Jahn v. Regan, Civ. No. 82-72012.

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Citation610 F. Supp. 1269
Docket NumberCiv. No. 82-72012.
PartiesPatrick JAHN and Melba Jahn, Plaintiffs, v. Donald REGAN, Defendant.
Decision Date21 May 1985

Riley P. Richard, Southfield, Mich., for plaintiffs.

Ronald F. Fischer, Tax Div., Dept. of Justice, Washington, D.C., for defendant.

MEMORANDUM OPINION AND ORDER

PHILIP PRATT, District Judge.

This action against the Secretary of the Department of Treasury of the United States ("Secretary") and a similar case filed against the Director of the Department of Social Services of the State of Michigan1 were initially brought by Patrick and Melba Jahn, husband and wife, who challenged the validity of the Internal Revenue Service's ("IRS") transmittal of plaintiffs' 1981 joint tax refund to the State pursuant to the Omnibus Budget Reconciliation Act of 1981, 42 U.S.C. § 664,2 and 26 U.S.C. § 6402.3 The refund was applied to the husband's debt to the State for child support.4 Plaintiffs alleged various violations of state law and the fifth and fourteenth amendments of the federal Constitution. Now before the Court is the Secretary's second motion to dismiss.5

I. BACKGROUND

On April 18, 1984, this Court issued a Memorandum Opinion on motions to dismiss and for summary judgment filed by the Secretary and the State. That opinion is reported at 584 F.Supp. 399 and sets forth the extensive facts of these cases which will not be repeated here. In the Memorandum Opinion the Court considered several grounds for dismissing the plaintiffs' complaint asserted by the Secretary and the State. Two of these grounds are relevant to the present motion: (i) the Court ruled that the doctrine of sovereign immunity barred plaintiffs' claim for damages, but not for injunctive and declaratory relief;6 and (ii) the Court granted the defendants' motion for summary judgment concerning Patrick Jahn's due process claim, but declined to rule that Melba Jahn's rights were not violated. This ruling significantly narrowed the issues raised by plaintiff's complaint. The claims that remain against the government defendants are Melba Jahn's claim for a tax refund and her request for injunctive and declaratory relief concerning the constitutionality of the procedures for implementing 42 U.S.C. § 664 and 26 U.S.C. § 6402.

In the present motion the Secretary asserts two further contentions for the dismissal of Melba Jahn's claim. First, the Secretary argues that plaintiff cannot seek a tax refund since she has failed to file a claim with the Secretary as required by 26 U.S.C. § 7422(a). Second, the Secretary asserts that Melba Jahn's claims for injunctive and declaratory relief are now moot since newly implemented procedures comport with due process. For the following reasons the Secretary's motion is granted.

II. PLAINTIFFS' CLAIM FOR REFUND

In their complaint plaintiffs requested damages and an amount representing their 1981 tax refund which was turned over to the State.7 In the previous Memorandum Opinion the Court considered the Secretary's contention that the doctrine of sovereign immunity barred plaintiffs' suit. The Court held that since the plaintiffs were alleging that the Secretary's actions and the statutes at issue were unconstitutional, plaintiffs' claims were under one of the exceptions to the sovereign immunity rule—the exceptions being that government officials can be sued in their official capacity absent an expressed waiver of Congress where the official acted outside his authority or where the statute or order conferring power upon the official is claimed to be unconstitutional. E.g., Larson v. Domestic Foreign Commerce Corp., 337 U.S. 682, 689-90, 69 S.Ct. 1457, 1461-62, 93 L.Ed. 1628 (1949). Although the plaintiffs' action was not generally barred, the Court further recognized that the principles underlying sovereign immunity could limit the relief which may be afforded if the relief would require an improper imposition upon the government. Larson v. Domestic & Foreign Commerce Corp., supra, 337 U.S. at 691 n. 11, 69 S.Ct. at 1462 n. 11. The Court concluded that the circumstances of this case did not warrant the relief of damages. 584 F.Supp. at 406. See e.g., DeLao v. Califano, 560 F.2d 1384 (9th Cir.1977); Schlafly v. Volpe, 495 F.2d 273 (7th Cir.1974); State of Washington v. Udall, 417 F.2d 1310 (9th Cir.1969).

In discussing the plaintiffs' claim for damages in the April 18th Memorandum Opinion, the Court expressed its reservations concerning plaintiffs' claim for a refund. 584 F.Supp. at 406 n. 14. The plaintiffs argued that they could properly seek damages and a refund in this Court because Congress had waived sovereign immunity by enacting 28 U.S.C. § 1346(a)(1). Section 1346(a)(1) states:

(a) The district court shall have original jurisdiction, concurrent with the United States Claims Court, of:
(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws ...

The difficulty with this position is that the requirements of 26 U.S.C. § 7422 must be satisfied before an action can be pursued under § 1346(a)(1). E.g. Zernial v. United States, 714 F.2d 431 (5th Cir.1983); Disabled American Veterans v. United States, 650 F.2d 1178 (Ct.Cl.1981); Bird v. United States, 534 F.2d 1214 (6th Cir.1976); Theophelis v. United States, 571 F.Supp. 516 (E.D.Mich.1983).8 Section 7422(a) provides:

No Suit Prior to Filing Claim for Refund—No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary or his delegate, according to the provisions of law in that regard, and the regulations of the Secretary or his delegate established in pursuance thereof.

