Opinion
No. 5:02-CV-818-BO(3)
March 28, 2003
ORDER
This matter is before the Court on Plaintiff's Application for Preliminary Injunction and Defendants' Motion to Dismiss. For the following reasons, Plaintiff's Application for a Preliminary Injunction will be DENIED, and Defendants' Motion to Dismiss will be GRANTED.
BACKGROUND
Plaintiff Warren R. Follum filed the instant lawsuit on November 4, 2002, seeking a temporary restraining order and preliminary injunction to prevent the Internal Revenue Service ("IRS") from levying on wages he receives from North Carolina State University. The levy arises out of Plaintiff's tax deficiency for the years 1990, 1991, 1992, and 1993. Plaintiff has unsuccessfully challenged this deficiency and the government's collection efforts in three prior proceedings. See Follum v. Comm'r, 72 T.C.M. 1076 (1996), aff'd 128 F.3d 118 (2d. Cir. 1997);Follum v. United States, 98-1 U.S.T.C. ¶ 50, 410 (W.D.N.Y. 1998);Follum v. United States, 89 A.F.T.R.2d 1625 (E.D.N.C. 2001).
According to Defendants, on December 29, 2000, the IRS provided Plaintiff with a due process notice, pursuant to 26 U.S.C. § 6330, that it intended to levy on his wages. Defendants contend that Plaintiff did not contest this wage levy, as permitted under 26 U.S.C. § 6330, and the levy was therefore served on Plaintiff's employer, North Carolina State University. North Carolina State University did not respond to this levy, and a second levy was issued on August 21, 2002. On October 7, 2002, the IRS received a payment of $2,914.30 and has since reduced the amount of the levy to $2,000.00 per pay period.
On August 12, 2002, the IRS provided Plaintiff with due process notice, pursuant to 26 U.S.C. § 6320, that it intended to file a notice of federal tax lien. Plaintiff filed a timely notice of appeal of this federal tax lien, and this appeal is currently pending. Plaintiff's Complaint seeks to enjoin the IRS from levying on his wages until a final decision is rendered in this appeal. A hearing was held in this matter on January 24, 2003 in Raleigh, North Carolina.
ANALYSIS
A. Defendants' Motion to Dismiss
1. Sovereign Immunity
Defendants claim that the United States has not waived sovereign immunity with respect to Plaintiff's claim, and therefore, this action must be dismissed for lack of subject matter jurisdiction. The United States can be sued only when it has expressly consented to suit. See,e.g., United States v. Dalm, 494 U.S. 596, 608 (1990); United States v. Mitchell, 445 U.S. 535, 538 (1980). In this case, Plaintiff claims that sovereign immunity has been waived pursuant to 26 U.S.C. § 6330 (d)(1), which provides for judicial review of the IRS's administrative determination to proceed with a levy following a taxpayer's collection due process appeal. Defendants argue, however, that Plaintiff did not file a timely collection due process appeal with respect to the levy at issue in this action and, therefore, has not satisfied the prerequisites for filing suit under 26 U.S.C. § 6330 (d)(1).
Plaintiff claims that, because he filed a collection due process appeal regarding the federal tax lien, the IRS should have suspended the levy on Plaintiff's wages. However, because the federal tax lien and wage levy are separate and distinct collection tools, Plaintiff's timely appeal of the lien did not constitute an appeal as to the levy. See 26 C.F.R. § 301.6320-1(g)(2) QA-G3 (explaining that "[l]evy actions . . . are not the subject of a [collection due process] hearing under section 6320. The IRS may levy for tax periods and taxes covered by the [collection due process] notice under section 6320 . . . if the [collection due process] requirements under section 6330 for those taxes and periods have been satisfied.").
Because Plaintiff did not request a collection due process hearing with respect to the wage levy, he cannot file suit pursuant to 26 U.S.C. § 6330 (d)(1). Therefore, the United States has not waived sovereign immunity with respect to Plaintiff's claim, and this Court lacks subject matter jurisdiction.
2. Anti-Injunction Act
In a second and related argument, Defendants claim that this Court lacks subject matter jurisdiction because Plaintiff's claim is barred by the Anti-Injunction Act, 26 U.S.C. § 7421 (a). This statute provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." In his request for relief, Plaintiff clearly seeks injunctive relief restraining the collection of a tax. Plaintiff's claim is therefore barred unless it fits within an exception to § 7421(a). Plaintiff contends that, because he is alleging that the Commissioner violated 26 U.S.C. § 6330 (e) by failing to suspend the levy on Plaintiff's wages pending the outcome of the collection due process hearing, his claim falls within one of the statutory exceptions set forth in § 7421(a). However, for the reasons discussed above, Plaintiff cannot maintain an action related to the levy under § 6330 because he failed to request a collection due process hearing with respect to this levy.
Moreover, because Plaintiff is free to pursue the pending due process appeal of the tax lien or pay the tax and sue for a refund pursuant to 26 U.S.C. § 7422, this claim does not fall within the judicially created exceptions to § 7421(a). See South Carolina v. Regan, 465 U.S. 367, 373 (1984) (holding that the Anti-Injunction Act does not bar an action to enjoin the collection or assessment of a tax where Congress has provided no alternative means of challenging the validity of the tax); Enochs v. Williams Packing Navigation Co., 370 U.S. 1, 7 (1962) (concluding that the Anti-Injunction Act does not apply if (1) the government could not prevail under any circumstances and (2) equity jurisdiction otherwise exists).
The Court therefore concludes that the relief sought by Plaintiff is barred by the Anti-Injunction Act. As a result, this Court lacks subject matter jurisdiction and must dismiss Plaintiff's Complaint.
At the January 24, 2003 hearing and in his "Cross-Motion to Deny Respondent's Motion to Dismiss and Preliminary Injunction," Plaintiff claims that he did not receive a collection due process notice regarding the wage levy. A thorough review of the record in this case reveals that Plaintiff failed to assert this argument in his Complaint. Instead, Plaintiff stated that "[b]ecause of a misunderstanding and the timing of the IRS levy action, no action was taken on the levy." Compl. at 2. Accordingly, any arguments relating to the IRS's failure to provide a collection due process notice are not properly before the Court and will not be considered at this time.
B. Plaintiff's Application for Preliminary Injunction
As discussed above, Plaintiff's Complaint must be dismissed due to lack of subject matter jurisdiction. Plaintiff's Application for Preliminary Injunction is therefore denied.
CONCLUSION
For the reasons stated above, Plaintiff's Application for Preliminary Injunction is DENIED and Defendants' Motion to Dismiss is GRANTED. Plaintiff's case is hereby DISMISSED in its entirety.
SO ORDERED.