Summary
holding that "Plaintiff waived any right he may have had to an in-person hearing when he refused to go forward."
Summary of this case from Boyd v. U.S.Opinion
Civil Action No. 0:02-2677-17BD
April 9, 2003
REPORT AND RECOMMENDATION
This action was filed by the Plaintiff, pro se, contesting a civil penalty imposed under § 6702 of the Internal Revenue Code. The Defendant filed a motion to dismiss pursuant to Rule 12(b)(6), Fed.R.Civ.P. on January 27, 2003. As the Plaintiff is proceeding pro se, a Roseboro order was entered by the Court on January 28, 2003, advising Plaintiff of the importance of a motion to dismiss and of the necessity for him to file an adequate response. Plaintiff was specifically advised that if he failed to adequately respond, the Defendant's motion may be granted, thereby ending his case. Plaintiff thereafter filed a reply to the motion to dismiss, with attachments, on March 3, 2003. Defendant's motion is now before the Court for disposition.
This case was automatically referred to the undersigned United States Magistrate Judge for all pretrial proceedings pursuant to the provisions of 28 U.S.C. § 636 (b)(1)(A) and (B) and Local Rule 73.02(B)(2)(e), D.S.C. The Defendant has filed a motion to dismiss. As this is a dispositive motion, this Report and Recommendation is entered for review by the Court.
Plaintiff has filed this action as an appeal from the Internal Revenue Service's (IRS) decision to assess a five hundred ($500.00) dollar frivolous return penalty for Plaintiff having allegedly filed a frivolous tax return. The following information is deemed to be undisputed.
Undisputed information for purposes of this Report and Recommendation is information provided by the Plaintiff in his verified Complaint, and in the documentation attached thereto. While Defendant's counsel also sets forth numerous purported statements of fact in the memorandum attached to Defendant's motion to dismiss, she has provided no affidavits or exhibits to support these assertions of fact. Statements and arguments by counsel in a memorandum are not evidence, and the undersigned cannot therefore assume the truth of the factual assertions set forth in Defendant's memorandum for purposes of evaluation of Defendant's 12(b) motion to dismiss. See Estrella v. Bryant, 682 F.2d 814, 819 (9th Cir. 1982) [legal memoranda are not evidence and do not create issues of fact]; see also Gans v. Gray, 612 F. Supp. 608, 619 (E.D. Pa. 1985) [mere statements made in counsel's briefs are not evidence for the purpose of supporting or opposing a motion for summary judgment]; cf Martin v. Cavalier Hotel Corp., 48 F.3d 1343, 1358 (4th Cir. 1995) [counsel's statements are not evidence].
The IRS assessed a frivolous return penalty against the Plaintiff with respect to his tax return for the year 1999. The amount of the assessed penalty was five hundred ($500.00) dollars. 26 U.S.C. § 6330 (d). After receiving notice from the IRS of its intent to levy on this penalty, Plaintiff timely requested a collection due process hearing. See 26 U.S.C. § 6330 (d). Once a collection due process hearing is requested, it must be held by the IRS Appeals Office. 26 U.S.C. § 6330 (d). During a telephone conference on May 2, 2002 between Plaintiff and an appeals officer, Plaintiff informed the appeals officer that he would be making a recording of the hearing. Plaintiff states in his verified Complaint that the appeals officer informed him that that would be fine as long as Plaintiff notified her of his intentions in advance. However, Plaintiff was thereafter informed in a letter dated May 15, 2002, that "Appeals has recently changed the policy regarding taping of conferences and such taping will no longer be allowed." See Exhibit C to Plaintiffs Complaint.
In this Circuit, verified complaints by pro se plaintiffs are to be considered as affidavits and may, standing alone, defeat a dispositive motion when the allegations contained therein are based on personal knowledge. Williams v. Griffin, 952 F.2d 820, 823 (4th Cir. 1991). Plaintiff has filed a verified Complaint. Therefore, the undersigned has considered the factual allegations set forth in the verified Complaint in issuing a recommendation in this case.
