Calen v. United States, 18-CV-2183 (JMA) (AKT)

CourtUnited States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
PartiesJAMES D. CALEN, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.
Docket Number18-CV-2183 (JMA) (AKT)
Decision Date24 September 2021

JAMES D. CALEN, Plaintiff,


No. 18-CV-2183 (JMA) (AKT)

United States District Court, E.D. New York

September 24, 2021

James D. Calen 19 Honeysuckle Lane Holtsville, NY 11742 Pro Se Plaintiff

Marie Wicks U.S. Department of Justice



Plaintiff James D. Calen (“Plaintiff”), proceeding pro se, brings this action against defendant the United States (“Defendant” or the “government”) alleging violations of the Internal Revenue Code, 26 U.S.C. §§ 7432, 7433, 7434, and the Administrative Procedure Act (“APA”). After Plaintiff filed a third amended complaint, (ECF No. 49), Defendant has moved to dismiss all claims pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6), and based on sovereign immunity. (ECF No. 53.) For the reasons stated below, Defendant's motion is GRANTED.


The Court assumes familiarity with the underlying record that is set forth in detail in Magistrate Judge A. Kathleen Tomlinson's March 13, 2020 Report and Recommendation (“R&R”) on Defendant's prior motion to dismiss, and this Court's May 19, 2020 Order adopting that R&R. (ECF Nos. 34, 44.) Accordingly, the Court recites only the facts necessary to determine the instant motion to dismiss.

A. Procedural Background

On April 12, 2018, Plaintiff, filed his initial Complaint against Defendant seeking to “allow the NOL carryover of $167, 448.00 to be allowed to the 2010 [tax year], ” compensatory damages in the amount of $779.40 for the levy on Plaintiff's bank and brokerage accounts, and punitive damages in the amount of $5, 000. (ECF No. 1.) The Court set a briefing schedule for Defendant to file a motion to dismiss (“First Motion to Dismiss”). (Electronic Order, October 9, 2018.) Prior to Defendant's motion being fully briefed and filed, Plaintiff filed a motion for leave to amend the complaint and attached an amended complaint to that filing. (ECF No. 24.) On June 14, 2019, the First Motion to Dismiss was fully briefed. (ECF No. 28.) On September 16, 2019, Plaintiff filed a second motion to amend the complaint and a second proposed amended complaint (“SAC”). (ECF No. 33-2.)

On March 13, 2020, Magistrate Judge Tomlinson issued an R&R recommending that the undersigned grant in part and deny in part Defendant's First Motion to Dismiss. (ECF No. 34.) In making this recommendation, the facts were taken from the SAC. (ECF No. 34 at 4.) On May 19, 2020, this Court adopted Judge Tomlinson's recommendations as follows. First, the Court dismissed Counts II and III of the SAC, alleging violations of 26 U.S.C. § 7422, pursuant to Fed.R.Civ.P. 12(b)(1) because the Court lacked jurisdiction to adjudicate the claims, or, in the alternative, pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief could be granted and denying leave to amend those claims. Second, the Court permitted Plaintiff to file a third amended complaint concerning: (1) an unauthorized collection claim, pursuant to 26 U.S.C. § 7433, based exclusively on the alleged violations of 26 U.S.C. § 7803(a)(3) and 26 U.S.C. § 6611[1], and (2) an unauthorized disclosure claim, pursuant to 26 U.S.C. § 7431.[2] (ECF No. 44.)

On June 22, 2020, Plaintiff filed a third amended complaint (“TAC”) (ECF No. 45.) The TAC seeks damages pursuant to 26 U.S.C. § 7432 for failure to release a lien, § 7433 for wrongful collection activity, and § 7434 for fraudulent filing of information returns. The TAC also claims that the Internal Revenue Service (“IRS”) violated the APA. On January 26, 2021, Defendant filed a fully briefed motion to dismiss the TAC. (ECF No. 53.)

B. Factual Background

The following facts are taken from Plaintiff's TAC. These facts are accepted as true for purposes of the pending motion to dismiss and are construed in a light most favorable to Plaintiff as the non-moving party. Aegis Ins. Servs., Inc. v. 7 World Trade Co., L.P., 737 F.3d 166, 176 (2d Cir. 2013). Because Plaintiff is proceeding pro se, the Court construes his pleadings liberally “to raise the strongest arguments that they suggest.” See McLeod v. Jewish Guild for the Blind, 864 F.3d 154, 156 (2d Cir. 2017).

Plaintiff alleges that on December 5, 2015, Rita A. VanIderstein, a Revenue Officer at the IRS, left a notice of levy at his residence in the amount of $199, 908.93 for tax assessments based on Plaintiff's 2008 and 2009 substitute tax returns. (TAC ¶ 5.) The IRS submitted substitute tax returns on Plaintiff's behalf for the 2008 and 2009 tax years because Plaintiff had failed to file any tax returns for either year. (Id. ¶¶ 5, 9.) The IRS is authorized to prepare and file a substitute tax return for a taxpayer who fails to file a timely return. See 26 U.S.C. § 6020. On December 12, 2015, Plaintiff requested a hearing to contest the notice of levy, claiming that he was not liable for any taxes assessed for 2008 and 2009. (TAC ¶ 7.) The IRS did not conduct a hearing but, rather, agreed to release the levy on the condition that Plaintiff file his 2008 and 2009 tax returns. (Id. ¶¶ 8-9.) The IRS subsequently released the levies in December 2015. (Id. ¶ 9.) Plaintiff ultimately filed completed tax returns for 2008 and 2009 in February 2016. (Id. ¶¶ 13, 14.)

