Bayne v. United States Internal Revenue Service et al

EX PARTE MOTION to Dismiss for Lack of Jurisdiction , MOTION to Dismiss for Failure to State a Claim

D. Ariz.May 8, 2017

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DAVID A. HUBBERT Acting Assistant Attorney General CHRISTIAN MEJIA (NJ SBN 129362015) Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044-0683 Telephone: (202) 305-7548 Facsimile: (202) 307-0054 E-Mail: Christian.Mejia@usdoj.gov Western.TaxCivil@usdoj.gov ELIZABETH A. STRANGE District of Arizona Acting United States Attorney Counsel for the United States of America IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Lawrence Bayne, Plaintiff, v. Internal Revenue Service; and Lorie J. Scovill, Defendants. Case No. 2:17-CV-00705-DGC UNITED STATES OF AMERICA’S MOTION TO DISMISS PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 12(b)(1), 12(b)(5), AND 12(b)(6) AND MEMORANDUM OF POINTS AND AUTHORITIES The United States of America, as the proper party Defendant, through undersigned counsel, hereby moves the Court for an order dismissing the above-captioned action. This action should be dismissed pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(5), and 12(b)(6). This Motion to Dismiss is supported by a Memorandum of Points and Authorities. Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 1 of 18 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Dated: May 8, 2017. DAVID A. HUBBERT Acting Assistant Attorney General /s Christian Mejia CHRISTIAN MEJIA Trial Attorney, Tax Division U.S. Department of Justice Attorneys for the United States of America MEET AND CONFER CERTIFICATION Pursuant to the Court’s Order dated March 9, 2017, counsel for the United States spoke with pro se Plaintiff, Lawrence Bayne, about this motion on May 4, 2017, and May 5, 2017, to determine if the motion can be avoided. The parties were unable to resolve this issue. MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THE UNITED STATES’ MOTION TO DISMISS On February 6, 2017, Plaintiff Lawrence Bayne commenced this action by filing a Complaint in the Superior Court of Arizona in Maricopa County. The United States of America subsequently removed this action to this Court on March 8, 2017.1 In his complaint, Plaintiff alleges that the Internal Revenue Service improperly levied a portion of his social security benefits and funds from a Wells Fargo bank account. Plaintiff seeks federal income tax refunds for the payments the IRS collected through levies and damages for alleged improper levies. The United States, as the proper party Defendant, through undersigned counsel, hereby moves to dismiss Plaintiff’s claims pursuant to Federal Rules of Civil Procedure 1 Plaintiff disputes the removal of this action. However, the United States contends this action was properly removed pursuant to 28 U.S.C. §§ 1441, 1442(a)(1), and 1444. Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 2 of 18 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12(b)(1), 12(b)(5), and 12(b)(6). As set forth in detail below, the Court should grant this Motion to Dismiss and enter an order dismissing all of Plaintiff’s claims. First, the relief Plaintiff seeks may, if at all, only be obtained against the United States. As such, the United States is the only proper party defendant. Second, Plaintiff’s federal income tax refund claims should be dismissed pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction because Plaintiff has failed to allege that he has paid in full the amount the IRS asserts he owes or that he has filed claims for refunds with the IRS for the refunds he seeks. Third, Plaintiff’s contractual, tort, and damages claims should be dismissed pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction because Plaintiff has failed to plead a statute that would confer jurisdiction over these claims. Further, to the extent Plaintiff seeks a claim for damages under 26 U.S.C. § 7433, this claim should also be dismissed pursuant to Rule 12(b)(6) for failure to state a claim. Specifically, Plaintiff has failed to plead the federal tax statute or regulation violated by the IRS. Fourth, Plaintiff is not entitled to a Bivens remedy. Fifth, Plaintiff’s claims should be dismissed pursuant to Rule 12(b)(1) for insufficient service of process because, as a matter of record, Plaintiff has failed to properly serve the Summons and Complaint. Accordingly, Plaintiff’s