Plaintiff questioned the IRS.s authority to prohibit him from recording his hearing in a letter dated May 21, 2002. Exhibit D to Plaintiffs Complaint. In a letter dated May 30, 2002, the Appeals Officer reiterated the IRS's position that Plaintiff would not be allowed to record his hearing, and as part of this response provided Plaintiff with a copy of a memorandum dated May 2, 2002 which set forth the IRS's policy regarding recording of appeal hearings. See Exhibit E to Plaintiff's Complaint. Nevertheless, when Plaintiff appeared for his hearing on June 28, 2002, he reiterated his demand that he be allowed to record his appeal hearing, a demand which was refused by representatives of the Appeals Office. As a consequence, the hearing did not go forward, and on July 16, 2002 the Appeals Office issued a notice of determination upholding the levy for the frivolous return penalty. See Exhibit A to Plaintiffs Complaint.
Plaintiff thereafter timely filed his Complaint in the United States District Court seeking review of this decision. 26 U.S.C. § 6330 (d). In his Complaint, Plaintiff alleges that the Defendant did not have the authority to prohibit him from recording his appeal hearing, and that because he had requested an appeal hearing, the Defendant did not have the right to issue a ruling upholding the levy without affording him a hearing.
Discission
When considering a motion under Rule 12(b), the Court is required to "accept the allegations in the complaint as true, and draw all reasonable factual inferences in favor of the Plaintiff. [The motion can be granted] only if no relief could be granted under any set of facts that could be proved." Southmark Prime Plus L.P. v. Falzone, 776 F. Supp. 888, 890 (D.Del. 1991); (quoting Turbe v. Government of Virgin Islands, 938 F.2d 427, 428 (3rd Cir. 1991)). Additionally, the Federal Court is charged with liberally construing a complaint filed by a pro se litigant to allow the development of a potentially meritorious case. See Cruz v. Beto, 405 U.S. 319 (1972); Haines v. Kerner, 404 U.S. 519 (1972). As the Plaintiff is proceeding pro se, his pleadings are considered pursuant to this liberal standard. However, even though summary dismissal of a case pursuant to Rule 12 is disfavored, Cardio-Medical Associates Ltd. V. Crozer-Chester Medical Center, 536 F. Supp. 1065, 1072 (E.D.Pa. 1982), the requirement of liberal construction does not mean that the Court can ignore a clear failure in the pleadings to allege facts which set forth a Federal claim, nor can the Court assume the existence of a genuine issue of material fact where none exists. Weller v. Department of Social Services, 901 F.2d 387 (4th Cir. 1990).
As noted, Plaintiff has filed this case pursuant to 26 U.S.C. § 6330 (d). In reviewing a case under this statute, the decision of the Appeals Officer is reviewed by the District Court de novo where the validity of the Plaintiffs underlying tax liability is at issue, However, where the validity of the tax liability is not itself part of the appeal, the Appeals Officer's determination as to the appropriateness of the collection activity is reviewed using an abuse of discretion standard of review. MRCA Information Services v. United States, 145 F. Supp.2d 194, 199 (D.Conn. 2000). Here, the issue Plaintiff appears to present in his Complaint does not concern the validity of the Plaintiffs underlying tax liability, but whether Plaintiff was improperly not allowed to record his appeal hearing, and whether the Defendant had the right to issue a ruling upholding the levy without affording him a hearing. Hence, the undersigned has reviewed these issues under the abuse of discretion standard of review. See Dean v. United States of America, No. 01-430, 2002 WL 31662299 at *4 (N.D.Fla. 2002).
Giving Plaintiff's Complaint the liberal construction to which it is entitled, and considering all facts set forth therein in the light most favorable to the Plaintiff, the undersigned does not find that the hearing officer abused her discretion in not allowing Plaintiff to record his appeal hearing. While Plaintiff argues in his Complaint that the hearing officer did not have the right to prohibit him from recording the appeals hearing, this contention is without merit. See Henry v. Bronstein, No. 02-2790, 2002 WL 31662363 (D.Md. September 12, 2002) ["[Plaintiff] admits that he refused to comply with the procedural rules in place for the hearing prohibiting tape recording. Refusal to comply with the rules for the hearing is tantamount to a waiver of his request for that hearing. In short, [Plaintiff] cannot assert that his rights to due process were denied when the hearing which he claims he was entitled to was waived."]. Further, to the extent Plaintiff contends that he was entitled to a hearing before the Appeals Officer, and that the decision on his appeal could not just be made on the record, this contention is also without merit. Dean, 2002 WL 31662299, at *3-4 ["The hearing does not have to be an in person meeting between an Appeals Officer and a taxpayer (but it can be) . . . It can consist of any written correspondence between the parties regarding the substantial issues."]; 26 C.F.R. § 301.6330-1(d)(2) QA D6 (2002). In any event, underHenry, Plaintiff waived any right he may have had to an in-person hearing when he refused to go forward.
