Bartley v. U.S. I.R.S., No. 1:04 CV 1840.

• Citation: 343 F.Supp.2d 649
• Decision Date: 14 October 2004
• Docket Number: No. 1:04 CV 1840.
• Parties: Jason BARTLEY, Plaintiffs, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant.
• Court: U.S. District Court — Northern District of Ohio

343 F.Supp.2d 649

Jason BARTLEY, Plaintiffs, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant.

No. 1:04 CV 1840.

United States District Court, N.D. Ohio.

October 14, 2004.

Jason Bartley, Akron, OH, pro se.

MEMORANDUM OF OPINION

O'MALLEY, District Judge.

On September 10, 2004, pro se plaintiff Jason Bartley filed this action against the Internal Revenue Service (IRS). Mr. Bartley is seeking to set aside a Notice of Determination ("Determination") issued by the I.R.S. Office of Appeals (Appeals Office) on August 12, 2004. He asserts that he is entitled to relief pursuant to 26 U.S.C. § 6330 because the Determination was issued in violation of the law. For the reasons set forth below, this action is dismissed.

Factual and Procedural Background

Mr. Bartley completed an I.R.S. Request for a Collection Due Process (CDP) Hearing (Form 12153), which he signed and dated on June 20, 2003. In response to a pre-printed directive on the form, Mr. Bartley indicated that he did not agree with the Notice of Levy/Seizure action taken by the I.R.S. He attached to the form an explanation of his position wherein he set forth that the "Notice (Exhibit a) advising me of my right for a CDP hearing ... was signed by no one. Therefore at my CDP hearing I demand that the appeals officer have at the hearing the Delegation Order from the Secretary of the Treasury delegating to whoever sent out the notice, the authority to notify me of my right to a CDP hearing as provided for in 6330(a)." (Pl.'s Ex. B-2)(emphasis in original). He further demanded that the Appeals Officer bring: (1) the delegation of authority from the Secretary of Treasury authorizing the person who imposed the frivolous penalty the authority to do so; (2) a job description of those I.R.S. employees who imposed the frivolous penalty; (3) the Treasury regulation that allows I.R.S. employees to impose a frivolous penalty and the regulation that requires him to pay it; and (4) written approval by an immediate supervisor approving the determination of an assessment pursuant to 26 U.S.C. § 6751. Mr. Bartley asserted that if an approval document were not available the Appeals Officer must bring "some other document that supports and authorized the imposition of the `frivolous' penalty." Id. (emphasis in original). He stated further that he is "challenging the `underlying liability' of the tax at issue as referred to in Code Section 6330(c)(2)(B), I am requesting that the hearing officer have at the hearing the specific Code section that makes me `liable' for the underlying, income tax at issue." (Pl.'s Ex. B-2.) Mr. Bartley concluded that it would be necessary for the Appeals Officer to present this information at the CDP hearing "before I am persuaded that I am legally obligated to pay the $500, frivolous penalty at issue." (Pl.Ex. at B-3.)

A CDP hearing was held in Cleveland, Ohio on May 25, 2004 between Mr. Bartley and Douglas Kane, I.R.S. Settlement Officer. At the request of Mr. Bartley, the hearing was tape recorded, as well as transcribed by a court reporter he hired. A review of the hearing transcript attached to the complaint indicates that Mr. Kane requested Mr. Bartley's administrative file (i.e. hard copies of taxpayer's return, correspondence, forms etc.) for the three relevant tax years, but only received the administrative file for 1998 in time for the hearing. In lieu of the two remaining files, Mr. Kane referred to I.R.S. computer transcripts which reflected when penalties were assessed, when the demand for payment was made and any balance which remained unpaid. He noted that it appeared that the balance for tax year 1998 had been paid, but a balance remained for tax years 1999 and 2000. Without specifically addressing the balances which appeared to be due, Mr. Bartley raised many of the same issues he outlined in his request for a hearing and concluded that he was not liable for any frivolous penalty because the I.R.S. failed to prove any taxpayer's "liability" for the payment of income taxes.

Diane Villa, I.R.S. Appeals Team Manager, issued a Notice of Determination to Mr. Bartley on August 12, 2004. In the Determination, she addressed the collection due process hearing held on May 25, 2004 regarding Mr. Bartley's frivolous return penalties for the 1998, 1999 and 2000 tax periods. Ms. Villa concluded that the proposed levy action for the 1999 and 2000 periods should be sustained and that the I.R.S. complied with applicable laws and procedures. In support of the Determination, she noted that "liabilities are due because you were assessed penalties under IRC § 6702 for filing frivolous tax returns. The Notice of Intent to Levy and Notice of Your Right to a Hearing was sent to you May 24, 2003. Your Form 12153, Request for a Collection Due Process Hearing, was postmarked on June 20, 2003. It was, therefore, a timely request." (Pl.Ex. A-3.)

