Carter Sir v. United States of America et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM and For Lack of Subject Matter Jurisdiction with Brief In Support

N.D. Ga.April 6, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION ANDRE' T. CARTER SR., ) ) Plaintiff, ) ) v. ) ) UNITED STATES, THE INTERNAL ) REVENUE SERVICE, ) ) Defendants. ) _________________________________) Case No. 1:16-CV-3495-AT UNITED STATES' MOTION TO DISMISS PLAINTIFF'S AMENDED COMPLAINT The plaintiff seeks (1) a refund of “second tier” self-employment taxes for various unnamed tax periods, (2) a declaration that certain tax laws preventing the plaintiff’s claimed refund be declared unconstitutional, and (3) an injunction “protecting” the taxpayer from future IRS actions. Pursuant to Fed. R. Civ. P. 12(b)(1) the United States of America, on behalf of the Internal Revenue Service, moves to dismiss these claims for lack of subject matter jurisdiction. Plaintiff also seeks damages for IRS levies on his wages. He has failed to allege a plausible claim under section 7433 of the Internal Revenue Code and that claim should be dismissed under Fed. R. Civ. P. 12(b)(6). Case 1:16-cv-03495-AT Document 22 Filed 04/06/17 Page 1 of 3 2 Dated: April 6, 2017 Respectfully submitted, DAVID A. HUBBERT Acting Assistant Attorney General /s/ Archana Ravindranath ARCHANA RAVINDRANATH Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 202-514-5885 (v) 202-514-4963 (f) Archana.Ravindranath@usdoj.gov Of Counsel: JOHN A. HORN United States Attorney Case 1:16-cv-03495-AT Document 22 Filed 04/06/17 Page 2 of 3 3 CERTIFICATE OF SERVICE I hereby certify that on this 6th day of April, 2017, I electronically filed the foregoing document with the Clerk of Court using the CM/ECF system and I mailed the document by United States Postal Service to the following: Andre’ T. Carter Sr. 1708 Belmont Parkway Roswell, GA 30076 /s/ Archana Ravindranath ARCHANA RAVINDRANATH Trial Attorney United States Department of Justice, Tax Division Case 1:16-cv-03495-AT Document 22 Filed 04/06/17 Page 3 of 3 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION ANDRE' T. CARTER SR., ) ) Plaintiff, ) ) v. ) ) UNITED STATES, THE INTERNAL ) REVENUE SERVICE, ) ) Defendants. ) _________________________________) Case No. 1:16-CV-3495-AT MEMORANDUM OF LAW IN SUPPORT OFUNITED STATES' MOTION TO DISMISS PLAINTIFF'S AMENDED COMPLAINT INTRODUCTION On November 8, 2016, the plaintiff filed a “Petition to receive credit for the 2nd tier social security taxes collected by the Internal Revenue Service during the Plaintiff employment status as an employee and/or have employment wages returned, and to declare all statute preventing the credit or return of the unauthorized taxes upon the wages unconstitutional.” (ECF No. 6). Separately, on November 21, 2017, plaintiff filed a memorandum of law in support of his complaint (ECF No. 12) and various exhibits. (ECF No. 14). Plaintiff then filed an “corrected petition” on January 30, 2017.” (ECF No. 20) In both the original Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 1 of 8 2 and the amended complaint plaintiff seeks largely the same relief, (1) a refund of “second tier” self-employment taxes for various unnamed tax periods, (2) a declaration that certain tax laws be declared unconstitutional, (3) an injunction protecting Mr. Carter from future IRS actions, and (4) an undisclosed amount of damages under 26 U.S.C. § 7433.1 The Court lacks subject matter jurisdiction to consider the refund, declaratory relief and injunction that plaintiff seeks. And, while the United States has waived its sovereign immunity from suits for damages stemming from the improper collection of tax, see 26 U.S.C. § 7433, plaintiff has failed to state a plausible claim for damages under that waiver. Plaintiff has previously filed a similar suit seeking to enjoin the IRS from collecting taxes owed by plaintiff and a refund of wages collected by the IRS. Carter v. United States, et al., Case No. 1:11-cv-4204 (N.D. Ga.) (“Carter I”). In that case, Judge