Washington v. United States
| Decision Date | 20 January 2021 |
| Docket Number | Case No. 20-cv-05801-TSH |
| Parties | WILLIAM WASHINGTON, Plaintiff, v. UNITED STATES OF AMERICA, Defendant. |
| Court | U.S. District Court — Northern District of California |
Plaintiff William Washington brings this case against the government for refund of funds levied by the Internal Revenue Service and applied toward his income tax liabilities. The government moves to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim pursuant to Rule 12(b)(6). ECF No. 23. Washington filed an Opposition (ECF No. 25) and the government filed a Reply (ECF No. 26). The Court finds this matter suitable for disposition without oral argument and VACATES the January 28, 2021 hearing. See Civ. L.R. 7-1(b). Having considered the parties' positions, relevant legal authority, and the record in this case, the Court GRANTS the government's motion for the following reasons.
On August 18, 2020, Washington commenced this action seeking a refund of $29,876.12 of funds levied by the IRS from his wages or from his bank account for his income tax liabilities for the taxable years 2003, 2004, 2007, and 2008. Compl. ¶ 6-7, ECF No. 1. He brings two causes of action - (1) wrongful levy and (2) failure to release levy and unlawful tax collection - and requests the Court determine he is entitled to a refund and award him damages. Id. at 9. In addition, Washington asks the Court to determine the levy is "unreasonable," the assessments are "inappropriate," and that the levy be "expunged" from his reports. Id. He requests "the installment payments, which to date, having no agreement commemorating same, be enjoined." Id. Washington also seeks damages pursuant to 26 U.S.C. § 7433, which allows taxpayers to bring a claim for damages if, "in the collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregards any provision of this title, or any regulation promulgated under this title." 26 U.S.C. § 7433(a).
Washington alleges that between February 1 and July 11, 2013, the IRS levied $29,876.12 from his bank account or from his wages. Compl. ¶ 7. In support, Washington attaches IRS Account Transcripts, dated October 23, 2013. Id., Ex. 1. As part of its motion, the government attached Forms 4340, Certificates of Assessments and Payments, for Washington's Individual Income Tax Returns (Form 1040), for the taxable years 2003, 2004, 2007, and 2008.1 Mot., Ex. A, ECF No. 23-1.
A review of the Account Transcript and Form 4340 for the taxable year 2003 shows that after Washington failed to file a timely income tax return, the IRS issued a Notice of Deficiency on February 12, 2008, and after he didn't petition the Tax Court, the IRS made subsequent assessments on July 28, 2008. After Washington submitted an untimely amended income tax return, the IRS abated the previously assessed tax and subsequently assessed additional tax andother statutory additions against him on March 12, 2012. Compl., Ex. 1 at 1-3; Mot., Ex. A at 1-7. Between February 19 and July 11, 2013, levy payments totaling $13,348.47 were applied to the 2003 taxable year. Mot., Ex. A at 4-5. The levy payments resulted in an overpayment of $3,021.99 that was used to offset another agency debt pursuant to 26 U.S.C. § 6402. Id. at 6. Notices of Intent to Levy were sent to Washington on November 2, 2008 and April 2, 2012. Id. There is no indication that Washington filed a Collection Due Process ("CDP") Hearing Request regarding any of these notices.
A review of the Account Transcript and Form 4340 for the taxable year 2004 shows that after Washington failed to file a timely income tax return, the IRS issued a Notice of Deficiency on December 30, 2008, and after he didn't petition the Tax Court, the IRS made subsequent assessments on June 8, 2009. Washington submitted an untimely amended income tax return, which the IRS accepted, and it abated a portion of the tax and additions previously assessed. Compl., Ex. 1 at 4-5; Mot., Ex. A at 8-12. Between April 5 and April 18, 2013, levy payments totaling $4,577.74 were applied to the 2004 taxable year. Mot., Ex. A at 10. The levy payments resulted in an overpayment of $831.57 that was used to offset another agency debt pursuant to 26 U.S.C. § 6402. Id. at 11. Notices of Intent to Levy were sent to Washington on July 13, 2009 and September 8, 2010. Id. There is no indication that Washington filed a CDP Hearing Request in relation to the first notice, while the second appears to have been "refused or unclaimed." Id. at 10.