The purpose of this section is to afford the Internal Revenue Service an opportunity to consider and dispose of claims without the expense and time involved in litigation and to prevent surprise on the facts. E.g., Dahlgren v. United States, 553 F.2d 434 (5th Cir.1977), rehearing denied, 557 F.2d 456; Bird v. United States, supra; Lemoge v. United States, 378 F.Supp. 228 (N.D.Cal.1974).

The courts and the Secretary's regulations require that the basis of the taxpayer's claim for refund "must be specifically set forth in the claim for refund filed with the Secretary, otherwise the court in a refund action is without jurisdiction to consider them." Bird v. United States, supra, 534 F.2d at 1219 (emphasis supplied). Regulation § 301.6402-2(b) states:

The claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to appraise the Commissioner of the exact basis thereof ... A claim which does not comply with this paragraph will not be considered for any purposes as a claim for refund or credit.

The Secretary contends that Melba Jahn has not filed a proper claim and that her claim for refund cannot be considered by this Court. The plaintiff presents two arguments in opposition. First, plaintiff asserts that she did comply with § 7422 and the various regulations by filing a copy of her W-2 form along with their joint tax return. According to plaintiff since the W-2 forms set forth the separate wages of each individual and the income withheld, the defendant could have specifically apportioned the joint refund. The W-2 form by itself, however, is not sufficient. The W-2 form only concerns the breakdown of wages not of all income earned. On a joint return the separate income from every source and the deductions are combined with no breakdown on the return as to which spouse earned the income or incurred the deductible expenses. Accord Marcello v. Regan, 574 F.Supp. 586 (D.R.I. 1983).9 Moreover, the presence of the W-2 does not give the Service sufficient notice of Melba Jahn's desire for a separate refund. See e.g., Disabled American Veterans v. United States, supra; Bird v. United States, supra.

The plaintiff's second argument is an apparent attempt to avoid the requirements of § 7422. Essentially plaintiff contends that since the Secretary violated various statutory and constitutional provisions in implementing the refund transfer program, plaintiff's suit comes under the exceptions to the sovereign immunity rule and "accordingly, plaintiffs action sic may be maintained even though the relief sought requires the defendant to take affirmative action." Plaintiff's Brief, at page 4. Presumably plaintiff asserts that because there is an alleged constitutional violation, this Court can order the return of the refund despite the statutory requirements.

Since plaintiff's claim for refund is a claim for funds belonging to the plaintiff and alleged to be held wrongfully by the government, the doctrine of sovereign immunity normally may not pose an obstacle to the Court ordering the government to return plaintiff's property.10 This case, however, does not involve the situation where the government has acted wrongfully and has not consented to be sued. By vesting jurisdiction in district courts for claims for refunds under 28 U.S.C. § 1346(a)(1) and directing the procedures for such claims in enacting 26 U.S.C. § 7422, Congress has waived immunity through specifically designed procedures which are efficient and reasonable and to which plaintiff had easy access. Had plaintiff filed the appropriate claim, in all likelihood, she would have obtained her refund along with statutory interest. Plaintiff has not offered and the Court has not found any reason justifying ignoring the congressional design. Importantly, the requirements of § 7422 have in this...

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5 cases
  • Laubinger v. Department of Revenue
    • United States
    • Appeals Court of Massachusetts
    • November 14, 1996
    ... ... The most favorable cases to Joyce involve tax intercepts. She relies on Jahn v. Regan, 584 F.Supp. 399, 416-417 (E.D.Mich.1984), S.C., 610 F.Supp. 1269 (1985), where a joint tax refund was seized because of the husband's ... ...
  • People ex rel. Sheppard v. Money
    • United States
    • Illinois Supreme Court
    • September 22, 1988
    ...and, most importantly, recourse to the courts. (See Jahn v. Regan (E.D.Mich.1984), 584 F.Supp. 399, 415 (Jahn I ); Jahn v. Regan (E.D.Mich.1985), 610 F.Supp. 1269 (Jahn II ).) A prior award of child support for minor children is not final and unalterable and does not preclude reconsideratio......
  • Rucker v. Secretary of Treasury of US
    • United States
    • U.S. District Court — District of Colorado
    • February 26, 1986
    ...demands." Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972). Id. at 596. 7 See Jahn v. Regan, 610 F.Supp. 1269, 1279-80 (D.C.Mich.1985), for statistical data regarding the soundness of the transfer system. Data further indicates that the number of nonobligat......
  • Knisley v. Bowman
    • United States
    • U.S. District Court — Western District of Michigan
    • April 13, 1987
    ...constitutionally sufficient. The constitutionality of these procedures was again recognized by Judge Pratt in Jahn v. Regan, 610 F.Supp. 1269, 1274-81 (E.D. Mich.1985) (Jahn II). Further, Congress's 1984 amendments of 42 U.S.C. § 664 provided a detailed codification of essentially similar p......
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