Totenberg dismissed both plaintiff’s claims for injunctive relief and for refund for lack of subject matter jurisdiction. See Carter I, ECF No. 25, 1 In addition, plaintiff requests (1) that all statutes preventing plaintiff from receiving IRS notices be declared unconstitutional; (2) that the IRS document the tax consequences of his amended income tax returns for the tax years 2004 -2008; (3) a determination that use of the Anti-Injunction Act is unconstitutional where the IRS is engaged in collection activity; (4) that the IRS pay the costs and fees associated with this action; (5) a determination that a Collection Due Process hearing does not require two requests and that the plaintiff did not participate in the “Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, and; the punishment of and damages from any private entity involved in the IRS’ collection activities against plaintiff. Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 2 of 8 3 (copy attached). The dismissal was affirmed by the 11th Circuit. Carter v. United States, et al., 517 Fed. Appx. 839 (11th Cir. 2013). Like his prior suit, the corrected petition must also be dismissed. ARGUMENT I. The Court Lacks Jurisdiction Over Plaintiff’s Claim for Refund Plaintiff requests that this Court refund his “second-tier” self-employment taxes, but fails to specify the amount of the refund he is seeking or the tax periods for which he is seeking a refund. More importantly, he has not satisfied the requirements to establish a waiver of sovereign immunity under 26 U.S.C. § 7422. This Court has jurisdiction to hear suits for the refund of taxes. 28 U.S.C. § 1346(a)(1). But the taxpayer must satisfy the requirements of 26 U.S.C § 7422(a), which include paying the tax he disputes and filing an administrative claim for refund. United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 5, 128 S. Ct. 1511, 1515 (2008) (quoting United States v. Dalm, 494 U.S. at 602, 110 S. Ct. at 1365) (“Read together, the import of [Section 6511(a) and Section 7422(a)] is clear: unless a claim for refund of a tax has been filed within the time limits imposed by § 6511(a), a suit for refund…may not be maintained in any court.”). He has not alleged he did so. Indeed, his first suit was dismissed on that basis. See Carter I, ECF No. 25, p. 5). II. Plaintiff’s Claims for Injunctive and Declaratory Relief Are Barred Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 3 of 8 4 A. The Declaratory Judgment Act precludes this Court from granting declaratory relief to the plaintiff. Plaintiff asks the Court to declare specified and unspecified tax-related statutes unconstitutional. (ECF No. 20 at page 3, para. 3(b), 3(c), and 3(f)). This appears to be a request for declaratory relief with regard to federal taxes, which is specifically barred by the Declaratory Judgment Act. 28 U.S.C. § 2201. 28 U.S.C. § 2201 provides that: “In a case of actual controversy within its jurisdiction, except with respect to Federal taxes…any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such a declaration, whether or not further relief is or could be sought.” Accordingly, to the extent that the plaintiff here seeks declaratory relief which the Court does not have power to grant, that portion of the complaint should be dismissed. B. The Anti-Injunction Act precludes this Court from granting injunctive relief to the plaintiff. Plaintiff seeks to have the IRS enjoined from taking any further action to collect his tax liabilities. Section 7421(a) of the Internal Revenue Code 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 . . .." The manifest purpose of section 7421(a) is "to permit the United States to assess and collect taxes alleged to Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 4 of 8 5 be due without judicial intervention, and to require that the legal right to the disputed sum be determined in a suit for refund." Enochs v. Williams Packing Navigation Co., 370 U.S. 1 (1962); see also Meyer v. Everson, 2006 WL 2583699, at *4 (M.D. Fla. Sept. 7, 2006). Although there