claims should be dismissed. FACTUAL BACKGROUND Plaintiff has accrued unpaid income tax liabilities for tax years 2006, 2007, 2008, 2009, and 2010. See Exhibit A, Declaration of Sandra Davaz, ¶¶ 6a and 6d-6i. Plaintiff’s income tax liability for tax year 2006 stems from a stipulated United States Tax Court decision. See Exhibit A, ¶ 6b; Exhibit C, 2006 United States Tax Court Decision. The IRS conducted an audit of Plaintiff’s 2006 income tax return. Exhibit A, ¶ 6a. Plaintiff then filed a petition in the Tax Court to contest the IRS’s determination for Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 3 of 18 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this year on September 20, 2010. See Exhibits B, 2006 Tax Court Docket; Exhibit C, 2006 Tax Court Decision. Thereafter, the IRS and Plaintiff reached a settlement in this matter, and a stipulated decision for tax years 2006 was entered by the Tax Court on November 22, 2011. Exhibit C. Plaintiff’s income tax liabilities for tax years 2009 and 2010 also stem from a stipulated Tax Court decision. See Exhibit A, ¶¶ 6c and 6d; Exhibit E, 2009 and 2010 Tax Court Decision. IRS conducted audits of Plaintiff’s 2009 and 2010 income tax returns. Exhibit A, ¶ 6a. Plaintiff then filed a petition in the Tax Court to contest the IRS’s determination for these two years. See Exhibit D, 2009 and 2010 Tax Court Docket; Exhibit E. Thereafter, the IRS and Plaintiff reached a settlement on these two years, and a stipulated decision was entered by the Tax Court on June 2, 2014. Exhibit E. DISCUSSION I. Legal Standards a. Legal Standard For Dismissal Under Fed. R. Civ. P. 12(b)(1) Under Fed. R. Civ. P. 12(b)(1), a claim should be dismissed if the Court lacks subject matter jurisdiction to adjudicate it. The party seeking to sue in federal court bears the burden of establishing that jurisdiction exists to hear the action. Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986). To establish subject matter jurisdiction in an action against the United States, there must be: 1) “statutory authority vesting a district court with subject matter jurisdiction”; and 2) “a waiver of sovereign immunity.” Alvarado v. Table Mountain Rancheria, 509 F.3d 1008, 1016 (9th Cir. 2007). Thus, even where statutory authority vests the district courts with subject matter jurisdiction, the United States cannot be sued unless it has expressly consented to suit. Dunn & Black, P.S. v. United States, 492 F.3d 1084. 1087-88 (9th Cir. 2007). Waivers of sovereign immunity Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 4 of 18 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cannot be implied, must be unequivocally expressed, and are to be strictly construed in favor of the sovereign. Id. at 1088. A party bringing suit against the United States bears the burden of demonstrating both elements of subject matter jurisdiction; where it has failed to do so, “dismissal of the action is required.” Id. b. Legal Standard For Dismissal Under Fed. R. Civ. P. 12(b)(5) An action should be dismissed against a defendant if a plaintiff has not timely and properly served that defendant with a copy of the complaint and summons. A federal court does not have jurisdiction over a defendant unless the defendant has been served properly under Fed. R. Civ. P. 4. Direct Mail Specialists v. Eclat Computerized Techs., 840 F.2d 685, 688 (9th Cir. 1998). Fed. R. Civ. P. 4(m) provides for 90 days for a plaintiff to effect proper service. Fed. R. Civ. P. 4(m). “If a defendant is not served within 90 days after the complaint is filed, the court--on motion or on its own after notice to the plaintiff--must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.” Fed. R. Civ. P. 4(m). c. Legal Standard For Dismissal Under Fed. R. Civ. P. 12(b)(6) A complaint should be dismissed where it fails to plead “enough facts to state a claim for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 (2007); Fed. R. Civ. P. 12(b)(6). A complaint is plausible on its face when the plaintiff “pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This amounts to a “two pronged approach” under which a Court first identifies the factual allegations entitled to an assumption of truth and then determines Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 5 of 18 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 “whether they plausibly give rise to an entitlement to