Opinion
Case No.: CV-S-01-0919 RLH(RJJ)
February 14, 2002
ORDER (Motion to Dismiss and for Summary Judgment — #4)
Before the Court is Defendant's Motion to Dismiss and for Summary Judgment (#4), filed October 11, 2001. The Court has also considered Plaintiff's Opposition (#7), filed December 4, 2001.
BACKGROUND
For the calendar years 1993, 1994, 1995, 1996, and 1997, Plaintiff indicated on his federal tax return that he had an income of $0. For the years 1993 and 1994 Plaintiff requested a full refund of income tax withheld by his employer. For the years 1995, 1996, and 1997, Plaintiff claimed to be exempt and therefore paid no federal income tax. For each of these years, the Internal Revenue Service assessed a penalty for filing a frivolous return. The IRS sent Plaintiff notification of the filing of a federal tax lien to collect back taxes and civil penalties and notified Plaintiff of the opportunity to request a hearing pursuant to 26 U.S.C. § 6330(b).
On June 14, 2001, a Collection Due Process Hearing was held at the Internal Revenue Service office in Las Vegas, Nevada. At the hearing, Plaintiff did not raise any appropriate defenses and instead attempted to revisit the issue of his underlying tax liability. On July 12, 2001, the IRS sent Plaintiff a Notice of Determination Concerning Collection Action Under Section 6320 and/or 6330. The Notice of Determination informed Plaintiff of the issues addressed at the Collection Due Process Hearing and notified Plaintiff of his right to appeal the determination with the United States District Court.
On August 8, 2001, Plaintiff filed a complaint for damages and appeal of the collection due process determination. Defendant now moves the Court for dismissal of Plaintiff's income tax-related claims under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction and for summary judgment as to Plaintiff's appeal of the collection due process determination.
DISCUSSION
26 U.S.C. § 6331 provides that if any person liable to pay any tax neglects or refuses to do so within ten days after notice and demand for payment, the IRS is authorized to collect such tax by levy upon property belonging to the taxpayer. Before proceeding with the collection by way of levy, however, the IRS must provide the taxpayer notice of the right to a hearing on the matter. Id. § 6330(a). The taxpayer has a right, within thirty days of the section 6330 notice, to request a hearing with the IRS Office of Appeals. Id. § 6330(a)(3)(B). At the hearing, the taxpayer may raise any issue relevant to the unpaid tax and the proposed levy, including challenges to the propriety of the levy and offers of collection alternatives. Id. § 6330(c)(2).
The impartial IRS Appeals Officer who conducts the hearing must then formulate his or her determination based on: (1) the verification that the requirements of any applicable law or administrative procedure have been met; (2) the issues raised by the taxpayer; and (3) the proper balance between the need for efficient tax collection and the legitimate concern that any collection action be no more intrusive than necessary. See id. § 6330(c)(3). Following the hearing, the Appeals Officer sends a Notice of Determination to the taxpayer that summarizes the matters raised during the hearing and responds to any offers or objections made by the taxpayer. If the taxpayer is dissatisfied with the administrative determination, he may seek judicial review in the United States Tax Court within 30 days of receiving the Notice or, if the Tax Court does not have jurisdiction over the underlying tax liability, the appropriate United States District Court. Id. § 6330(d)(1). Review is limited to matters actually raised at the administrative hearing. Temp. Treas. Reg. § 301.6330-1T(f) (2001).
Here Plaintiff challenges both his underlying tax liability and the determination of the IRS hearing officer with respect to the frivolous return penalties assessed against him. The Court will address separately Defendant's motion to dismiss for lack of subject matter jurisdiction and motion for summary judgment.
I. Motion to Dismiss for Lack of Subject Matter Jurisdiction
In general, the United States is immune from suit under the doctrine of sovereign immunity unless it explicitly waives such immunity. United States v. Mitchell, 445 U.S. 535, 538 (1980). The plaintiff has the burden of establishing that the government has waived sovereign immunity and to identify the specific statutory provision containing the waiver. See Baker v. United States, 817 F.2d 560, 562 (9th Cir. 1987). The waiver must be express and will not be implied. Lane v. Pena, 518 U.S. 187, 192 (1996). The scope of a waiver of sovereign immunity is to be strictly construed in favor of the sovereign. Dep't of the Army v. Blue Fox, Inc., 525 U.S. 255, 261 (1999).