are limited statutory exceptions to the Act, none apply here. See Carter I, ECF No. 25, pp. 2-4. III. Plaintiff Has Failed to State a Claim for Damages In addition to his barred claims, plaintiff seeks an undisclosed amount in damages under section 7433 of the Internal Revenue Code, claiming that the IRS levied against his wages. Plaintiff did not request damages in Carter I, but his petition here fails to provide any specific information about the IRS’ levies or about the damages sought. Section 7433 of the Internal Revenue Code allows a taxpayer to bring a civil action for damages against the IRS in cases where an IRS officer or employee intentionally or negligently disregards the Internal Revenue Code or IRS regulations in connection with the collection of taxes. Plaintiff, however is not alleging that the IRS used an improper collection method. Rather, he claims collection was wrongful because no tax is owed. That’s a challenge to the liability, not collection. As such, it is outside the scope of section 7433 and plaint has failed to state a claim for damages. See Sande v. United States, 323 Fed.Appx. 812, 815- 816 (11th Cir. 2009). Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 5 of 8 6 Even if this Court finds that plaintiff’s claim does arise from the IRS’ collection activities, the plaintiff is still required to exhaust his administrative remedies prior to bringing a suit for damages. 26 U.S.C § 7433(d). To exhaust his administrative remedies the taxpayer must comply with Treasury Regulation § 301.7433-1(e)(1)-(2). Here, Plaintiff has failed to exhaust his administrative remedies prior to filing this suit. Plaintiff makes a general statement that “all administrative remedies have been exhausted,” but there is nothing in the complaint to suggest that this is the case. To avoid a motion to dismiss on the basis that he failed to exhaust his administrative remedies plaintiff must allege how he exhausted those remedies. Smith v. United States, 475 F. Supp.2d 1, 12 (D.D.C. 2006); McGuirl v. United States, 360 F.Supp.2d 125, 128 (D.D.C. 2004). Plaintiff’s complaint contains no allegations regarding how he exhausted his administrative remedies. By failing to plead and prove exhaustion, plaintiff has failed to state a claim upon which relief can be granted. See generally Arbaugh v. Y & H Corp., 546 U.S. 500, 511-16, (2006); Hoogerheide v. United States, 637 F.3d 634, 636-39 (6th Cir. 2012); Galvez v. United States, 448 Fed. App’x 880, 887 (11th Cir. 2011). Thus, the Plaintiff is not entitled to any damages and his damages claim should be dismissed. CONCLUSION Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 6 of 8 7 Plaintiff is not entitled to obtain the relief that he seeks in this complaint because the Court does not have subject matter jurisdiction to consider the refund, declaratory relief and injunction that plaintiff seeks and plaintiff has failed to state a plausible claim for damages. Plaintiff’s complaint should be dismissed. Dated: April 6, 2017 Respectfully submitted, DAVID A. HUBBERT Acting Assistant Attorney General /s/ Archana Ravindranath ARCHANA RAVINDRANATH Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 202-514-5885 (v) 202-514-4963 (f) Archana.Ravindranath@usdoj.gov Of Counsel: JOHN A. HORN United States Attorney Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 7 of 8 8 CERTIFICATE OF COMPLIANCE I hereby certify that this brief has been prepared using 14 point Times New Roman font and does not contain more than 10 characters per inch of type. /s/ Archana Ravindranath ARCHANA RAVINDRANATH Trial Attorney United States Department of Justice, Tax Division Case 1:16-cv-03495-AT Document 22-1 Filed 04/06/17 Page 8 of 8 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION ANDRE T. CARTER SR., Plaintiff, v. UNITED STATES, INTERNAL REVENUE SERVICE, THE STATE OF GEORGIA DEPARTMENT OF REVENUE, Defendants. : : : : : : : : : : : : CIVIL ACTION NO. 1:11-CV-4204-AT ORDER This matter is before the Court on Plaintiff’s motion for temporary restraining order (“TRO”) [Doc. 