Gillett v. U.S., 5:01-CV-104.

• Decision Date: 20 September 2002
• Docket Number: No. 5:01-CV-104.,5:01-CV-104.
• Citation: 233 F.Supp.2d 874
• Parties: Larry GILLETT, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Western District of Michigan

233 F.Supp.2d 874

Larry GILLETT, Plaintiff, v. UNITED STATES of America, Defendant.

No. 5:01-CV-104.

United States District Court, W.D. Michigan, Southern Division.

September 20, 2002.

COPYRIGHT MATERIAL OMITTED

Larry Gillett, Mason, MI, pro se.

Elizabeth Lan, U.S. Department of Justice, Tax Division, Washington, DC, for United States of America, Defendant.

MEMORANDUM OPINION

McKEAGUE, District Judge.

This is an action brought by a pro se plaintiff to challenge IRS penalties imposed upon him for filing an allegedly frivolous tax return and to challenge his obligation to pay federal income taxes. The IRS imposed the penalties pursuant to 26 U.S.C. § 6702 for frivolous tax returns for the 1998 and 1999 tax years. Plaintiff's complaint asks this court to declare the penalties "invalid" because the hearing officer failed to conduct a "valid" due-process hearing pursuant to 26 U.S.C. § 6330(c). Plaintiff asks the court to "Order the government to reimburse plaintiff for all of (his) costs in bringing this action. 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." (Complaint at 5) (citing 26 U.S.C. § 7433).

The matter is before the court on defendant's motion for summary judgment. (docket # 5). Defendant seeks dismissal of plaintiff's claims on the basis that this court lacks subject-matter jurisdiction. Defendant asserts that the proper forum for plaintiff's lawsuit attempting to challenge his underlying tax liability is the United States Tax Court. (Def. Brief at 4). Defendant argues that this court does have "jurisdiction to review the IRS's determination with respect to the frivolous return penalties assessed pursuant to 26 U.S.C. § 6702." (Def. Brief at 4 n.1) (citing Van Es v. Commissioner, 115 T.C. 324, 2000 WL 1520321 (2000)). Defendant seeks a court order affirming the decision of the appeals officer imposing sanctions against plaintiff for filing frivolous tax returns.

Plaintiff filed his response on February 21, 2002. (docket # 13). Plaintiff opposes defendant's motion for summary judgment on the basis that, "Defendant's memorandum of law is nothing but a conglomeration of false and fraudulent claims designed to circumvent the law and deny plaintiff protection." (docket # 13, at 2). Plaintiff vehemently disagrees with the defendant's assertion that plaintiff's underlying ability to pay taxes was not at issue at the hearing. Plaintiff claims that he challenged his underlying liability to pay taxes at the hearing and states, "it is an issue in this proceeding and is a contested issue of fact." (Id.). Plaintiff repeats this assertion on page 3 of his brief where he states, "The issue of underlying liability is at issue in this proceeding and is a contested issue of fact." (Id. at 3). Plaintiff repeats these arguments on page 21 of his brief and in the declaration he attached in support of his brief.

Upon review, defendant's motion for summary judgment affirming the administrative decision imposing sanctions will be granted. Plaintiff's remaining claims will be dismissed because the court lacks subject-matter jurisdiction on those claims.

Applicable Standards

Defendant has filed a motion asking that the complaint against it be dismissed for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). The Sixth Circuit recognizes two types of 12(b)(1) motions: a "facial" attack challenging the sufficiency of the plaintiff's factual allegations, in which all well-pleaded factual allegations in the complaint are taken as true; and a "factual" attack challenging the actual fact of subject-matter jurisdiction, which is analyzed under Fed. R. Civ. P. 56 standards. See Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 324 (6th Cir.1990); Treglowne v. United States, No. 99-cv-70323, 2000 WL 264677, at * 3 (E.D.Mich. Jan.21, 2000). The difference is often significant, because under a factual challenge the district court is empowered to weigh the evidence, and no presumptions apply as to the truthfulness of plaintiff's allegations. United States v. A.D. Roe Co., 186 F.3d 717, 721-22 (6th Cir.1999). The Sixth Circuit has clearly recognized that a district court is empowered consider evidence beyond the pleadings and to resolve factual disputes when necessary to resolve challenges to subject-matter jurisdiction under Rule 12(b)(1). See Madison-Hughes v. Shalala, 80 F.3d 1121, 1130 (6th Cir.1996); RMI Titanium Co. v. Westinghouse Elec. Co., 78 F.3d 1125, 1133-34 (6th Cir.1996); compare United States v. BellSouth Telecommunications, Inc., 123 F.3d 935, 937 (6th Cir.1997). Here, defendant presents a factual attack challenging this court's subject-matter jurisdiction.

