Hunter v. United States
| Decision Date | 07 July 2020 |
| Docket Number | Civil Action No. 3:19-cv-557-RGJ |
| Parties | WILLIAM B. HUNTER Plaintiff v. UNITED STATES OF AMERICA Defendant |
| Court | U.S. District Court — Western District of Kentucky |
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Defendant, the United States of America moves to dismiss this action. [DE 9]. Pro Se Plaintiff, William B. Hunter ("Hunter"), did not respond and the time for doing so has passed. For the reasons below, the motion is GRANTED.
Hunter filed this action pro se against the United States for "the unauthorized retention" of funds "from his personal investment account to the United States' agent, the Internal Revenue Service ["IRS"]. . . as 'income' tax." [DE 1, Compl. at 2]. Hunter received a distribution from his retirement account in the amount of $75,577.19 for the year 2011. [DE 1-2]. The IRS withheld $14,715.44 of the distribution as federal income tax. Id. Hunter received a Form 1099-R showing this distribution and withheld tax. Id. Hunter filed an individual income tax return Form 1040 for 2011, claiming no income and no tax liability, but showing he should receive the withheld tax as a refund. [DE 1-3 at 1-2]. The IRS determined Hunter's Form 1040 was frivolous and denied his claim for a refund. [DE 1-4].
Several years later, in 2016, Hunter demanded a refund from the IRS for the tax withheld from his retirement distribution in 2011. [DE 1-7, DE 1-8, DE 1-9]. When the IRS did not respond to Hunter's "Claim for Refund, Attempt to Exhaust Administrative Remedies and Obtain Waiver of Sovereign Immunity," he claimed the IRS to be in default, thus owing him the refund. [DE 1-8; DE 1-9; DE 1-11].
In 2019, Hunter filed this action. Hunter cites 26 U.S.C. § 7433 as the basis of jurisdiction and the basis of his claim and alleges that administrative remedies have been exhausted. [DE 1 at 1]. Hunter also asserts the United States' refusal to return the funds constitutes theft by conversion, violates his Fourth Amendment right to be secure from unreasonable seizure, and violates his Fifth Amendment right to due process. [Id., at 2, 7]. Hunter seeks a judgment for the funds, plus interest, costs, an injunction barring the IRS from contacting Hunter, and any other damages to which his is entitled. [Id.]
The United States moved to dismiss under Federal Rules of Civil Procedure (FRCP) 12(b)(1), for lack of subject matter jurisdiction, and FRCP 12(b)(6), for failure to state a claim upon which relief may be granted. [DE 9]. The United States argues Hunter's claims are barred by the sovereign immunity of the United States, Hunter's complaint fails to state a claim upon which relief can be granted, and Hunter's requested relief is barred by the Anti-Injunction and Declaratory Judgment Acts.
Federal Rule of Civil Procedure 12(b)(1) allows dismissal for "lack of jurisdiction over the subject matter" of claims asserted in the Complaint. Fed. R. Civ. P. 12(b)(1). Generally, Fed. R. Civ. P. 12(b)(1) motions fall into two categories: facial attacks and factual attacks. Fed. R. Civ. P. 12(b)(1); United States v. Richie, 15 F.3d 592, 598 (6th Cir. 1994). In a facial attack, the Defendant asserts that the allegations in a Complaint are insufficient on their face to invoke federal jurisdiction. Id. By contrast, in a factual attack, the Defendant disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction and the Court is free to weigh theevidence. Id. Plaintiff has the burden of proving subject matter jurisdiction to survive a motion to dismiss pursuant to Rule 12(b)(1). Madison-Hughes v. Shalala, 80 F.3d 1121, 1130 (6th Cir. 1996). Lack of subject matter jurisdiction is a non-waivable, fatal defect. Von Dunser v. Aronoff, 915 F.2d 1071, 1074 (6th Cir. 1990).
Federal Rule of Civil Procedure 12(b)(6) instructs that a court must dismiss a complaint if the complaint "fail[s] to state a claim upon which relief can be granted[.]" Fed. R. Civ. P. 12(b)(6). To properly state a claim, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" Fed. R. Civ. P. 8(a)(2). When considering a motion to dismiss, courts must presume all factual allegations in the complaint to be true and make all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citation omitted). "But the district court need not accept a bare assertion of legal conclusions." Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citation omitted). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted).
