Ford v. Ciraolo-Klepper et al

MOTION to DISMISS for LACK of JURISDICTION

E.D. Cal.March 31, 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 JONATHAN M. HAUCK Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-616-3173 (v) 202-307-0054 (f) jonathan.m.hauck@usdoj.gov Of Counsel: PHILLIP A. TALBERT United States Attorney IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA MELBA FORD, ) ) Plaintiff, ) ) v. ) ) CAROLINE CIRAOLO-KLEPPER; ) DENNIS STIFFLER, REVENUE OFFICER; ) COMMISSIONER, INTERNAL REVENUE; ) UNITED STATES ATTORNEY GENERAL; ) 2 UNKNOWN ATTORNEYS, ) ) Defendants. ) _______________________________________) Case No. 1:17-cv-00034-DAD-EPG NOTICE OF AND UNITED STATES’ MOTION TO DISMISS Date: May 2, 2017 Time: 9:30 AM Place: Courtroom 5, 7th Floor Judge: Honorable Dale A. Drozd NOTICE PLEASE TAKE NOTICE THAT Defendant, the United States of America, will bring a Motion to Dismiss for hearing before the Honorable Dale A. Drozd, United States District Court Judge, in Courtroom 5, 7th Floor of the United States Courthouse located at 2500 Tulare Street, Fresno, California, on May 2, 2017, at 9:30 AM, or soon thereafter. NOTICE IS FURTHER GIVEN that, pursuant to Local Rule 230(c), opposition, if any, to the granting of this motion shall be in writing and shall be filed and served not less than fourteen (14) days preceding the noticed (or continued) hearing date. A responding party who Case 1:17-cv-00034-DAD-EPG Document 13 Filed 03/31/17 Page 1 of 3 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 has no opposition to the granting of the motion shall serve and file a statement to that effect, specifically designating the motion in question. No party will be entitled to be heard in opposition to a motion at oral arguments if opposition to the motion has not been timely filed by that party. MOTION The United States, by and through its undersigned counsel, pursuant to Federal Rule of Civil Procedure 12(b)(1) hereby moves the Court for dismissal of the Plaintiff’s Complaint for for lack of subject matter jurisdiction. In addition, the United States moves pursuant to Federal Rule of Civil Procedure 12(b)(5) that the Complaint be summarily dismissed because Plaintiff has not properly served the United States with a copy of the Summons and the Complaint. A memorandum in support of this motion is submitted herewith. Wherefore, the United States prays that this Court grant its motion and dismiss and the complaint with prejudice. Dated: March 31, 2017. DAVID A. HUBBERT Acting Assistant Attorney General /s/ Jonathan M. Hauck JONATHAN M. HAUCK Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-616-3173 (v) 202-307-0054 (f) jonathan.m.hauck@usdoj.gov Of Counsel: PHILLIP A. TALBERT United States Attorney Case 1:17-cv-00034-DAD-EPG Document 13 Filed 03/31/17 Page 2 of 3 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 CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing NOTICE OF AND UNITED STATES’ MOTION TO DISMISS has been made on March 31, 2017, by ECF Filing and and by depositing a copy into a pre-paid envelope in the United States Postal Service addressed to: Melba Ford 905 Ross Way Hanford, CA 93230 /s/ Jonathan M. Hauck JONATHAN M. HAUCK Trial Attorney, Tax Division U.S. Department of Justice Case 1:17-cv-00034-DAD-EPG Document 13 Filed 03/31/17 Page 3 of 3 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 JONATHAN M. HAUCK Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-616-3173 (v) 202-307-0054 (f) jonathan.m.hauck@usdoj.gov Of Counsel: PHILLIP A. TALBERT United States Attorney IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA MELBA FORD, ) ) Plaintiff, ) ) v. ) ) CAROLINE CIRAOLO-KLEPPER; ) DENNIS STIFFLER, REVENUE OFFICER; ) COMMISSIONER, INTERNAL REVENUE; ) UNITED STATES ATTORNEY GENERAL; ) 2 UNKNOWN ATTORNEYS, ) ) Defendants. ) _______________________________________) Case No. 1:17-cv-00034-DAD-EPG MEMORANDUM IN SUPPORT OF UNITED STATES’ MOTION TO DISMISS Date: May 2, 2017 Time: 9:30 AM Place: Courtroom 5, 7th Floor Judge: Honorable Dale A. Drozd Introduction As indicated in the first paragraph of Melba Ford’s (Plaintiff) complaint filed January 10, 2017, (Complaint), this action is one in a series of similar actions filed since 2012 that seek to do the same two basic things: (1) enjoin the Internal Revenue Service (“IRS”) from preparing substitutes for returns for individuals who do not file their required federal income tax returns (which they characterize as “fraudulent” and “criminal” and which Plaintiff specifically Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 