Opinion
03 Civ. 4296 (LTS)(FM)
April 29, 2004
REPORT AND RECOMMENDATION TO THE HONORABLE LAURA TAYLOR SWAIN
I. Introduction
Plaintiff Gabriel T. Lewis ("Lewis") is a resident of, as he puts it, the "New York State Republic." (See Cayenne Decl. Attach. at 67). Despite having earned more than $40,000 in income in 1998 through his employment at TIAA-CREF, Lewis filed a federal income tax return for that year in which he claimed no income and therefore sought to obtain a refund of all of the federal income tax that had been withheld. (See id. at 67-68, 72). He purports to believe that earned income is not income at all and that he therefore owes no income tax. (See id. at 69).
Taking a somewhat different view of Lewis' tax liability, the Internal Revenue Service ("IRS") advised Lewis, on June 5, 2000, that he in fact owed $4,626.42 in taxes, interest and penalties. (Id. at 95). After Lewis failed to remit payment, the IRS eventually sent Lewis a Notice of Intent to Levy against his assets on December 15, 2002. (See Burg Decl. ¶¶ 2-4). Although the Notice of Intent to Levy was sent by certified mail, Lewis either failed to claim it at the Post Office or refused delivery. (Id. ¶ 4).
On March 4, 2003, the IRS served TIAA-CREF with a Notice of Levy ("IRS Levy") which required it to remit $10,106.28 of Lewis' wages and salary to satisfy the IRS lien. (See Cayenne Decl. Attach. at 3). This amount was approximately three times the $3,287 that the IRS calculated Lewis originally would have owed had he timely filed an accurate tax return. (See id. at 88). The difference is attributable to statutory interest and penalties. (Id. at 3).
The IRS Levy did not go unnoticed by Lewis. Within a matter of weeks, he sent the IRS a Request for a Collection Due Process ("CDP") Hearing ("CDP Hearing Request") on IRS Form 12153. (Id. at 1). The CDP Hearing Request, which is dated April 1, 2003, alleged that Lewis was "not given notice and [an] opportunity for a hearing before [the] [t]hird party [N]otice of Levy was sent." (Id.). Lewis also sent the IRS a lengthy explanation of what he believed was improper about the IRS Levy. (Id. at 4-7).
By letter dated August 18, 2003, the IRS Appeals Officer informed Lewis that his CDP Hearing Request was untimely. (Id. at 34-35). The IRS cautioned Lewis that its administrative appeals process did "not extend to cases involving solely the failure or refusal to comply with the tax laws because of moral, religious, political, constitutional, conscientious, or similar grounds." (Id. at 34). Nonetheless, the IRS Appeals Officer offered to reconsider Lewis' tax liability under the IRS' "Equivalent Hearing" procedures. (Id.).
A. Lawsuit
Lewis's pro se complaint alleges that his CDP Hearing Request was timely because he did not receive notice of the IRS Levy until March 20, 2003. (Compl. ¶¶ 13-15). He further alleges, upon information and belief, that the IRS did not provide him with the required CDP Hearing before levying against his assets. (Id. ¶¶ 16, 24). Lewis seeks to assert six claims against the IRS under 42 U.S.C. § 1981, 1983 and 1985. (Id. ¶¶ 28-41). Lewis seeks declaratory relief, costs, disbursements, "reasonable [f]ees," and "such other, further and different relief" as may be appropriate. (Id. at 8).
B. Motion
The defendant IRS Commissioner has moved to dismiss Lewis' complaint, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, for lack of subject matter jurisdiction. (Docket No. 5). Lewis has also recently filed a cross-motion for summary judgment. (Docket No. 10). For the reasons set forth below, the Commissioner's motion should be granted, Lewis' cross-motion should be denied, and the Complaint should be dismissed with prejudice.
II. Discussion
A. Standard of Review
The plaintiff in any federal suit has the burden of proving by a preponderance of the evidence that the court has subject matter jurisdiction to hear the plaintiff's claims. Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000); Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996). In determining whether that burden has been met, a district court is not limited to the face of the complaint and may consider affidavits submitted by the parties and other extrinsic evidence. See, e.g., Robinson v. Gov't of Malaysia, 269 F.3d 133, 140-41 (2d Cir. 2001); Kamen v. Am. Tel. Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986); Exch. Nat'l Bank of Chicago v. Touche Ross Co., 544 F.2d 1126, 1130-31 (2d Cir. 1976).