On April 30, 2016, Plaintiff received a Letter 105C (“LTR 105C”) from the IRS for the tax year 2009, “denying a carryover in the amount of $158, 580.00.” (Id. ¶15.) On May 2, 2016, Plaintiff went to the IRS office in Hauppauge, New York, to inquire about the LTR 105C for 2009 and alleges that he was informed by an IRS employee that his 2008 tax return was not processed due to a processing error. (Id. ¶ 16.) Reading the TAC liberally, Plaintiff appears to allege that the IRS incorrectly assessed Plaintiff's 2009 tax liability and disallowed his 2009 NOL deductions because it processed Plaintiff's 2009 tax return before processing his 2008 tax return. Plaintiff alleges that because the IRS processed the 2009 tax return first, Plaintiff's 2009 deductions and tax liability were incorrectly based on his 2008 substitute tax return as opposed to the new 2008 tax return that he filed. (Id. ¶¶ 15-16.)

On May 3, 2016, Plaintiff received a notice of levy dated April 26, 2016, stating liabilities in the amount of $135, 269.58. (Id. ¶ 17.) Plaintiff contacted Ms. VanIderstine at the IRS and informed her that the notice of levy was issued in error because Plaintiff did not owe any tax liabilities. (Id. ¶¶ 20, 21.)

On May 4, 2016, Plaintiff contacted the IRS Taxpayer Advocate Service, and on May 11, 2016 received a response in which the Taxpayer Advocate Service asked him to submit a “multitude of documents” and then proceeded to “look[] into [his] claim.” (Id. ¶ 22, 24.)

On May 11, 2016, “[i]n response to LTR 105C for tax year 2009, ” Plaintiff “sent in a written request for Formal Protest (aka Appeal) via Certified Mail.” (Id. ¶ 23.) On May 20 and 24, respectively, “money was levied from [Plaintiff's] Bank and Brokerage accounts, ” which Plaintiff alleges “[e]ffectively clos[ed] Plaintiff's business.” (Id. ¶ 25.)

The IRS then sent Plaintiff a LTR 105C dated December 1, 2016[3] regarding tax year 2008 disallowing his NOL carryback claim. (Id. ¶ 32.) Plaintiff alleges that he did not receive the LTR 105C until September 8, 2017 and was therefore within the 30-day time-period to appeal. Plaintiff alleges that “[p]ursuant to IRS procedures, Plaintiff sent in a written Formal Protest (aka Appeal) on October 4, 2017, via Certified Mail.” (Id.)

Plaintiff alleges that his “moneys [were] refunded, albeit with mistakes” and therefore, in October 2017, the Taxpayer Advocate Service recommended that he “guard [his] rights, by making an administrative claim for refund, by sending in form 843[] Refund Request and Abatement of Penalties” and that he explain that the IRS miscalculated the amount to be refunded, that the IRS failed to record the $340.40 levied from an account at Teachers Federal Credit Union[4], and that the IRS did not account for the fees associated with the levies of $75.00 and $4.00. (Id. ¶ 30.)

On February 8, 2018, the IRS Appeals Office informed Plaintiff in a letter that it was upholding the disallowance of his claim “for abatement and/or refund of taxes that were charged [him]” related to the tax year 2008 and notifying him that he could pursue his abatement/refund claim further “by filing suit in either the United States District Court or the United States Court of Federal Claims.” (Id. ¶ 41; Pl. Ex. 7.) Plaintiff alleges that, notwithstanding the denial of his formal protests, the IRS returned all of the monies levied from Plaintiff's bank and brokerage accounts. (Id. ¶ 33.) Plaintiff also alleges that on January 2, 2017, the IRS abated all tax assessments, fees, and penalties for the 2009 tax year. (Id. ¶¶ 19, 28.)

Plaintiff filed the instant lawsuit on April 12, 2018. As relief, Plaintiff requests $5, 653.23 in compensatory damages pursuant to 26 U.S.C. §§ 7430, 7432, 7433, 7434, and 6611. Specifically, Plaintiff alleges he is entitled to $75.00 for a legal processing fee he paid to the Teachers Federal Credit Union regarding the levy on his account; $4.00 for a fee from Interactive Brokers regarding the levy on his account; “$24.23 in interest”; $550.00 in litigation costs; and $5, 000 in damages for the filing of fraudulent tax returns. (Id. 14.)


A. Standard of Review

1. Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) requires the dismissal of a claim when there is a “lack of subject-matter jurisdiction.” Fed.R.Civ.P. 12(b)(1). A case is properly dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) “when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000); see Fed.R.Civ.P. 12(b)(1).

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