Christensen v. US

• Decision Date: 19 March 1990
• Docket Number: Civ. A. No. 88-5075(SSB).
• Parties: Tom CHRISTENSEN and Jean Christensen, Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of New Jersey

733 F. Supp. 844

Tom CHRISTENSEN and Jean Christensen, Plaintiffs, v. UNITED STATES of America, Defendant.

Civ. A. No. 88-5075(SSB).

United States District Court, D. New Jersey.

March 19, 1990.

Tom Christensen, Jean Christensen, Marmora, N.J., plaintiffs, pro se.

Samuel A. Alito, Jr., U.S. Atty. by Louis J. Bizzarri, Asst. U.S. Atty., Camden, N.J. and Joseph F. Minni, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., for defendant.

OPINION

BROTMAN, District Judge.

Currently before the court is the motion of pro se plaintiffs Tom and Jean Christensen for summary judgment. The defendant, the United States of America, has cross-moved for summary judgment. For the reasons stated in the following opinion, this court will deny plaintiffs' motion and grant the government's motion.

I. FACTS AND PROCEDURE

Plaintiffs initiated this suit in November 1988 by filing a complaint and an application for a temporary restraining order. Plaintiffs alleged that the Internal Revenue Service ("IRS" or "Service") had failed to follow the proper procedure in levying upon Mr. Christensen's wages. Plaintiffs maintained that the IRS levied on Mr. Christensen's wages for Mrs. Christensen's tax liability and, therefore, sought an order restraining the seizure of his wages. At a hearing before this court held January 6, 1989, the attorney for the government told the court that the IRS levy would be released. The parties agreed to a dismissal of the request for a temporary restraining order.

Plaintiffs amended their complaint on January 18, 1989, asserting a cause of action under Internal Revenue Code ("I.R.C." or "Code") § 7431 (1989). The statute provides:

(a)(1) Disclosure by employee of United States.—If any officer or employee of the United States knowingly, or by reason of negligence, discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages in a district court of the United States....

(b) No liability for good faith but erroneous interpretation.—No liability shall arise under this section with respect to any disclosure which results from a good faith, but erroneous interpretation of section 6103.

Id. Damages are limited by the statute to costs of the action plus the greater of $1,000.00 per unauthorized disclosure or actual damages. Id. §§ 7431(c)(1)(A)-(B). Punitive damages are available for a willful disclosure or a disclosure that is the result of gross negligence. Id. § 7431(c)(1)(B)(ii). Plaintiffs here seek compensatory and punitive damages for eight allegedly unauthorized disclosures.

The amended complaint includes the following allegations of unauthorized disclosure: on or about September 3, 1987, the IRS sent a Notice of Levy to the First Jersey National Bank; on or about May 12, 1988, the IRS sent two Notices of Tax Lien to the Cape May County Recorder; on or about June 15, 1988, the IRS served two Notices of Levy that were later superceded; on or about June 16, 1988, the IRS served two Notices of Levy on A & F Abstracting Company; and, on or about October 25, 1988, the IRS mailed a Notice of Levy to Mr. Christensen's employer, the J. Byrne Agency. Plaintiffs contend that these disclosures are not authorized by section 6103, therefore, the government is subject to liability under section 7431.

In their brief supporting their motion for summary judgment, plaintiffs admit that they did not file tax returns for the years 1983, 1984, and 1985. Plaintiffs also admit, however, that they received property during these years by performing an "occupation of common right." Plaintiffs contend that this property is not gross income within the meaning of I.R.C. § 61(a), therefore they are not required to file a return pursuant to I.R.C. § 6012(a)(1)(A) because they have gross income less than $1,000.00 for those tax years.

Plaintiffs' brief sets forth the following arguments:

(1) The IRS had no authority to impose the liens because there was no "judgment by a court of competent jurisdiction" as required by I.R.C. § 6502.¹

(2) No record of assessment exists determining their tax liability under I.R.C. § 6203,² thus, the IRS cannot impose the liens.

(3) No properly executed return exists for the Christensens for the years in question because they did not file returns and the Service's Substitute For Return ("SFR") was not signed by anyone from the Service. As such, plaintiffs contend, the Service cannot rely on the SFR to impose liens under I.R.C. § 6020(b)(2).³

(4) The Notice and Demand for Payment sent by the IRS, Form 8126, does not comply with the requirements of I.R.C. § 6303,⁴ therefore, this court cannot honor it.

