Tornichio v. U.S.

• Decision Date: 11 December 2002
• Docket Number: No. 5:02-CV-351.,5:02-CV-351.
• Citation: 263 F.Supp.2d 1090
• Parties: Joseph TORNICHIO, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Northern District of Ohio

263 F.Supp.2d 1090

Joseph TORNICHIO, Plaintiff, v. UNITED STATES of America, Defendant.

No. 5:02-CV-351.

United States District Court, N.D. Ohio, Eastern Division.

December 11, 2002.

COPYRIGHT MATERIAL OMITTED

Michael W. Davis, U.S. Department of Justice, Tax Division, Washington, DC, for United States of America, (dft).

ORDER AND OPINION,

GWIN, District Judge.

On October 29, 2002, Defendant the United States of America ("the United States") moved the Court to dismiss pro se Plaintiff Tornichio's complaint against it and affirm the Internal Revenue Service's ("IRS") determination that Tornichio is liable for filing frivolous income tax returns. In his complaint, Tornichio asks the Court to invalidate the IRS's determination because he believes the IRS collection due process ("CDP") hearing was invalid. He also seeks compensatory and punitive damages against the United States.

The United States alleges that Tornichio fails to state a claim upon which the Court can grant relief. The United States further claims that the Court must dismiss Tornichio's compensatory and punitive damage claims for lack of subject matter jurisdiction. Tornichio opposes the motion.

For the reasons that follow, the Court grants the United State's motion to dismiss and affirm. Accordingly, the Court dismisses Tornichio's complaint against the United States and affirms the determination of the IRS Appeals Office that Tornichio is liable for filing frivolous income tax returns.

I. Background

Tornichio filed tax returns for tax years 1996, 1997, and 1998 in which he reported his income as "-0-." In support of his claim that he had zero income and tax liability, Tornichio alleged that the IRS lacks authority to collect income taxes. After receiving information documents showing that Tornichio earned $51,700.00 in 1996, $78,952.00 in 1997 and $45,244.00 in 1998, the IRS assessed Tornichio a $500 "frivolous return" penalty on each return. After Tornichio refused to voluntarily pay the penalties, the IRS sent several notices of intent to levy on each return assessment. Tornichio still did not pay the penalties.

On October 17, 2000, the IRS sent Tornichio, by certified mail, a final notice of intent to levy. On November 3, 2000, Tornichio requested a CDP hearing pursuant to Internal Revenue Code ("I.R.C.") § 6330. He asked that the appeals officer furnish the following information at the hearing:

i. verification from the Secretary that the requirements of any applicable law or administrative procedure have been met;

ii. delegation orders from the Secretary delegating authority to those persons who imposed the `frivolous penalty;'

iii. a listing of Treasury Department regulations that allow IRS employees to impose `frivolous penalties;'and

iv. documented proof that the Secretary authorized the collection action and that the Attorney General or his delegate directed that collection action commence.

Tornichio also advised the appeals officer that he intended to challenge the "`existence of the underlying liability' of the tax that generated the `frivolous penalty'" because he never received a Deficiency Notice regarding the underlying tax liability.

IRS Settlement Officer Dolin responded to Tornichio in a letter dated November 28, 2001. Dolin advised Tornichio that the CDP conference would be informal, "facts, arguments, and legal authority to support your position" may be presented, but "[i]t is the Service's position that in cases where a taxpayer's request for a collection due process hearing only states moral, religious, political, constitutional, conscientious or similar grounds to support his/her position, Appeals will not consider those grounds in the Due Process/Equivalent hearing pursuant to IRC Section 6320/6330."(emphasis in original). Dolin noted further that courts had previously addressed Tornichio's concerns about the legal authority of the IRS.

Tornichio responded in a letter dated December 4, 2001, saying again that he wanted the IRS officer to bring all of the items listed in his September 28, 2001, letter to the hearing. Concerned that he did not receive a reply from the IRS, Tornichio sent a certified letter dated December 18, 2001, requesting several documents, including IRS Document # 330 for tax years 1996,1997, & 1998.

On January 15, 2002, the IRS Appeals Office held the CDP hearing. The hearing did not result in any settlement or resolution of the matter. Accordingly, on February 1, 2002, the IRS sent a "Notice of Determination Concerning Collection Action^) Under Section 6320 and/or 6330", via certified mail, to Tornichio.