1 of 16 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 characterizes as an “institutionalized scheme to fabricate evidence concerning Plaintiff” at Compl. ¶ 20, 88), and (2) enjoin the Department of Justice (the “DOJ”) from using certified copies of non-filers’ tax transcripts in subsequent collection and enforcement proceedings. All the previous actions in the series of similar actions were filed in the United States District Court for the District of Columbia1. While the previous actions filed against the United States are similar in substance and formatting to the Complaint in the instant action, there is no “Class” of plaintiffs as repeatedly mentioned in Complaint2. 1 Ellis v. Commissioner, 67 F. Supp. 3d 325 (D.D.C. 2014) was dismissed. McNeil v. Commissioner, et al., 179 F.Supp. 2d 1 (D.D.C. Apr. 12, 2016) was dismissed and summary affirmance was granted on appeal. Ellis v. Langer, No. 1:16-cv-00729 (D.D.C. April. 21, 2016) was dismissed and summary affirmance was granted on appeal. Ellis v. Jarvis, No. 1:16-cv- 00031, 2016 WL 3072244 (D.D.C. May 31, 2016) was dismissed and summary affirmance was granted on appeal. DePolo v. Ciraolo-Klepper, et al., 197 F.Supp 2d 186 (D.D.C. July 14, 2016) was dismissed. Dwaileebe v.Martineau, et al., 1:16-cv-00420, Morris v. McMonagle, et al.,, No. 1:16-cv-01384, McGarvin v. McMonagle, et al., No. 1:16-cv-01458, Podgorny v. McMonagle, et al., No. 1:16-cv-1768, and Deorio v. Ciraolo-Klepper, et al., 1:16-cv-2089 were all consolidated with Crumpacker v. Ciraolo- Klepper, 1:16-cv-01053 in the United States District Court for the District of Columbia, and each of the complaints were dismissed by a December 31, 2016 order. Finally, on November 18, 2016, the complaint in Ellis, et al. v. Jackson, et al., 1:16-cv-02313 was filed in the District Court for the District of Columbia. A motion to dismiss has been filed, but not yet ruled upon by the court. 2 The complaint seems to assume that class action was authorized or is being commenced. Even assuming that a class action - or any action - was authorized (or had even been properly pleaded), the Court cannot certify a class before first finding that it has subject matter jurisdiction over the plaintiff’s claims. Steel Co .v Citizens for a Better Env’t, 523 U.S. 89, 94 (1998) (“Without jurisdiction the court cannot proceed at all in any case.”). Moreover, “[i]t is well established that the privilege to represent oneself pro se provided by § 1654 is personal to the litigant and does not extend to other parties or entities.” Simon v. Hartford Life, Inc., 546 F.3d 661, 664 (9th Cir. 2008). Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 2 of 16 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 Plaintiff, like the plaintiffs in, Ellis, McNeil, and Depolo, alleges that the IRS “fabricated” its records to reflect that it had prepared a return on her behalf. She alleges that, in fact, the IRS “never generates substitute income tax returns”. Compl. ¶¶ 30, 67. Plaintiff goes on to argue that the DOJ’s subsequent use of a certified transcript generated from the allegedly falsified records is “criminal.” Compl. ¶ 108. She also alleges that the DOJ “conceals” this “scheme” by filing motions to dismiss. Id. ¶¶ 24, 65-69, 116-117. On these allegations, Plaintiff asserts claims against Caroline Ciraolo-Klepper, the former Acting Assistant Attorney General of the Tax Division of the DOJ, the Commissioner of Internal Revenue, and the Attorney General of the United States under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 702, (Compl. ¶¶ 16, 24-35, 88) and the Fifth Amendment. Id. ¶¶ 89-90, 93-95.3 Plaintiff’s claims are neither meritorious nor new. The “conspiracy” she alleges - the IRS’s determination of a tax deficiency and the making of a return when the taxpayer has refused to prepare one - is authorized by statute and the Treasury Regulations. See 26 U.S.C. § 6020(b)(1) (“if any person fails to make any return required by any internal revenue law or 3 Plaintiff names individual a former Department of Justice Attorney, an Internal Revenue Service Revenue Officer, and “2 Unknown-named attorneys, (1 IRS, 1 DOJ,)” in personal capacity” in the Complaint. With regard to the former Department of Justice attorney, Plaintiff’s theory is that she “conceal and prolong” the scheme in “all suits filed by Class members” by filing “false and misleading documents” in those cases. Compl. ¶24. As discussed infra, the individuals named in the complaint are not proper defendants in this case, and have not been properly served. In any event, Plaintiff has pleaded no facts showing that individuals have engaged in any collection or litigation activity related to her. Plaintiff’s attempt to sue government attorneys for filing briefs in other cases is inappropriate. Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 3 of 16 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 regulation made thereunder … the Secretary shall make such return[.]”) (emphasis added); 26 C.F.R. §§ 301.6211-1 (For the purpose of calculating tax deficiency, “if no return is made … ‘the amount shown as the tax by the taxpayer upon his return’ shall be considered as zero.”). Similarly, the use of such returns and certified transcripts thereof to collect unpaid taxes is authorized. 26 U.S.C. § 6020(b)(2) (“Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes.”). Three trial courts in the District of Columbia and the United States Court of Appeal for the District of Columbia have all agreed that these claims should be dismissed. The same result is required here. Factual Allegations and Summary of Argument When a taxpayer does not file a tax return, the IRS opens an Individual Master File (“IMF”) for the non-filer in its computer system by creating an entry showing that he / she has paid zero tax.4 The IRS calculates the individual’s tax deficiency, as well as any penalties and interest (referred to as “additions to tax”), and records that on a Form 4549 “Income Tax Examination Changes” (accompanied, at least in some instances, by a Form 866 “Explanation of Items.”). The IRS appends the Form 4549 and the Form 866 to a Form 13496 “IRC § 6020(b) Certification” containing an assessment of the taxes due. This package of records typically forms what plaintiff refers to as a “Substitute for Return.” See 26 C.F.R. § 301.6020-1(b)(2). The IRS later creates a certified transcript of the IMF for the purpose of taking administrative 4 The presumption that zero tax was paid by the non-filer is authorized by the Treasury Regulations. 26 C.F.R. § 6211-1(a). Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 4 of 16 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 and legal collection actions against the non-filer. Compl. ¶ 93. The IRS allegedly generated these documents and sent them to the Plaintiff for tax year 2003, and filed liens against her. Id.¶¶ 17, 55, 61, 90, 93. Plaintiff alleges that the IRS improperly labels her an income tax “non-filer,” based on records falsified [by the IRS].” Compl. ¶¶ 43, 48-53. She goes on to allege that the IRS’s preparation of a Form 4549 “Income Tax Examination Changes” form for her was fraudulent because “no original return of any sort existed which IRS might have been ‘adjusting.’” Id. ¶ 55. She does not allege that she has filed federal income tax returns for any of the years at issue. Rather, she alleges that the IRS may prepare returns for non-filers only if the tax at issue is an employment, partnership, or excise tax. Id. ¶¶ 3,7, 60. Plaintiff’s Complaint raises the same arguments raised by the plaintiffs in Florance, Ellis, and McNeil. In each case, the district court dismissed each of those actions on the ground that it lacked subject matter jurisdiction over the action, and the D.C. Circuit has agreed in a memorandum opinion. Ellis v. Comm’r, 622 Fed. App’x 2 (D.C. Cir. 2015). Plaintiff’s complaint should be similarly dismissed with prejudice. Argument I. THE COMPLAINT SHOULD BE TREATED AS A SUIT AGAINST THE UNITED STATES, AND THE INDIVIDUAL DEFENDANTS SHOULD BE DISMISSED As a preliminary matter, the Complaint should be treated as a suit against the United States, despite naming as defendants, an Internal Revenue Service Revenue Officer, a former Acting Assistant Attorney General of the Tax Division Caroline Ciraolo-Klepper, the Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 5 of 16 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 Commissioner of Internal Revenue, and the Attorney General,5 acting in either a personal or official capacity. A suit brought against a government official in his / her official capacity “generally represent[s] only another way of pleading an action against an entity of which an officer is an agent.” Kentucky v. Graham, 473 U.S. 159, 165-66 (1985) (quoting Monell v. New York City Dept. of Social Services, 436 U.S. 658, 690, n. 55 (1978)). Therefore, “an official- capacity suit is, in all respects other than name, to be treated as a suit against the entity.” Id. at 166; see also, Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985) (“[A] suit against IRS employees in their official capacity is essentially a suit against the United States.”). This suit should be treated as a suit against the United States and the United States should be substituted for the individual defendants. II. THE COURT LACKS JURISDICTION OVER PLAINTIFF’S CLAIMS Federal courts are courts of limited jurisdiction, and “it is to be presumed that a cause lies outside this limited jurisdiction[.]” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Fed.R.Civ.P. 8(a)(1) provides that a pleading for relief must contain “a short and 5 Plaintiff has filed an affidavit asserting that she has served the United States and the individual defendants. (ECF Docket No. 9) She has not. Instead, she mailed a copy of the complaint and summons by mail to the individual defendants, and mailed a copy to the United States attorney for the District of Columbia. This is ineffective service against the United States and its employees. Fed. R. Civ. P 4(i)(1)(A)-(C) (service by mail on the United States), 4(i)(2) (service on employee sued in official capacity), 4(i)(3) (service on United States employee sued individually), 12(a)(2)-(3) (time for Untied States and/or employee to respond to complaint measured from date of service on United States Attorney). Accordingly, the United States does not concede that it has been properly served, and indeed asserts the failure of service as yet another ground for dismissal. Fed. R. Civ. P. 12(b)(5). Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 6 of 16 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 plain statement of the grounds for the court’s jurisdiction.” “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). The limits upon federal jurisdiction, whether imposed by the Constitution or by Congress, must be neither disregarded nor evaded. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). A plaintiff bears the burden to establish that subject matter jurisdiction is proper. Kokkonen, 511 U.S. at 377; see Tosco Corp. v. Communities for Better Environment, 236 F.3d 495, 499 (9th Cir.2001) (“plaintiff has burden of proving jurisdiction” to survive a F.R.Civ.P. 12(b)(1) motion to dismiss). “It is clear that the party seeking to invoke the jurisdiction of the federal court has the burden of establishing that jurisdiction exists.” Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977) citing KVOS, Inc. v. Associated Press, 299 U.S. 269, 278 (1936). If Plaintiff cannot meet this burden, the action is properly dismissed under Federal Rule of Civil Procedure 12(b)(1). See Righthaven LLC v. Newman, 838 F. Supp. 2d 1071 (D. Nev. 2011). Like the actions that preceded this case - Florance, Ellis, and McNeil - Plaintiff’s action fails because the Court cannot exercise subject matter jurisdiction to consider it. There are two grounds for this conclusion. First, this is an action seeking to enjoin the assessment and collection of taxes, which is barred by Anti-Injunction Act (26 U.S.C. § 7421). Second, Plaintiff cannot show the injury, causation, or redressability necessary to establish her Article III standing. Each provides an adequate, independent ground for dismissal. If the Court agrees, it need not consider section III, infra, regarding Plaintiff’s failure to state a claim under Rule 12(b)(6). Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 7 of 16 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 A. The Anti-Injunction Act Bars This Suit The doctrine of sovereign immunity protects the United States from suit except when Congress has “unequivocally expressed” a waiver of sovereign immunity United States v. Nordic Village, Inc., 503 U.S. 30, 33 (1992). Plaintiff purports to rely on the Administrative Procedure Act and the Fifth Amendment for the exercise of jurisdiction in this case. These statutes do not provide jurisdiction, however, because this entire action is barred by the Tax Anti-Injunction Act (26 U.S.C. § 7421). The Complaint seeks the following relief: (1) to enjoin the Service from preparing returns from information available to it based on a presumption “that a zero amount due was shown on an imaginary return, pursuant to any regulation, including § 301.6211” (Compl. ¶ 111); (2) to enjoin the IRS from creating certified account transcripts thereon (id. ¶ 112); and (3) enjoin the DOJ from using those documents in court (id. ¶¶ 113-116). None of the requested relief is permissible because of the Anti-Injunction Act. Under the Act, “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person[.]” 