Loetscher v. United States of America

MOTION to Dismiss for Lack of Jurisdiction

D. Ariz.October 26, 2016

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 CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General ALEXANDER STEVKO Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044-0683 Telephone: (202) 616-2380 Facsimile: (202) 307-0054 Email: Alexander.Stevko@usdoj.gov Western.Taxcivil@usdoj.gov JOHN S. LEONARDO United States Attorney District of Arizona Of Counsel Attorneys for the United States of America IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA RENEE L. LOETSCHER, ) ) Plaintiff, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) ____________________________________) Case No. CV-16-0575-TUC-JAS UNITED STATES OF AMERICA’S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION The United States of America, by and through its undersigned counsel, files this motion to dismiss for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(1). Plaintiff does not allege to have brought an administrative claim or to have fully paid her assessed taxes, both of which are jurisdictional Case 4:16-cv-00575-JAS Document 3 Filed 10/26/16 Page 1 of 6 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 requirements for tax refund suits. 26 U.S.C. § 7422(a); Dunn & Black, P.S. v. United States, 492 F.3d 1084, 1089 (9th Cir. 2007). FACTUAL AND PROCEDURAL BACKGROUND Plaintiff Renee Loetscher filed her complaint (ECF No. 1) on August 25, 2016. Plaintiff is seeking a refund of taxes that she alleges were taken in violation of 26 U.S.C. § 6212 & 6213. Specifically, she is seeking a refund of amounts levied by the IRS to pay her tax liability for tax years 2007, 2008, 2010, and 2011. Plaintiff alleges that she never received notices of deficiency as prescribed in 26 U.S.C. § 6212 , and she therefore argues that amounts the IRS assessed against her for these years are invalid. As a result, she claims that amounts levied from her to pay toward her assessed taxes for these years were improperly taken, and she is seeking a refund of those amounts. ARGUMENT I. Lack of Subject-Matter Jurisdiction Generally A defendant may move under Rule 12(b)(1) to dismiss for lack of subject-matter jurisdiction. On such a motion, the plaintiff bears the burden of establishing that subject- matter jurisdiction exists. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Courts will presume they lack jurisdiction unless a plaintiff demonstrates otherwise. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).To establish subject-matter jurisdiction against the United States, there must be (1) statutory authority granting subject-matter jurisdiction and 2) a waiver of sovereign immunity. Alvarado v. Table Mountain Rancheria, 509 F.3d 1008, 1016 (9th Cir. 2007). As a sovereign, the United States may only be sued in strict accordance with the terms of a specific and explicit waiver of sovereign immunity granted by Congress. Case 4:16-cv-00575-JAS Document 3 Filed 10/26/16 Page 2 of 6 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 United States v. Nordic Village, Inc., 503 U.S. 30, 34 (1992). Waivers of sovereign immunity “cannot be implied, but must be unequivocally expressed,” and are strictly construed in favor of the sovereign. United States v. Idaho, 508 U.S. 1, 6-7 (1993); Dunn & Black P.S. v. United States, 492 F.3d 1084, 1088 (9th Cir. 2007). Where the United States has not waived sovereign immunity, courts lack jurisdiction over the subject matter of the action and must dismiss it. Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). Plaintiffs bear the burden of identifying an unequivocal waiver of sovereign immunity. Holloman v. Watt, 708 F.2d 1399, 1401 (9th Cir. 1983), cert. denied 446 U.S. 958 (1984). II. This Court Lacks Jurisdiction Over Plaintiff’s Refund Claim Because She Has Not Brought an Administrative Claim for a Refund The United States has waived its sovereign immunity for suits brought for the recovery of taxes that have been erroneously collected. 28 U.S.C. § 1346(a)(1); 26 U.S.C. § 7422. Section 7422 requires a party to have first brought an administrative claim for a refund with the IRS before initiating a suit in district court for a refund of any amount erroneously or wrongfully assessed or collected. 