Summary judgment is appropriate when the record reveals that there are no issues as to any material fact in dispute and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Hiney Printing Co. v. Brantner, 243 F.3d 956, 959 (6th Cir.2001); Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir.2001); Parker v. Metropolitan Life Ins. Co., 121 F.3d 1006, 1009 (6th Cir.1997) (en banc). The standard for determining whether summary judgment is appropriate is whether "the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see Watkins v. City of Battle Creek, 273 F.3d 682, 685 (6th Cir.2001); Groner v. Golden Gate Gardens Apts., 250 F.3d 1039, 1043 (6th Cir.2001); Strouss v. Michigan Dep't of Corr., 250 F.3d 336, 341 (6th Cir.2001). The court must consider all pleadings, depositions, affidavits, and admissions on file, and draw all justifiable inferences in favor of the party opposing the motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Pride v. BIC Corp., 218 F.3d 566, 567 (6th Cir.2000).

When the party without the burden of proof (generally the defendant) seeks summary judgment, that party bears the initial burden of pointing out to the district court an absence of evidence to support the nonmoving party's case, but need not support its motion with affidavits or other materials "negating" the opponent's claim. Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 339 (6th Cir.1993). Once the movant shows that "there is an absence of evidence to support the nonmoving party's case," the non-moving party has the burden of coming forward with evidence raising a triable issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To sustain this burden, a plaintiff may not rest on the mere allegations of his pleadings. FED. R. CIV. P. 56(e); Dudley v. Eden, 260 F.3d 722, 724 (6th Cir.2001); Braithwaite v. Timken Co., 258 F.3d 488, 493 (6th Cir. 2001); Campbell v. Grand Trunk W.R.R., 238 F.3d 772, 775 (6th Cir.2001). "A mere scintilla of evidence is insufficient." March v. Levine, 249 F.3d 462, 471 (6th Cir.2001). Rather, a party with the burden of proof opposing a motion for summary judgment has the burden to come forth with requisite proof to support his legal claim, particularly where he has had an opportunity to conduct discovery. See Cardamone v. Cohen, 241 F.3d 520, 524 (6th Cir.2001); Noble v. Chrysler Motors Corp., 32 F.3d 997, 999 (6th Cir.1994).

Facts

The following facts are beyond genuine issue. In September of 2000, the Internal Revenue Service received 1040 forms from plaintiff for the 1988 and 1999 tax years. Plaintiff had entered zeros in the spaces provided for his wages, total income and adjusted gross income. Plaintiff's W-2's showed the payment of wages, tips and other compensation. On the 1999 form, plaintiff claimed a refund in the amount of $16.80. At the bottom of page two plaintiff wrote, "I am not filing this voluntarily, but I am filing this return in fear that if I didn't I would be prosecuted (illegally) for failing to do so." (docket # 8, Ex. A). In response, the IRS sent plaintiff the following letter:

We have determined that the information you sent is frivolous and your position has no basis in law. Claims, such as yours, have been considered and rejected repeatedly as without merit by federal court, including the Supreme Court of the United States. Therefore, we will not respond to future correspondence concerning these issues.

In answering your tax questions, we encourage you to seek advice from competent tax counsel or an attorney qualified to practice in your state.

This is to inform you of the potential consequences of the position you have taken and to offer you and opportunity to correct your position within 30 days from the date of this letter.

INTERNAL REVENUE CODE SECTION 6702 (FRIVOLOUS INCOME TAX RETURN) PROVIDES:

(a) CIVIL PENALTY — if —

(1) any individual files what purports to be a return of the tax imposed by subtitle A but which

(A) does not contain information on which the substantial correctness of the self-assessment may be judged; or

(B) contains information that on its face indicates that the self-assessment is substantially incorrect; and

(2) the conduct referred to in paragraph (1) is due to —

(A) a position which is frivolous, or

(B) a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws, then such individuals shall pay a penalty of $500.

(b) PENALTY IN ADDITION TO OTHER PENALTIES — The penalty imposed by subsection (a) shall be in addition to any other penalty provided by law.

On October 9, 2000, the IRS assessed the $500 penalty upon the 1998 and 1999 returns. The IRS issued a notice of assessment and demand for payment at that time. On February 8, 2001, the IRS issued a "Final Notice-Notice of Intent to Levy and Notice of Your Right to a Hearing." This notice...