Dockens v. United States of America

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM with Brief In Support

N.D. Ga.May 17, 2017

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION WANDA Y. DOCKENS, ) ) Plaintiff, ) ) v. ) ) UNITED STATES OF AMERICA, ) Defendant. ) __________________________________) Case No. 1:15-cv-2761-SCJ UNITED STATES’ MOTION TO DISMISS The United States of America, by and through undersigned counsel, moves the Court to dismiss Plaintiff’s Fourth Amended Complaint (ECF No. 43) pursuant to Fed. R. Civ. Proc. 12(b)(6) for failure to state a claim upon which relief can be granted. On February 10, 2017, the Court granted in part the United States’ Motion to Dismiss Plaintiff’s Third Amended Complaint and dismissed with prejudice Plaintiff’s claims based on the Federal Tort Claims Act, claims seeking to enjoin the IRS from assessing or collecting tax liabilities, and all claims against individual IRS agents under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). (ECF No. 38.) However, the Court provided Plaintiff another opportunity to file an amended complaint-her Fourth Amended Complaint-only with respect to her claims for damages under 26 Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 1 of 12 2 U.S.C. § 7433 and a claim for refund made pursuant to 28 U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422.1 The Court provided explicit instructions limiting Plaintiff’s amended complaint to these claims and explaining what to plead in order to show that she has exhausted her administrative remedies for any claim made under §§ 7433 and 7422. As a threshold matter, Plaintiff’s Fourth Amended Complaint does not comply with the Court’s instructions in its February 10, 2017 Order because it includes two new claims that the Court did not authorize. Plaintiff now attempts to include a claim under the 26 U.S.C. § 7803(a)(3)(A) - (J) and 26 U.S.C. § 6304 (ECF No. 43 at ¶ ¶ 3, 4.)2 The Court warned Plaintiff in its Order that failure to follow its instructions could result in dismissal for failure to follow a lawful order 1 In its order, the Court determined that it was satisfied that Plaintiff had full paid her tax liabilities for the 2013 tax year and that her letters to the IRS could be construed as informal claims for refund but that Plaintiff had failed to show she had exhausted her administrative remedies by filing a proper formal claim for refund that conformed to statute and regulations. (ECF No. 38 at 13-15.) 2 In any event, the Court does not have subject matter jurisdiction over either claim. 26 U.S.C. §7803 (a)(3)(A)-(J) directs the Commissioner of Internal Revenue to ensure that IRS employees are familiar with taxpayer rights. This provision does not contain an individual cause of action or a waiver of sovereign immunity. 26 U.S.C. § 6304 provides guidelines for appropriate IRS tax collection practices, violations of which may be alleged under 26 U.S.C. §7433. Plaintiff has not alleged a claim for damages under 26 U.S.C. §7433 in her Fourth Amended Complaint. Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 2 of 12 3 of the Court. (ECF No. 38 at 28.) Plaintiff has been afforded four opportunities to properly plead her complaint and she has been instructed on what claims her Fourth Amended Complaint could include. Her blatant failure to follow the Court’s instructions should not be rewarded, and her Fourth Amended Complaint should be dismissed on this basis. Plaintiff’s Fourth Amended Complaint seeks to recover $8,300,000 in damages primarily associated with an uncompleted home sale and unspecified “statutory” damages. The Fourth Amended Complaint does not include a claim for damages under 26 U.S.C. § 7433 or contend that the IRS engaged in unlawful collection activity. Most of the Fourth Amended Complaint merely reiterates Plaintiff’s contentions that the fraudulently filed tax return and resulting identity theft investigation prevented her from closing on the purchase of a new home in 2013. Plaintiff again seeks a refund under 28 U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422 and has now filed an administrative claim for refund and Form 1040X for the 2013 tax year. As discussed in the incorporated memorandum of law which follows, Plaintiff’s Fourth Amended Complaint should be dismissed for failure to state a claim because Plaintiff has failed to provide any plausible basis for which she would be entitled to a refund with respect to the 2013 tax year and Plaintiff has not Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 3 of 12 4 shown that she has exhausted her administrative remedies as required by § 7422 and 26 C.F.R. § 301.6402. MEMORANDUM OF LAW FACTS The facts remain unchanged from Plaintiff’s last four complaints. Wanda Y. Dockens, alleges