26 U.S.C. § 7421(a)(1) (emphasis added). The principal purpose of the Anti-Injunction Act is to preserve the Government's ability to assess and collect taxes expeditiously with “a minimum of preenforcement judicial interference” and “to require that the legal right to the disputed sums be determined in a suit for refund.” Bob Jones Univ. v. Simon, 416 U.S. 725, 736 (1974) (citing, Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962)). “This ‘statutory ban against judicial interference with the assessment or collection of taxes ‘is equally applicable to activities which are intended to or may culminate in the assessment or Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 8 of 16 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 collection of taxes.’” Peters v. Agents for Int'l Monetary Fund, 918 F. Supp. 309, 311 (C.D. Cal. 1995) (citing, Blech v. United States, 595 F.2d 462, 466 (9th Cir.1979) (quoting United States v. Dema, 544 F.2d 1373, 1376 (7th Cir.1976), cert. denied, 429 U.S. 1093, 97 S.Ct. 1106 (1977). This suit fits squarely within the Act’s prohibitions of suits “brought for the purpose of restraining the assessment or collection of tax” and those seeking to enjoin actions leading up to assessment or collection of taxes. First, the entire process of determining the tax liability of a non-filer under Section 6020(b) - beginning with the IRS’s presumption that the amount of taxes paid by a non-filer is zero (26 C.F.R. § 301.6211-1(a)), to modifying IRS computer records to generate substitute returns and certifications - is intended to culminate in the assessment or collection of taxes. Other courts have held that the Act prohibits any attempt to enjoin the preparation of returns under I.R.C. § 6020(b) in similar cases in the claimed class. Ellis, 67 F. Supp. 3d at 333 (“The use of the ‘created’ return directly relates to the tax assessment and is certainly an activity that resulted in the imposition of tax liability.”); McNeil, 2016 WL 1446127, at *5 (“All the actions of which Plaintiff complains and that are the bases for Plaintiff’s request for relief are actions taken in the process of assessing and collecting taxes: from the presumption that the amount of taxes paid by a non-filer is zero . . . to falsifying and/or modifying the IRS computer record system used to generate substitute returns, to using those allegedly falsified returns and certifications in proceedings related to the assessment and collection of taxes.”). Second, Plaintiff openly admits that she seeks to restrain the DOJ from bringing or defending civil and criminal actions where the IRS has assessed taxes against a non-filer based on the procedures contained in I.R.C. § 6020. Compl. ¶ 113. The Act plainly prohibits such Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 9 of 16 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 relief. See Tecchio v. U.S., 153 Fed. App’x 841, 843 (3d Cir. 2005) (holding action barred by Anti-Injunction Act where plaintiff sought “to enjoin the United States from using a substitute 1040 return to impose tax liability”). B. Plaintiff Cannot Establish The Causation And Redressability Requirements Necessary For Article III Standing The Court also lacks subject matter jurisdiction over this action because Plaintiff cannot establish the elements necessary to establish her standing to seek injunctive relief. Under Article III, federal courts assert jurisdiction only over a case or controversy. “[T]he core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992) (referencing Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). To establish Article III standing, Plaintiff must plead and prove an injury in fact that is fairly traceable to the defendant’s allegedly unlawful conduct and which is likely to be redressed by the requested relief. See Lugan, supra and Simon v. E. Kentucky Welfare Rights Org., 426 U.S. 26, 33 (1976). Plaintiff cannot establish either an injury in fact or causation because she has not claimed an injury. In addition, even her prospective injury is not “fairly traceable” to the criminal conspiracy she alleges. Plaintiff’s complaint does not request any relief that is directly applicable to Plaintiff other than to suggest that the injunction she seeks would prospectively protect her from future “attacks using falsified IRS records,” “give her standing to remove liens,” and prevent the United States from using specific evidence in “any criminal case against Plaintiff or others similarly situated...” Compl. ¶ 17 Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 10 of 16 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 Further, the prospective injuries are not redressable. To establish redressability, a plaintiff must show that “it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” (internal quotations omitted) Lujan, 504 U.S. at 561. Enjoining the IRS’s preparation of returns under § 6020 and use of assessments and transcripts based upon those returns in court is not “likely” to prevent future activities by the IRS against Plaintiff if she fails to file tax returns. Plaintiff is liable for federal income taxes owed whether she files a return or not, and whether the IRS prepares a return for her or not. 26 U.S.C. § 1. The IRS may calculate her tax deficiency and take action to collect it regardless of whether it prepares a substitute return. 26 U.S.C. § 6211 (defining “deficiency”); 26 C.F.R. § 301.6211- 1(a) (providing for calculation of deficiency using presumption of zero tax paid for non-filers); 26 U.S.C. § 6301 (authorization for collections). The requested injunctive relief would therefore give Plaintiff no more than “psychic satisfaction,” which is not enough under Article III. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 107 (1998). III. THE COMPLAINT FAILS TO STATE A PLAUSIBLE CLAIM ON WHICH RELIEF CAN BE GRANTED AGAINST THE UNITED STATES A motion to dismiss should be granted where Plaintiff fails to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Determining whether a complaint states a plausible claim for relief [is] … a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). A plaintiff must allege “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. When ruling on a motion to dismiss, a court must accept Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 11 of 16 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 factual allegations pleaded in the complaint as true, but it need not accept unsupported inferences or legal conclusions cast in the form of factual allegations. Carson Harbor Village, Ltd. v. City of Carson, 353 F.3d 824, 826 (9th Cir.2004); Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.2004). “Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]’ - ‘that the pleader is entitled to relief.’” Iqbal at 679. Although courts accept the well-pleaded factual allegations of a complaint as true, and draw reasonable inferences therefrom in the plaintiff's favor, they are not required to blindly accept “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences,” nor must they accept “allegations that contradict matters properly subject to judicial notice.” Stratton v. Mecklenburg Cty. Dep't of Soc. Servs., 521 F. App'x 278, 288 (4th Cir. 2013) (quoting Veney v. Wyche, 293 F.3d 726, 730 (4th Cir.2002)). Although courts are obliged to construe liberally the allegations of a pro se complaint, they are not required to credit outlandish conspiracy theories simply because a plaintiff does not have a lawyer. Id. (citing Weller v. Dep't of Soc. Svcs., 901 F.2d 387, 390-91 (4th Cir.1990)). The Complaint fails to state a plausible claim for relief for two reasons. First, Plaintiff’s claims are precluded as a matter of law because they depend upon the fanciful claim that the Service’s preparation of returns under 6020(b) from information available to it runs afoul of the Fifth Amendment privilege against self-incrimination. Second, the claims fail because they are based upon statutorily-authorized conduct. A. Plaintiff Has Not Alleged A Plausible Violation Of The Fifth Amendment Plaintiff’s Fifth Amendment claim fails because it is based on an illusory premise: the Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 12 of 16 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 “IRS unlawfully circumvents” her privilege against self-incrimination and her due process rights by “falsifying records and certifications” and “using the falsified records as false evidence” in support of court actions and collections activities. Compl. ¶ 93. Plaintiff has no Fifth Amendment right to refuse to file a tax return or to be free from collections actions, so her constitutional claim fails as a matter of law. United States v. Sullivan, 274 U.S. 259, 263 (1927) (individual may not “refuse to make any return at all” on account of the Fifth Amendment); Garner v. United States, 424 U.S. 648, 661 (1975) (“The requirement that such returns be completed and filed simply does not involve the compulsion to incriminate”); 26 U.S.C. § 6012 (setting forth categories of individuals who must file income tax returns). B. Plaintiff Has Not Alleged A Plausible Violation Of Any Statute Plaintiff’s APA claim fails because the challenged conduct is expressly authorized by law. A plaintiff may only bring suit under the APA to protect interests that are “arguably within the zone of interests to be protected or regulated by the statute that he says was violated.” Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 132 S.Ct. 2199, 2210 (2012). Plaintiff alleges that the IRS “creates and uses . . . an unlawful presumption that a zero return was filed by Plaintiff.” Compl. ¶ 89 . This is incorrect. The Treasury Regulations authorize that presumption. 30 C.F.R. § 301.6211-1(a)(1) (“If no return is made . . . for the purpose of the definition ‘the amount shown as tax by the taxpayer upon his return’ shall be considered as zero.”) (emphasis added). Plaintiff may also claim that the IRS may only generate a return from information available to it when a taxpayer elects that the IRS do so under Section 6020(a). This argument Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 13 of 16 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 also fails. Section 6020(a) does not apply to individuals who simply do not file a return. Instead, Section 6020(b) applies, and it expressly authorizes the IRS to prepare a return based on information available to the IRS for individuals who do not file a return. 26 U.S.C. § 6020(b) (“If any person fails to make any return required by any internal revenue law or regulation made thereunder … the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise.”) (emphasis added). In any event, Plaintiff’s tax deficiency exists even if no return is prepared at all. See 26 C.F.R. § 301.6211- 1(a) (“if no return is made . . . ‘the amount shown as the tax by the taxpayer upon his return’ shall be considered as zero . . . [and] if no deficiencies with respect to the tax have been assessed, or collected without assessment, and no rebates have been made, the deficiency is the amount of the income tax imposed by subtitle A[.]”) (emphasis added). Because Plaintiff has not alleged - and cannot allege - a statutorily “protected” interest, her APA claim must fail as “the plaintiff must establish that the injury he complains of (his aggrievement, or the adverse effect upon him ) falls within the “zone of interests” sought to be protected by the statutory provision whose violation forms the legal basis for his complaint.” Lujan, supra at 883. IV. THE COMPLAINT IS FRIVOLOUS AND MAY BE DISMISSED SUA SPONTE The Complaint - like the complaints dismissed in Florance, Ellis, and McNeil - is frivolous on its face. Accordingly, this action may be dismissed sua sponte. See Neitzke v. Williams, 490 U.S. 319, 328 (1989) (authorizing a court to dismiss immediately claims based on “fantastic or delusional scenarios”). A position maintained by a taxpayer is frivolous where it is Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 14 of 16 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 “contrary to established law and unsupported by a reasoned, colorable argument for change in the law.” See Coleman v. Comm’r, 791 F.2d 68, 71 (7th Cir. 1986). Since Plaintiff is simply rehashing the same claims raised and rejected by the plaintiffs in Florance, Ellis, and McNeil, the Complaint should be dismissed without further proceedings. See Douglas v. United States, 324 Fed. App’x 320, 321 (5th Cir. 2009) (“argument that the IRS committed ‘fraud’ by filling out returns on his behalf as authorized by I.R.C. § 6020(b) is frivolous”). Conclusion For the foregoing reasons, the United States respectfully requests that the Court dismiss the Complaint with prejudice. Dated: March 31, 2017. DAVID A. HUBBERT Acting Assistant Attorney General /s/ Jonathan M. Hauck JONATHAN M. HAUCK Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-616-3173 (v) 202-307-0054 (f) jonathan.m.hauck@usdoj.gov Of Counsel: PHILLIP A. TALBERT United States Attorney Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 15 of 16 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 CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing MEMORANDUM IN SUPPORT OF UNITED STATES’ MOTION TO DISMISS has been made on March 31, 2017, by ECF Filing and by depositing a copy into a pre-paid envelope in the United States Postal Service addressed to: Melba Ford 905 Ross Way Hanford, CA 93230 /s/ Jonathan M. Hauck JONATHAN M. HAUCK Trial Attorney, Tax Division U.S. Department of Justice Case 1:17-cv-00034-DAD-EPG Document 13-1 Filed 03/31/17 Page 16 of 16