Spahr v. U.S.

• Decision Date: 17 August 2007
• Docket Number: Civil Action No. 07-00362(ESH).
• Parties: Marshall R. SPAHR, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Columbia

501 F.Supp.2d 92

Marshall R. SPAHR, Plaintiff, v. UNITED STATES of America, Defendant.

Civil Action No. 07-00362(ESH).

United States District Court, District of Columbia.

August 17, 2007.

Marshall Richard Spahr, Woodland, CO, Pro se.

Beatriz T. Saiz, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION

HUVELLE, District Judge.

Plaintiff Marshall R. Spahr has filed a pro se amended complaint raising twenty-six boilerplate "counts" that "defendant through principals, officers, agents, and/or employees of [the] Internal Revenue Service" ("IRS") has "disregard[ed]" the Internal Revenue Code. (E.g., Am. Compl. at 4.) For each count, plaintiff seeks "damages in accordance with [26 U.S.C.]7433."¹ (Id. at 14.) The government has moved to dismiss for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted. For the reasons set forth herein, the government's motion will be granted.

BACKGROUND

The twenty-six counts in plaintiff's amended complaint can be grouped into seven general categories: (1) counts alleging failure to notify plaintiff of his obligation to keep records and file tax returns, failure to prepare substitute tax returns on his behalf when he failed to file tax returns, and improper use of his Social Security number (Counts 1-6 and 8); (2) counts alleging both the assessment of taxes against plaintiff and the collection of taxes from him in amounts that were not properly assessable against him and that were not properly verified or recorded (Counts 9-13, 22, and 26); (3) counts alleging failure to disclose plaintiff's tax returns or substitute tax returns, records of assessments made against him, or copies of such records (Counts 7 and 14-15); (4) counts alleging failure to satisfy statutory duties to promulgate and implement various procedures and regulations (Counts 16-17); (5) counts alleging the imposition of tax liens against plaintiff that were improper because no tax assessment was ever made, because plaintiff never received proper notice or demand, because plaintiff was denied a hearing regarding the liens, and because notices of the liens were not certified (Counts 18, 20-21, and 23-24); (6) a count alleging harassment in connection with the collection of taxes (Count 19); and (7) a count alleging criminal disclosure to third parties of plaintiff's tax return information (Count 25).

ANALYSIS

I. Legal Standards

A. Rule 12(b)(1)

Under Federal Rule of Civil Procedure 12(b)(1), which governs motions to dismiss for lack of subject matter jurisdiction, the burden of establishing jurisdiction lies with the plaintiff. E.g., Martens v. United States, No. 05-1805, 2007 WL 2007580, at *1 (D.D.C. July 6, 2007). Jurisdiction must be established by a preponderance of the evidence. E.g., id.

B. Rule 12(b)(6)

In deciding a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted, the Court "may only consider the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice." Id. (quoting Gustave-Schmidt v. Chao, 226 F.Supp.2d 191, 196 (D.D.C.2002)). Although a plaintiff need not provide "detailed factual allegations," it is "a plaintiff's obligation to provide the `grounds' of his `entitle[ment]' to relief." Id. (quoting Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___ - ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (alteration in original)). This obligation "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007)). Rather, "[t]he facts alleged [in the complaint] `must be enough to raise a right to relief above the speculative level.'" Id. (quoting Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007)). "The court need not accept as true inferences unsupported by facts set out in the complaint or legal conclusions cast as factual allegations." Id.

II. Most Counts Will Be Dismissed for Lack of Jurisdiction

Plaintiff seeks to establish jurisdiction based on the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., and § 7433.² (See Am. Compl. at 2-3.) It is well settled, however, that the APA does not waive sovereign immunity with respect to suits for money damages. See, e.g., Buaiz v. United States, 471 F.Supp.2d 129, 138 (D.D.C.2007) ("By its express terms, ... the APA does not waive immunity for claims seeking money damages."). Thus, plaintiff's claims must be dismissed for lack of jurisdiction unless they fall within the waiver of sovereign immunity provided in § 7433. See, e.g., id. at 134 ("[F]ederal courts lack subject matter jurisdiction over suits against the United States in the absence of a waiver.").

