Hutchinson v. U.S.
| Decision Date | 26 May 1982 |
| Docket Number | No. 79-4542,79-4542 |
| Citation | 677 F.2d 1322 |
| Parties | 82-1 USTC P 9405 J. Albert HUTCHINSON, Plaintiff-Appellant, v. UNITED STATES of America, A political entity and corporation, Commissioners of Internal Revenue and Acting Commissioners of Internal Revenue, Twenty Unknown District Directors, Acting District Directors and Revenue Agents of Internal Revenue Service, Western Division, Delagatees of the Secretary of the Treasury, each Incumbent during the Calendar Years 1970 through 1977, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
J. Albert Hutchinson, in pro per.
John A. Dudeck, Jr., Dept. of Justice, Washington, D. C., argued, for defendants-appellees; Michael L. Paup, Dept. of Justice, Washington, D. C., on brief.
Appeal from the United States District Court for the Northern District of California.
Before GOODWIN, SNEED, and ANDERSON, Circuit Judges.
Taxpayer/appellant Hutchinson 1 appeals pro se from the district court's dismissal of his claims for refund of asserted overpayments, for declaratory and injunctive relief and for damages against the Commissioner and his employees in both their individual and official capacities. Our jurisdiction arises under 28 U.S.C. § 1291. The district court found that there were no genuine issues of material fact and granted the government's motion for summary judgment. We affirm.
Hutchinson filed an individual income tax return for 1970 which showed a tax liability of $7,892.10. 2 His prepaid estimated and withholding tax credits totaled $10,720.70, entitling him to a refund of $2,828.60, the amount of his overpayment for 1970. In lieu of the refund, Hutchinson requested that the Commissioner credit the overpayment to his estimated liability for 1971 income taxes. This the Commissioner did. Hutchinson filed his 1971 return in a timely manner.
This same 1970 overpayment influenced Hutchinson's 1972 return also. For taxable Hutchinson, however, was not content. Thereafter, he amended his 1971 return, reducing his tax liability and claiming a resulting overpayment of $3,078.12. He asked the Commissioner to apply the overpayment to his estimated tax liability for 1972. The Commissioner refused to recognize the overpayment and commenced an examination of Hutchinson's 1970 and 1971 returns. He eventually determined not only that Hutchinson was not entitled to the asserted overpayment, but also that Hutchinson's reported liabilities should be increased by $4,317.96 for 1970 and $1,520.18 for 1971. Upon the Commissioner's issuance of the statutory notices of deficiency, the taxpayer petitioned the tax court for review of the examination results and for a determination that he was entitled to the asserted overpayment for 1971.
year 1972 Hutchinson reported a liability of $6,885.99 and prepaid withholding and estimated tax credits of $3,484.20, which included the $2,828.60 overpayment from 1970 transferred into the 1971 account per his request. He paid the $3,401.79 difference between his reported liability and prepayment credits.
Prior to the tax court's determination of the controversies related to the results of the examinations of the 1970 and 1971 returns and the amended 1971 return, Hutchinson filed not only his 1972 income tax return, but also an amended 1972 return and a return for 1973. Although he knew that no final decision had yet been reached on the merits of his claim and that the Commissioner was contesting the asserted overpayment on the 1971 amended return, Hutchinson continued to claim the overpayment as a credit against tax, requesting that the Commissioner credit it against his 1972 and 1973 liabilities. This the Commissioner refused to do.
Since the Commissioner did not recognize the asserted overpayment from 1971 as applicable to reduce Hutchinson's 1973 liability, he determined that there was a balance due on the 1973 account. Hutchinson continued to insist that there was no balance due on the account due to the credit generated by his asserted 1971 overpayment. He failed to pay the 1973 liability and the Commissioner commenced enforcement activity.
In response, Hutchinson filed this action on October 19, 1978, seeking: (1) recovery of an alleged overpayment of income taxes for the year 1973; (2) declarative and injunctive relief with respect to his entitlement to credits based on the alleged overpayment for prior years; and (3) compensatory and exemplary damages for the alleged wrongful conduct of Internal Revenue Service employees and officials in connection with their denial of the claimed credits and actions taken to enforce collection. In addition to the United States, the complaint purported to join as defendants the Commissioner, Acting Commissioner, various District Directors, Acting District Directors and Revenue Agents.
