Maruska v. U.S.

• Citation: 77 F.Supp.2d 1035
• Decision Date: 02 August 1999
• Docket Number: No. Civ. 98-790 RLE.,Civ. 98-790 RLE.
• Parties: Paul MARUSKA; and Mary Maruska, Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Minnesota

77 F.Supp.2d 1035

Paul MARUSKA; and Mary Maruska, Plaintiffs, v. UNITED STATES of America, Defendant.

No. Civ. 98-790 RLE.

United States District Court, D. Minnesota.

August 2, 1999.

Paul Maruska, St. Paul, MN, pro se.

Mary Maruska, St. Paul, MN, pro se.

Daniel R. Conrad, U.S. Dept. of Justice, Washington, DC, Carl J. Tierney, U.S Dept. of Justice, Tax Division, Washington, DC, for U.S.

MEMORANDUM ORDER

ERICKSON, United States Magistrate Judge.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to the parties' consent, made in accordance with the provisions of Title 28 U.S.C. § 636(c), upon the Defendant's Motion to Dismiss or, in the alternative, for Summary Judgment.¹ See, Rules 12(b)(1), (b)(6), and 56, Federal Rules of Civil Procedure. A Hearing on the Motion was conducted on May 11, 1999, at which the Plaintiffs appeared pro se, and the Defendant appeared by Carl J. Tierney, United States Department of Justice. For reasons which follow, the Defendant's Motion is granted, and this action is dismissed, without prejudice, because the Court lacks jurisdiction over the subject matter. See, Rule 12(b)(1), Federal Rules of Civil Procedure.

II. Factual and Procedural History

The Plaintiffs, Paul Maruska and Mary Maruska, instituted this tax refund suit in order to challenge the Federal withholding, as well as the assessment of income taxes, on their wages. Reflective of Shylock's protest, that "you take my life [w]hen you take the means whereby I live," William Shakespeare, The Merchant of Venice, Act IV, sc. 1, the Plaintiffs contend that their wages, as the legitimate fruits of their labor, and as the underpinning of all of their property holdings, should be constitutionally immune from the Federal income tax.

The Plaintiffs jointly filed an IRS Form 1040 — EZ Federal income tax return — with the Internal Revenue Service ("IRS"), for the taxable year of 1996, on April 10, 1997. See, Compl., Ex. A. Their IRS W2 forms reported that Paul Maruska had earned $20,068.81, and that Mary Maruska had earned $32,147.48, in wages, tips, and other compensation, during 1996. See, Second Declaration of Carl J. Tierney, and attachments. Nevertheless, the Plaintiffs reported that they had no income, by entering "$0.00" in the space for "Total wages, salaries, and tips," which expressly referenced the W2 forms. The Plaintiffs accurately reported that $6,901.26 had been withheld from their wages and, given their reported absence of taxable income, the Plaintiffs claimed a refund for the entire amount of taxes withheld. The Plaintiffs appended a notarized declaration to their tax return, which articulated their belief that they have no taxable income, and which stated that they were filing their return, under protest, in order "to prevent illegal prosecution of an alleged failing to file a proper tax return for the year 1996." Compl., Ex. A.

The Plaintiffs' tax return was not well-received at the IRS. The IRS notified the Plaintiffs on June 28, 1997, that their tax return was being rejected, as a "frivolous return," and instructed the Plaintiffs to file a corrected return within 30 days. Compl., Ex. C. To date, the Plaintiffs have not corrected their tax return. Rather, the Plaintiffs instituted a civil action in this Court for a refund of the $6,902.26 that had been withheld, and claimed that the IRS had no authority to withhold those funds, when there had not, as yet, been an actual assessment of taxes against them. See, Compl. ¶ 6-9. The Defendant promptly moved to dismiss the Complaint, and a Hearing on that Motion was conducted on June 1, 1998.

Thereafter, the IRS issued notices of deficiency to the Plaintiffs, which increased their 1996 Federal income taxes to reflect additional taxable income, and statutory penalties, for failing to file a return for that year. As a consequence, the Defendant's Motion to Dismiss was withdrawn, and this action was continued until March 27, 1999, in order to afford the Plaintiffs an opportunity to petition the United States Tax Court for a redetermination of the asserted deficiency. See, Title 26 U.S.C. § 7422(e). On March 10, 1999, the IRS made an assessment of Federal income tax liabilities against both of the Plaintiffs.

Now, the Defendant renews its Motion to Dismiss, and contends that this action is not embraced by any waiver of the United States' sovereign immunity. Further, the Defendant urges that the substance of the Plaintiffs' Complaint is wholly without merit. Hence, the Defendant seeks dismissal, or Summary Judgment, for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted.