that she was the victim of identity theft that resulted in the filing of a fraudulent tax return for the 2013 tax year. After Plaintiff late-filed her 2013 tax return in 2015, she was notified by the IRS that a tax return had already been filed in her name for that tax year. (ECF No. 43 at 2.) Plaintiff contacted the IRS and filed an identity theft affidavit. (Id.) The IRS then cancelled the erroneous refund that had been issued in connection with the fraudulent tax return. (ECF No. 43-1, 2-8.) The IRS subsequently determined that Plaintiff’s 2013 return underreported her tax liabilities. (Id.) The IRS also assessed penalties against Plaintiff for filing her 2013 tax return after the due date. (Id.) Due to the fraudulent tax return and the resulting identity theft investigation, Plaintiff alleges she was unable to provide her lender with tax transcripts, and as a result, she could not close on the purchase of a new home. (Id. at 3-4.) Plaintiff continues to allege damages related to the loss of potential financial benefits associated with the home purchase. Without any basis, Plaintiff continues to Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 4 of 12 5 maintain that IRS employees were somehow complicit in the filing of a fraudulent return in order to “steal her money.” (Id. at Ex. 1.) ARGUMENT As with each previous attempt, this complaint has no merit. The Court should dismiss the Fourth Amended Complaint for failure to state a claim upon which relief can be granted because the facts she articulates are neither plausible nor sufficient to claim a refund. Plaintiff has also failed to show that she has exhausted her administrative remedies under § 7422. Although Plaintiff has now filed a Form 1040X and an administrative claim for refund, neither filing conforms to the statutory or regulatory requirements for administrative exhaustion. The Court Should Dismiss Plaintiff’s Fourth Amended Complaint Because It Fails to State a Claim for Relief The Court should dismiss Plaintiff’s Fourth Amended Complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) and 8(a)(2). In deciding a motion to dismiss under Fed. R. Civ. Proc. 12(b)(6), a court must accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). However, a motion to dismiss should be granted when the plaintiff has not proffered “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 5 of 12 6 has factual plausibility 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). A. Plaintiff has failed to allege any plausible basis for a refund Pursuant to 28 U.S.C. § 1346(a)(1), Plaintiff requests a refund of $1,288 in penalties and interest assessed against her for the 2013 tax year. (ECF No. 43 at 6, ¶ 1.) Under § 1346(a)(1), the United States has conditionally waived sovereign immunity where income taxes have been “erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority.” Here, Plaintiff has failed to allege any facts to show that she was wrongly assessed income taxes, or the IRS lacked authority to collect penalties, for the 2013 tax year. Thus, the waiver of sovereign immunity found under § 1346(a)(1) cannot be utilized to bring a refund action in this case. Plaintiff does not allege that her 2013 tax liabilities were erroneously or illegally assessed, but broadly contends that the IRS’ processing of a fraudulent tax return caused her certain damages. (ECF No. 43, 4-6.) Indeed, Plaintiff does not dispute her income tax liabilities for the 2013 tax year and acknowledges that she intended to pay those liabilities when she late-filed her return. (Id. at 6, ¶ 2.) Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 6 of 12 7 Plaintiff alleges that she is entitled to a refund of penalties and interest assessed against her for the 2013 tax year because the IRS mistakenly based them on the fraudulently filed return.3 (Id. at 5-7 ¶ ¶ 1, 2.) But she does not explain how she came to that conclusion or allege why the IRS lacked authority to collect the penalties. (Id.) In fact, the penalty for late-filing her return was assessed only after Plaintiff late-filed her 2013 tax return.4 (ECF 43-2 at 2-8.) The penalty and any interest on the penalty are due to the fact that Plaintiff filed her tax return after the due date- a fact she does not dispute. (ECF No. 43 at 1.) The IRS had authority to assess and collect such penalties under 26 U.S.C. § 6651(a)(1). The IRS may also credit any future overpayment against other liabilities, including this penalty and interest. See 26 U.S.C. § 6402. Plaintiff has failed to allege any facts in her complaint to support her refund suit. Indeed, the Fourth Amended Complaint’s allegations all point to the fact that 3 Without any basis, Plaintiff also states that she is entitled to three times the amount of penalties and interest. 