Opinion
CASE NO. 01-CV-2320 H (JAH)
June 7, 2002
Order Granting Defendant's Motion to Dismiss
Plaintiffs Kevin and Deborah Macleod, proceeding pro se, filed the above-captioned action against Defendant Internal Revenue Service ("IRS") on December 18, 2001. Defendant filed a Motion to Dismiss on February 20, 2002. Plaintiffs filed an Opposition to the Motion to Dismiss on March 11, 2002. No reply was filed, and the motion is submitted on the papers without oral argument, pursuant to Local Rule 7.1.
BACKGROUND
This case arises from an on-going dispute over Plaintiffs' tax liability. Prior to the filing of this case, Plaintiffs filed two other actions against the IRS in federal district court, both of which have been dismissed and terminated.
See Macleod v. Internal Revenue Service, Case No. 99-CV-1088; Macleod v. Internal Revenue Service, Case No. 0l-CV-0125.
In this latest Complaint, Plaintiffs fail to state a claim for relief. According to the IRS, Plaintiffs submitted a request for access to information and a request to amend their tax records, ostensibly pursuant to the FOIA and the Privacy Act. Plaintiffs sent the request to the IRS's Laguna Niguel Disclosure Office by fax on July 24, 2001. The Laguna Niguel Disclosure Office released 307 pages of responsive documents by letter dated October 2, 2001. The letter also informed Plaintiffs that records pertaining to the determination, collection, or payment of federal taxes are not subject to amendment under the Privacy Act. The Laguna Niguel Disclosure Office sent a follow-up letter, dated October 11, 2001, to restate that I.R.C. Section 7852(e) precluded the amendment of Plaintiffs' tax records.
Plaintiff Kevin Macleod replied by letter dated October 24, 2001, indicating that he disagreed with the determination that his tax records were exempt from amendment and requesting an administrative review. The Laguna Niguel office responded by letter dated December 19, 2001, informing Plaintiff Kevin Macleod that he should write to the national office in order to pursue an administrative review. Nothing in the Complaint alleges that Plaintiffs have pursued an administrative claim alleging unauthorized collection action.
DISCUSSION
I. Standards on a Motion to Dismiss
Defendant moves for dismissal of all of Plaintiffs' claims under both Federal Rule of Civil Procedure 12(b)(6) (failure to state a claim) and Federal Rule of Civil Procedure 12(b)(1) (lack of federal jurisdiction).
A. 12(b)(6)
Generally, the issue to be decided on a motion to dismiss is not whether a plaintiffs claims have merit but whether the moving defendant has shown beyond doubt that the plaintiff can prove no set of facts entitling it to relief. See Conley v. Gibson, 355 U.S. 41 (1957); Church of Scientology v. Flynn, 744 F.2d 694, 696 (9th Cir. 1984). Courts grant 12(b)(6) relief only where a plaintiffs complaint lacks a "cognizable legal theory" or sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept, 901 F.2d 696, 699 (9th Cir. 1990).
In deciding a motion to dismiss, the complaint must be construed in the light most favorable to plaintiff. See Russell v Landrieu, 621 F.2d 1037, 1039 (9th Cir. 1980). Dismissal is proper if the complaint is vague, conclusory, and fails to set forth any material facts in support of the allegation. See North Star Intern v. Arizona Corp Comm'n, 720 F.2d 578, 583 (9th Cir. 1983). However, courts must assume that all general allegations "embrace whatever specific facts might be necessary to support them." Peloza v. Capistrano Unified School District, 37 F.3d 517 (9th Cir. 1994). Additionally, the allegations of the complaint must be taken as true for purposes of a decision on the pleadings. Hughes v. Rowe, 449 U.S. 5, 10 (1980) (per curiam). To dismiss with prejudice, it must appear to a certainty that the plaintiff would not be entitled to relief under any set of facts that could be proven. See Reddy v. Litton Indus., 912 F.2d 291, 293 (9th Cir. 1990), cert. denied, 502 U.S. 921 (1991).
B. 12(b)(1)
Federal Rule of Civil Procedure 12(b)(1) allows litigants to seek the dismissal of an action from federal court for lack of subject matter jurisdiction. When subject matter jurisdiction is challenged under Federal Rule of Procedure 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion. See Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). "A plaintiff suing in a federal court must show in his pleading, affirmatively and distinctly, the existence of whatever is essential to federal jurisdiction, and, if he does not do so, the court, on having the defect called to its attention or on discovering the same, must dismiss the case, unless the defect be corrected by amendment." Smith v. McCullough, 270 U.S. 456, 459 (1926).
