Bell v. Rossotti

• Decision Date: 30 September 2002
• Docket Number: No. CIV.A. 1:CV-01-1725.,CIV.A. 1:CV-01-1725.
• Citation: 227 F.Supp.2d 315
• Parties: Thurston P. BELL, Plaintiff, v. Charles ROSSOTTI, et al., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

227 F.Supp.2d 315

Thurston P. BELL, Plaintiff, v. Charles ROSSOTTI, et al., Defendants.

No. CIV.A. 1:CV-01-1725.

United States District Court, M.D. Pennsylvania.

September 30, 2002.

Thurston P. Bell, Hanover, PA, pro se.

Anne K. Fiorenza, Asst. U.S. Atty., U.S. Atty's Office, Harrisburg,PA, Donlad N. Dowie, U.S. Dept. of Justice, Washington, DC, Evan J. Davis, U.S. Dept. of Justice Trial Atty., Tax Div., Central Trial Section, Waashington, DC, for Defendants.

MEMORANDUM AND ORDER

KANE, District Judge.

Before this Court is Defendants' motion to dismiss and/or for summary judgment (Doc. No. 12). The motion has been fully briefed, and is ripe for disposition. For the reasons that follow, the motion will be granted.

I. Background

On September 10, 2001, Plaintiff Thurston Bell, proceeding pro se, filed a complaint against IRS Commissioner Charles Rossotti in his official capacity, and IRS agents Chris Roginsky and Kathleen Lennon in their official and individual capacities. In his suit, Bell seeks (1) a declaratory judgment that his websites and their content are protected by the First Amendment to the United States Constitution, (2) an injunction against Defendants preventing them from approaching him and his family, and (3) compensatory damages in the amount of $30,000 and punitive damages of $1,000,000 from each of the Defendants sued in their individual capacities for violations of his First Amendment rights.

Bell founded the National Institute for Taxation Education ("NITE") in November, 1997. Through NITE, Plaintiff owns and maintains two websites which expound Plaintiff's views of tax law: http://www.nite.org and http://www.tax-gate.com. Plaintiff asserts that the content on these websites is protected by the First Amendment. In addition to providing the information on the websites, Plaintiff assists NITE members by drafting letters on their behalf and attending meetings with IRS personnel.

Ultimately, Plaintiff's complaint alleges that an IRS investigation of his websites violates his First Amendment rights. However, the complaint first details a number of alleged wrongs to others that have heightened Plaintiff's fear of imminent IRS action against him.¹ These events include raiding the business office of Plaintiff's former associate, Nick Jesson, and the investigation of Plaintiff's associates Darlow Thomas Madge and Hal Hearn. Plaintiff offers these events as evidence of his fear that the IRS will undertake similar actions against him.

On September 4, 2001, Plaintiff received a letter from the IRS stating that he and his websites were under investigation for possible violation of 26 U.S.C. §§ 6700² and 7408.³ The letter stated that a possible consequence of the investigation would be an injunction. Furthermore, the letter notified Plaintiff that he was required to cooperate with the investigation. Plaintiff asserts that the IRS investigative activity violates his First Amendment right to free speech.

II. Discussion

A. Standard of Review

The Court will consider the pending motion as a motion to dismiss. Defendants move to dismiss Plaintiff's complaint under Fed.R.Civ.P. 12(b)(1) and 12(b)(6). A Rule 12(b)(1) motion may be treated either as a facial or factual challenge to the court's subject matter jurisdiction. Gould Electronics, Inc. v. United States, 220 F.3d 169, 177 (3d Cir.2000). When reviewing a facial attack, the Court considers only the allegations in the complaint, documents referenced therein, and documents attached thereto. Id. These must be read in the light most favorable to the plaintiff. Id. Only when reviewing a factual attack may the court consider evidence outside the pleadings. Id.

As with a Rule 12(b)(1) facial attack, when considering a Rule 12(b)(6) motion to dismiss, the Court considers only the allegations within the complaint, any documents referred to in the complaint, and documents attached to the complaint. "A motion to dismiss pursuant to Rule 12(b)(6) may be granted only if, accepting all well pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir.1997) (internal citation omitted). Therefore, when analyzing Defendants' Motion to Dismiss, this Court construes all facts alleged in the complaint as true, and draws all reasonable inferences in the plaintiff's favor. Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478 (3d Cir.1998). This Court will only grant Defendants' Motion to Dismiss if there is clearly no remedy available for the Plaintiff's claim, or if Plaintiff has no right or power to assert the claim. Melo-Sonics Corp. v. Cropp, 342 F.2d 856, 859 (3d Cir.1965).

