Opinion
No. 99-4170-SAC
May 14, 2002
MEMORANDUM AND ORDER
The case comes before the court on the plaintiff's motion for preliminary injunction (Dk. 44) and the plaintiff's motion for leave to file a reply brief (Dk. 52). In his first motion, the plaintiff asks the court to enjoin agents with the Internal Revenue Service from disclosing that the nature of the investigation against him is criminal. The government opposes the first motion arguing that this court lacks jurisdiction to grant the requested injunction, that sovereign immunity bars this court from awarding injunctive relief, and that the disclosure in question is authorized by statute. In his second motion, the plaintiff asks for leave to file his reply brief out of time. The government argues the court should deny the plaintiff's second motion for its failure to show excusable neglect.
MOTION FOR LEAVE TO FILE REPLY BRIEF (Dk. 52).
"Extensions will not be granted unless the motion is made before the expiration of the specified time, except upon a showing of excusable neglect." D.Kan. Rule 6.1(a). The plaintiff's motion does not offer any explanation for his dilatory filing that would satisfy the standard of excusable neglect. The plaintiff received and was aware of the defendant's memorandum within a period sufficient for filing a timely motion for an extension. It is not enough for excusable neglect that the plaintiff appears pro se and has otherwise not been dilatory. The court denies the plaintiff's motion for leave to file a reply brief.
MOTION FOR PRELIMINARY INJUNCTION (Dk. 44).
Arguments
In his motion, the plaintiff summarizes the procedural posture of this case as one in which a stay of discovery was extended several times but has expired as of January 15, 2002. In his declaration under penalty of perjury filed in support of his motion, the plaintiff states that Lawrence Schmidt and Henry Herron, Special Agents with the Internal Revenue Service, have disclosed, directly and indirectly, that the investigation against the plaintiff is criminal in nature. Specifically, Schmidt has provided business cards, certified mail return receipts and envelopes which have identified the "Criminal Investigation Division" as being involved. The plaintiff's declaration points out that Schmidt's business cards no longer include this identifier and that the summonses issued by the special agents also lack this identifier. As for Agent Henry Herron, the plaintiff declares that Herron has orally disclosed the criminal nature of the investigation against Pflum and that Herron's business cards carry the identifier of "Criminal Investigation."
The plaintiff alleges that Agents Schmidt and Herron have continued to make these disclosures despite the plaintiff's efforts at notifying the government that their actions violated 26 U.S.C. § 6103 and 7431 and despite the plaintiff's instant action for damages as a result of these violations filed over two years ago. The plaintiff argues all the required elements for a preliminary injunction are met here. Besides a likelihood of success on the merits, the plaintiff argues that he has shown injury from the ongoing disclosures, including the injury to his reputation, for which monetary damages cannot adequately compensate. The plaintiff denies any harm to the government from an injunction that simply forbids the agents from disclosing the criminal nature of their investigation.
Relying on the Anti-Injunction Act, 26 U.S.C. § 7421(a), the government maintains the court is without jurisdiction to enjoin it in the assessment or collection of tax or any "`activities which are intended or may culminate in the assessment or collection of taxes." (Dk. 48, pp. 4-5) (quoting Dickens v. United States, 671 F.2d 969, 971 (6th Cir. 1982)). This Act expressly removes jurisdiction for injunctive relief from the federal courts. In the government's opinion, the plaintiff still has an adequate remedy at law for damages from any wrongful disclosures in violation of § 6103. Finally, "[t]o prevent the grand jury from completing its investigation will, of necessity, interfere with the government's duty and ability to assess and collect taxes." (Dk. 48, p. 6).
Analysis and Holding
Sovereign immunity generally bars suits against the United States unless the government has expressly waived its immunity. See National Commodity Barter Ass'n v. Gibbs, 886 F.2d 1240, 1245-46 (10th Cir. 1989). Thus, in suing the United States, the plaintiff must allege a basis for jurisdiction and a specific statute that waives the government's immunity from suit. Andrean v. Secretary of U.S. Army, 840 F. Supp. 1414, 1421 (D.Kan. 1993). A statute waiving sovereign immunity "must be strictly construed." Pipkin v. United States Postal Service, 951 F.2d 272, 275 (10th Cir. 1991) (citations omitted).
