Hughes v. U.S.
| Decision Date | 02 December 1991 |
| Docket Number | 91-55195,Nos. 90-56150,s. 90-56150 |
| Citation | 953 F.2d 531 |
| Parties | -472, 92-1 USTC P 50,086, 21 Fed.R.Serv.3d 728, 34 Fed. R. Evid. Serv. 1318 Richard C. HUGHES; Joan C. Hughes, Plaintiffs-Appellants, v. UNITED STATES of America; Commissioner of Internal Revenue, Defendants-Appellees. Richard C. HUGHES; Joan C. Hughes, Plaintiffs-Appellants, v. COMMISSIONER OF IRS; United States of America; Steven R. High; Lena High; United Savings Bank, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard C. Hughes and Joan C. Hughes, pro se.
Gary R. Allen, Tax Div., U.S. Dept. of Justice, Washington, D.C., for defendants-appellees.
Appeal from the United States District Court for the Central District of California.
Before PREGERSON, CANBY and RYMER, Circuit Judges.
Richard and Joan Hughes, in an effort to forestall any further tax collection activities against them, brought suit against the United States and the Commissioner of Internal Revenue seeking declaratory and injunctive relief and damages. The district court dismissed the counts seeking declaratory and injunctive relief on the ground that the court lacked subject matter jurisdiction, and granted summary judgment in favor of the government and the Commissioner on the damage claims.
Among other things, the Hugheses contend on appeal that the district court had subject matter jurisdiction despite the Anti-Injunction Act, 26 U.S.C. § 7421, because Form 4340 does not constitute proof that assessments were made and thus no valid assessments against them exist, and because the IRS failed to present any evidence that it mailed notices of assessments and demands for payments. They further argue that the Secretary of the Treasury failed to delegate his authority to collect taxes to local IRS agents. Alternatively, the Hugheses assert that the district court had jurisdiction under the Administrative Procedure Act, notwithstanding the jurisdictional limitations imposed by the Anti-Injunction Act and 28 U.S.C. § 2201. They also claim that jurisdiction was proper under 28 U.S.C. § 2410 because this suit is really an action to quiet title.
Additionally, the Hugheses make several evidentiary challenges, including the contentions that the IRS's Office of the Los Angeles District Director does not legally exist and thus all forms issuing from that office are inadmissible, and that 4340 Forms are inadmissible because they are hearsay, they are unacceptable summaries, they were generated by a computer, and they were not legitimately certified under government seal. Finally, the Hugheses claim that the district court erred by refusing to allow the addition of new parties in the first amended complaint, and that the district court erred in several respects when it granted summary judgment in favor of the government. We affirm.
The IRS determined that the Hugheses were liable for tax deficiencies for the year 1981. The IRS provided notice of the deficiencies and demanded payment, but the Hugheses did not satisfy the debt. The IRS then levied upon and, in 1985, sold property owned by the Hugheses in order to satisfy a portion of the still outstanding liabilities.
The IRS also determined that the Hugheses were liable for additional deficiencies for the years 1979-1984. Once again, the IRS provided the Hugheses with the requisite notices of assessment and demands for payment. To satisfy these liabilities, the IRS garnished the Hugheses' wages.
In May 1990, the Hugheses filed suit against the United States, the Commissioner of Internal Revenue, and "Does 1-10," seeking declaratory and injunctive relief and damages. The Hugheses subsequently filed a first amended complaint that attempted to add three new defendants--Steven High, Lena High, and the United Savings Bank, the current owners of the house that the IRS had taken from the Hugheses in partial satisfaction of their tax debt.
The gravamen of counts I-V of the first amended complaint was that the IRS had wrongfully seized the Hugheses' property and wages in the attempt to satisfy their still outstanding tax liabilities. The Hugheses sought declaratory relief in the form of a determination that the IRS's garnishment of wages and seizure of property was illegal. They also framed this portion of their complaint as an action to quiet title; they sought a declaration that they were the owners of the property which the IRS had "illegally" levied upon and sold. Finally, the Hugheses sought to enjoin the IRS from any future tax collection activities with regard to the tax liabilities at issue.