relief.” Id. at 679. Under this standard, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678. Although a Court must consider the factual allegations in a complaint as true, a Court is not bound to accept as true a legal conclusion couched as a factual allegation. Caviness v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 812 (9th Cir. 2010). “Conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.” Id. II. The Court Should Substitute The United States For All Named Defendants As The Only Proper Defendant In This Action The Complaint names the IRS and IRS Revenue Officer Scovill as defendants in this action. However, the United States is the only proper defendant in this action. The IRS is an improper party to this action. “It is well established that federal agencies are not subject to suits Eo nomine unless so authorized by Congress in explicit language.” City of Whittier v. United States Dep’t of Justice, 598 F.2d 561, 562 (9th Cir. 1979) (internal quotation and citation omitted). See also Castleberry v. Alcohol, Tobacco & Firearms Div. of Treasury Dep’t, 530 F.2d 672, 673 n. 3 (5th Cir. 1976) (explaining that Congress has not authorized suits against the Department of the Treasury or any of its division or branches). There is no Congressional authority to sue the IRS. Therefore, the IRS is not a suable entity, cannot be a defendant in this case, and should be dismissed from this action. IRS Revenue Officer Scovill is also an improper party to this action. A civil action filed against an officer of the United States is in fact “against the sovereign if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration, or if the effect of the judgment would be to restrain the Government from acting, or to compel it to act.” Dugan v. Rank, 372 U.S. 609 (1963) Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 6 of 18 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (internal citations omitted). Because adjudication of this case would expend itself on the public fisc, this suit constitutes an action against the United States of America. All of the relief that plaintiff seeks (i.e., income tax refunds and damages) can only be obtained from the United States, and thus the United States of America is the only proper federal defendant. Further, a suit against IRS employees in their official capacities is essentially a suit against the United States. Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). Here, Plaintiff alleges no specific allegations with respect to Revenue Officer Scovill other than that she levied on the Plaintiff’s social security benefits. This allegation focuses on actions taken by the IRS to collect Plaintiff’s taxes. Thus, because collection of taxes is included in the IRS employees’ official capacities, the United States should be the only party Defendant in this suit. III. Plaintiff’s Refund Claims Should Be Dismissed Pursuant To Fed. R. Civ. P. 12(b)(1) For Lack of Subject Matter Jurisdiction a. Plaintiff Fails To Meet Jurisdictional Prerequisites For A Refund Suit Plaintiff’s refund claims should be dismissed for lack of subject matter jurisdiction. District courts have original jurisdiction over tax refund claims. 28 U.S.C. § 1346(a)(1). However, in order for a court to have subject matter jurisdiction over a tax refund suit, a taxpayer must allege and satisfy certain jurisdictional prerequisites. Generally, first, a taxpayer must have “fully paid” the tax for which a refund is sought. Flora v. United States, 362 U.S. 145, 146-147 (1960); Hutchison v. United States, 677 F.2d 1322, 1325 (9th Cir. 1982). Second, the taxpayer must have filed a proper and timely claim for refund. See United States v. Dalm, 494 U.S. 596, 601-02 (1990). And third, the taxpayer’s claim for a refund must either have been rejected by the IRS or not have been acted upon by the IRS for six months. See 26 U.S.C. § 6532(a)(1). If a Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 7 of 18 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 taxpayer fails to meet these requirements, the district court lacks subject matter jurisdiction under 28 U.S.C. § 1346(a) to consider the claims. Omohundro v. United States, 300 F.3d 1065, 1066-67 (9th Cir. 2002)(per curiam). Here, Plaintiff alleges that the IRS levied on his social security benefits and on a Wells Fargo bank account, and he is requesting that these levied funds be returned to him. In