26 U.S.C. § 7422(a). A taxpayer must also fully pay the assessed tax before a court has jurisdiction over a refund claim. See Flora v. United States, 362 U.S. 145 (1960). A party who has not fully paid the assessed tax or first brought an IRS administrative claim has not complied with the explicit waiver of sovereign immunity, and a district court would lack jurisdiction over his tax refund suit. Id.; Dunn & Black, P.S, 492 F.3d at 1089; see also Goulding v. United States, 929 F.2d 329, 333 (7th Cir. 1991) (stating that a taxpayer had to first file an Case 4:16-cv-00575-JAS Document 3 Filed 10/26/16 Page 3 of 6 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 administrative refund claim when the claim was based on alleged invalid assessments due to not receiving a statutory notice of deficiency). Generally, taxpayers file formal refund claims by submitting a Form 1040, U.S. Individual Income Tax Return, for the year in which they are seeking a refund, or they may file a Form 1040X, Amended U.S. Individual Tax Return. 26 C.F.R. § 301.6402- 3(a). Regardless of the form, taxpayers must include sufficient facts to inform the IRS of the basis for the refund. 26 C.F.R. § 301.6402-2(c). Taxpayers may also bring an informal refund claim, which must be written and have sufficient information to put the IRS on notice that a refund is sought and provide the basis for the refund. Missouri Pac. R. Co. v. United States, 558 F.2d 596, 598 (Ct. Cl. 1977); O'Brien v. United States, 766 F.2d 1038, 1041 n.3 (7th Cir. 1985). Plaintiff never alleges that she submitted either a formal or informal administrative claim for a refund. She does not allege that she filed returns for any of the years at issue, or even informal writings that would meet the standards of an informal claim. And the IRS has no evidence that she has either. This means that Plaintiff has not met her burden of showing that this Court has subject-matter jurisdiction over her suit. Even if she had first brought an administrative refund claim, Plaintiff also has not alleged that she fully paid her assessed taxes. Plaintiff alleges, and the United States admits, that the IRS has levied some of Plaintiff’s property to pay her taxes for 2007, 2008, 2010, and 2011. Plaintiff has not shown that she fully paid her taxes though. IRS records show that the levied amount did not fully pay Plaintiff’s 2010 and 2011 tax liability. On a motion brought pursuant to Rule 12(b)(1), the burden is on the plaintiff to show that subject-matter jurisdiction exists. See Kokkonen, 511 U.S. at 377 (1994). Case 4:16-cv-00575-JAS Document 3 Filed 10/26/16 Page 4 of 6 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 Plaintiff has not done this, and so the Court would lack jurisdiction over her 2010 and 2011 tax liabilities even if she had first brought an administrative refund claim. CONCLUSION For the foregoing reasons, this Court lacks subject-matter jurisdiction over Plaintiff’s tax refund claims, and this action should be dismissed. Respectfully submitted this 26th day of October, 2018. Respectfully Submitted, CAROLINE D. CIRAOLO Principal Deputy Assistant Attorney General /s/ Alexander E. Stevko_____ ALEXANDER E. STEVKO Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-616-2380 (v) 202-307-0054 (f) Alexander.Stevko@usdoj.gov JOHN S. LEONARDO United States Attorney District of Arizona Of Counsel Case 4:16-cv-00575-JAS Document 3 Filed 10/26/16 Page 5 of 6 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 Certificate of Service I certify that on October 26, 2016 I filed the foregoing Motion with the Clerk of the Court through the Court’s CM/ECF system. I further certify that on the same day I served a true and complete copy of the foregoing document by United States Postal Service mail upon Plaintiff Renee Loetscher at the following address: Renee Loetscher 12995 N. Oracle Road, #141-318 Tucson, AZ 85739 /s/ Alexander E. Stevko_____ ALEXANDER E. STEVKO Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington, D.C. 20044 202-616-2380 (v) 202-307-0054 (f) Alexander.Stevko@usdoj.gov Case 4:16-cv-00575-JAS Document 3 Filed 10/26/16 Page 6 of 6