Opinion
No. CIV.S-00-0478 EJG DAD PS
November 1, 2000
FINDINGS AND RECOMMENDATIONS
This action came before the court for hearing on defendants' motion to dismiss and plaintiff's motion for "trial by certificate." Plaintiff appeared pro se. G. Patrick Jennings, Trial Attorney, U.S. Department of Justice, appeared on behalf of defendants. Having considered all written materials submitted with respect to the motions and after hearing oral argument, for the reasons set forth below the undersigned recommends that defendants' motion to dismiss be granted and plaintiff's motions be denied.
In addition, plaintiff has filed a number of repetitive motions, none of which have been properly noticed for hearing. In this regard, plaintiff has filed documents reflecting the following motions: motion for judgment by demand filed March 6, 2000; motion for judgment by demand filed March 27, 2000; amended motion for judgment by demand filed March 28, 2000; motion for lien/levy abatement filed March 29, 2000; amended motion for judgment by demand filed April 6, 2000; ex parte motion for trial by certificate filed May 8, 2000; and a motion to supplement filed October 4, 2000. All of plaintiff's motions are meritless and should be denied for the reasons set forth below.
BACKGROUND
On March 6, 2000, plaintiff filed this action, without the appropriate filing fee, erroneously styled as an application for writ of habeas corpus brought pursuant to 28 U.S.C. § 2241. On March 17, 2000, the Clerk of the Court issued a notice informing the parties that a clerical error had been made upon the opening of the case and that the case number was being corrected to reflect that this was a civil action pursued by a plaintiff proceeding in pro se rather than a habeas corpus action filed by an incarcerated individual seeking to collaterally attack a criminal conviction. The case was referred to the undersigned pursuant to Local Rule 72-302(c)(21).
Plaintiff filed the same application for writ of habeas corpus again on March 27, 2000.
On March 28, 2000, plaintiff filed an objection to a Magistrate Judge conducting these proceedings. The objection is not well-taken.
By order filed April 20, 2000, the undersigned noted that plaintiff had paid only the $5.00 filing fee associated with a petition for writ of habeas corpus and directed plaintiff to submit the appropriate filing fee to commence a civil action. On May 8, 2000, plaintiff paid the filing fee and filed yet another "Application for Habeas Corpus 28 U.S.C. § 2241(a) Amended pursuant to FRCP 15(a)(b)," which this court has construed as an amended complaint.
In his difficult to decipher complaint plaintiff appears to allege that: (1) the United States does not have the authority to tax compensation for personal labor or personal services; (2) the revenue officers named as defendants have denied him his due process and "white citizen" right to a "trial by certificate"; and (3) he is not subject to Internal Revenue Service (IRS) administrative penalties. Plaintiff requests that the court issue a stay, apparently prohibiting further IRS collection efforts, and award damages in the amount of $350,000. Plaintiff seeks to invoke this court's jurisdiction under 28 U.S.C. § 1343 and 1340. Through his various motions, plaintiff seeks a "trial by certificate," "judgment by demand" and a stay of IRS collection efforts aimed at him.
On May 22, 2000, defendants filed a motion to dismiss. Therein they contend that this is plaintiff's third frivolous action challenging tax assessments and penalties and that the two prior actions have been dismissed due to lack of subject matter jurisdiction. Defendants argue that: (1) because plaintiff is not incarcerated, the court has no jurisdiction to hear his petition for writ of habeas corpus and to the extent plaintiff seeks to enjoin IRS collection activities the action is barred by the Anti-Injunction Act ( 26 U.S.C. § 7421) and the Declaratory Judgment Act ( 28 U.S.C. § 2201); (2) the court lacks subject matter jurisdiction because the United States has not waived sovereign immunity; and (3) the court lacks jurisdiction over the individual IRS employees named as defendants. Defendants conclude that because plaintiff's claims are frivolous the complaint should be dismissed with prejudice. The undersigned agrees.
Judicial notice may be taken of court records. Valerio v. Boise Cascade Corp., 80 F.R.D. 626, 635 n. 1 (N.D. Cal. 1978), aff'd, 645 F.2d 699 (9th Cir. 1981). Accordingly, the undersigned will take judicial notice of this court's records in Alvarez v. United States, Civ.S-98-2355 GEB GGH P and Civ.S-98-2356 EJG GGH P.
