Smith v. U.S., Civ. No. 05-2069(CKK).

• Decision Date: 07 November 2006
• Docket Number: Civ. No. 05-2069(CKK).
• Citation: 475 F.Supp.2d 1
• Parties: Daniel T. SMITH, et al., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. District Court — District of Columbia

Page 1

475 F.Supp.2d 1

Daniel T. SMITH, et al., Plaintiffs, v. UNITED STATES, Defendant.

Civ. No. 05-2069(CKK).

United States District Court, District of Columbia.

November 7, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Daniel T. Smith, Plant City, FL, pro se.

Mary G. Smith, Plant City, FL, pro se.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

Pro Se Plaintiffs Daniel and Mary Smith bring this action against Defendant, the United States, pursuant to the Taxpayer Bill of Rights, 26 U.S.C. § 7433 ("TBOR"), alleging that "principals, officers, agents, and/or employees of the Internal Revenue Service" ("IRS") "recklessly, intentionally or by reason of negligence[,] disregarded and continue to disregard provisions of [the Internal Revenue Code ("IRC"),] Title 26 of the United States Code[,] and the regulations promulgated thereunder." Am. Compl. ¶ 1. Plaintiffs seek a declaratory judgment that the IRS "recklessly, intentionally or by reason of negligence" violated the IRC, and damages for each section of the IRC so violated. Am. Compl. ¶¶ 31-32.

Following an entry of default by the Clerk of the Court in this case on February 23, 2006, Defendant made an appearance on March 3, 2006 via its [10] Motion to Vacate Entry of Default and [9] Motion to Dismiss. Defendant's Motion to Vacate and Motion to Dismiss contend that the entry of default must be vacated and the case dismissed because (1) "venue in this Court is improper"; (2) "the Anti-Injunction Act bars the injunctive relief [P]laintiff[s] seek[]"; (3) Plaintiffs "failed to properly serve the United States,"; and (4) "the Court lacks subject matter jurisdiction over the complaint, due to [P]laintiffs' failure to exhaust administrative remedies prior to filing their suit." Def.'s Mot. to Dismiss Compl. at 1; Def.'s Mem. in Supp. of United States' Mot. to Vacate Entry of Default (hereinafter "Def.'s Mem. in Supp.") at 5. Following a January 26, 2006[4] Order by this Court for the Plaintiffs to show cause why venue in the District of Columbia is proper, Plaintiffs amended their pleading, removing their requests for an injunction on tax collection and for a tax refund. See generally Pls.' Resp. to Order to Show Cause at 1-4 (asserting that removal of the refund claims moots the venue issue, and attaching an amended complaint that reflects this change and makes no mention of injunctive relief). Thus, the issues presently before the Court concern whether or not Plaintiffs' request for damages survive Defendant's Motion to Dismiss based on improper service and lack of jurisdiction. Further, the Court will address whether or not this Court lacks subject matter jurisdiction over Plaintiffs claims for declaratory relief.

Upon a searching examination of the relevant filings, the attached exhibits, the relevant case law, and the entire record herein, the Court shall grant Defendant's Motion to Vacate Entry of Default and Motion to Dismiss in full, and sua sponte dismiss Plaintiffs' request for declaratory judgment for want of subject matter jurisdiction.

I: BACKGROUND

Plaintiffs brought this action via a Complaint dated October 20, 2005. After perfecting service through postage on the United States Attorney General and on the United States Attorney for the District of Columbia on January 5, 2006, Pls.' Return of Service at 2, 4, 6, Plaintiffs were ordered to show cause why venue in the District of Columbia was proper. Plaintiffs filed an Amended Complaint allegedly addressing the Court's concerns regarding venue. See Pls.' Resp. to Order to Show Cause ¶ 2 ("In seeking, as a part of the remedy, return of amounts unlawfully collected without assessment, Plaintiff(s) have/has apparently clouded the issues in the above-captioned action."). The Court granted Plaintiffs leave to file their Amended Complaint on April 14, 2006.

This Amended Complaint represents one of dozens of virtually identical lawsuits brought in this jurisdiction by tax protesters — allegedly proceeding pro se — asserting a variety of forms of misconduct by the IRS.¹ The Amended Complaint in this case contains a deficiency seen in most of these cases — namely, it provides no particularized facts specifically pertaining to Plaintiffs Daniel and Mary Smith; instead, it consists almost entirely of argument and restatement of putatively pertinent legal standards. See Am. Compl. ¶¶ 7-25. Moreover, even the few passages in the Amended Complaint that purport to describe "facts" that support Plaintiffs' position merely offer boilerplate recitations of the factual showings required to satisfy the various statutory provisions relied upon by Plaintiffs. See, e.g., id. ¶¶ 1, 5, 7, 26-29.