B. Injunction

On the face of his complaint, Plaintiff seeks to enjoin the IRS investigation of whether his websites violate United States law. Plaintiff also seeks an injunction

prohibiting Defendant Commissioner and all of his agents (defined as those executing the orders of Defendant Commissioner or operating in any form of cooperation or collusion) from physically approaching Plaintiff, His Family, and the Offices of NITE, at a distance of less than 300 feet, without prior approval from Plaintiff or non ex parte order of this Court.

Compl, p. 3.

The Tax Anti-injunction Act, however, states, with certain exceptions not applicable here, "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person." 26 U.S.C. § 7421(a). Information gathering that may lead to the assessment or collection of taxes falls within this tax anti-injunction provision. Linn v. Chivatero, 714 F.2d 1278, 1281-82 (5th Cir.1983). Since the IRS investigation into Plaintiff's websites may ultimately lead to the assessment and collection of taxes from individuals using Plaintiff's methods, the investigation falls under this anti-injunction provision. This Court is prohibited from entering any injunction against the IRS and its agents for allegedly harassing activities when those activities fall within the scope of a valid investigation. Black v. United States, 534 F.2d 524, 526-27 (2d Cir.1976); Graham v. United States, 528 F.Supp. 933 (E.D.Pa.1981).

Plaintiff argues that his case fits into a narrow, judicially recognized, exception to the anti-injunction provision. A court may enter an injunction against the collection of any tax already assessed if (1) it is clear that under no circumstances could the government ultimately prevail and (2) the taxpayer shows that "`equity jurisdiction' otherwise exists, i.e., the taxpayer shows that he would otherwise suffer irreparable injury." C.I.R. v. Shapiro, 424 U.S. 614, 627, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976); Sokolow v. United States, 169 F.3d 663 (9th Cir.1999). To show irreparable injury, the taxpayer must "plead and prove facts establishing that his remedy in the Tax Court or in a refund suit is inadequate to repair any injury that might be caused by an erroneous assessment or collection of an asserted tax liability." Id. at 628, 96 S.Ct. 1062. This extremely narrow exception to the Tax Anti-injunction act is applicable to situations where irreparable injury may result from a deprivation of property pending final adjudication of the rights of the parties. Id. The exception was created because the "Due Process Clause requires that the party whose property is taken be given an opportunity for some kind of predeprivation or prompt post-deprivation hearing at which some showing of the probable validity of the deprivation must be made." Id.

Plaintiff, however, does not present a scenario where this narrow exception would apply since the government has not assessed a tax penalty against the Plaintiff and therefore has nothing to collect. Plaintiff is attempting to enjoin the IRS from an investigation that may lead to the assessment or collection of taxes from him or from others using the information Plaintiff provides on his websites and to NITE members. He is not requesting an injunction to prevent the collection of taxes already assessed. Plaintiff, therefore, can not plead the irreparable harm created by the depravation of property the exception requires since there has been no attempt to collect any taxes in this case.

It is clear that the anti-injunction provision of the Internal Revenue Code applies here. Where the Anti-injunction Act applies, and the cause of action does not fall into one of the statutory or judicially recognized exceptions, the claim must be dismissed for lack of subject matter jurisdiction. Sokolow, 169 F.3d at 665. Therefore, Plaintiff's claim for injunctive relief will be dismissed pursuant to Fed. R.Civ.P. 12(b)(1).

C. Declaratory Judgment

Plaintiff asks this Court to declare "that his individual speech as well as forms thereof posted on [his websites] is protected by the First Amendment to the United States Constitution guaranty of Free Speech and does not violate any provisions of the Internal Revenue Code or Treasury Regulations ...." Compl., p. 2. However, this Court does not have jurisdiction over Plaintiff's request for declaratory judgment. The Declaratory Judgment Act grants federal courts jurisdiction to hear declaratory judgment actions:

In a case of actual controversy within its jurisdiction, except with respect to Federal taxes other than actions brought under section 7428 of the Internal Revenue Code of 1986, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

28 U.S.C. § 2201(a) (emphasis added). It is clear from the face of the statute that this Court cannot enter judgment with respect to Plaint...