The plaintiff's complaint does not allege a jurisdictional basis for injunctive relief nor a specific statute waiving the government's immunity from a suit seeking injunctive relief. The plaintiff generally relies on 26 U.S.C. § 7431(a) which is a limited waiver of the United States' immunity in permitting "a civil action for damages" for a violation of the disclosure provisions at 26 U.S.C. § 6103. Section 7431(a) creates a suit only for damages and does not authorize injunctive relief. Henkell v. United States, 1998 WL 41565, at *5 (E.D.Cal. Jan. 9, 1998) "When Congress has acted to create a comprehensive statutory scheme to address a particular class of claims, the courts will not act to create additional judicial remedies." Pipkin, 951 F.2d at 275 (citations omitted). The plaintiff has not shown that Congress has waived sovereign immunity to be sued for equitable relief for a violation of § 6103.
Additionally, the Anti-Injunction Act provides in relevant part that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed. 26 U.S.C. § 7421(a). "The Act specifically divests the district court of jurisdiction in order to prevent pre-assessment judicial interference." Sterling Consulting Corp. v. United States, 245 F.3d 1161, 1167 (10th Cir. 2001) (citation omitted), cert. denied, 122 S.Ct. 921 (2002). Courts "strictly enforce" this Act, Maxfield v. United States Postal Service, 752 F.2d 433, 434 (9th Cir. 1984) (citations omitted), and construe it broadly so as to bar suits that seek to enjoin the IRS from issuing administrative summonses, or from otherwise engaging in information gathering activities, see, e.g., Lowrie v. United States, 824 F.2d 827, 831 (10th Cir. 1987); United States v. First Family Mortgage Corp., 739 F.2d 1275, 1278 (7th Cir. 1984); Smith v. Rich, 667 F.2d 1228, 1230 (5th Cir. 1982); Zimmer v. Connett, 640 F.2d 208, 209-10 (9th Cir. 1981); Blech v. United States, 595 F.2d 462, 466 (9th Cir. 1979); Johnson v. Treasury Dept., 917 F. Supp. 813, 819 (N.D.Ga. 1995); Tollerson v. Internal Revenue Service, 1993 WL 174884, at *5. 71 A.F.T.R. 2d 93-1250 (S.D.Tex. Mar. 4, 1993), aff'd, 21 F.3d 1108 (5th Cir. 1994) (Table). Put another way, "the statute applies not only to the actual assessment or collection of a tax, but is equally applicable to activities leading up to, and culminating in, such assessment and collection." Lowrie v. United States, 824 F.2d at 830 (citing Dickens v. United States, 671 F.2d 969, 971 (6th Cir. 1982)). A suit to enjoin government agents from acting in a particular manner while gathering information needed to calculate an assessment is a suit designed "for the purpose of restraining" an assessment under the Act. 26 U.S.C. § 7421(a).
Any attempt at distinguishing the requested injunction here as a restraint only on disclosures in violation of the statute and not on the assessment of tax liability must fail:
Plaintiff argues that the Anti-Injunction Act is inapplicable because the requested injunction would restrain allegedly unlawful disclosures, not any calculation of tax liability. This very argument was raised and rejected by the Fifth Circuit in Kemlon Products Development co. v. United States, 638 F.2d 1315, 1320 (5th Cir.), modified, 646 F.2d 223 (5th Cir.), cert. denied, 454 U.S. 863 (1981). The Kemlon Products court held the Anti-Injunction Act applicable to a litigant's attempt to enjoin the Internal Revenue Service from making an "alleged unnecessary disclosure of return information" in violation of section 6103 of the Internal Revenue Code. Id. at 1320. This Court concurs with the Kemlon Products holding. Obviously, many tax investigations will require some amount of pre-assessment disclosure of tax information. Congress, however, has determined that courts should not become involved in the early stages of tax assessment and collection. See Enochs v. Williams Packing Navigation, 370 U.S. 1, 7 (1962).Reyes v. Lynch, 52 A.F.T.R. 2d 83-5693, 1983 WL 1635, at *2 (D.D.C. Jul. 29, 1983).
There are limited exceptions to the Act, but none of them have been alleged by the plaintiff. Nor do they appear to apply, as the court is not persuaded that the plaintiff has shown certainty of success on the merits. See Lowrie, 824 F.2d at 830, Reyes, 1983 Wl 1635, at *3.
In summary, the court finds that the plaintiff alleges no statutory waiver of sovereign immunity for a claim of injunctive relief, that the Anti-Injunction Act applies, and that the plaintiff alleges no exception to this Act. Thus, the court is without subject matter jurisdiction to pass on the plaintiff's motion for a preliminary injunction.
IT IS THEREFORE ORDERED that the plaintiff's motion for leave to file a reply brief (Dk. 52) is denied;
IT IS FURTHER ORDERED that the plaintiff's motion for preliminary injunction (Dk. 44) is denied, because the court lacks subject matter jurisdiction to grant the relief requested.