II. Analysis
Although Plaintiffs' Complaint only ambiguously refers to certain statutory and legal bases for suit against the IRS, the Court will liberally construe the Complaint to encompass a number of possible claims. See Garaux v. Pulley, 739 F.2d 437, 439 (9th Cir. 1984) ("This circuit has long had a rule of liberal construction of pleadings presented by pro se litigants, particularly when a motion to dismiss under Rule 12(b)(6) is being considered.").
A. Plaintiffs Have Not Stated an FOIA or Privacy Act Claim
The Court first addresses Plaintiffs' attempt to use the FOIA or the Privacy Act to force the IRS to amend Plaintiffs' tax records. Nothing in Plaintiffs' pleading papers would permit the Court to provide the relief Plaintiffs have requested under either of these statutes.
The Complaint states: "We have made Privacy Act, FOIA and (Title 5 § 552a) requests to the 28 I.R.S. Disclosure office and to the T.I.G.T.A. Disclosure office to amend our file after receiving prior Privacy Act and F.O.I.A. requests. Both Disclosure offices have refused to amend."
The FOIA confers jurisdiction on the district courts "to enjoin the agency from withholding agency records and to order the production of any agency records improperly withheld." § 552(a)(4)(B). Under this provision, "federal jurisdiction is dependent on a showing that an agency has (1) `improperly' (2) `withheld' (3) "agency records.'" U.S. Dept of Justice v Tax Analysts, 109 S.Ct. 2841. 2846 (1989) (quoting Kissinger v. Reporters Committee for Freedom of Press, 445 U.S. 136, 150 (1980)). Unless each of these criteria is met, a district court lacks jurisdiction to devise remedies to force an agency to comply with the FOIA's disclosure requirements. Id.
Plaintiffs have not shown that this Court has jurisdiction over an FOIA claim. Plaintiffs attempt to use the FOIA as a basis for their request that the Court order the IRS to amend Plaintiffs' tax records to expunge all records pertaining to the assault charges. However, the FOIA only allows federal courts to order an agency to provide documents; it does not provide federal courts with the power to require agencies to amend or change their records. See id. Plaintiffs' Complaint does not allege that the IRS has withheld any agency records. Additionally, nothing in the Complaint alleges that Plaintiffs have requested certain documents under the FOIA or that the IRS has withheld any documents from them. Without this showing, Plaintiffs have failed to meet the jurisdictional requirement for bringing an FOIA claim. The Court must dismiss any such claim.
Plaintiffs also have not shown that this Court has jurisdiction over a Privacy Act claim. The Privacy Act permits an individual to review agency records that contain information pertaining to that individual. 5 U.S.C. § 552a(d)(1). In addition, the individual is permitted to request amendment of a record that pertains to him, 5 U.S.C. § 552a(d)(2), and the agency is required promptly either to "make any correction of any portion thereof which the individual believes is not accurate, relevant, timely or complete," 5 U.S.C. § 552a(d)(2)(B)(i), or to inform the individual of its refusal to amend the record and the reason for the refusal, 5 U.S.C. § 552a(d)(2)(B)(ii). The individual who disagrees with the refusal of the agency to amend its records is permitted to seek review of that decision. 5 U.S.C. § 552a(d)(3). If the reviewing official refuses to amend the record, the individual may file with the agency a statement setting forth the reasons for his disagreement with the agency's decision, 5 U.S.C. § 552a(d)(3), and he may bring a civil action in the United States district court against the agency, 5 U.S.C. § 552a(g)(1)(A).
Congress has, however, limited the applicability of the Privacy Act's remedial provisions with regard to records maintained by the IRS. Section 7852 of the Internal Revenue Code provides: "[t]he provides of subsections (d)(2), (3), and (4) and (g) of section 552a of title 5, United States Code, shall not be applied, directly or indirectly, to the determination of the existence or possible existence of liability (or amount thereof) of any person for any tax, penalty, interest, fine, forfeiture, or other imposition or offense to which the provisions of this title apply." 26 U.S.C. § 7852(e). Consequently, the district court is without jurisdiction over a civil action by an individual who seeks to amend a record relating to the determination of actual or possible tax liability. England v. C.I.R., 798 F.2d 350, 352 (9th Cir. 1986).