4 The transcript included with Plaintiff’s Fourth Amended Complaint indicates late-filing penalties assessed in 2015, after Plaintiff late-filed her tax return and the fraudulent tax return had been reversed by the IRS. Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 7 of 12 8 the penalty assessed against her and associated interest were valid and lawful. As a result, Plaintiff’s refund claim under §1346(a)(1) should be dismissed. B. Plaintiff has failed to exhaust her administrative remedies under 26 U.S.C. § 7422 Plaintiff’s failure to properly exhaust her administrative remedies prior to filing suit under § 7422 also subjects the Fourth Amended Complaint to dismissal for failure to state a claim. As with Plaintiffs prior attempts, the Fourth Amended Complaint does not satisfy Federal Rule of Civil Procedure 8(a) because it merely contains an “unadorned, the-defendant-unlawfully-harmed-me-accusation.” Ashcroft, 556 U.S. at 678. “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679. As the Court noted in its February 10, 2017 order, Plaintiff must show that she has exhausted her administrative remedies by filing both the appropriate tax form, such as a Form 1040X, and a verified written declaration that describes in detail each ground upon which a credit is claimed and enough facts to apprise the IRS of the exact basis of the claim. (ECF No. 38 at 29); see also, 26 C.F.R. § 301.6402-3(a)(2); Enax v. Comm’r, 476 Fed. Appx. 857, 859 (11th Cir. 2012). Plaintiff has failed to meet either requirement, and thus, she has not exhausted her administrative remedies for the credit or refund she now claims. Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 8 of 12 9 First, Plaintiff has not filed the appropriate form to claim a refund of penalties and interest assessed for her failure to timely file a tax return and pay her income tax liabilities for the 2013 tax year. Claims by taxpayers for a refund of these types of penalties and interest must be made on a Form 843 (Claim for Refund and Request for Abatement). See 26 C.F.R. § 301.6402-2(c). Plaintiff did not file a Form 843 but instead filed a Form 1040X on which she does not change her tax liability, but appears to request only a refund of the penalties and interest described above. (ECF No. 43-2 at 2-3, 2-4.) Second, Plaintiff’s administrative claim does not set forth a detailed basis for her claim for a refund of the penalties and interest. Without any explanation or basis, the claim appears to conflate these assessments with the fraudulent tax return and demands a refund of three times the amount of the penalties and interest. (ECF No. 43-1 at 1-2.) Indeed, since the fraudulent tax return filed in her name was not the cause of her late-filing, it is difficult to ascertain what Plaintiff’s basis for a refund might be. Because Plaintiff’s submissions do not conform to the regulation’s requirements for a proper administrative claim under § 7422, Plaintiff has not exhausted her administrative remedies and her claim under § 7422 must be dismissed. Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 9 of 12 10 CONCLUSION The Fourth Amended Complaint fails to state a claim upon which relief can be granted for Plaintiff’s claim for a refund, because she has articulated no plausible claim for a refund and has failed to adequately exhaust her administrative remedies. Further, in its order on Plaintiff’s last complaint, the Court clearly instructed Plaintiff what claims she could include in this iteration. Her failure to abide by the Court’s order should subject her complaint to dismissal without the need for further inquiry. Therefore, the Fourth Amended Complaint should be dismissed under Federal Rule of Civil Procedure 12(b)(6). Dated: May 17, 2017 DAVID A. HUBBERT Acting Assistant Attorney General /s Christopher M. Whitcomb CHRISTOPHER M. WHITCOMB Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 202-353-9175 (v) 202-514-4963 (f) Christopher.M.Whitcomb@usdoj.gov Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 10 of 12 11 Of Counsel: JOHN A. HORN United States Attorney I certify that this pleading is being submitted in accordance with LR 5.1C. s/ Christopher M. Whitcomb CHRISTOPHER M. WHITCOMB Trial Attorney United States Department of Justice, Tax Division Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 11 of 12 12 CERTIFICATE OF SERVICE I hereby certify that on this 17th day of May, 2017, I electronically filed the foregoing document with the Clerk of Court using the CM/ECF system, and served by U.S. mail to: Wanda Y. Dockens 2105 Marsh Trail Circle Atlanta, Georgia 30328 s/ Christopher M. Whitcomb CHRISTOPHER M. WHITCOMB Trial Attorney United States Department of Justice, Tax Division Case 1:15-cv-02761-SCJ Document 44 Filed 05/17/17 Page 12 of 12