Kim v. U.S.A
| Decision Date | 21 January 2011 |
| Docket Number | No. 09-5227,09-5227 |
| Parties | Calvin Ki Sun Kim and Chun Cha Kim, Appellants, v. United States of America, et al., Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Joseph Peter Drennan argued the cause for appellants.
Calvin K. Kim and Chun C. Kim, appearing pro se, filed briefs.
Gretchen M. Wolfinger, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Jonathan S. Cohen. R. Craig Lawrence, Assistant U.S. Attorney, entered an appearance.
Before: Brown and Griffith, Circuit Judges, and Williams, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge BROWN.
For the Kims, like many income-producing U.S. residents, the tax man cometh, but the Kims, by taking the offensive and suing the Internal Revenue Service (IRS), have been unusually unwelcoming. Calvin Ki Sun Kim and Chun Cha Kim are tax protesters who, in an action for unspecified damages, allege the iRS violated the Taxpayer Bill of Rights, failed to comply with various statutes, and perpetrated an "ongoing campaign of harassment by correspondence." Compl. at 6. The Kims' lawsuit is one of many similar actions brought by tax protestors accusing the IRS of a miscellany of misconduct.
From 1998 through 2003, the Kims did not regularly file tax returns. When they did file, their tax returns did not include required information. Unsurprisingly, in 2002 the IRS contacted the Kims about their frivolous or missing returns. The resulting correspondence between the Kims and the IRS is the gravamen of this suit.
The Kims insist they are not required to file individual income tax returns because the IRS did not maintain proper records or perform all duties required by law. See Compl. at 6-8. Based on these alleged failures, the Kims filed suit in the United States District Court for the District of Columbia in September 2008. Their complaint asserted twenty-one separate counts of wrongdoing against the United States; the Commissioner of the IRS; IRS employees Dennis Parizek, Scott Prentky, and A. Chow; and four unknown IRS agents (collectively "Defendants"). Specifically, the Kims' complaint alleged "denial of the right to due process of the tax law, administrative law, and record-keeping law of the United States," Compl. at 1, and "disregard of provisions of the tax law of the United States and regulations promulgated thereunder," Compl. at 2. For redress of these claimed violations, the Kims sought damages pursuant to Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971), and what is commonly known as the Taxpayer Bill of Rights, 26 U.S.C. § 7433.1
The district court dismissed Counts 1 through 18—the Bivens claims—under Federal Rule of Civil Procedure 12(b)(1), holding it lacked jurisdiction to hear the Kims' claims against the Defendants in their official capacities, and under Rule 12(b)(6), for failure to state a claim because no Bivens remedy exists for claims against the Defendants in their individual capacities. Kim v. United States, 618 F. Supp. 2d 31, 37-40 (D.D.C. 2009). The district court also dismissed Counts 19 and 20 under Rule 12(b)(1), holding the two counts did not pertain to "collection activities" within the meaning of the Taxpayer Bill of Rights. Id. at 41. Alternatively, the district court dismissed Counts 19 and 20, along with Count 21, under Rule 12(b)(6) because the Kims failed to plead exhaustion in their complaint and failed to rebut the government's exhaustion defense. Id. at 42-43.
We affirm the judgment of the district court with regard to Counts 1 through 18 because no Bivens claim is availableagainst the Defendants in their official capacities and no Bivens remedy is available against the Defendants in their individual capacities. But we find, contrary to the holding of the district court, that Counts 19 (relating to liens and levies) and 20 (failure to provide notice of tax assessment) relate to "collection activities" under the Taxpayer Bill of Rights and are therefore within the subject-matter jurisdiction of the federal courts. That said, we affirm the district court's dismissal of Count 19 for lack of subject-matter jurisdiction, albeit for a different reason. Moreover, the Kims were not required to plead exhaustion pursuant to the Taxpayer Bill of Rights in order to survive the Defendants' motion to dismiss Counts 20 and 21. We therefore affirm the district court with respect to Counts 1 through 19, and reverse with respect to Counts 20 and 21.
We review de novo the district court's grant of a motion to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1), Am. Fed'n of Gov't Emps., AFL-CIO, Local 446 v. Nicholson, 475 F.3d 341, 347 (D.C. Cir. 2007), and for failure to state a claim under Rule 12(b)(6), Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009). Because jurisdiction is a threshold question, see Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998), we turn first to the district court's dismissals under Rule 12(b)(1).
To the extent the Kims asserted Bivens claims against the Defendants in their official capacities, the district court dismissed the claims under Rule 12(b)(1). Kim, 618 F. Supp. 2d at 37-38. It is well established that Bivens remedies do not exist against officials sued in their official capacities. See Clark v. Library of Cong., 750 F.2d 89, 103 (D.C. Cir. 1984). We therefore affirm the district court with respect to its jurisdictional dismissal of Counts 1 through 18 as against the Defendants in their official capacities.
The district court concluded Counts 19 and 20 were subject to dismissal under Rule 12(b)(1) for lack of subject-matter jurisdiction because the challenged conduct was unrelated to "collection activity" as required by the Taxpayer Bill of Rights.
The Taxpayer Bill of Rights provides:
If, 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, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.
26 U.S.C. § 7433(a) (emphasis added). Section 7433 applies only to collection-related activities. See Miller v. United States, 66 F.3d 220, 222-23 (9th Cir. 1995) (); Shaw v. United States, 20 F.3d 182, 184 (5th Cir. 1994) (); Gonsalves v. IRS, 975 F.2d 13, 16 (1st Cir. 1992) (per curiam) (); see also Rossotti, 317 F.3d at 411 ().
Count 20 alleges violations of Internal Revenue Code § 6303. Section 6303 requires the Secretary to provide a taxpayer notice of assessment within sixty days of making the assessment. That notice must "stat[e] the amount [of an unpaid tax] and demand[] payment...." 26 U.S.C. § 6303(a). Section 6303 appears in Chapter 64 of the Internal Revenue Code, which is aptly entitled "Collection." This placement is persuasive. Moreover, we think a demand for payment is certainly "in connection with any collection of Federal tax." That the demand is also a notice of assessment does not change this conclusion. A tax assessment is "essentially a bookkeeping notation," recording a taxpayer's liability. Hibbs v. Winn, 542 U.S. 88, 100 (2004) (internal quotation marks omitted). As such, the assessment serves as a "trigger" for administrative enforcement efforts such as tax liens or levies to collect outstanding taxes. Id. at 102. In contrast, a taxpayer receives a notice of assessment after his liability is set. The notice of assessment signifies the beginning of the Commission's enforcement efforts. Thus, the notice of assessment, unlike the assessment itself, is a precursor to the filing of a lien and the execution of a levy.
In addition, § 6303 requires notice of assessment "after the making of an assessment of a tax pursuant to section 6203." 26 U.S.C. § 6303. Unlike § 6303, however, § 6203 appears in the statutory chapter entitled "Assessment" and does notrequire prior notice to the taxpayer. See 26 U.S.C. § 6203 () Placement of the provision requiring notice of assessment in the chapter pertaining to "collection" is not happenstance. it strongly suggests the notice of assessment referred to in § 6303 pertains to collections, while those actions authorized under § 6203 do not. See Miller, 66 F.3d at 222 (). Thus, the provision of notice of assessment is a collection activity. Because Count 20 involves conduct in connection with collection, the district court improperly dismissed it for want of subject-matter jurisdiction.
Count 19 alleges violation of 26 U.S.C. § 6301 and the iRS Restructuring and Reform Act of 1998, which together require the Commissioner to develop and implement review...
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