B. Subject Matter Jurisdiction
The United States and its agencies, including the IRS, are generally entitled to sovereign immunity, which precludes their being named as defendants in a suit. See United States v. Mitchell, 445 U.S. 535, 538 (1980). The sovereign immunity doctrine is derived from the British fiction that the Crown could do no wrong. Feres v. United States, 340 U.S. 135, 139 (1950). Because the doctrine can lead to harsh results in many circumstances, the Government has from time to time taken steps to increase its exposure by waiving immunity. Id. at 139-40. It remains true, however, that a suit may not be brought against the United States or its agencies without the Government's consent, Brown v. General Servs. Admin., 507 F.2d 1300, 1307 (2d Cir. 1974), which must be "unequivocally" expressed in a statute.Lane v. Pena, 518 U.S. 187, 192 (1996); United States v. Shaw, 309 U.S. 495, 500-01 (1939).
Pursuant to Title 26, United States Code, Section 6330(a)(2)(C), taxpayers are entitled to request CDP hearings within thirty days after the IRS sends a notice of its intention to levy against their property to them by certified or registered mail, return receipt requested, at their last known addresses. Additionally, pursuant to Section 6330(d)(1), taxpayers may appeal an adverse determination resulting from the CDP hearing to the Tax Court or, "if the Tax Court does not have jurisdiction of the underlying tax liability to a district court of the United States." 26 U.S.C. § 6330(d)(1)(A), (B). Although not provided for by statute, the IRS regulations also afford taxpayers "equivalent hearings" when they have not made a timely request for a CDP hearing. See 26 C.F.R. § 301.6330-1(i).
Here, it appears undisputed that Lewis was sent a notice of the IRS's intent to levy by certified mail, return receipt requested, on December 15, 2002. (See Burg. Decl. ¶¶ 2-4). Accordingly, he had until January 14, 2003, to request a hearing. Lewis's CDP Hearing Request, which is dated April 1, 2003, was therefore plainly untimely. Accordingly, because Lewis did not request a CDP hearing within the required time period, this Court lacks subject matter jurisdiction over his due process claim. See Fabricius v. United States, No. CV-F-02-5597, 2002 WL 31662301, at *2-*3 (E.D. Cal. Oct. 18, 2002) (collecting cases).
Lewis seeks to overcome this conclusion by asserting that he did not receive notice of the IRS's intention to levy before the Notice of Levy was sent to his employer. (See Cayenne Decl. Attach. at 1). The statute does not require, however, that the taxpayer actually receive notice of the IRS's intention to levy.See 26 U.S.C. § 6630(a). All that is required is that the notice be delivered in the proper manner. (Id.). Here, the notice was sent by certified mail, and the location to which it was sent appears to have been Lewis's home address at all relevant times.
The IRS indicates that it sent the Notice of Intention to Levy to Lewis' "last address of record." (Burg Decl. ¶ 3). Although that address is not specifically set forth, Lewis' W-2 Form for 1998, Form 1040 for 1998, Complaint, and "Response to Defendant's Motion to Dismiss" all set forth the same address: 477 FDR Drive, New York, New York 10002.
Lewis also argues that his CDP Hearing Request was timely because he submitted it within thirty days after the IRS Notice of Levy was served upon TIAA-CREF. (Compl. ¶¶ 14-15). In advancing this argument, Lewis mistakenly assumes that a Notice of Intention to Levy is the same as a Notice of Levy. Section 6330 prohibits the IRS from levying against a taxpayer's property until the taxpayer has been given thirty days' notice of the IRS's intention to levy. See 26 U.S.C. § 6330(a)(1), (2). The IRS clearly met that requirement by sending its notice of intention to levy in mid-December 2002 and delaying its actual levy until March 2003. Although Lewis submitted his CDP Hearing Request to the IRS shortly after he received notice of the actual levy, Lewis has not shown that the United States has waived its sovereign immunity with respect to taxpayers who fail to submit their requests for more than thirty days after a notice of intention to levy is sent. Accordingly, the fact that Lewis may have sent his CDP Hearing Request within thirty days after his receipt of notice of the actual levy does not entitle him to maintain this suit.