However, while the Appeals Officer may have been justified in not proceeding with the hearing, Plaintiff also appears to allege that the administrative record alone is inadequate to sustain the hearing officer's decision, citing to the case of Mesa Oil, Inc. v. United States, 00:851, 2000 WL 1745280 (D.Col. Nov. 21, 2000). After careful review of the material before this Court, the undersigned is constrained to agree. In Mesa Oil, the court held that in order for a sufficient record to be before the court for review, "there must be enough information contained in the documentation created by the IRS for a court to draw conclusions about statutory compliance and whether the AO abused his or her discretion." Mesa Oil, at *8. The court held in Mesa Oil that the record was not sufficiently complete to enable a review of the determination, finding that the determination "gave no statement of facts, no legal analysis, and no explanation of how or why the proposed levy balanced the need for levy with Mesa's interests." Mesa Oil, at *4.
Here, the exhibits provided by the Plaintiff as attachments to his Complaint are not sufficient for this Court to draw conclusions about the Defendant's statutory compliance and whether the Appeals Officer made a proper ruling. RCA Corp. v. United States, 664 F.2d 881, 886 (2d Cir. 1981) ["the task of [this] Court . . . [is] to determine whether their is an adequate basis in law for the [officer's] conclusion. . . ."]; Kitchen Cabinets, Inc. v. United States, 2001 WL 237384, *3 (N.D.Texas 2001) [determination upheld where the evidence before the court showed that the appeals officer did not abuse his discretion in upholding a levy]. Plaintiffs exhibits show that the notice of determination dated July 16, 2002 included an attachment specifically setting forth the applicable law and administrative procedures followed in Plaintiffs case. This attachment also contains a section titled "Relevant Issues Presented by the Taxpayer", pointing out the code section which grants the Internal Revenue Service the authority to levy a five hundred ($500.00) dollar penalty for filing a frivolous tax return. See also 26 U.S.C. § 6702. However, nowhere in this determination is the basis for assessing Plaintiff this five hundred ($500.00) dollar penalty set forth.
Of course, Defendant's counsel thoroughly reviewed the Defendant's rationale for assessing Plaintiff this penalty in the memorandum filed in support of Defendant's motion to dismiss, which rationale would appear to be sufficient justification for the decision. However, as previously noted, statements and arguments set forth in Defendant's memorandum do not constitute evidence in this case. Estrella, 682 F.2d at 819; Gans, 612 F. Supp. at 619. Rather, the applicable caselaw requires that this Court base its decision on the record provided, which record must contain "enough information . . . for a court to draw conclusions about statutory compliance and whether the [Appeals Officer] abused his or her discretion." Mesa Oil, at *8. No documentation from the IRS has been provided to the Court to establish the justification for the Defendant's decision, nor do the exhibits provided by the Plaintiff, or Plaintiff's own assertions of fact in his verified Complaint, do so. Therefore, the undersigned is unable to find that the Appeals Officer did not commit an abuse of discretion in rendering her decision, or that "no relief could be granted to the Plaintiff under any set of facts that could be proved;"Falzone, 776 F. Supp. at 890; MRCA Information Services, 145 F. Supp.2d at 199; and Defendant's motion to dismiss should be denied.
At least one court has held that the $500.00 frivolous filing penalty is itself a "tax", and that any review of an Appeals Officer's decision to levy this penalty is therefore reviewable under the de novo standard. Dean, 2002 WL 31662299, at *3, n. 5. However, even assuming this to be the case, Defendant's motion to dismiss must still be denied for the same reasons previously stated, even if the issue is consideredde novo.
Conclusion
Based on the foregoing, it is recommended that the Defendant's Rule 12 motion to dismiss be denied. This recommendation is without prejudice to the Defendant's right to seek the upholding of the administrative decision based on a proper record and documentation being filed with the Court.The parties are referred to the Notice Page attached hereto.