LEGAL ANALYSIS
A complaint, or portion thereof, should only be dismissed for failure to state a claim upon which relief can be granted if it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim or claims that would entitle him to relief. Hishon v. King Spalding, 467 U.S. 69, 73 (1984) (citing Conley v. Gibson, 355 U.S. 41 (1957)); Palmer v. Roosevelt Lake Log Owners Ass'n, 651 F.2d 1289, 1294 (9th Cir. 1981). In reviewing a complaint under this standard, the court must accept as true the allegations of the complaint. Hospital Bldg. Co. v. Rex Hosp. Trustees, 425 U.S. 738, 740 (1976). Furthermore, the court must construe the pleading in the light most favorable to the plaintiff, and resolve all doubts in the plaintiff's favor. See Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). In a case where the plaintiff is pro se, the court has an obligation to construe the pleadings liberally. Bretz v. Kelman, F.2d 1026, 1027 n. 1 (9th Cir. 1985) (en banc). However, the court's liberal interpretation of a pro se complaint may not supply essential elements of a claim that are not pled. Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 1992); Ivey v. Board of Regents of University of Alaska, 673 F.2d 266, 268 (9th Cir. 1982).
In addition, a claim is legally frivolous when it lacks an arguable basis either in law or in fact. Neitzke v. Williams, 490 U.S. 319, 325, 1831-32 (1989); Franklin v. Murphy, 745 F.2d 1221, 1227-28 (9th Cir. 1984). Under this standard, a court shall dismiss a claim as frivolous where it is based on an indisputably meritless legal theory or where the factual contentions are clearly baseless. See Neitzke, 490 U.S. at 327.
On a motion to dismiss for lack of subject matter jurisdiction, plaintiff bears the burden of establishing subject matter jurisdiction.Kokkonen v. Guardian Life Insurance Company of America, 511 U.S. 375, 377 (1994); Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). Plaintiff must therefore plead facts sufficient to overcome the presumption that federal court jurisdiction is lacking. General Atomic Corp. v. United Nuclear Corp., 655 F.2d 968, 969 (9th Cir. 1981).
ANALYSIS
I. Defendants' Motion to Dismiss
It appears that plaintiff is seeking to challenge an IRS assessment of $2,500 in penalties against him for filing frivolous tax returns and an IRS assessment of $10,421 in tax, penalties and interest against him for the 1996 tax year after he filed a return indicating no tax owed. Plaintiff also seeks to prohibit IRS collection efforts with respect to these amounts.
It is appropriate to begin with that aspect of the motion to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(1) since it addresses the exercise of federal jurisdiction over this action. "The United States, as sovereign, may only be sued to the extent it consents to suit by statute. Isaacson v. United States, 848 F. Supp. 129, 130 (E.D. Cal. 1993) (citing United States v. Testan, 424 U.S. 392, 399 (1976), aff'd, 35 F.3d 571 (9th Cir. 1994). Absent plaintiff's showing of an explicit waiver of sovereign immunity, the court lacks jurisdiction and the case must be dismissed. Id. (citing Block v. North Dakota, 461 U.S. 273, 280 (1983)). Plaintiff has clearly failed to meet his burden in this regard.
Were the court to construe plaintiff's action as he has insisted on presenting it, as a petition for writ of habeas corpus, the court is without jurisdiction since plaintiff is not in custody. See Henry v. Lungren, 164 F.3d 1240, 1241 (9th Cir. 1999); 28 U.S.C. § 2241(c)
Likewise, the court lacks jurisdiction over plaintiff's complaint to the extent it seeks money damages based upon the defendants' assessment or collection of taxes. Smith v. Brady, 972 F.2d 1095, 1099-1100 (9th Cir. 1992); Hutchinson v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982); Isaacson, 848 F. Supp. at 131. The court also lacks jurisdiction over plaintiff's request for injunctive relief restraining the collection of the taxes in question. Stonecipher v. Bray, 653 F.2d 398, 401 (9th Cir. 1981); see also Elias v. Connett, 908 F.2d 521, 523 (9th Cir. 1990); Isaacson, 848 F. Supp. at 130-31. Declaratory relief is likewise unavailable because federal courts are not permitted to order such relief in controversies concerning federal taxes. Bob Jones Univ. v. Simon, 416 U.S. 725, 732 n. 7 (1974).
The district court does have jurisdiction, concurrent with the United States Court of Claims, over some tax refund suits. 28 U.S.C. § 1346(a)(1). Such actions are governed by the provisions of 26 U.S.C. § 7422(a). However, one of the preconditions for maintaining such an action is that the subject tax liability be paid in full prior to the commencement of the action. Flora v. United States, 362 U.S. 145, 177 (1960); Brennan v. Southwest Airlines Company, 134 F.3d 1405, 1412 (9th Car. 1998). Another prerequisite to such a suit is that the taxpayer file a timely administrative claim with the IRS for a refund. Yuen v. United States, 825 F.2d 244, 245 (9th Cir. 1987);Northern Life Insurance Co. v. United States, 685 F.2d 277, 279 (9th Cir. 1982) Plaintiff has neither asserted that his action is brought pursuant to § 7422(a) nor alleged that he has satisfied the prerequisites for the bringing of such an action. Thus, to the extent plaintiff's action is a tax refund suit against the United States, the court lacks jurisdiction and the action should be dismissed.