A review of the Account Transcript and Form 4340 for the taxable year 2007 shows that after Washington failed to file a timely income tax return, the IRS issued a Notice of Deficiency on January 10, 2009. Washington then submitted an untimely amended income tax return, and the IRS made assessments based on his submission on May 31, 2010, followed by additional assessments pursuant to an examination on July 26, 2010. Compl., Ex. 1 at; Mot., Ex. A at 13-17. Between May 16 and June 3, 2013, levy payments totaling $4,577.73 were applied to the 2007 taxable year. Mot., Ex. A at 15. The levy payments resulted in an overpayment of $1,060.77 that was used to offset another agency debt pursuant to 26 U.S.C. § 6402. Id. at 16. Notices of Intent to Levy were sent to Washington on August 30, 2010 and March 16, 2012. Id. There is noindication that Washington filed a CDP Hearing Request in relation to the first Notice, while the second notice appears to have been "refused or unclaimed." Id. at 15.
A review of the Account Transcript and Form 4340 for the taxable year 2008 shows that Washington filed an untimely income tax return that was accepted as filed by the IRS, and assessments were made accordingly on March 29, 2010. Compl., Ex. 1 at 8-9; Mot., Ex. A at 18-22. On May 2, 2013, a levy payment of $2,288.85 was applied to the 2008 taxable year. Mot., Ex. A at 20. The levy payment resulted in an overpayment of $1,953.48 that was used to offset another agency debt pursuant to 26 U.S.C. § 6402. Id. at 21. Notices of Intent to Levy were sent to Washington on August 30, 2010 and March 16, 2012. Id. There is no indication that Washington filed a CDP Hearing Request in relation to the first notice, while the second notice appears to have been "refused or unclaimed." Id. at 10.
On January 21, 2013, the IRS sent Washington's employer a Notice of Levy on Wages, Salary, or Other Income, listing the taxable years at issue as 2004, 2007, and 2008. Compl., Ex. 2. Washington alleges this notice was not sent to his last known address and alleges that no notice of levy was sent regarding the taxable year 2003. Compl. ¶¶ 8, 12. On January 29, 2013, Washington's employer sent him a Notice of Withholding, advising him that if he disputed the deductions, he must "contact the issuing agency reflected in the attached order." Id., Ex. 9 at 7.2 The IRS sent Washington's employer a Release of Levy dated June 28, 2013. Id., Ex. 10.
Washington alleges that he learned he had become the victim of identity theft on February 1, 2013. Compl. ¶ 14. In support, he attaches an Identity Theft Affidavit he states was submitted to the IRS that same day (Ex. 6) and a letter from the IRS dated May 3, 2013 (Ex. 7). The affidavit states that "someone filed a 2011 tax return, and I have yet to file 2011 or 2012," and identifies the "tax years affected" as 2011 and 2012. Id., Ex. 6. The May 3 letter advises Washington that he may have been a victim of identity theft for 2011, as more than one tax returnwas filed using his personal information for that year. Id., Ex. 7. The letter further advises that the IRS adjusted his account to reflect the correct return information. Id. Reading the two documents together, it appears that the year affected by any potential identity theft was 2011. As part of its motion, the government attached a copy of IRS Account Transcripts for the taxable year 2011, which show that the first tax return for this year was submitted on October 29, 2012, and the subsequent return was submitted on February 21, 2013. Mot., Ex. B.
Washington alleges the IRS should not have continued levying on his income tax liabilities for the taxable years 2003, 2004, 2007, and 2008 due to an alleged identity theft related to his income tax return filed for the taxable year 2011. Compl. ¶¶ 16-17.
On April 12, 2015, Washington submitted a Form 843, Claim for Refund and Request for Abatement, claiming a refund for $31,655.91, due to an "illegal levy on wages," between January 21 and June 30, 2013. Id., Ex. 13. As he did not identify the periods for which he sought a refund, the IRS sent Washington a letter on December 10, 2015, advising him that the Form 843 he submitted was viewed as a frivolous position and, if not corrected, the IRS would assess a penalty against him. Id., Ex. 19. Washington then sent a letter to the IRS contesting the position. Id., Ex. 16. Washington also sent letters to additional individuals within the IRS referring to his wrongful levy claim, but he failed to elaborate the details of the alleged erroneous levies, such as the dates of such levies, the liabilities they were applied to, or the basis for his contention that such levies were erroneous. Id., Exs. 15, 17-18.
The Complaint also includes a letter from Washington to the IRS pertaining to a Notice of Levy he received for the taxable year 2015 and documents that pertain to a CDP hearing related to 2015. Id., Exs. 14, 20-22. He alleges he was "forced to pay $290 per month . . . for the tax periods 2015, 2016, 2017, and 2018." Comp...
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