IRS is required to follow in accordance with IRC § 6330(c)(1)." It appears that the plaintiffs are challenging both the procedures used by the IRS during this process as well as the result of the hearing. For the reasons described below, this Court does not have jurisdiction over such a challenge and therefore the case must be dismissed.
I.R.C. § 6331(a) provides that if any person fails to pay a tax liability within 10 days after notice and demand for payment, the Secretary of the Treasury is authorized to collect such tax by way of a levy upon the person s property. Section 6331(d) provides that at least 30 days prior to proceeding with enforced collection by way of a levy on a person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.
In the Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide protections for taxpayers in tax collection matters. Section 6330 generally provides that the Commissioner cannot proceed with enforced collection by way of levy until the taxpayer has been given notice of and the opportunity for an administrative review of the matter (in the form of an Appeals Office hearing) and, if dissatisfied, the taxpayer may seek judicial review of the administrative determination. See Davis v. Commissioner, 115 T.C. 35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).
Section 6330(a) provides in pertinent part that the Secretary shall notify a person in writing of his or her right to an Appeals Office hearing regarding a notice of intent to levy by mailing such notice by certified or registered mail, return receipt requested, to such person's last known address. Section 6330(a)(2) provides that the prescribed notice shall be provided not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period. Further, section 6330(a)(3)(3) provides that the prescribed notice shall explain that the person has the right to request an Appeals Office hearing during the 30-day period under paragraph (2).
Section 6330(c) prescribes the matters that may be raised by a taxpayer at an Appeals Office hearing. In sum, section 6330(c) provides that a taxpayer may raise collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection, such as an offer-in-compromise. Section 6330(c)(2)(B) provides that the existence and amount of the underlying tax liability can be contested at an Appeals Office hearing only if the taxpayer did not receive a notice of deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute such tax liability. See Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).
The IRS issued a Notice of Intent to Levy to plaintiffs on August 24, 2001. This notice also informed plaintiffs that they had the right to request a Collection Due Process hearing ("CDP") within 30 days of the date of the letter. 26 C.F.R. § 301.6330-1(c). The 30-day period ended on September 23, 2001. Because this was a Sunday, the regulations consider that a CPD request dated the next day, Monday, September 24, 2001 would have been timely. Plaintiffs request was not until September 25, 2001, however, 32 days after the notice. As a consequence of petitioner's failure to make a timely request for an Appeals Office hearing, the Appeals Office was not obliged to conduct the administrative hearing contemplated under section 6330(b). See id. In lieu of the CDP, the IRS granted plaintiffs a so-called "equivalent hearing" on January 23, 2002, as provided under the regulations. 26 C.F.R. § 301.6330-1(i). Although a CDP determination may be appealed under I.R.C. § 6330(d), the regulations state that "equivalent" hearings cannot be appealed in court. 26 C.F.R. § 301.6330-1(i), Q-15/A-15. See also Moorhous v. Commissioner; 116 T.C. 263 (2001), Kennedy v. Commissioner, 116 T.C. 255 (2001). Thus there is no jurisdiction for this Court to hear an appeal of the Decision Letter issued as a result of the "equivalent" hearing. Furthermore, because plaintiffs are contesting the underlying income tax liability, even if the Code permitted an appeal, it could only have been made to the United States Tax Court. See I.R.C. § 6330(d)(1) (appeal must be to Tax Court unless the Tax court does not have jurisdiction over the underlying tax liability).
The IRS issued its Decision Letter on April 10, 2002. Even if this had been a CDP hearing, the appeal, which must be filed within 30 days of the determination, likely would not have been timely because plaintiffs' complaint was not filed until May 21, 2002. See I.R.C. § 6330(d)(1).
A plaintiff who timely files in U.S. District Court instead of Tax Court is allowed to file in the Tax Court after dismissal by the District Court. I.R.C. § 6330(d)(1). This does not appear to help the plaintiffs, however, because they filed in this Court after the applicable 30-day period had ended, therefore a case in the Tax Court would likewise be untimely. Furthermore, this does not apply anyway because plaintiffs have no right to appeal the results of an "equivalent" hearing. See id.
Other courts addressing similar cases, often by pro se plaintiffs, have reached the same result, dismissing for lack of subject matter jurisdiction, generally in unpublished opinions. See, e.g. Van Gaasbeck v. United States, CV-S-01-1004-KJD (PAL), 2002 U.S. Dist. LEXIS 7693 (D. Nev. February 15, 2002); Steidel v. Evans, CV-S-01-1004-KJD (PAL), 2002 U.S. Dist. LEXIS 16000 (W.D. Wa. July 22, 2002); Tornichio v. United States, No. 5:02 CV 0351, 2002 U.S. Dist. LEXIS 7363 (N.D. Ohio March 18, 2002). The Ninth Circuit affirmed a similar ruling, holding that "[t]he district court also correctly concluded that the tax court had exclusive jurisdiction over [plaintiff's] appeal from the adverse ruling in his collection proceedings [under I.R.C. § 6330]." Beech v. Commissioner, No. 01-16986, 2002 U.S. App. LEXIS 11738 (9th Cir. June 13, 2002).
Plaintiffs also raise some other claims which appear to be allegations of due process violations regarding the notice they received and the counting method utilized by the I.R.C. and Treasury Regulations. There is no jurisdiction over these claims. See, e.g. Tornichio v. United States, No. 5:02 CV 0351, 2002 U.S. Dist. LEXIS 7363, at *8 (N.D. Ohio March 18, 2002) ("If [plaintiff] is also seeking to assert a procedural due process claim, this court nonetheless lacks jurisdiction. District courts have no jurisdiction over civil claims challenging taxes unless litigants first pay the assessed tax and then raise these claims in a refund suit."); see also Flora v. United States, 362 U.S. 145 (1960) (holding 28 U.S.C. § 1346(a), which gives district courts jurisdiction over civil suits challenging tax assessments, requires full payment of assessed tax prior to suit)
Thus the United States motion to dismiss for lack of subject matter jurisdiction is granted. As described above, the plaintiffs cannot get relief in any court because they filed their request for a CDP too late. Furthermore, even if they had filed on time, only the U.S. Tax Court would have jurisdiction over the case.
ACCORDINGLY, the defendant's motion to dismiss is granted and the plaintiffs' cause of action is dismissed.