In outlining the procedures the I.R.S. followed prior to issuing its Determination, Ms. Villa noted that (1) assessments were made in accordance with IRC § 6702; (2) the notice and demand for payment letter was mailed to the last known address within 60 days of the assessment, as required by IRC § 6303; (3) IRC § 6321 provides for the imposition of a statutory lien when a taxpayer neglects or refuses to pay a tax liability after notice and demand; and (4) at the time the CDP notice was issued per IRC § 6322 and sent by certified mail return receipt to the last known address a balance was due. (Letter from Villa to Bartley of 8/12/04, at Attach. 1.) Ms. Villa concluded that this information was verified through a review of computer transcripts and information contained in the case file.

Mr. Bartley appealed the Determination issued by the I.R.S. as it relates to § 6702 civil penalties for the 1999 and 2000 tax periods. Citing this court's jurisdiction pursuant to 26 U.S.C. § 6330(d)(1)(B) in his complaint, Mr. Bartley asks this court to:

a) Declare invalid the IRS "determination" of January 26, 2001, since no meaningful hearing was ever held.¹

b) [R]emand to the Commissioner with directions to remand to a new Appeals Officer.

c) Order the government to reimburse Plaintiff for all of (her) [sic] costs in bringing this action.

d) Award Plaintiff such other punitive damages as equity relief dictates, based on the needless time, effort and money Defendant's lawless actions compelled Plaintiff to expend.

(Compl. at 12.)

Law and Analysis

Although pro se pleadings are liberally construed, Boag v. MacDougall, 454 U.S. 364, 365, 102 S.Ct. 700, 70 L.Ed.2d 551 (1982) (per curiam); Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972), a "district court may, at any time, sua sponte dismiss a complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure when the allegations of a complaint are totally implausible, attenuated, unsubstantial, frivolous, devoid of merit or no longer open to discussion." Apple v. Glenn, 183 F.3d 477, 479 (6th Cir.1999); see Hagans v. Lavine, 415 U.S. 528, 536-37, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974) (citing numerous Supreme Court cases for the proposition that patently frivolous claims divest the district court of jurisdiction); In re Bendectin Litig., 857 F.2d 290, 300 (6th Cir.1988) (recognizing that federal question jurisdiction is divested by obviously frivolous and unsubstantial claims).

I. Standard of Review

Although § 6330 does not prescribe the standard of review the district court must apply in reviewing the I.R.S.'s administrative determinations, the legislative history of the provision does address this issue. In particular, H. Conf. Rept. 105-599 (1998) states, "Judicial review. The conferees expect the appeals officer will prepare a written determination addressing the issues presented by the taxpayer and considered at the hearing.... Where the validity of the tax liability was properly at issue in the hearing ... [t]he amount of the tax liability will in such cases be reviewed by the appropriate court on a de novo basis. Where the validity of the tax liability is not properly part of the appeal, the taxpayer may challenge the determination of the appeals officer for abuse of discretion." See Sego v. Commissioner, 114 T.C. No. 37, 2000 WL 889754 (2000) (setting out the same standard); see also Carroll v. United States, 217 F.Supp.2d 852, 855 (W.D.Tenn.2002)("district courts within the circuit have adopted the abuse of discretion standard in IRS cases citing the legislative history of § 6330(d)"). "Under the abuse of discretion standard, a determination will be affirmed unless the court determines with a `definite and firm conviction' that a clear error of judgment has been committed." Carroll, 217 F.Supp.2d at 856 (quoting Cincinnati Ins. Co. v. Byers, 151 F.3d 574, 578 (6th Cir.1998)).

II. Due Process Provisions

Upon the filing of a notice of federal tax lien or before the issuance of an I.R.S. levy, the I.R.S. is required to notify a taxpayer of his right to request a collection due process hearing within 30 days of the notice of intent. See 26 U.S.C. § § 6330(a) and 6331(d). Although there was an initial question regarding the timeliness of Mr. Bartley's request for a hearing, he did provide the Settlement Officer a copy of his Form 12153 Request, which was date stamped: "Received, Internal Revenue Service June 24, 2003."²

The Settlement Officer, Douglas Kane, explained that the subject of Mr. Bartley's hearing involved the civil penalty liabilities assessed under Internal Revenue Code (I.R.C.) § 6702 for the 1998, 1999 and 2000 tax year periods. Mr. Kane advised Mr. Bartley that the CDP hearing is an Administrative Appeal in which the settlement officer is not required to consider a taxpayer's refusal to comply based on any moral, religious, political, and/or constitutional issues. (Pl.'s Ex. Trans. at 4.) He explained his role as independent of the I.R.S. Compliance Division, that he had not...