In short, Plaintiffs' Amended Complaint attempts to catalogue provisions of the IRC they claim have been contravened by the IRS. See id. ¶ 7. Plaintiffs contend that Defendant, through agents of the IRS, violated the following provisions of the IRC during its levy of taxes against them:²

1. 26 U.S.C. § 6102(a)(1), by disclosing confidential income tax return information to persons not statutorily authorized to receive such information;

2. 26 U.S.C. § 6201(a), by failing to make an assessment of the taxes owed by Plaintiffs;

3. 26 U.S.C. § 6202, by failing to make an assessment of the taxes owed by Plaintiffs within the time and mode set forth by the Secretary of the Treasury;

4. 26 U.S.C. § 6203, by failing to record an assessment of the taxes owed by Plaintiffs and by failing to furnish Plaintiffs copies of the assessment upon their request;

5. 26 U.S.C. § 7214(a), by attempting and continuing to attempt to collect sums greater than appear on records of assessment;

6. 26 C.F.R. § 601.702(c), by failing to answer Plaintiffs' correspondence within ten (10) days;

7. 26 U.S.C. § 6159, by abrogating Plaintiffs'"guaranteed" availability of an installment agreement;

8. 26 U.S.C. § 6320, by failing to notify Plaintiffs of the filing of a notice of lien;

9. 26 U.S.C. § 6321, by filing an invalid and unlawful Notice of Tax Lien against Plaintiffs and by filing an invalid and unlawful Notice of Tax Levy on Plaintiffs wages, bank accounts, etc.;

10. 26 U.S.C. § 6325, by failing to release liens "when it became obvious" that such liens were invalid and/or unlawful 11. 26 U.S.C. § 6331, by failing to send Plaintiffs a ten (10) demand for payment before issuing a levy;

12. 26 U.S.C. § 6343, by refusing to relax a levy after determination that the total sum of taxes was not collectible;

13. 26 U.S.C. § 6402, by failing to refund all unassessed taxes taken from Plaintiffs following their written request;

14. 26 U.S.C. § 6404(g), by failing to suspend interest and penalties "for reason that defendant has not specifically stated the amount of, and the basis for the liability" Plaintiffs are alleged to owe;

15. 26 U.S.C. § 6501(a), by neglecting to assess taxes owed within three years;

16. 26 U.S.C. § 6751(a), by failing to include in a notice imposing the penalty (1) the name of the penalty; (2) the Code section authorizing the penalty; and (3) an actual computation of the penalty;

17. 26 U.S.C. § 6751(b)(1), by failing to verify that a supervisor had personally approved, in writing, the initial penalty determination;

18. 26 U.S.C. § 7123(b)(1), by failing to provide Plaintiffs with non-binding mediation;

19. 26 U.S.C. § 7491(b), by refusing to prove items of income which were reconstructed solely through the use of statistical information on unrelated taxpayers;

20. 26 U.S.C. § 7491(c), by refusing to produce any evidence with respect to the imposition of penalties and additions; and

21. 26 U.S.C. § 7602(a), by conducting a presumed financial status audit.

Id. Finally, Plaintiffs allege violations of federal record-keeping laws contained at 44 U.S.C. § 3101, 44 U.S.C. § 3106, and 36 C.F.R. § 1222. Id.³

The Amended Complaint seeks two forms of redress: (1) a declaratory judgment that Defendant has violated one or more of the demarcated IRC provisions, id. ¶ 31; (2) and an award of damages under 26 U.S.C. § 7433 "to amend the reprehensible, egregious, and vexatious behavior of the defendant," id. ¶ 32.

Following Plaintiffs' apparent service, Plaintiffs filed a Request for Entry of Default on February 21, 2006, contending that Defendant's non-appearance and failure to answer their Complaint warranted entry of default. See Pls.' Mot. for Entry of Default ¶¶ 4-6. The Clerk of the Court subsequently entered default on February 23, 2006. On March 3, 2006, Defendant made an appearance in this case via its Motion to Vacate Entry of Default and its Motion to Dismiss. Plaintiffs filed an Opposition to Defendant's Motions on March 29, 2006.⁴ Defendant filed a Reply on May 1, 2006.

II: LEGAL STANDARDS

A. Motion to Dismiss Pursuant to Rule 12(b)(1)

A court must dismiss a case when it lacks subject matter jurisdiction pursuant to Rule 12(b)(1). In general, a motion to dismiss under Federal Rule of Civil Procedure 12(b) should not prevail "unless plaintiffs can prove no set of facts in support of their claim that would entitle them to relief." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). A court may appropriately dispose of a case under 12(b)(1) for standing, and may "consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Coalition for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C.Cir.2003) (citations omitted); see also Artis v. Greenspan, 223 F.Supp.2d 149, 152 n. 1 (D.D.C.2002) ("A court may consider material outside of the pleadings in ruling on a motion to dismiss for lack of venue, personal jurisdiction or subject matter jurisdiction."); Vanover v. Hantman, 77 F.Supp.2d 91, 98 (D.D.C.1999) ("where a document is referred to in the complaint and is central to plaintiffs claim,...