4], Defendants the United States and Internal Revenue Service’s (“IRS”) Motion to Dismiss [Doc. 12], and Defendant Georgia Department of Revenue’s (“DOR”) Motion to Dismiss [Doc. 23]. In his complaint, Plaintiff seeks preliminary and permanent injunctive relief preventing the IRS and Georgia DOR from enforcing the tax levies they have issued against him and an order that the funds previously collected by the IRS and DOR be returned to him. (Compl. ¶ 1.) Case 1:11-cv-04204-AT Document 25 Filed 04/23/12 Page 1 of 6Case 1:16-cv-03 95-AT Document 2 -2 Filed 04/06/17 Page 1 of 6 2 A. Injunctive Relief Against Federal Levy Under the Anti-Injunction Act, the Court lacks subject matter jurisdiction to consider any suit to restrain the assessment or collection of a tax unless one of the Act’s exceptions applies. 26 U.S.C. § 7421 (“Except as provided in [certain statutes], 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 response opposing the IRS’s motion to dismiss, Plaintiff first argues that the exception to the Anti-Injunction Act contained in 26 U.S.C. § 6330(e)(1) applies.1 This section provides that if a party requests a hearing challenging a tax levy, the levy shall be suspended for the period of the hearing and any appeals, and if the IRS pursues a levy during this period, a court may enjoin the levy. Id. The IRS argues that this exception could not possibly apply, because Plaintiff has not requested a hearing regarding the levy issued November 24, 2010. Plaintiff requested a due process hearing after receiving the Notice of Federal Tax Lien sent on September 8, 2009. (Compl. Ex. A-1, Doc. 3-4; Ex. B, Doc. 3-5.) However, the IRS sent the Notice of Levy that prompted Plaintiff’s right to request a hearing related to the levy on May 10, 2010. (Comp. Ex. K, Doc. 3-14.) Nothing pled in the complaint or attached as an exhibit suggests that 1 Plaintiff does not argue and the Court does not find that any other exception to the Anti- Injunction Act could apply under the facts pled here. Case 1:11-cv-04204-AT Document 25 Filed 04/23/12 Page 2 of 6Case 1:16-cv-03 95-AT Document 2 -2 Filed 04/06/17 Page 2 of 6 3 Plaintiff requested a due process hearing during the 30-day period after receiving the Notice of Levy. (See generally Compl.) Plaintiff also argues that the Anti-Injunction Act should not apply to his suit because he “will prevail” in the action. (Resp. Br., Doc. 15-1, at 1.) In making this argument, Plaintiff relies on the limited exception the Supreme Court has created for suits otherwise barred by the Act where (1) it is clear that under no circumstances the United States will prevail, and (2) the taxpayer lacks an adequate remedy at law. See Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 7 (1962). This exception stems from the Court’s determination that “if it is clear that under no circumstances could the Government ultimately prevail, the central purpose of the Act is inapplicable and . . . the attempted collection may be enjoined if equity jurisdiction otherwise exists.” Id. To benefit from this exception, a plaintiff must show that “in addition to the illegality of an exaction in the guise of a tax there exist special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence.” Miller v. Standard Nut Margarine Co. of Florida, 284 U.S. 498, 509 (1932). Based on the facts pled in the complaint, Plaintiff Carter has not shown either (1) that there is no possibility the United States will prevail or (2) that he lacks an adequate remedy at law – specifically, a suit for refund – giving rise to equity jurisdiction. The Anti-Injunction Act deprives this Court of subject matter jurisdiction over Plaintiff’s claims for preliminary or permanent injunctive relief barring the Case 1:11-cv-04204-AT Document 25 Filed 04/23/12 Page 3 of 6Case 1:16-cv-03 95-AT Document 2 -2 Filed 04/06/17 Page 3 of 6 4 collection of federal taxes. Thus, Plaintiff’s claims for injunctive relief against the U.S. and IRS are DISMISSED for lack of subject matter jurisdiction. B. Injunctive Relief Against State