For the reasons discussed by the Honorable Rosemary M. Collyer in Buaiz, the waiver of sovereign immunity provided in § 7433 is limited to claims that "aris[e] from the collection of income taxes." Id. at 136 (emphasis added); see id. at 135-36. Section 7433 does not give the Court jurisdiction over "[c]laims that the IRS has incorrectly determined the amount of taxes owed" or any other claims that do not directly arise from the IRS's collection activities. See id. at 136.

Here, most of plaintiff's claims clearly fall outside § 7433's limited waiver of sovereign immunity. The claims in the first group (Counts 1-6 and 8) arise from defendant's alleged failure to notify plaintiff of his obligation to keep records and file tax returns, failure to prepare substitute tax returns on plaintiff's behalf, and improper use of plaintiff's Social Security number. These claims do not arise from efforts to collect taxes. See id. at 136 (dismissing Counts 1, 2, and 4). Similarly, the claims in the second group (Counts 9-13, 22, and 26) "all arise from the assessment of taxes and are therefore beyond § 7433's sovereign immunity waiver." Id. (emphasis added). It is also clear that the claims in the third group (Counts 7 and 14-15), which allege that defendant failed to disclose returns and assessments upon plaintiff's request, fall outside § 7433's waiver of sovereign immunity. See id. (dismissing claims "related to the IRS's alleged failure to disclose to [the plaintiff] ... tax returns, assessments, and other tax records" for lack of jurisdiction). Finally, the claims in the fourth group (Counts 16-17) arise from defendant's alleged failure to promulgate regulations and procedures that plaintiff contends were required under 26 U.S.C. §§ 6211 and 6301. As defendant has cogently argued, claims based on an alleged failure to promulgate regulations and procedures do not implicate § 7433's prohibition against collection activity that disregards provisions of, or regulations under, the Internal Revenue Code. (See Reply at 2.) Thus, because Counts 1-17, 22, and 26 do not arise from tax collection activity, those claims must be dismissed under Rule 12(b)(1) for lack of jurisdiction. See id. at 135-36.

III. The Remaining Counts Will Be Dismissed for Failure to State a Claim

Counts 18-21 and 23-25 will be dismissed under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.³

Counts 18, 21, 23, and 25 fail to state a claim upon which relief can be granted because they are based on allegations that are flatly contradicted by exhibits that plaintiff has, attached to his amended complaint. See, e.g., Braude & Margulies, P.C. v. Fireman's Fund Ins. Co., 468 F.Supp.2d 190, 195 (D.D.C.2007) (explaining that a court need not "accept as true the complaint's factual allegations insofar as they contradict exhibits to the complaint") (quoting Kaempe v. Myers, 367 F.3d 958, 963 (D.C.Cir.2004)). In Counts 18 and 19, plaintiff alleges that the IRS asserted tax liens against him without proper notice and demand. (See Am. Compl. at 11 (alleging, in Count 18, that the IRS "failed to `within 60 days after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof.'" (quoting 26 U.S.C. § 6303)); id. at 11-12 (alleging, in Count 21, that the IRS asserted two notices of lien against him (attached as "Exhibits 1 and 2") "without giving proper notice and without making demand").) In Count 23, plaintiff alleges that two notices of lien (attached as "Exhibits 1 and 2") were unlawfully "made, executed, and issued" for "amounts for which no assessment was made." (Id. at 12.) Similarly, in Count 25, plaintiff alleges that defendant "unlawfully disclosed return information [] by filing two Notice(s) of Lien into the Public Record[] in stated amounts for which no record of assessment exists." (Id. at 13.) Contrary to plaintiff's allegations, the exhibits on which he relies clearly reflect that the IRS made assessments and demands for payment. (See id. Exs. 1, 2 (stating, on Forms 688(Y), "that taxes ... have been assessed," listing the date of each assessment, and explaining that "[the IRS has] made a demand for payment"); see also id. Exs. 3-5 (listing the unpaid balance of assessments against plaintiff and stating that, "[a]lthough [the IRS] ... told [plaintiff] to pay the amount ... owe[d], it is still not paid").) Thus, plaintiff's allegations that defendant filed notices of tax liens without first making assessments or demanding payment are contradicted by his own exhibits. Similarly, because "notice and demand are inextricably coupled," plaintiff cannot rely on allegations that he failed to receive notice of his tax liability. United States v. Lorson Elec. Co., 480 F.2d 554, 556 (2d Cir.1973). Thus, Counts 18, 21, 23, and 25 must be dismissed for failure to state a claim upon which relief can be granted.

Two of plaintiff's remaining claims ...