essence, he is seeking income tax refunds for payments the IRS levied towards his income tax liabilities. However, because Plaintiff has not alleged that he has paid the full amount the IRS asserts he owes, or that he has filed claims with the IRS for the refunds he seeks, Plaintiff’s refund claims should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. b. Plaintiff’s Refund Claims For Tax Years 2006, 2009, And 2010 Are Barred By 26 U.S.C. § 6512(a) In addition to lacking subject matter jurisdiction for the reasons stated above, this Court also lacks subject matter jurisdiction with respect to any refund claim for tax years 2006, 2009, and 2010 because Plaintiff has already challenged these years in the United States Tax Court. 26 U.S.C. 6512(a) states that if a taxpayer properly files a petition with the Tax Court, except in certain select circumstances2, “no credit or refund of income tax for the same taxable year ... shall be allowed or made and no suit by the taxpayer for the recovery of any part of the tax shall be instituted in any court.” 26 U.S.C. § 6512(a). This means that once the tax liability for a particular year has been decided by the Tax Court, a subsequent refund suit for that same year is barred. This is true even if the issues raised in the subsequent suit differ from the issues decided by the Tax Court. United 2 There are six exceptions, none of which appear to apply here. Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 8 of 18 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 States v. Wolf, 238 F.2d 447, 451 (9th Cir. 1956). The Ninth Circuit stated that ‘the mere filing of the petition operates to deprive the district court of jurisdiction to entertain a subsequent suit for refund..... It is not the decision which the Tax Court makes but the fact that the taxpayer has resorted to that court which ends his opportunity to litigate in the District Court his tax liability for the year in question.” Here, Plaintiff has not alleged specifically what tax years he is seeking income tax refunds for in his Complaint. However, to the extent he seeks income tax refunds for tax years 2006, 2009, and 2010, these refund claims should be dismissed for lack of subject matter jurisdiction pursuant to 26 U.S.C. § 6512(a). Plaintiff filed petitions in the Tax Court challenging the IRS’s proposed deficiencies for these tax years, and subsequently signed decision documents reflecting agreed-upon income tax liabilities and penalties for these tax years. See Exhibits B-E. The Tax Court then entered stipulated decisions for these tax years. See Exhibits B-E. Plaintiff had an opportunity to litigate his income tax liabilities for tax years 2006, 2009, and 2010, including any refund claims, in the Tax Court. Plaintiff opted not to pursue these claims when he signed decision documents. Thus, because Plaintiff filed Petitions in the Tax Court and because the Tax Court has already entered stipulated decisions, this Court lacks subject matter jurisdiction with respect to any refund claims for these tax years. IV. Plaintiff’s Contract Claims Should Be Dismissed Pursuant To Fed. R. Civ. P. 12(b)(1) For Lack of Subject Matter Jurisdiction Under the “Applicable Law Supporting Claims” section of his Complaint, Plaintiff has alleged that the IRS “breached contract and inrichment against [him].” Plaintiff also seeks $100,000 in damages. To the extent Plaintiff is asserting contractual claims for $100,000 against the United States, these claims should be dismissed for lack of subject matter jurisdiction, because, for contract claims against the United States in this amount, Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 9 of 18 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sovereign immunity has only been waived for suits in the Court of Federal Claims. The Tucker Act grants the Court of Federal Claims exclusive jurisdiction and waives sovereign immunity for “any claim [in excess of $10,000] against the United States founded ... upon any express or implied contract with the United States.” 