Levy Similarly, Plaintiff’s claim for injunctive relief against the Georgia DOR is barred by the equivalent statute depriving federal courts of jurisdiction to enjoin the collection of state taxes, the Tax Injunction Act. See 28 U.S.C. § 1341 (“The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.”). The Eleventh Circuit has recognized that Georgia provides taxpayers with the following remedies in tax disputes: Georgia taxpayers may utilize four statutory means to contest their tax liability. They may: (1) appeal the assessment directly to the superior court pursuant to O.C.G.A. § 48-2-59; (2) pay the tax and bring an action for a refund pursuant to O.C.G.A. § 48-2-35; (3) file an affidavit of illegality to the levy of execution and have the case heard in superior court pursuant to O.C.G.A. § 48-3-1; and (4) appeal under Georgia's Administrative Procedure Act, O.C.G.A. § 50- 13-12. Waldron v. Collins, 788 F.2d 736, 738 (11th Cir. 1986). In light of these avenues for relief, the Eleventh Circuit determined that Georgia provides procedures for litigating tax matters that are adequate under the Tax Injunction Act, and therefore the federal court lacks jurisdiction to consider requests for such injunctive relief. Id. Case 1:11-cv-04204-AT Document 25 Filed 04/23/12 Page 4 of 6Case 1:16-cv-03 95-AT Document 2 -2 Filed 04/06/17 Page 4 of 6 5 Therefore, the Court DISMISSES Plaintiff’s claim for injunctive relief against the DOR for lack of subject matter jurisdiction. C. Request for Federal Refund Plaintiff’s claim for a refund of tax monies already collected by the IRS is subject to dismissal for failure to plead facts showing that he has satisfied the conditions for waiver of the United States’ sovereign immunity. See 26 U.S.C. § 7422 (“[n]o suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . until a claim for refund or credit has been duly filed with the Secretary”); U.S. v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 4-5 (2008)(before brining an action in district court, the taxpayer “must comply with the tax refund scheme established in the Code”); Galvez v. I.R.S., 448 F. App’x 880, 887 (11th Cir. 2011) (exhaustion of administrative remedies is a jurisdictional requirement in refund suits under 26 U.S.C. § 7422). Therefore, the Court DISMISSES Plaintiff’s claim for a refund of federal taxes collected without prejudice for lack of subject matter jurisdiction. D. Request for State Refund Plaintiff’s request for a refund of all funds collected by the Georgia DOR is barred from proceeding in this Court by principles of comity. See Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100, 113 (1981) (tax suit for damages in federal court barred by principle of comity); Ayers v. Polk Case 1:11-cv-04204-AT Document 25 Filed 04/23/12 Page 5 of 6Case 1:16-cv-03 95-AT Document 2 -2 Filed 04/06/17 Page 5 of 6 6 County, Ga., 697 F.2d 1375, 1377 (11th Cir. 1983) (Georgia provides a remedy that is plain, adequate, and complete, therefore comity bars suit in federal court). Further, Plaintiff’s suit for a refund of state taxes is barred from proceeding in this Court under the Eleventh Amendment. Edelman v. Jordan, 415 U.S. 651, 668-69 (1974) (citing Ford Motor Co. v. Dept. of Treasury, 323 U.S. 459 (1945)) (suit against a state by its own citizen in federal court for tax refund or restitution barred by the Eleventh Amendment). Therefore, the Court DISMISSES Plaintiff’s claim for a refund of state taxes without prejudice for lack of subject matter jurisdiction. E. Conclusion For the foregoing reasons, Defendants’ motions to dismiss [Doc. 12 and 23] are GRANTED, Plaintiff’s motion for preliminary injunction [Doc. 4] and motion for summary judgment [Doc. 18] are DENIED, and Plaintiff’s complaint is DISMISSED. The Clerk is DIRECTED to close the case. It is so ORDERED this 23rd day of April, 2012. __________________________________ AMY TOTENBERG UNITED STATES DISTRICT JUDGE Case 1:11-cv-04204-AT Document 25 Filed 04/23/12 Page 6 of 6Case 1:16-cv-03 95-AT Document 2 -2 Filed 04/06/17 Page 6 of 6