Summary judgment is appropriate only where there is no issue of material fact and the moving party, here, the government, must demonstrate the right to judgment as a matter of law. Aronsen v. Crown Zellerbach, 662 F.2d 584, 591 (9th Cir. 1981). We are mindful too that summary judgment procedures should be used with care and restraint. Douglas v. Anderson, 656 F.2d 528, 535 (9th Cir. 1981).
We turn now to an application of these principles to each of taxpayer's claims.
Basically, Hutchinson asks us to hold that a tax liability be deemed satisfied for purposes of maintaining a refund suit in the district court, even though the asserted satisfaction is dependent solely upon the application of a credit that is the subject of an unresolved dispute between the taxpayer and the Commissioner. We decline to so hold.
Full satisfaction of the income tax assessment upon which refund is sought is a jurisdictional prerequisite to maintenance of a suit for refund in the district court. Flora v. United States, 362 U.S. 145, 146, 80 S.Ct. 630, 631, 4 L.Ed.2d 623 (1960). Hutchinson's allegation that he had paid the 1973 assessment in full at the time he filed suit rests entirely upon the claim that the outstanding liability for 1973 should have been satisfied by transfer of his asserted overpayment from 1971. Hutchinson knew when he filed suit in the district court that the Commissioner did not recognize the asserted overpayment and that the matter was still pending before the tax court. His mere claim that the 1973 liability was satisfied by a then-disputed credit from 1971 does not establish full satisfaction of the 1973 liability. Were it to do so, any taxpayer could sue for a refund in the district court upon a mere claim that a liability had been satisfied by a transfer of credits from another tax period. Flora v. United States, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960), requires full satisfaction of any reported liability, not merely the claim thereof. Accordingly, the dismissal of this claim was proper because the affidavits and pleadings establish that Hutchinson had not fully satisfied his 1973 income tax liability at the time summary judgment was granted. 3
Under the Anti-Injunction Act, I.R.C. § 7421(a), courts are without jurisdiction to grant injunctions restraining the assessment or collection of taxes. This proscription, however, is subject to the exception provided in I.R.C. § 6213(a), which authorizes a court to restrain the assessment or collection of taxes if the Commissioner has failed to issue a statutory notice of deficiency under I.R.C. § 6212. It is undisputed that the Commissioner did not issue such a notice to Hutchinson for 1973. However, because he was not required to issue the notice under the circumstances of this case the exception of I.R.C. § 6213(a) is not applicable.
This inapplicability rests on the fact that the Commissioner has not challenged Hutchinson's 1973 reported liability. Rather, the dispute relates solely to whether Hutchinson is entitled to transfer an asserted overpayment from 1971 to satisfy his 1973 liability. It is the satisfaction of the 1973 liability that is challenged, not its existence and amount. The assessment of an amount of tax which the Commissioner claims has not been satisfied but which the taxpayer claims has been satisfied is not the assessment of a deficiency. Denton v. United States, 235 F.2d 733, 735 (3d Cir. 1956).
Hutchinson's 1973 claim of overpayment from 1971 taxes constituted an overstatement of credits, as described in I.R.C. § 6201(a)(3), because the audit of appellant's 1971 taxes had wiped out the credit he was claiming in satisfaction of his 1973 liability. Issuance of statutory notices of deficiency is not required for assessments under I.R.C. § 6201(a)(3). No deficiency, as defined in I.R.C. § 6211, with respect to 1973 existed. Accordingly, the exception to I.R.C. § 7421 provided in I.R.C. § 6213(a) is not applicable. The district court properly declined to grant injunctive relief to appellant.
The district court lacked jurisdiction to enter a declaratory judgment with respect to Hutchinson's liability. In pertinent part, the Declaratory Judgment Act, 28 U.S.C. § 2201 provides:
"In a case of actual controversy within its jurisdiction, except with respect to Federal taxes ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought...." (emphasis added).
Thus, the district court properly declined to grant declaratory relief.
The United States is a sovereign and, as such, is immune from suit without its prior consent. United States v. Shaw, 309 U.S. 495, 500-01, 60 S.Ct. 659, 661, 84 L.Ed. 888 (1940). Where sovereign immunity is waived, any suit must comply with the terms...
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