Plaintiff relies on 26 U.S.C. § 6330(d) as a basis for the Court's subject matter jurisdiction and the United States' waiver of sovereign immunity. Under Section 6330(d), an individual may seek judicial review of the determination of an IRS hearing officer, an employee and representative of the United States. However, the person appealing the determination must bring suit in the United States Tax Court unless the Tax Court does not have jurisdiction over the type of underlying tax liability involved. 26 U.S.C. § 6330(d).
Plaintiff challenges the IRS's determination that he owed taxes for the years 1995, 1996, and 1997. See Complaint ¶¶ 52-58. The Tax Court has exclusive jurisdiction over petitions for the redetermination of income tax deficiencies. 26 U.S.C. § 2613. As such, the Tax Court has exclusive jurisdiction to hear Plaintiff's income tax-related claims. This Court, therefore, has no jurisdiction to hear these claims. See 26 U.S.C. § 6330(d)(1). Plaintiff's challenge to the levy related to his tax liability for the years 1995, 1996, and 1997 will therefore be dismissed. In accordance with 26 U.S.C. § 6330(d), Plaintiff has thirty days to file his appeal with the U.S. Tax Court.
II. Motion for Summary Judgment
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper only "where the record before the court on the motion reveals the absence of any material facts and [where] the moving party is entitled to prevail as a matter of law." Zoslaw v. MCA Disrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982) (quoting Portland Retail Druggists Ass'n v. Kaiser Found, Health Plan, 662 F.2d 641, 645 (9th Cir. 1981)), cert denied, 460 U.S. 1085 (1983). "A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth." Sec. Exch. Comm'n v. Seaboard Corp., 677 F.2d 1289, 1293 (9th Cir. 1982) (citations omitted).
The party moving for summary judgment has the burden of showing the absence of a genuine issue of material fact, and the court must view all facts and draw all inferences in the light most favorable to the responding party. See Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). See also Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982), cert. denied, 460 U.S. 1085 (1983). Once this burden has been met, "[t]he opposing party must then present specific facts demonstrating that there is a factual dispute about a material issue." Zoslaw, 693 F.2d at 883 (citation and internal quotes omitted).
Section 6330(d) does not specify the standard of review a district court should apply to an appeal of a Notice of Determination. However, the legislative history indicates that the court should conduct a de novo review only "where the validity of the tax liability was properly at issue at the administrative hearing." H. Conf. Rept. 105-599, 105th Cong.2d Sess. 266 (1998). Where the amount of the underlying tax liability is not properly part of the appeal, the court reviews a Notice of Determination for abuse of discretion. See Sego v. Comm'r of Internal Revenue, 114 T.C. 604, 609-10 (2000); Goza v. Comm'r of Internal Revenue, 114 T.C. 176, 179-80 (2000).
Here the IRS hearing officer did not abuse his discretion when he determined that the requirements of applicable law had been met and that Plaintiff had been afforded statutorily-required administrative procedures. See 26 U.S.C. § 6330(c)(1). The hearings officer also attempted to address the issues raised by Plaintiff; however, Plaintiff did not address any of the statutorily-specified issues that may be raised at a collection due process hearing, such as spousal defenses, the appropriateness of an intended collection action, and possible alternative means of collection. See 26 U.S.C. § 6330(c); see also Sego, 114 T.C. at 609. Instead Plaintiff attempted to revisit the issue of his underlying tax liability at the collection hearing at issue.
Appeals of the underlying claims are only appropriate at a collection due process hearing if the plaintiff did not receive notice of tax liability, Goza, 114 T.C. at 182, or "had no previous opportunity to contest the validity of those claims." Kintzler v. Internal Revenue Serv., 2001 WL 1137294, at *2 (D. Nev. 2001). Here Plaintiff both received notice of his tax liability and had an opportunity to contest those claims. The only other issues raised by Plaintiff at the collection due process hearing have been deemed frivolous by the courts. See, e.g., Olsen v. United States, 760 F.2d 1003, 1005 (9th Cir. 1985) (rejecting "wages are not income" argument); Browder v. Comm'r of Internal Revenue, T.C.M. 1990-408 (rejecting claim that IRS employee was not a "delegate" of the Secretary of the Treasury).
Plaintiff has not, and cannot, prove any set of facts in support of his claim which would entitle him to relief and has failed to demonstrate that there are any material issues of fact. Summary judgment is therefore appropriate. See Kintzler, 2001 WL 1137294, at *3 (ranting summary judgment against tax protester seeking appeal of IRS Notice of Determination).
CONCLUSION
Accordingly, and for good cause appearing,
IT IS HEREBY ORDERED that Defendant's Motion to Dismiss and for Summary judgment (#4) is GRANTED.