Turner v. U.S.

• Decision Date: 13 April 2005
• Docket Number: No. 2:04-CV-855.,2:04-CV-855.
• Citation: 372 F.Supp.2d 1053
• Parties: Robin S. TURNER, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Southern District of Ohio

372 F.Supp.2d 1053

Robin S. TURNER, Plaintiff, v. UNITED STATES of America, Defendant.

No. 2:04-CV-855.

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

April 13, 2005.

COPYRIGHT MATERIAL OMITTED

Robin S. Turner, Mingo Junction, OH, pro se.

Steve A. Serman, US Dept. of Justice, Washington, DC, for Defendant.

OPINION AND ORDER

FROST, District Judge.

This matter comes before the Court for consideration of a Motion for Affirmance of the IRS Administrative Decision and to Dismiss Claim for Damages filed by Defendant United States of America ("Defendant" or "Government").¹ (Doc. # 8). Plaintiff Robin S. Turner ("Plaintiff" or "Turner") filed an Answer to Defendant's Motion. (Doc. # 10). For the following reasons, the Court GRANTS the Defendant's motion to affirm and dismiss.

I. Background

Turner completed his Form 1040 2002 income tax return by filling in zeros for his income and tax liability and filed it with the Internal Revenue Service ("IRS"). (Doc. # 1, Ex. A(2).) However, independent third parties provided income documents to the IRS that established that Turner had earned wages totaling $34,903 and interest income of $77 in 2002. (Id.) As a result, the IRS assessed a $500 monetary penalty against Turner on January 12, 2004 for filing a frivolous tax return. (Doc. # 1 Ex. C; Doc. # 8 at 3). Because Turner did not pay the fine, the IRS sent him a Final Notice of Intent to Levy and Notice of Your Right to a Hearing ("the levy notice"). (Doc. # 1 Ex. C.) In response, Turner filed a written request for a Collection Due Process hearing ("CDP hearing") to challenge the appropriateness of the collection action and the existence of the underlying tax liability. (Doc. # 1 at ¶ ¶ 14-15, 17.) In this letter, Turner demanded certain documents and verification be produced at the CDP hearing, including (1) the specific code section that makes him liable for the income tax at issue; (2) the names and identification numbers of the IRS employees who imposed the penalty; (3) the delegation of authority from the Secretary of the Treasury authorizing the employees to impose the penalty; (4) a copy of the record of his assessment; and (5) copies of statutes and regulations pertaining to the penalty assessed and his liability thereunder. (Doc. # 1 at ¶ ¶ 19-20.)

The IRS denied Turner's request for an in-person oral hearing because the issues he raised in his letter were "frivolous" and/or "groundless." (Doc. # 1 Ex. F.) The IRS instead offered Turner two options. (Id.) First, a telephone hearing could be conducted. (Id.) Second, Turner could express his arguments through written correspondence. (Id.) Turner timely responded in writing by declining both of the options and instead insisted upon a "face-to-face meeting." (Doc. # 1 Ex. E.) He also reiterated his complaints and threatened to sue the IRS for damages if it refused to grant him an in-person hearing. (Id.)

Apparently, the IRS treated Turner's response as an acceptance of their offer to address his arguments through written correspondence. Subsequently, the IRS issued its Notice of Determination on August 10, 2004. (Doc. # 1 Ex. A.) The Notice of Determination was the administrative determination of the IRS relative to Turner's liability for the collection action. (Id.) That determination concluded that Turner intentionally filed a frivolous tax return and noted that Turner presented only frivolous arguments regarding his liability in his request for an in-person hearing. (Doc. # 1 Ex. A(4).) The Notice of Determination also informed Turner of his right to appeal the Notice of Determination to a Federal District Court within 30 days. (Doc. # 1 Ex. A.)

Proceeding pro se, Turner instituted this action on September 4, 2004, requesting this Court set aside the Notice of Determination and award him costs and damages. (Doc. # 1.) On December 8, 2004, the Government moved for affirmance of the IRS Administrative Decision and dismissal of Turner's damage claim. (Doc. # 8.) On January 12, 2005, Turner untimely filed a response to Defendant's motion.² (Doc. # 10.) It is to an examination of the Government's motion that this Court now turns.

II. Discussion

At the outset, the Court is aware that pro se complaints such as the one in the present case are subject to a less stringent standard than those prepared by an attorney. Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). Even taking this into consideration, the Court GRANTS Defendant's motion.

A. MOTION TO AFFIRM

The Government first argues that the Court should affirm the Notice of Determination of the IRS. (Doc. # 8). In contrast, Turner asserts that the Government violated his due process rights by not holding an in-person hearing. (Docs.# # 1, 10).

The IRS may assess a civil penalty of $500 against anyone who "files what purports to be [an income tax] return" but which contains "information that on its face indicates that the self-assessment is substantially incorrect" and is due to "a position which is frivolous." 26 U.S.C. § 6702(a); see also Gillett v. United States, 233 F.Supp.2d 874, 881 (W.D.Mi.2002). An individual's position meets the objective test for frivolousness under 26 U.S.C. § 6702(a)(2) when it has "no basis in fact or law." Gillett, 233 F.Supp.2d at 881.

