Worsham v. U.S. Dep't of the Treasury
| Decision Date | 17 September 2013 |
| Docket Number | Civil Action No. ELH-12-2635 |
| Parties | MICHAEL C. WORSHAM, Plaintiff, v. U.S. DEPARTMENT OF THE TREASURY, Defendant. |
| Court | U.S. District Court — District of Maryland |
Michael C. Worsham, plaintiff,1 filed suit under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, the Paperwork Reduction Act ("PRA"), 44 U.S.C. §§ 3501 et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking to compel the United States Department of the Treasury (the "Treasury"), defendant, and the Internal Revenue Service ("IRS"), which is a bureau of the Treasury, to disclose and release certain agency records, and seeking declaratory and other relief. In his Amended Complaint (ECF 14), which is the operative pleading, plaintiff asserts four counts.2
Count 1 arises under the FOIA, and seeks the release of certain information regarding a document published on the IRS's website entitled "The Truth About Frivolous Tax Arguments." Count 2, which also arises in part under the FOIA, seeks the release of information regarding backup withholding that the IRS directed Worsham's financial institution to impose againstWorsham beginning in March 2009, and asserts that the backup withholding against Worsham is unlawful.3 Count 3 asserts that three forms published by the IRS (Form 1040, Form W-9, and Form 4564) do not comply with the PRA, and seeks, inter alia, a declaration that Worsham cannot be penalized for failing to file those forms unless the IRS brings them into compliance with the PRA. Count 4 seeks a declaration that the federal income tax is unconstitutional as administered because it is a non-apportioned direct tax.
After suit was filed, Worsham filed a "Petition[ ] to Quash Two IRS Summons" ("Petition to Quash") (ECF 28), which does not pertain directly to any of the causes of action he asserted in his complaint. Rather, the Petition to Quash arises under 26 U.S.C. § 7609(b)(2)(A), and seeks to quash administrative summonses issued by the IRS to two banking institutions with which Worsham holds accounts, seeking examination, pursuant to 26 U.S.C. § 7602(a)(2), of banking records concerning Worsham for certain specified time periods.4
Six motions are currently pending. Worsham has filed a "Motion for Partial Summary Judgment for Count 3 Under the Paperwork Reduction Act") ("PRA Motion") (ECF 16) and a "Motion to Produce Documents Responsive to FOIA Claims" ("FOIA Production Motion") (ECF 41). The Treasury has filed a partial motion to dismiss, seeking dismissal of Counts 3 and 4 for lack of subject matter jurisdiction and dismissal of Counts 1 and 2, in part, for failure to state a claim upon which relief can be granted ("Motion to Dismiss") (ECF 19 & 20). Subsequently, the Treasury filed a partial motion for summary judgment as to Counts 1 and 2 ("FOIA MSJ") (ECF 42 & 43), and Worsham filed a cross-motion for summary judgment as to those counts ("FOIA Cross-MSJ") (ECF 46). Finally, the Treasury has filed a motion to deny the Petition to Quash and for summary enforcement of the summonses to Worsham's financial institutions ("Quash Motion") (ECF 31 & 32).
The motions have been fully briefed,5 and no hearing is necessary to resolve them. See Local Rule 105.6. For the reasons that follow, I will grant the Treasury's Motion to Dismiss asto Counts 3 and 4; deny, as moot, Worsham's PRA Motion; deny, as moot, Worsham's FOIA Production Motion; grant in part and deny in part the Petition to Quash and the Quash Motion; and grant the FOIA MSJ in part and deny the FOIA Cross-MSJ in part, and otherwise hold those motions sub curia. In particular, I will grant the FOIA MSJ and deny the FOIA Cross-MSJ with respect to the FOIA claims in Count 2, and I will dismiss the non-FOIA claims in Count 2 for lack of subject matter jurisdiction; with respect to Count 1, I will hold the FOIA MSJ and FOIA Cross-MSJ sub curia, pending further submissions.6
As noted, the Treasury challenges the Court's subject matter jurisdiction regarding Count 3 (the PRA claim) and Count 4 (the challenge to the constitutionality of the federal income tax). Because "a court that lacks jurisdiction has no power to adjudicate and dispose of a claim on the merits," S. Walk at Broadlands Homeowner's Ass'n, Inc. v. OpenBand at Broadlands, LLC, 713 F.3d 175, 187 (4th Cir. 2013), the jurisdictional issue is necessarily antecedent to any consideration of the merits. However, to put the jurisdictional issues in perspective, I begin by providing some detail regarding the nature of the two counts at issue, starting with Count 3.
