Opinion
Case No. 5:02 CV 0351.
March 18, 2002
MEMORANDUM OF OPINION AND ORDER
On February 26, 2002, plaintiff pro se Joseph T. Tornichio filed this action against the United States of America. Mr. Tornichio is seeking to set aside a Notice of Determination issued by the Internal Revenue Service (IRS) Appeals Office. Accompanying plaintiff's complaint is a "Motion That The District Court Declare Invalid the IRS `Determination' at Issue." [Dkt. #5] Mr. Tornichio asserts that he is entitled to relief because the IRS Appeals Officer failed to conduct a hearing in accordance with the law. For the reasons stated below, this action is dismissed without prejudice.
On September 25, 2001, plaintiff states he requested a Collection Due Process hearing (CDP) before an IRS Appeals Officer pursuant to 26 U.S.C. § 6330(b). He requested the hearing to determine whether the United States "could legally seize Plaintiff's property pursuant to Internal Revenue Code Section 6331, in connection with a $500 frivolous `penalty' (for each of three years at issue, being 1996, 1997, 1998) which had been imposed by employees of the United States . . . even though no court order, writ of garnishment or writ of attachment had ever been issued by any court of law with respect to Plaintiff's property." (Compl. at 1-2.) Mr. Tornichio also requested that the Appeals Officer furnish the following information:
Title 26, Section 6330 provides, in relevant part, that the IRS may not place a levy on any property of any person unless the Secretary of Treasury ("the Secretary") notifies the person in writing that he is entitled to a hearing before the levy is issued. 26 U.S.C. § 6330(a)(1).
i. verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.
ii. delegation orders from the Secretary delegating authority to those persons who imposed the `frivolous penalty'.
iii. a listing of Treasury Department regulations that allow IRS employees to impose `frivolous penalties'.
iv. documented proof that the Secretary authorized the collection action and that the Attorney General or his delegate directed that collection action commence.
(Compl. at 3.) Plaintiff also advised the Appeals Officer that he intended to challenge the "`existence of the underlying liability' of the tax that generated the `frivolous penalty'" (Compl. at 3.) because he never received a Deficiency Notice regarding the underlying tax liability.
IRS Settlement Officer Stephen Dolin responded to plaintiff in a letter dated November 28, 2001 (plaintiff's Exhibit D). Mr. Dolin advised Mr. Tornichio that the CDP conference would be informal, "facts, arguments, and legal authority to support your position" may be presented, but "[i]t is the Service's position that in cases where a taxpayer's request for a collection due process hearing only states moral, religious, political, constitutional, conscientious or similar grounds to support his/her position, Appeals will not consider those grounds in the Due Process/Equivalent hearing pursuant to IRC Section 6320/6330." (Ex.D-1 at 2.) (emphasis in original). Mr. Dolin noted further that plaintiff's concerns regarding the legal authority of the IRS had previously been addressed by the courts. Mr. Tornichio responded in a letter dated December 4, 2001 wherein he reiterated that he wanted the Appeals Officer to bring all of the items listed in his September 28, 2001 letter to the hearing. (Ex. E.) Concerned that he did not receive a reply from the IRS, plaintiff sent a certified letter dated December 18, 2001 requesting several documents, including IRS Document #330 for tax years 1996, 1997, 1998.
A hearing was conducted before an IRS Appeals Officer on January 15, 2002. Plaintiff complains that the appeals officer failed to provide any of the information he requested in his September 28, 2001 letter. He claims the appeals officer refused to accept his "collection alternative" of paying the penalty immediately "if the appeals officer would merely cite and produce the statute . . . where an income tax `liability' was established by law." (Compl. at 4-5). A Notice of Determination, dated February 2, 2002, was issued by the IRS Appeals Team Manager, Joseph Weiss, stating "that no relief is to be granted and that the proposed levy action is sustained." (Ex. A-2.) As an attachment to the Notice, Mr. Weiss provided a Discussion and Analysis that included "Verification of Legal and Procedural Requirements." In summarizing the issues raised by Mr. Tornichio at the CDP hearing, the Team Manager noted "[y]ou raised numerous issues in your letter dated 9/28/2001 and also at the Collection Due Process (CDP) Hearing but none addresses the appropriateness of the proposed collection action. You have challenged the authority of the Internal Revenue Service to collect income taxes but this is not an issue that is addressed at a CDP Hearing." (Ex. A-4.)
Mr. Tornichio questions the legitimacy of the CDP hearing because the IRS failed to provide information he believes is critical to a valid CDP hearing. He claims the IRS employees had no basis in law or fact to issue a determination. He requests that the court, therefore, invalidate the IRS Determination, order the government to reimburse him for the cost of bringing this action and award him "punitive damages as equity relief dictates."
Although pro se pleadings are liberally construed, Boag v. MacDougall, 454 U.S. 364, 365 (1982) (per curiam); Haines v. Kerner, 404 U.S. 519, 520 (1972), a "district court may, at any time, sua sponte dismiss a complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil procedure." Apple v. Glenn, 183 F.3d 477, 479 (6th Cir. 1999); see Hagans v. Lavine, 415 U.S. 528, 536-37 (1974). When a case laying venue in the wrong division or district is filed in a district court, the court is compelled to dismiss it. 28 U.S.C. § 1406.
Any person seeking judicial review of an IRS Appeals Office determination has 30 days within which he may appeal to "the Tax Court (and the Tax Court shall have jurisdiction to hear such matter); or (B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States." 26 U.S.C. § 6330(d)(1). The Tax Court has jurisdiction over many types of claims related to the Tax Code, as set forth under Title 26 of the United States Code. For certain categories of claims the Tax Court's jurisdiction is exclusive, thus depriving the district court of jurisdiction over those claims.
A review of the IRS documents furnished with plaintiff's complaint indicates that Mr. Tornichio failed to report any income on his tax returns for 1996, 1997 and 1998. Because the IRS subsequently received information that he did earn income in the amount of $51,700.00 in 1996, $78,952.00 in 1997 and $45,244.00 in 1998, the Service assessed a Frivolous Return Penalty of $500.00 for each year. At several points during plaintiff's CDP hearing he challenged the legitimacy of that penalty based on the underlying tax liability. To the extent Mr. Tornichio challenges the Appeals Officer's Determination based on whether an underlying tax liability exists, this matter is one over which the Tax Court has jurisdiction. See 26 U.S.C. § 7441-42; see also 26 U.S.C. § 1, 61, 63 (imposing income tax liability, and defining gross income and taxable income). With respect to Mr. Tornichio's claim challenging a levy on his property, it is the Tax Court which has exclusive jurisdiction over appeals of levy determinations since it has exclusive jurisdiction over plaintiff's underlying tax liability. 26 U.S.C. § 6330(d)(1)(A); Lundsford v. Comm'r, 117 T.C. 183 (2001) (Tax Court has jurisdiction over petitions arising under section 6330(d)(1)(A)).
If Mr. Tornichio 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 26 U.S.C. § 7421(a) (prohibiting suits to restrain assessment or collection of taxes); 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).
Based on the foregoing, this court lacks subject matter jurisdiction over Mr. Tornichio's complaint. Since this is not the proper venue for the case, this action is dismissed without prejudice pursuant to 28 U.S.C. § 1406. Plaintiff shall have 30 days from the date of this decision to appeal the IRS Appeals Office determination with the Tax Court. 26 U.S.C. § 6330(d)(1)(B).
IT IS SO ORDERED.