Finally, to the extent plaintiff may be seeking damages based upon IRS collection activities, he has failed to allege that the prerequisites for such an action have been met. In this regard, 26 U.S.C. § 7433 allows taxpayers under some circumstances to recover civil damages for certain unauthorized collection activities of the IRS. However, as a prerequisite to filing such an action, a taxpayer must exhaust all administrative remedies within the IRS. 26 U.S.C. § 7433(d)(1); Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir. 1992). Plaintiff does not allege that he has satisfied this requirement.
For all these reasons, plaintiff has not met his burden of establishing subject matter jurisdiction over this action. Accordingly, the motion to dismiss due to lack of subject matter jurisdiction should be granted.
Moreover, plaintiff's complaint is frivolous and fails to state a cognizable claim. In this regard, plaintiff appears to assert that as a "white citizen" any compensation paid to him for personal services is not income and cannot be taxed. This claim is frivolous and fails to state a claim upon which relief may be granted. See Gattuso v. Pecorella, 733 F.2d 709, 710 (9th Cir. 1984) ("Taxpayers' claim that their wages are not income is frivolous."); United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981) ("Romero's proclaimed belief that he was not a `person' and that the wages he earned as a carpenter were not `income' is fatuous as well as obviously incorrect."); see also Brushaber v. Union Pacific R.R., 240 U.S. 1, 9 (1916) (Congress has the power to tax income from whatever source derived).
Plaintiff's petition also fails to state a cognizable constitutional claim. Due process is not violated by the statutory scheme that allows taxpayers to contest tax liability subsequent to summary collection proceedings. Phillips v. Commissioner, 283 U.S. 589, 595-97 (1931);Stonecipher v. Bray, 653 F.2d at 403. Any claim that the use of a lien or levy in this area violates the Fourth Amendment is similarly foreclosed.Maraziti v. First Interstate Bank of California, 953 F.2d 520, 524 (9th Cir. 1992) ("when the government seizes property to collect delinquent taxes, there is no violation of the Fourth Amendment if the seizure is not an invasion of the taxpayer's personal effects or premises.");Hutchinson v. United States, 677 F.2d 1322, 1328 (9th Cir. 1982) (Id.);Nelson v. Silverman, 888 F. Supp. 1041, 1046 (S.D. Cal. 1995) (finding no legitimate expectation of privacy implicated by a wage levy). Because the courts have not recognized a constitutional violation arising from the collection of taxes and in light of the remedies provided by Congress, including the right to sue the government for a refund of taxes improperly collected, an action for damages based upon such collection of taxes is foreclosed. Wages v. IRS, 915 F.2d 1230, 1235 (9th Cir. 1990) (dismissing claim against IRS agents "based upon allegedly fraudulent and intimidating conduct" in garnishing plaintiff's paycheck).
Moreover, a suit for money damages to remedy an alleged violation of Constitutional rights may not be maintained against the United States. American Association of Commodity Traders v. Dep't of Treasury, 598 F.2d 1233, 1235-36 (1st Cir. 1979).
Finally, under these circumstances, it appears clear that any attempt by plaintiff to amend would be futile. Accordingly, the undersigned will recommend that this action be dismissed without leave to amend.
II. Plaintiff's Motions
Plaintiff has moved for a "trial by certificate," erroneously arguing that he has a right to such a proceeding pursuant to 28 U.S.C. § 2241, 2246 and 2242. None of the cited statutes addresses "trial by certificate" nor has plaintiff cited any authority for the proposition that trial by the record has any applicability in these proceedings. Accordingly, the motion lacks merit and should be denied. Finally, plaintiff's other motions for judgment by demand, abatement of lien/levy and to supplement are equally meritless and should be denied for the reasons set forth above in connection with defendants' motion to dismiss.
CONCLUSION
Accordingly, the court HEREBY RECOMMENDS that:
1. Defendants' motion to dismiss be granted and this action be dismissed with prejudice;
2. Plaintiff's motion for judgment by demand filed March 6, 2000 and again on March 27, 2000 and amended March 28, 2000 and April 6, 2000 be denied;
3. Plaintiff's motion for "lien/levy abatement" filed March 29, 2000 be denied;
4. Plaintiff's ex parte motion for trial by certificate filed May 8, 2000 be denied; and
5. Plaintiff's motion to supplement filed October 4, 2000 be denied.
These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within ten (10) days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the objections shall be served and filed within ten (10) days after service of the objections. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v Ylst, 951 F.2d 1153 (9th Cir. 1991)