Chandler v. United States

• Citation: 338 F.Supp.3d 592
• Decision Date: 09 October 2018
• Docket Number: No. 3:17-cv-2935-S-BN,3:17-cv-2935-S-BN
• Parties: Melody CHANDLER, Plaintiff, v. UNITED STATES of America, Defendants.
• Court: U.S. District Court — Northern District of Texas

338 F.Supp.3d 592

Melody CHANDLER, Plaintiff,

v.UNITED STATES of America, Defendants.

No. 3:17-cv-2935-S-BN

United States District Court, N.D. Texas, Dallas Division.

Signed October 9, 2018

Harold D. Rogers, Law Office of Harold D. Rogers, Wichita Falls, TX, for Plaintiff.

Holly M. Church, US Department of Justice-Tax Division, Dallas, TX, for Defendants.

ORDER ACCEPTING FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

KAREN GREN SCHOLER, UNITED STATES DISTRICT JUDGE

After making an independent review of the pleadings, files, and records in this case, and the Findings, Conclusions, and Recommendation of the United States Magistrate Judge dated September 17, 2018, the Court finds that the Findings Conclusions, and Recommendation of the Magistrate Judge are correct and they are accepted as the Findings, Conclusions, and Recommendation of the Court.

IT IS, THEREFORE, ORDERED that the Findings, Conclusions, and Recommendation of the United States Magistrate Judge are accepted.

The Court hereby GRANTS United States's Motion to Dismiss Plaintiff's Complaint for Lack of Subject-Matter Jurisdiction [Dkt. No. 23], and DENIES Plaintiff Melody G. Chandler's Motion to Amend Complaint [Dkt. No. 25]. The Court DISMISSES Plaintiff Melody G. Chandler's action without prejudice for lack of subject-matter jurisdiction, without reaching her Motion to Change Venue [Dkt. No. 25] or Motion for Summary Judgment [Dkt. No. 32].

SO ORDERED this 9^th day of October, 2018.

FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

DAVID L. HORAN, UNITED STATES MAGISTRATE JUDGE

This case has been referred to the undersigned United States magistrate judge for pretrial management under 28 U.S.C. § 636(b) and a standing order of reference from United States District Judge Karen Gren Scholer. See Dkt. No. 21.

Defendant United States of America has filed a Motion to Dismiss Plaintiff's Complaint for Lack of Subject-Matter Jurisdiction. See Dkt. No. 23 ("the Motion to Dismiss"). Plaintiff Melody G. Chandler failed to file a written response to the Motion to Dismiss, and her time to do so has passed. See Dkt. No. 24.

Ms. Chandler instead filed a Motion to Change Venue and to Amend Complaint. See Dkt. No. 25. The United States filed a response to the motion, see Dkt. No. 33, however, Ms. Chandler has not filed a reply, and her time to do so has passed, see Dkt. No. 27.

Ms. Chandler has also filed a Motion for Summary Judgment [Dkt. No. 32], seeking summary judgment in her favor as to the issue of whether she qualified as an innocent spouse within the meaning of 26 U.S.C. § 6015(f). The United States has filed a response, asserting that, for the reasons explained in the Motion to Dismiss, see Dkt. No. 35, "this Court lacks subject-matter jurisdiction to consider the merits of Plaintiff's section 6015 innocent spouse claim" and so "should deny Plaintiff's motion for summary judgment, and dismiss this case for lack of subject-matter jurisdiction," id. at 1. "Alternatively, if the Court does not dismiss this case, the United States requests that pursuant to Rule 56(d), the deadline to file a response to the merits of Plaintiff's section 6015 innocent spouse claim be set for at least 30 days after the close of discovery." Id. at 1 (footnote omitted). Again, Ms. Chandler has not filed a reply.

The undersigned recommends that the Court grant United States's Motion to Dismiss Plaintiff's Complaint for Lack of Subject-Matter Jurisdiction [Dkt. No. 23], deny Plaintiff Melody G. Chandler's Motion to Amend Complaint [Dkt. No. 25], and dismiss Plaintiff Melody G. Chandler's action without prejudice for lack of subject-matter jurisdiction and without reaching her Motion to Change Venue [Dkt. No. 25] or Motion for Summary Judgment [Dkt. No. 32].

Background

In October 2011, Ms. Chandler sent Form 8857 to the Internal Revenue Service ("IRS"), as a Request for Innocent Spouse Relief (her "Request"). Ms. Chandler requested relief for the years of 1997 to 2002. See Dkt. No. 23, Ex. 1-A at App. 9. In her Request, Ms. Chandler claimed that she did not know that her ex-husband had filed tax returns during those years with incomplete or missing information. See id. at App. 9. Ms. Chandler further argued that their taxes were prepared by a professional accounting firm, that her money was not co-mingled with her ex-husband's, and that she was simply "handed a thick pile of paper each year and told to sign the box." Id. at App. 8.