Plaintiffs want to amend their IRS records to eliminate from them any documents related to Mr. Macleod's alleged complaints against IRS agents who were working to assess the Macleod's tax liability for previous tax years. These records, though, are related to the IRS's ability to determine the Macleod's past and future tax liability. Cf. England, 798 F.2d at 352 (finding a "direct relationship" between documents flagging an individual's record as a tax protestor and the determination of his tax liability). Consequently, these records are excluded from amendment under the Privacy Act and the Court has no jurisdiction to hear this claim. See England, 798 F.2d at 351-52. There is no set of facts that would allow Plaintiffs to receive the relief they have requested under these two statutes, and therefore the Court must dismiss the claims under the Privacy Act and the FOIA with prejudice.
IV. Plaintiffs Cannot Maintain a Tort Claim Under the Tort Claims Act
Plaintiffs' tort claim against the United States and its employees fails under the theory of sovereign immunity. The Complaint names the IRS and the Treasury Department as defendants, and it appears to seek damages from five IRS employees and three TIGTA employees for "incompetence, life endangerment, collusion, conspiracy, and giving false testimony" pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2671 et seq.
It is well settled that the United States is a sovereign, and, as such, is immune from suit unless it has expressly waived such immunity and consented to be sued. United States v. Shaw, 309 U.S. 495, 500-01 (1940); Hutchinson v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982). "It is axiomatic that the United States may not be sued without its consent and that the existence of such consent is a prerequisite for jurisdiction." United States v. Mitchell, 463 U.S. 206 (1983). Therefore, absent a waiver of sovereign immunity an action must be dismissed for lack of subject matter jurisdiction. Gilbert v DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985).
Plaintiffs attempt to pursue a damage award against government employees under the Federal Tort Claims Act ("FTCA"). The Federal Tort Claims Act is a general waiver of sovereign immunity that allows a private litigant to bring causes of action for state law torts against the United States and its employees acting in the scope of their employment. See 28 U.S.C. § 1346(b). However, the Federal Tort Claims Act does not apply to "[a]ny claim arising in respect of the assessment or collection of any tax or customs duty . . ." 28 U.S.C. § 2680(c); see also Hutchinson v. United States [82-1 USTC ¶ 9405], 677 F.2d 1322, 1327 (9th Cir. 1982). Because the conduct about which Plaintiffs complain is not covered by the FTCA's waiver of sovereign immunity, the FTCA does not give this Court jurisdiction over Plaintiffs' tort claims. Plaintiff has failed to show that the United States has waived its immunity under the FTCA or another statutory source, and therefore the Court must also dismiss Plaintiffs' tort claims. Because sovereign immunity bars Plaintiffs' tort claims completely, the Court dismisses such claims with prejudice.
III. Plaintiffs Have Not Alleged an Unauthorized Collection Action
The Court is also willing to construe its ambiguous reference to "Title 26 § 7433" as presenting a claim for unauthorized collection action pursuant to 26 U.S.C. § 7433. However, Plaintiffs fail to allege any facts to support such a claim.
Section 7433 of the Internal Revenue Code provides a means to recover damages against the United States "[i]f in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title. . . . 26 U.S.C. § 7433(a). In order to make out a claim under Section 7433(a), a claimant must demonstrate that an employee of the IRS violated a specific section of the Internal Revenue Code or Treasury Regulations in collecting taxes from the claimant. See id.; see also Miller v. United States, 66 F.3d 220, 222 (9th Cir. 1995).
First, Plaintiffs' Complaint fails to identify a specific section of the Internal Revenue Code that the IRS employees allegedly violated. Instead, Plaintiffs make vague allegations charging government employees with "incompetence, life endangerment, collusion, conspiracy, and giving false testimony." These vague and conclusory allegations are not enough to overcome a motion to dismiss.
Moreover, Plaintiffs have not shown that they have exhausted their administrative remedies. Under 26 C.F.R. § 301.7422-1(e), a claimant seeking damages under Section 7433 must, inter alia, send a claim in writing to the District Director of the district in which the taxpayer resides. The claim must include the grounds for the claim, a description of the injuries incurred, and the dollar amount of the claim. Id. Plaintiffs have not presented evidence of their compliance with 26 C.F.R. § 301.7433-1(e), nor do they allege that they have complied. Consequently, the Court must dismiss any Section 7433 claim.
CONCLUSION
For the reasons provided above, the Court GRANTS Defendant's Motion to Dismiss Plaintiffs' Complaint with prejudice, as Plaintiffs have not alleged facts to support a possibility of relief under the law.
IT IS SO ORDERED.