Notice of Right to File Objections to Magistrate Judge's Report and Recommendation The Serious Consequences of a Failure to Do So
The parties are hereby notified that any objections to the attached Report and Recommendation (or Order and Recommendation) must be filed within ten (10) days of the date of its riling. 28 U.S.C. § 636 and Fed.R.Civ. p. 72(b). The time calculation of this ten-day period excludes weekends and holidays and provides for an additional three days for riling by mail. Fed.R.Civ.P.6. Based thereon, this Report and Recommendation, any objections thereto, and the case file will be delivered to a United States District Judge fourteen (14) days after this Report and Recommendation Is filed. Advance Coating Technology, Inc. v. LEP Chemical, Ltd., 142 F.R.D. 91, 94 n. 3 (S.D.N.Y. 1992). A magistrate judge makes only a recommendation, and the authority to make a final determination in this case rests with the United States District Judge. See Mathews v. Weber, 423 U.S. 261, 270-271 (1976); and Estrada v. Witkowskl, 816 F. Supp. 408, 410 (D.S.C. 1993).
During the ten-day period, but not thereafter, a party must file with the Clerk of Court specific, written objections to the Report and Recommendation, If he wishes the United States District Judge to consider any objections. Any written objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. Failure to file written objections shall constitute a waiver of a party's right to further judicial review, including appellate review, if the recommendation is accepted by the United States District Judge. See United States v. Schronce, 727 F.2d 91, 94 n. 4 (4th Cir.), cert. denied, Schronce v. United States 467 U.S. 1208 (1984); and Wright v. Collins, 766 F.2d 841, 845-47 nn. 1-3 (4th Cir. 1985). Moreover, if a party riles specific objections to a portion of a magistrate judge's Report and Recommendation, but does not file specific objections to other portions of the Report and Recommendation, that party waives appellate review of the portions of the magistrate judge's Report and Recommendation to which he did not object. In other words, a party's failure to object to one issue in a magistrate judge's Report and Recommendation precludes that party from subsequently raising that issue on appeal, even if objections are filed on other issues. Howard v. Secretary of HHS, 932 F.2d 505, 508-509 (6th Cir. 1991). See also Praylow v. Martin, 761 F.2d 179, 180 n. 1 (4th Cir.) (party precluded from raising on appeal factual issue to which it did not object in the district court), cert. denied, 474 U.S. 1009 (1985). InHoward, supra, the Court stated that general, non-specific objections are not sufficient:
A general objection to the entirety of the [magistrate judge's] report has the same effects as would a failure to object. The district court's attention is not focused on any specific issues for review, thereby making the initial reference to the [magistrate judge] useless. * * * This duplication of time and effort wastes judicial resources rather than saving them, and runs contrary to the purposes of the Magistrates Act. * * * We would hardly countenance an appellant's brief simply objecting to the district court's determination without explaining the source of the error.Accord Lockert v. Faulkner, 843 F.2d 1015, 1017-19 (7th Cir. 1988), where the Court held that the appellant, who proceeded pro se in the district court, was barred from raising issues on appeal that he did not specifically raise in his objections to the district court:
Just as a complaint stating only 'i complain' states no claim, an objection stating only 'I object' preserves no issue for review. * * * A district judge should not have to guess what arguments an objecting party depends on when reviewing a (magistrate Judge'sJ report.See also Branch v. Martin, 886 F.2d 1043, 1046 (8th Cir. 1989) ("no de novo review if objections are untimely or general"), which involved a pro se litigant; and Goney v. Clark, 749 F.2d 5, 7 n. 1 (3rd. Cir. 1984) ("plaintiff's objections lacked the specificity to trigger de novo review"). This notice, hereby, apprises the parties of the consequences of a failure to file specific, written objections. See Wright, supra,; and Small v. Secretary of HHS, 892 F.2d 15, 16 (2nd Cir. 1989). Filing by mail pursuant to Fed.R.Civ.P. 5 may be accomplished by mailing addressed as follows:
Larry W. Propes, Clerk United States District Court 1845 Assembly Street Columbia, South Carolina 29201