The IRS received these forms on November 29, 2011, and ultimately denied Ms. Chandler's Request on December 24, 2012. See Dkt. No. 23, Ex. 1-B at App. 15. The IRS explained that it denied Ms. Chandler's claim because she failed to show that it was unfair to hold her responsible where she (1) did not prove that she had reason to believe the taxes would be paid at the time she signed the return, and (2) proffered documents that did not show an economic hardship. See id. The IRS specifically stated in its response that, if Ms. Chandler disagreed with its decision, she could file a petition with the United States Tax Court ("Tax Court") to review the denial. See id. The letter warned that any appeal must be made within 90 days from the date of denial notification. See id.

Ms. Chandler failed to submit an appeal. Instead, after the 90-day window, she filed another Form 8857 with the IRS on September 23, 2012, requesting tax relief for the same years that the IRS had previously denied. See Dkt. No. 23, Ex. 1-C at App. 19. Although the IRS received Ms. Chandler's request after the 90 days had elapsed, it considered the new Form 8857 a request for reconsideration and again denied relief. See Dkt. No. 23, Ex. 1-D at App. 24. Ms. Chandler's attorney went on to file three similar submissions in February, May, and August of 2014, each of which the IRS denied for the lack of any new information. See Dkt. No. 23, Ex. 1-E at App. 26.

In June 2013, the IRS sent Ms. Chandler a Notice of Levy on Wages, Salary, and Other Income. In response, Ms. Chandler filed a Collection Appeal Request through the IRS's Collection Appeals Program. See Dkt. No. 23, Ex. 1 at App. 2. However, the IRS upheld the levy. See Dkt. No. 23, Ex. 1-J at App. 37.

From 2014 through 2015, the IRS levied $22,890 in proceeds and applied this money to Ms. Chandler's tax liabilities for 2001 and 2002. See Dkt. No. 23, Ex. 1 at App. 3. But, in May 2015, the IRS wrote off $61,009.67 of Ms. Chandler's federal income tax liabilities for 2001 and $51,381.31 for 2002 because the collection statute of limitations had run. See id.

In July of 2015, Ms. Chandler filed a Claim for Refund form, requesting a refund based upon her innocent spouse relief claim. See Dkt. No. 23, Ex. 1-H at App. 34. The IRS initially refused the claim as untimely but eventually considered its merits and denied it. See Dkt. No. 23, Ex. 1-I at App. 35. Once more, Ms. Chandler filed a Collection Appeals Request to appeal the denial. See Dkt. No. 23, Ex. 1-J at App. 37. But, in 2017, the IRS informed Ms. Chandler that IRS Appeals decided to sustain the disallowance of her refund request and that IRS Appeals did not have the authority to address the issue of innocent spouse relief because she failed to petition the Tax Court after that claim was denied several years prior. See id.

Ms. Chandler then filed this lawsuit. See Dkt. No. 1. She contends that she is entitled to a refund of $32,929 based on innocent spouse relief. Id.

Legal Standards

I. Subject-Matter Jurisdiction

"Federal courts are courts of limited jurisdiction, and absent jurisdiction conferred by statute, lack the power to adjudicate claims." Stockman v. Fed. Election Comm'n , 138 F.3d 144, 151 (5th Cir. 1998). The Court "must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum." Howery v. Allstate Ins. Co. , 243 F.3d 912, 916 (5th Cir. 2001). "If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action." FED. R. CIV. P. 12(h)(3).

The Court must dismiss a complaint for lack of subject-matter jurisdiction " ‘when the court lacks the statutory or constitutional power to adjudicate the case.’ " Home Builders Ass'n of Miss., Inc. v. City of Madison , 143 F.3d 1006, 1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund , 81 F.3d 1182, 1187 (2d Cir. 1996) ). The Court will not assume it has jurisdiction. Rather, "the basis upon which jurisdiction depends must be alleged affirmatively and distinctly and cannot be established argumentatively or by mere inference." Getty Oil Corp. v. Ins. Co. of N.A. , 841 F.2d 1254, 1259 (5th Cir. 1988) (citing Ill. Cent. Gulf R. Co. v. Pargas, Inc. , 706 F.2d 633, 636 & n.2 (5th Cir. 1983) ).

"The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist" in any case originally filed in federal court. Ramming v. United States , 281 F.3d 158, 161 (5th Cir. 2001).

The United States Court of Appeals for the Fifth Circuit recognizes a distinction between a "facial" attack to subject-matter jurisdiction, which is based solely on the pleadings, and a "factual" attack to jurisdiction, which is based on affidavits, testimony, and other evidentiary material. See Paterson v. Weinberger , 644 F.2d 521, 523 (5th Cir. 1981) ; accord Ramming , 281 F.3d at 161 ("Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts."). Regardless of the nature of the attack, the plaintiff seeking a federal forum "constantly bears the burden of proof that jurisdiction does in fact exist." Ramming , 281 F.3d at 161....