Enacted in 1980, the "PRA was passed in an effort to reduce the burden thatadministrative agencies place upon the public by requesting information." United States v. Gross, 626 F.3d 289, 295 (6th Cir. 2010) (citing Dole v. United Steelworkers of Am., 494 U.S. 26, 32 (1990)). To that end, the PRA requires a federal agency that intends to conduct or "sponsor" a "collection of information" to conduct an internal evaluation of the need for the collection of information at issue and the burdens it will impose, see 44 U.S.C. §§ 3506(c), 3507(a)(1)(A); to solicit public comment on the proposed collection, id. § 3507(a)(1)(B); and to submit its proposed form for collection of information to the Office of Management and Budget ("OMB"), which must review the proposal and, if it approves it, provide a "control number" for the collection, which must be "displayed upon the collection of information," i.e., on the form or other document that is used to collect the information. Id. § 3507(a)(2)-(3).
The PRA provides a protection for the public against agency collection of information that does not comply with the statute. It is codified in § 3512:
Worsham contends that IRS Forms 1040, W-9, and 4564 constitute agency "collection[s] of information" under the PRA, but that the IRS has not submitted these forms to OMB for periodic approval as required by the PRA, and either has not obtained OMB control numbers for the forms or has not affixed currently valid control numbers to them. Form 1040 is the "UnitedStates Individual Income Tax Return," readily familiar to virtually every person of working age in the United States. Form W-9 is the "Request for Taxpayer Identification Number and Certification," another ubiquitous IRS form, which is used by payors who must report payments to the IRS in order to acquire from their payees information regarding each payee's identity and TIN. Form 4564 is likely less familiar to the average taxpayer. It is the form for an "Information Document Request," which may be issued by the IRS to a taxpayer to request the production of documents specified by the requesting IRS agent.
In his amended complaint, Worsham claims that, within a week after service of his original complaint on the government, an IRS agent sent him an IRS Form 4564 seeking production of "25 different categories of documents." Amended Complaint ¶ 22. Worsham alleges that he should not be required to respond to the Form 4654 request, id. ¶ 35, nor should he be required to complete and provide a Form 1040 unless and until the forms are brought into compliance with the PRA. With respect to Form W-9, Worsham alleges that, "[a]s an attorney handling settlements," he is often requested (or his clients are requested) to "complete a Form W-9 as a condition of completing and paying a settlement." Id. ¶ 57. He claims that neither he nor his clients should be required to complete Form W-9s until the form is brought into compliance with the PRA.
As relief with respect to Count 3, Worsham seeks an order making four declaratory rulings, as follows, id. at 8-9:
Count 4 asserts a constitutional challenge to the federal income tax. The United States Constitution, Article I, § 8 grants Congress the "Power To lay and collect Taxes, Duties, Imposts and Excises," and the "Uniformity Clause" of that section provides that "all Duties, Imposts and Excises shall be uniform throughout the United States." "Imposts," "Duties," and "Excises," in the sense discussed in the Uniformity Clause, are all varieties of so-called "indirect" taxes, in contrast to "direct taxes," which are discussed in Sections 2 and 3 of Article I. See, e.g., United States v. West Virginia, 339 F.3d 212, 215 (4th Cir. 2003) () (Citations omitted) (alteration in original).
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