To survive a motion to dismiss, a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "A complaint will be dismissed . . . if no law supports the claims made, if the facts alleged are insufficient to state a claim, or if the face of the complaint presents aninsurmountable bar to relief." Southfield Educ. Ass'n v. Southfield Bd. of Educ., 570 F. App'x 485, 487 (6th Cir. 2014) (citing Twombly, 550 U.S. at 561-64).
The United States argues Hunter's claims are barred by the sovereign immunity of the United States, Hunter's complaint fails to state a claim upon which relief can be granted, and Hunter's requested relief is barred by the Anti-Injunction and Declaratory Judgment Acts.
The United States asserts the Court lacks subject matter jurisdiction. It argues that the United States has sovereign immunity from suit and that no waiver of this immunity applies to Hunter's suit. The United States is immune from suit under the doctrine of sovereign immunity except for cases in which the United States has expressly waived sovereign immunity. McGinness v. United States, 90 F.3d 143, 145 (6th Cir. 1996). A waiver of sovereign immunity must be express, not implied, and must be strictly construed in favor of the United States. United States v. Idaho, 508 U.S. 1, 6-7 (1993); United States v. Nordic Vill, Inc., 503 U.S. 30, 34 (1992); United States v. King, 395 U.S. 1,4 (1969). The party suing the United States has the burden of identifying an express waiver of sovereign immunity. Reetz v. United States, 224 F.3d 794, 795 (6th Cir. 2000).
For tax disputes, the United States has waived sovereign immunity to suit in two specific types of matters. The first waiver of sovereign immunity arises under 26 U.S.C. § 7422, allowing taxpayers who seek a refund for an overpayment of taxes to sue after they have exhausted theiradministrative remedies. Hunter does not allege that he is seeking a refund for an overpayment of taxes under § 7422. Thus, this waiver is inapplicable.1
The second waiver arises under 26 U.S.C. § 7433, allowing taxpayers to sue the United States "[i]f, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title." Hunter alleges the Court's original jurisdiction under 26 U.S.C. § 7433. [DE 1 at 1]. But Hunter does not allege that "any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title." Hunter's complaint is thus insufficient on its face to establish waiver of sovereign immunity and jurisdiction under 26 U.S.C. § 7433.
Hunter also alleges in this complaint that the IRS wrongly determined that he owed another sum of $7,917.56, plus penalties. [DE 1 at 3]. But 26 U.S.C. § 7433 does not waive sovereign immunity for damages for violations made during "the assessment or tax determination part of the process." Hohman v. Eadie, 894 F.3d 776, 781-82 (6th Cir. 2018) (quoting Miller v. United States, 66 F.3d 220, 222 (9th Cir. 1995). Instead, 26 U.S.C. § 7433 applies to the collection process. Id. Nor does the waiver extend to actions seeking to enjoin the assessment or collection of taxes. Those actions are denied by the Anti-Injunction Act, 26 U.S.C. § 7421(a). The waiver applies onlyto claims of employee misconduct during collection proceedings. If Hunter's claims pertain to the tax determination process, Congress has not waived sovereign immunity for those types of claims. Yedlick v. Comm'r, IRS, No. 1:19 CV 2139, 2020 WL 364245, at *3 (N.D. Ohio Jan. 21, 2020). Thus, the Court would not have subject matter jurisdiction over that aspect of Hunter's claim.
Besides failing to establish subject matter jurisdiction, Hunter fails to state a claim upon which relief can be granted. He alleges that "Title 26 has not been enacted into positive law," and "[t]here is no statute in title 26 which imposes liability for an income tax." [DE 1 at 2]. The Sixth Circuit, however, has rejected this argument as "frivolous" and confirmed that 26 U.S.C. § 1 imposes liability for income tax. Hackett v. Comm'r, 791 F.2d 933 (6th Cir. 1986); United States v. Kramer, No. 17-3900, 2018 WL 1954260, at *2 (6th Cir. Apr. 5, 2018), cert. denied, 138 S. Ct. 2640, 201 L. Ed. 2d 1030 (2018), reh'g denied, 139 S. Ct. 315, 202 L. Ed. 2d 208 (2018).
Hunter also alleges that the...
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