28 U.S.C. § 1491(a)(1). Because Plaintiff apparently seeks recovery in excess of $10,000, the Tucker Act does not waive sovereign immunity for Plaintiff’s contractual claims before this Court. V. Plaintiff’s FTCA Claims Should Be Dismissed Pursuant To Fed. R. Civ. P. 12(b)(1) For Lack of Subject Matter Jurisdiction In his Complaint, Plaintiff seeks “all monies fraudulently taken from [him].” To the extent Plaintiff seeks a fraud tort claim against the United States, this claim should be dismissed for lack of subject matter jurisdiction. The Federal Torts Claims Act, 28 U.S.C. §§ 2671-2680 waives the government’s sovereign immunity to allow claims against the United States for personally injury resulting from the negligent or wrongful acts of its employees while acting within the scope of their employment. However, this waiver is subject to the exceptions in 28 U.S.C. § 2680, and if a claim falls within one of the listed exceptions, federal courts lack subject matter jurisdiction. McQuade v. United States, 839 F.2d 640, 642 (9th Cir.1988). Section 2680(c) expressly precludes any claim “arising in respect of the assessment or collection of any tax” from being brought under the FTCA. 28 U.S.C. § 2680(c). This language has precluded suits for allegedly tortious acts related to the collection of taxes. See Morris v. United States, 521 F.2d 872, 874 (9th Cir.1975) (even if the IRS agents' collection activity was beyond the normal scope of authority and amounted to deplorable, tortious conduct, taxpayer's claim is exempted from FTCA); see also Jones v. United States, 16 F.3d 979, 980-81 (8th Cir.1994) (United States retains its Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 10 of 18 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sovereign immunity under § 2680(c) even when the claims encompass torts an constitutional violations); Perkins v. United States , 55 F.3d 910, 916-17 (4th Cir.1995) (Section 2680(c) exception applies to protect illegal acts or torts committed by IRS agents when they are related, however remotely, to a bona fide effort to assess or collect tax debt); Capozzoli v. Tracey, 663 F.2d 654, 657 (5th Cir.1981) (alleged invasion of privacy and trespass in photographing property during an investigation of casualty loss; language of § 2680(c) “is broad enough to encompass any activities of an IRS agent even remotely related to his or her official duties”). Here, Plaintiff’s claims arise with respect to the collection of income taxes and are therefore barred by 28 U.S.C. § 2680. Consequently, the Court has no jurisdiction over any of the tort claims asserted in the Complaint. VI. Plaintiff’s Claim For Damages Should Be Dismissed Pursuant To Fed. R. Civ. P. 12(b)(1) For Lack of Subject Matter Jurisdiction And Pursuant To Fed. R. Civ. P. 12(b)(6) For Failure To State A Claim a. The Court Lacks Subject Matter Jurisdiction Over Plaintiff’s Damages Claim Because He Offers No Valid Waiver Of Sovereign Immunity The United States has not waived its sovereign immunity with respect to any claim for damages. It appears that Plaintiff seeks damages based on an allegation that the IRS improperly levied a portion of his social security benefits and funds from a Wells Fargo bank account. However, Plaintiff has not established that the Court has subject matter jurisdiction over this claim for damages or that the United States has waived its sovereign immunity with respect to this claim. Specifically, Plaintiff has failed to point to a statute that would confer jurisdiction over this claim. Therefore, the Court should dismiss Plaintiff’s claim for damages pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. See Baker v. United States, 817 F.2d 560, 562 (9th Cir. 1987(a party bringing an action against the Government bears the burden of showing an unequivocal Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 11 of 18 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 waiver of the Government’s immunity). 26 U.S.C. § 7433 Further, the Complaint does not cite 26 U.S.C. § 7433 as a source of jurisdiction for damages. However, to the extent Plaintiff seeks to bring a claim for damages under 26 U.S.C. § 7433, this claim should be dismissed. 26 U.S.C. § 7433 provides: “If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Except as provided in section 7432, such civil action shall be the exclusive remedy for recovering damages resulting from such actions.” 26 U.S.C. § 7433(a). The statute further includes the requirement that administrative remedies be exhausted: “A judgment for damages shall not be awarded … unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.” 26 U.S.C. § 7433(d). See also 26 C.F.R. § 301.7433-1(e) (specifying required administrative remedies). The exhaustion of administrative remedies here is jurisdictional. Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir.1992) (failure to exhaust administrative remedies under § 7433(d)(1) deprived the court of jurisdiction over a taxpayer's damages claims regarding improper tax collection under § 7433(a)). Some courts have questioned whether this exhaustion requirement is jurisdictional in light of Arbaugh v. Y & H Corp., 546 U.S. 500, 515-16 (2006), which states that statutory limitations should be viewed as non-jurisdictional in the absence of a clear statement that the limitation is jurisdictional. Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 12 of 18 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 See, e.g., Hoogerheide v. IRS, 637 F.3d 634, 636, 638 (6th Cir. 2011); Kim v. United States, 632 F.3d 713, 719 (D.C. Cir. 2011). Following the Supreme Court’s decision in Arbaugh, however, the Ninth Circuit has retained the position articulated in Conforte, that the exhaustion requirement in Section 7433 is jurisdictional. See, e.g., Joseph v. United States, 517 Fed. Appx. 543 (9th Cir. 2013); Camangian v. United States, 475 Fed. Appx. 216 (9th Cir. 2012); Manant v. United States, 498 Fed. Appx. 752 (9th Cir. 2012). Here, Plaintiff does not allege that he has exhausted his administrative remedies, much less that he filed an administrative claim for damages with the IRS. Under Ninth Circuit law, therefore, Plaintiff’s failure to allege that he exhausted administrative remedies deprives deprive the Court of jurisdiction over any claim for damages under 26 U.S.C. § 7433. Additionally, relief under Section 7433 is available only for actions “in connection with any collection of Federal tax.” 26 U.S.C. § 7433(a) (emphasis added). See, e.g. Miller v. United States, 66 F.3d 220, 223 (9th Cir. 1995) (taxpayer cannot seek damages under § 7433 for improper assessments); Latch v. United States , 842 F.2d 1031, 1033 (9th Cir. 1988) (federal courts have no jurisdiction under § 7433 over suits for tax accounting); Shaw v. United States , 20 F.3d 182, 184 (5th Cir. 1994) (“To prove a claim for improper collection practices, the taxpayer must demonstrate that the IRS did not follow the prescribed methods of acquiring assets.”) Here, Plaintiff alleges that the IRS attacked his social security benefits “without a legal liability shown.” A taxpayer may not rely on the waiver of sovereign immunity under 26 U.S.C. § 7433 to claim that he does not owe the tax. Thus, to the extent Plaintiff seeks to challenge any IRS assessment against him under 26 U.S.C. § 7433, this claim should be dismissed for lack of subject matter jurisdiction. Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 13 of 18 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 b. To The Extent Plaintiff Seeks A Damages Claim Under 26 U.S.C. § 7433, This Claim Should Be Dismissed Pursuant To Fed. R. Civ. P. 12(b)(6) For Failure To State A Claim Even assuming arguendo that Plaintiff is able to establish jurisdiction over a claim for damages under 26 U.S.C. § 7433, this claim should be dismissed for failure to state a claim. In order to state a claim under 26 U.S.C. § 7433, a taxpayer must be able to point to a specific statute or regulation violated by the IRS. Here, Plaintiff fails to allege any violation of a federal tax statute or regulation by the IRS in his Complaint. Accordingly, to the extent Plaintiff seeks to bring a claim for damages under 26 U.S.C. 7433, this claim should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Moreover, Plaintiff contends that the IRS is improperly levying his property. However, it is unclear what law Plaintiff relies upon in forming this allegation. To the extent Plaintiff contends that the IRS does not have the authority to levy on property, Plaintiff is incorrect. 