Counts VI-VIII sought damages based on alleged unauthorized disclosure by the IRS of information about the Hugheses, violation by the IRS of the Hugheses' state privacy rights, and intentional misrepresentation of records maintained by the IRS.
On July 25, 1990, the district court dismissed with prejudice counts I-V (seeking declaratory and injunctive relief) and count VII (the state law claim). 1 The court found that, pursuant to the Anti-Injunction Act, 26 U.S.C. § 7421, it lacked subject matter jurisdiction over those counts. The district court also found that the damage claims were jurisdictionally defective because the Hugheses had made no showing that the United States had waived its sovereign immunity, and because they had not shown compliance with the administrative prerequisites of the Federal Tort Claims Act. The court, however, permitted the Hugheses to file a second amended complaint as to these counts. Finally, the district court refused to allow the addition of the new defendants, the Highs and the United Savings Bank.
On November 26, 1990, the district court granted summary judgment in favor of the government on all the claims presented in the second amended complaint. The court determined that, as a matter of law, all collection actions taken by the IRS, and all disclosures of tax return information occurring in connection with such collection actions, were authorized by law.
The Hugheses now appeal both the dismissal of their declaratory and injunctive relief claims, and the grant of summary judgment in favor of the government on the damages claims.
In counts I-V of their complaint, the Hugheses sought both declaratory and injunctive relief against the United States. The district court granted the government's motion to dismiss, finding that the court lacked subject matter jurisdiction over these counts. The Hugheses contend on appeal that the district court in fact did have jurisdiction.
The existence of subject matter jurisdiction is a question of law reviewed de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). The district court's factual findings on jurisdictional issues must be accepted unless clearly erroneous. Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir.1989). We conclude that the district court properly dismissed these counts.
The Anti-Injunction Act (the Act) provides that, with certain exceptions, "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." 26 U.S.C. § 7421(a).
The Hugheses argue that their request for injunctive relief falls within the judicial exception to the Act. To avail themselves of this exception, the Hugheses bear the burden of demonstrating that "(1) under no circumstances can the government ultimately prevail on the merits; and (2) the taxpayer will suffer irreparable injury without injunctive relief." Elias v. Connett, 908 F.2d 521, 525 (9th Cir.1990).
In an attempt to establish the first prong of the Elias exception, the Hugheses first argue that the IRS failed to make a valid assessment against them so that all current IRS actions to collect from them are unlawful. Thus, the Hugheses argue, the IRS could never succeed on the merits of its claim. We reject this argument.
The IRS submitted Certificates of Assessments and Payments (Form 4340) as proof that assessments had been made. Official certificates, such as Form 4340, can constitute proof of the fact that the assessments actually were made. See United States v. Zolla, 724 F.2d 808, 810 (9th Cir.) (postal form 3877 certifying mailing of deficiency notices and an IRS form certifying that taxes and failure-to-pay penalties had been assessed are "official certificates" that "are highly probative, and are sufficient, in the absence of contrary evidence, to establish that the notices and assessments were properly made"), cert. denied, 469 U.S. 830, 105 S.Ct. 116, 83 L.Ed.2d 59 (1984); United States v. Chila, 871 F.2d 1015, 1017-18 (11th Cir.) (Certificate of Assessments and Payments is presumptive proof of a valid assessment), cert. denied, 493 U.S. 975, 110 S.Ct. 498, 107 L.Ed.2d 501 (1989). 2 Because Form 4340 is an official document which establishes that assessments were made, and because the Hugheses have presented no contrary evidence indicating that assessments were not made, the Hugheses' argument fails.
The Hugheses next argue that the IRS cannot prevail because the IRS did not present any evidence that it mailed notice of assessments and demands for payment as required by 26 U.S.C. § 6303(a). We reject this argument because the Hugheses received numerous final notices (notices of intention to levy) as well as notices of deficiencies, notices of liens, a notice of levy, a notice of sealed bid sale, and a notice of garnishment. These notices satisfied the requirements of § 6303(a) by informing the Hugheses of the amount owed and by requesting payment. These numerous notices were sufficient because "[t]he form on which a notice of assessment...
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