The determination letter stated as follows:

It has been determined that no relief is to be granted and that the proposed levy action is sustained. The Internal Revenue Service has complied with code and procedural requirements in collecting the tax.

The letter further stated that Tornichio could appeal the IRS determination by filing a complaint with the Court within thirty days.

On February 26, 2002, Tornichio timely filed this action. In his complaint, Tornichio seeks to set aside the IRS determination of liability. In asking that his liability be set aside, Tornichio says that the IRS unlawfully issued the determination. Specifically, Tornichio complains that the appeals officer failed to provide any of the information he requested in his September 28, 2001, letter. Additionally, he claims the IRS officer refused to accept his "collection alternative" of paying the penalty immediately "if the appeals officer would merely cite and produce the statute ... where an income tax `liability' was established by law." Tornichio also makes claims for compensatory and punitive damages against the United States.

On March 18, 2002, the Court dismissed the action without prejudice because the Tax Court appeared to have sole jurisdiction. On September 17, 2002, the Court vacated its March 18, 2002 opinion and order and reopened the case.

On October 29, 2002, the United States moved the Court to dismiss the complaint against it and affirm the IRS Appeals Office's determination. The United States also moved the Court to dismiss Tornichio's damage claims against the United States for lack of subject matter jurisdiction. Tornichio opposes the motion.

II. Standard & Analysis

A. Standard

The United States alleges that the Court should dismiss the complaint against it and affirm the determination of the IRS officer for two reasons. First, the United States says that the Court should dismiss the claim that the CDP hearing was invalid because it fails to state a claim upon which the Court can grant relief. Second, it asserts that the Court lacks subject matter jurisdiction over Tornichio's damage claims against the United States.

The Court now presents the standards for the two dismissal grounds, and then discusses each ground in later sections.

1. Failure to State a Claim

The Court uses the Fed.R.Civ.P. 12(b)(6) standard to judge the legal sufficiency of a claim. Under this rule, the Court presumes that all well pleaded allegations are true, resolves all doubts and inferences in favor of the pleader, and views the pleading in the light most favorable to the non-moving party. Cent. States, Southeast & Southwest Areas Pension Fund v. Mahoning Nat'l Bank, 112 F.3d 252 (6th Cir.1997). See also In re Sofamor Danek Group, Inc., 123 F.3d 394, 400 (6th Cir.1997) (holding that when ruling on a motion to dismiss for failure to state a claim, the court deems as admitted all factual allegations made by plaintiff, and the court must construe all ambiguous allegations in plaintiffs favor.) Courts will dismiss a claim under this rule only if it appears beyond doubt that the pleader can prove no set of facts in support of the claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Advocacy Org. For Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315 (6th Cir.1999). Finally, the district court must read a pro se plaintiffs allegations liberally and apply a less stringent standard to the pleadings of a pro se plaintiff than to a complaint drafted by counsel. Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972).

2. Subject Matter Jurisdiction

When a party challenges subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1), the plaintiff has the burden of proving that the Court has jurisdiction over the cause of action. Madison-Hughes v. Shalala, 80 F.3d 1121, 1130 (6th Cir.1996); Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir.1986). The Court, however, construes the allegations of the complaint favorably to the pleader. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). In ruling on such a motion, the district court may resolve factual issues when necessary to resolve its jurisdiction. Madison-Hughes, 80 F.3d at 1130; Rogers, 798 F.2d at 918. Further, when considering a motion to dismiss for lack of subject matter jurisdiction, this Court may look beyond jurisdictional allegations in the complaint and the Court may consider whatever evidence the parties submit. Fairport Intern. Exploration, Inc. v. Shipwrecked Vessel Known as THE CAPTAIN LAWRENCE, 105 F.3d 1078, 1081 (6th Cir.1997). Finally, the district court must read a pro se plaintiff's allegations liberally and apply a less stringent standard to the pleadings of a pro se plaintiff than to a complaint drafted by counsel. Haines, 404 U.S. at 520-21, 92 S.Ct. 594.

B. Analysis

The United States says that the Court should dismiss Tornichio's claim that the CDP hearing was invalid because the IRS officer did not abuse his discretion. Therefore, the United States asks the Court to affirm the determination of the appeals officer. It also moves the Court to dismiss the damage claims against it because the United States has not waived its sovereign immunity. Accordingly, the United States argues that the Court lacks subject matter jurisdiction.

The...