26 U.S.C. § 6331 provides that the IRS may collect taxes of a delinquent taxpayer “by levy upon all property and rights to property … belonging to such person.” In addition, the property levied by the IRS as alleged by Plaintiff in his Complaint is not exempted under 26 U.S.C. § 6334(a). Moreover, Plaintiff contends that the IRS has “attacked [his] social security benefit and has taken 35% percent from [him] without a legal liability shown.” It appears that Plaintiff is challenging the percentage amount of social security benefits the IRS is able to levy from a taxpayer. To the extent Plaintiff is contending that the IRS is unable to levy 35% of a taxpayer’s social security benefits, Plaintiff is incorrect. The IRS is able to levy 35% of a taxpayer’s social security benefits under 26 U.S.C. § 6331(a). See Bowers v. U.S., 498 Fed.Appx. 623, 627 (7th Cir. 2012); Hines v. United States, 658 F.Supp.2d 139, 146-47 (D.D.C. 2009); Duran v. IRS, No. CV-F-09-345OWW/DLB, 2009 WL 700518, at *4 (E.D.Cal. Mar. 16, 2009); Beam v. United States, No. 07-6035- Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 14 of 18 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TC, 2007 WL 1674083, at *1 (D.Or. June 6, 2007); United States v. Marsh, 89 F.Supp.2d 1171, 1179 (D.Haw.2000). VII. No Bivens-type Constitutional Tort Is Available, And Qualified Immunity Bars Any Action Against the Individually Named Defendants Plaintiff alleges that Ms. Scovill “attacked [his] social security benefit.” To the extent that this allegation can be read to assert a constitutional violation against Revenue Officer Scovill, this claim should be dismissed. The Supreme Court has held that Federal officials may be held personally liable for actions taken under the color of government authority which violate individuals’ constitutional rights. Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). However, “Bivens remedies are not available to compensate plaintiffs for all constitutional torts committed by federal officials.” W. Cent. For Journalism v. Cederquist, 235 F.3d 1153, 1156 (9th Cir. 2000). A Bivens action does not lie where Congress has created a comprehensive federal program with a meaningful statutory mechanism for relief from wrongs committed within that program. Schweiker v. Chilicky, 487 U.S. 412, 423 (1988); Bush v. Lucas, 462 U.S. 367, 368 (1983); Berry v. Hollander, 925 F.2d 311, 313 (9th Cir. 1991). The Court of Appeals has held that Bivens relief is unavailable for plaintiffs against IRS officials “[b]ecause the Internal Revenue Code gives taxpayers meaningful protections against government transgressions in tax assessment and collection.” Adams v. Johnson, 355 F.3d 1179, 1186 (9th Cir. 2004). And, indeed, 26 U.S.C. § 7433, discussed above, is one of those statutory protections. Even if Bivens relief were available, Revenue Officer Scovill would be entitled to qualified immunity, as Plaintiff has alleged no facts which would support a finding that there was a violation of clearly established rights. Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012). Thus, to the extent that Plaintiff’s complaint can be read to Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 15 of 18 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assert a constitutional violation against Revenue Officer Scovill, this claim must be dismissed. VIII. This Action Should be Dismissed Pursuant To Fed. R. Civ. P 12(b)(5) For Insufficient Service of Process As a matter of record, proper service has not been tendered with respect to any of the defendants in this action. The federal rules regarding service of process apply to civil actions removed to the district courts after removal, but if process was properly issued and timely served under state law before removal, the service remains sufficient after removal. Nealey v. Transportacion Maritima Mexicana, S.A., 662 F.2d 1275, 1282 (9th Cir.1980). Because, as a matter of record, proper service was not tendered on either Revenue Officer Scovill or the IRS prior to removal of this action to this Court, the United States contends that the federal rules regarding service of process apply in this action. Pursuant to Fed. R. Civ. P. 4(i), proper service on the United States or its agencies, corporations, officers, or employees requires delivering a copy of the Summons and the Complaint on the United States Attorney in the district in which the action is brought and on the Attorney General of the United States. Fed. R. Civ. P. 4(i)(1). In addition, in order to properly serve an agency, officer, corporation, or employee of the United States who is sued in their official capacity, “a party must serve the United States and also send a copy of the Summons and of the Complaint by registered or certified mail to the agency, corporation, officer, or employee.” Fed. R. Civ. P. 4(i)(2). Lastly, in order to properly serve an officer or employee in their individual capacity for an act or omission occurring in connection with duties performed on the United States’ behalf, a party must serve the United States and also serve the officer or employee. Fed. R. Civ. P. 4(i)(3). Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 16 of 18 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Here, Plaintiff has not complied with the proper service requirements with respect to any of the named defendants or the United States.3 Specifically, as a matter of record, Plaintiff has not served the United States Attorney for the District of Arizona, the United States Attorney General, or IRS Revenue Officer Lorie Scovill as required by Fed. R. Civ. P. 4(i). Therefore, because proper service has not been tendered in this matter with respect to any of the named defendants or the United States, this action should be dismissed pursuant to Fed. R. Civ. P. 12(b)(5) for insufficient service of process. CONCLUSION For the foregoing reasons, the Court should grant the United States’ Motion to Dismiss Plaintiff’s action. Dated: May 8, 2017. DAVID A. HUBBERT Acting Assistant Attorney General /s Christian Mejia CHRISTIAN MEJIA Trial Attorney, Tax Division U.S. Department of Justice ELIZABETH A. STRANGE Acting United States Attorney District of Arizona Attorneys for the United States of America 33 The ninety days from the filing of the Complaint will elapse on May 8, 2017. Plaintiff may effect proper service upon the defendants before this date. However, until proper service has been tendered, the United States contends that the Court lacks personal jurisdiction over the defendants in this action. Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 17 of 18 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the UNITED STATES OF AMERICA’S MOTION TO DISMISS PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 12(b)(1), 12(b)(5), AND 12(b)(6) AND MEMORANDUM OF POINTS AND AUTHORITIES has been made this 8th day of May, 2017, by depositing a copy thereof in the United States Mail in a postage prepaid envelope addressed to: Lawrence Bayne 7350 W. Tumblewood Drive Peoria, AZ 85382 /s Christian Mejia CHRISTIAN MEJIA Trial Attorney, Tax Division U.S. Department of Justice Case 2:17-cv-00705-DGC Document 6 Filed 05/08/17 Page 18 of 18 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 1 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 2 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 3 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 4 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 5 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 6 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 7 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 8 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 9 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 10 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 11 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 12 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 13 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 14 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 15 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 16 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 17 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 18 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 19 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 20 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 21 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 22 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 23 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 24 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 25 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 26 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 27 of 28 Case 2:17-cv-00705-DGC Document 6-1 Filed 05/08/17 Page 28 of 28 Case 2:17-cv-00705-DGC Document 6-2 Filed 05/08/17 Page 1 of 2 Case 2:17-cv-00705-DGC Document 6-2 Filed 05/08/17 Page 2 of 2 Case 2:17-cv-00705-DGC Document 6-3 Filed 05/08/17 Page 1 of 3 Case 2:17-cv-00705-DGC Document 6-3 Filed 05/08/17 Page 2 of 3 Case 2:17-cv-00705-DGC Document 6-3 Filed 05/08/17 Page 3 of 3 Case 2:17-cv-00705-DGC Document 6-4 Filed 05/08/17 Page 1 of 2 Case 2:17-cv-00705-DGC Document 6-4 Filed 05/08/17 Page 2 of 2 Case 2:17-cv-00705-DGC Document 6-5 Filed 05/08/17 Page 1 of 3 Case 2:17-cv-00705-DGC Document 6-5 Filed 05/08/17 Page 2 of 3 Case 2:17-cv-00705-DGC Document 6-5 Filed 05/08/17 Page 3 of 3