To be sure, the IRS did grant Lewis an Equivalent Hearing. (See Cayenne Decl. Attach at 34). Such hearings, however, are a creature of regulation, not statute. The fact that Lewis was granted an equivalent hearing consequently does not give this Court jurisdiction to hear his claims. See Fabricius, 2002 WL 31662301, at *2.
Lewis' failure to comply with Section 6330 is hardly the only jurisdicitonal impediment to his request that the Court entertain his claims. As the IRS correctly observes, the Court lacks subject matter jurisdiction over this lawsuit for at least three additional reasons. First, to the extent that Lewis seeks a declaratory judgment that his rights were violated, his complaint runs afoul of Title 28, United States Code, Section 2201, the Declaratory Judgment Act, which expressly states that declaratory relief is unavailable "with respect to Federal taxes," unless the action arises under "section 7428 of the Internal Revenue Code of 1986." That provision relates to tax-exempt organizations and is plainly inapplicable here. See 28 U.S.C. § 2201(a). Second, to the extent that Lewis' complaint seeks injunctive relief, his suit it barred by the Anti-Injunction Act, 26 U.S.C. § 7421, which "prohibits any suit which would enjoin the assessing or collecting of any taxes." Greenhouse v. United States, 780 F. Supp. 136, 140 (S.D.N.Y. 1991) (quoting Johnson v. United States, 680 F. Supp. 508, 512 (E.D.N.Y. 1987)).
There is a limited exception to the Anti-Injunction Act applicable in situations where it is clear that the IRS could not prevail on its claim for back taxes under any circumstances, and the taxpayer would suffer irreparable injury unless his claim were heard. Lewis cannot make either required showing. Apart from the fact that his claim is frivolous, it is settled law that "[e]conomic injury alone, even to the point of financial 'ruination of the taxpayer's enterprise[,]' will not allow a party to escape application of the Anti-Injunction Act." Gallo v. United States, 950 F. Supp. 1246, 1249 (S.D.N.Y. 1997) (quoting Enochs v. Williams Packing Navigation Co., 370 U.S. 1, 6 (1972); Greenhouse v. United States, 738 F. Supp. 709, 713 (S.D.N.Y. 1990)).
Finally, each of the statutes that Lewis seeks to invoke to support his claim that the IRS has acted unconstitutionally requires that the defendant have acted under "color of state law." See 42 U.S.C. § 1981, 1983, 1985. Consequently, these statutes cannot provide a basis for this Court to hear Lewis' claims against the IRS, which is a federal agency. See Greenhouse, 780 F. Supp. at 143 (quoting Wages v. IRS, 915 F.2d 1230, 1235 (9th Cir. 1990) ("It is well established that '[courts] have never recognized a constitutional violation resulting from the collection of taxes.'")); see also Fabricius, 2002 WL 31662301, at *3 (quoting Tornichio v. United States, No: 5:02 CV 0351, 2002 WL 508325, at *2 (N.D. Ohio Mar. 18, 2002) ("District courts have no jurisdiction over civil claims challenging taxes unless litigants first pay the assessed tax and then raise these claims in a refund suit.")).
C. Leave to Amend
In his complaint, Lewis also seeks leave to amend "once discovery is completed, and Defendants [sic] has raised the usual Fed.R.Civ.P. 12(b)(6) objections and avalanche of procedural gimmicks and immunity defenses." (Compl. at 8). Because this Court lacks subject matter jurisdiction, and because this defect cannot be cured, Lewis' request for leave to amend should be denied. See Altman v. Comm'r of Internal Revenue, No. 91 Civ. 8389 (KMW) (MHD), 1993 WL 119684, at *1, *5 (S.D.N.Y. Apr. 14, 1993) (denying taxpayer's request to supplement complaint where there was no subject matter jurisdiction to hear his claims).
III. Conclusion
For the foregoing reasons, the Commissioner's motion to dismiss for lack of subject matter jurisdiction should be granted, Lewis' cross-motion for summary judgment should be denied, and the complaint should be dismissed with prejudice.
IV. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Laura Taylor Swain, at the United States Courthouse, 40 Centre Street, New York, New York 10007, to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Swain. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140 (1985); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).