III. Discussion

A. Standard of Review. As a Federal Court, we have limited jurisdiction, and may only hear matters which fall within our jurisdictional limits. Marine Equipment Management Co. v. United States, 4 F.3d 643, 646 (8th Cir.1993) ("Federal courts are not courts of general jurisdiction and have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto."), citing Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986), citing in turn, Marbury v. Madison, 5 U.S. [1 Cranch] 137, 2 L.Ed. 60 (1803). As a consequence, we have a primordial duty, in every case before us, to inquire whether the vital prerequisite of subject matter jurisdiction has been satisfied. See, Magee v. Exxon Corp., 135 F.3d 599, 601 (8th Cir.1998); Bradley v. American Postal Workers Union, AFL — CIO, 962 F.2d 800, 802 n. 3 (8th Cir.1992).²

As a sovereign power, the United States may be sued only to the extent that it has consented to suit by Statute. United States Dep't of Energy v. Ohio, 503 U.S. 607, 615, 112 S.Ct. 1627, 118 L.Ed.2d 255 (1992); United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980). In granting its consent to be sued, the United States may attach such conditions, and limitations, as it deems proper, and strict compliance with those conditions is an absolute requirement. Bellecourt v. United States, 994 F.2d 427, 430 (8th Cir. 1993) (holding that waiver of Federal Tort Claims Act sovereign immunity is conditioned upon strict compliance with exhaustion requirement), cert. denied, 510 U.S. 1109, 114 S.Ct. 1049, 127 L.Ed.2d 371 (1994). Waivers of sovereign immunity must be strictly construed in favor of the sovereign, and may not be enlarged beyond what the language of the waiver requires. West v. Gibson, 527 U.S. 212, 119 S.Ct. 1906, 1912, 144 L.Ed.2d 196 (1999); Department of the Army v. Blue Fox, Inc., 525 U.S. 255, 119 S.Ct. 687, 691, 142 L.Ed.2d 718 (1999); United States v. Nordic Village, Inc., 503 U.S. 30, 34, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992). Ultimately, when the sovereign consents to be sued, the terms of the waiver of sovereign immunity establish the parameters of the Court's jurisdiction. Hercules, Inc. v. United States, 516 U.S. 417, 422, 116 S.Ct. 981, 134 L.Ed.2d 47 (1996); United States v. Mottaz, 476 U.S. 834, 841, 106 S.Ct. 2224, 90 L.Ed.2d 841 (1986); United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941).

B. Legal Analysis. To successfully establish Federal subject matter jurisdiction over their tax refund suit, the Plaintiffs must affirmatively demonstrate that they have met the conditions, and requirements, which are necessary to the United States' waiver of sovereign immunity. See, Ohio National Life Ins. Co. v. United States, 922 F.2d 320, 324 (6th Cir.1990); Watts v. Internal Revenue Service, 925 F.Supp. 271, 275 (D.N.J.1996). The Plaintiffs have failed to sustain that burden.

Title 28 U.S.C. § 1346(a), which permits suits against the government for recovery of taxes "erroneously or illegally assessed or collected," and Section 7422 of the Internal Revenue Code, Title 26 U.S.C. § 7422, which provides the same relief, waive the sovereign immunity of the United States so as to permit civil actions, in the United States Courts, for the refund of Federal income taxes. As stated by the Supreme Court, these sections must be read in concert, giving full effect "to provisions which qualify a taxpayer's right to bring a refund suit upon compliance with certain limitations." United States v. Dalm, 494 U.S. 596, 599, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990). The Plaintiffs run afoul of two important qualifications on their right to seek redress in Federal Court; namely, exhaustion, and payment in full of their tax liability.

First, the waiver of sovereign immunity is conditioned upon administrative exhaustion, as follows:

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 of any penalty claimed to have been collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.

Title 26 U.S.C. § 7422(a).

In addition, a refund suit may not be filed earlier than six months after the filing of the administrative claim for refund, unless the Secretary renders a decision within that time. Title 26 U.S.C. § 6532. The timely filing of a refund claim that complies with IRS regulations is, under established precedent, a non-waivable, jurisdictional prerequisite to the maintenance of a tax refund suit. Chernin v. United States, 149 F.3d 805, 813 (8th Cir.1998), citing United States v. Dalm, supra at 602, 110 S.Ct. 1361, and United States v. Kales, 314 U.S. 186, 193, 62 S.Ct. 214, 86 L.Ed. 132 (1941); Ahmed v. United States, 147 F.3d 791, 795 (8th Cir.1998); Bohn v. United States, 467 F.2d 1278, 1279 (8th Cir.1972).

Superficially, it appears that the Plaintiffs met the administrative exhaustion requirement when they demanded a tax refund in their original tax...