A taxpayer has a right to a CDP hearing before the IRS can issue a levy against any of the taxpayer's property. 26 U.S.C. § 6330. The CDP hearing, conducted by the Office of Appeals of the IRS, provides for the opportunity to discuss collection options and liability issues. 26 U.S.C. § § 6330(c)(2); 6330(a)(3)(B). At a CDP hearing, a taxpayer may challenge the existence or the amount of the underlying tax liability. 26 U.S.C. § § 6330(c)(2)(A), 6330(c)(2)(B). In this case, the underlying tax liability was the frivolous return penalty because the: (1) notice of intent to levy notified Turner of the Government's intention to collect on the penalty and not on any income tax liability, and (2) at the time the notice of intent to levy was sent, the IRS had not yet completed its assessment of Turner's 2002 income tax liability. 26 U.S.C. § 6321.

Turner seeks judicial review of the Notice of Determination pursuant to 26 U.S.C. § 6330(d). The Sixth Circuit held in an unpublished decision that a suit pursuant to that statute that attempts to challenge a hearing officer's decision concerning a plaintiff's underlying tax liability for particular years fell within the exclusive jurisdiction of the United States Tax Court. See Diefenbaugh v. Weiss, 234 F.3d 1267 (6th Cir.2000) (affirming District court's sua sponte dismissal of the plaintiff's complaint). At present, it is unclear whether the Sixth Circuit would correspondingly hold that review of the administrative decision to impose civil sanctions for filing frivolous returns fell within the exclusive jurisdiction of the United States Tax Court. As a result, in the absence of controlling authority, the Court will assume for purposes of ruling on this motion that the Court does have subject matter jurisdiction limited to the review of the appropriateness of the frivolous tax return penalty assessed pursuant to 26 U.S.C. § 6330(d). See Gillett, 233 F.Supp.2d at 882.

Section 26 U.S.C. § 6330(d) fails to specify the standard of review a court should use for cases involving frivolous returns. See 26 U.S.C. § 6330(d); Gillett, 233 F.Supp.2d at 881 (citing Carroll v. United States, 217 F.Supp.2d 852, 855 (W.D.Tenn.2002)). The legislative history of 26 U.S.C. § 6330(d) indicates that the Court should conduct a de novo review "where the validity of the tax liability was properly at issue in the administrative hearing." H.R. Conf. Rep. No. 105-599, at 266 (1998); see also Tornichio v. United States, 263 F.Supp.2d 1090, 1095 (N.D.Oh.2002) (citing Rennie v. IRS, 216 F.Supp.2d 1078, 1080 (E.D.Ca.2002)); Geller v. U.S., 2001 WL 1346669 (S.D.Oh.2001). When the underlying tax liability is not at issue, a court must review the determination using an abuse of discretion standard. Tornichio, 263 F.Supp.2d at 1095; MRCA Info. Services v. United States, 145 F.Supp.2d 194, 199 (D.Conn.2000).

The only tax liability at issue here is the penalty assessed for filing a frivolous return. 26 U.S.C. § 6671(a) (stating in relevant part that "except as otherwise provided, any reference in this title to `tax' imposed by this title" also refers to the "penalties and liabilities provided by this subchapter"); see 26 CFR § 301.6321-1; see also Bartley v. United States, Internal Revenue Service, 343 F.Supp.2d 649, 654 (N.D.Oh.2004). Because the validity of Turner's tax liability was properly at issue in the CDP hearing, this Court will review the case de novo.

However, this Court is confined to the administrative record in considering Turner's appeal. 26 C.F.R. § 301.6330-1(f)(2) Q-F5/A-F5 ("[T]he taxpayer can only ask the court to consider an issue that was raised in the taxpayer's CDP hearing."). "Courts interpreting these provisions have determined that actions brought pursuant to § 6330(d) are actions for administrative review and, thus, the reviewing district court is limited to the administrative record and the parties are not entitled to discovery or jury trial." Hart v. United States, 291 F.Supp.2d 635, 640 (N.D.Oh.2003) (citing Community Residential Servs. v. United States, 2003 WL 21033239 at * 1 (M.D.N.C. May 7, 2003); Carroll v. United States, 217 F.Supp.2d 852, 858 (W.D.Tenn.2002)).

1. CDP Hearing and IRS determination

Before the issuance of an IRS levy or upon the filing of a notice of federal tax lien, the IRS is required to notify a taxpayer of his right to request a CDP hearing within 30 days of the notice of intent. See 26 U.S.C. §§ 6330(a) and 6331(d); see also Bartley, 343 F.Supp.2d at 652. Turner timely requested a CDP hearing and attached the issues he planned to raise at the hearing. (Doc. # 1 Ex. B.) The Appeals Office of the IRS denied Turner's request for an in-person...