At this point, plaintiffs' brief becomes rambling and largely incomprehensible. As best this court can surmise, plaintiffs assert that, although the government relies on I.R.C. § 6321⁵ to support its imposition of a lien, the lien is invalid because Congress cannot impose a lien without first bringing suit in court and reducing its claim to judgment. Additionally, plaintiffs argue that the government cannot rely on this invalid lien to levy on plaintiffs' property under I.R.C. § 6331.⁶ Plaintiffs refer to this levy as an "administrative non judicial levy" and contend that such a levy is permissible only for jeopardy assessments, the accrued salary of government employees, liens under the estate and gift tax provisions of the Code, or liens under I.R.C. § 6321.

Plaintiffs conclude that liens under I.R.C. § 6321 are "secret liens," however, the rationale supporting this conclusion and the consequences of such a characterization are not apparent from their brief. Plaintiffs maintain that the United States Supreme Court, in United States v. Hooe, 7 U.S. (3 Cranch) 73, 2 L.Ed. 370 (1805), set forth certain conditions that must be met before the government can impose a statutory lien against a citizen. Here, according to plaintiffs, the lien should have remained secret because the conditions were not met.

Plaintiffs' next argument provides that the use of a "administrative non judicial notice of levy" (Form 668) is limited to the following situations: for a special tax lien under the estate and gift tax code; for secret assessment liens under I.R.C. § 6321; when conditions for jeopardy exist; and when a statute authorizes a levy on the accrued salary of a government employee. Plaintiffs cite a Decision of the Comptroller General from 1947 to support their apparent contention that Form 668 is to be used only to levy against the wages of government employees.

Plaintiffs assert that the Service has violated their constitutional and statutory rights under I.R.C. § 6502 because they were denied a "proceeding in court" as guaranteed by the seventh amendment to the United States Constitution. Plaintiffs also claim that the IRS did not follow the proper procedure because certain documents lack a signature, therefore, this court should dishonor those documents.

Finally, plaintiffs assert that the IRS did not comply with the notice and demand requirements of I.R.C. § 6303 because its Form 8126 is evidence that no assessment and demand for payment has ever been made. Plaintiffs conclude by asserting that the unauthorized lien and levy violated their constitutional rights under the fourth, fifth, and seventh amendments.

In its response, the government maintains that the liens and levies were proper. The IRS assessed Mrs. Christensen for 1983 tax liabilities on October 13, 1986; it assessed Mr. Christensen for 1983 tax liabilities on October 27, 1986. The IRS issued final notice, "Notice of Intention to Levy," to the Christensens for payment of these taxes, plus accumulated interest and penalties, on July 30, 1987 and April 21, 1988.⁷ The IRS issued a levy from its Sacramento, California district office to the First Jersey National Bank on September 1, 1987. The IRS issued two Notices of Federal Tax Lien in April 1988 in the Cape May County Courthouse, Cape May, New Jersey. The IRS also issued two levies to A & F Abstracting Company; the IRS released these levies on June 16, 1988 when plaintiffs' liabilities were satisfied upon sale of a parcel of their property. The government maintains that each disclosure was authorized, therefore, plaintiffs cannot recover under I.R.C. § 7431.

In their reply brief, plaintiffs concede that I.R.C. § 6103 authorizes the filing of liens and levies as necessary to the collection of taxes. Again, they assert they do not owe tax because their income is derived from an "occupation of common right." The Christensens also maintain that no assessments of the tax owed exist. They contend that they are not persons subject to the government's taxing authority because Congress may only collect taxes by an action in debt that complies with the seventh amendment. Plaintiffs assert that, because they have not agreed to the assessment, the assessment is merely an arbitrary act of the government. They also dispute the government's contention that they have only two alternatives in challenging the assessments, that is, petitioning the tax court or paying the disputed amount and suing for a refund.

II. DISCUSSION

The standard for granting summary judgment is a stringent one, but it is not insurmountable. A court may grant summary judgment only when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir.1983). In deciding whether there is a disputed issue of material fact the court must view all doubt in favor of the nonmoving party. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir.1983), cert. denied, 465 U.S. 1091, 104 S.Ct. 2144 (1984); Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir.1972). The threshold...