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Anderson v. United States

July 18, 2007

BROOKS ANDERSON & HOLLY ANDERSON, PLAINTIFFS,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

Plaintiffs Brooks and Holly Anderson filed a pro se Complaint against the United States alleging that the Internal Revenue Service ("IRS"), through its "principals, officers, agents, and/or employees," violated 26 U.S.C. § 7433 by arbitrarily and capriciously abusing its discretion. Compl. at 4, Count 1. Plaintiffs allege 41 separate counts for alleged violations of various sections of the Internal Revenue Code and the Code of Federal Regulations. Compl. at 18. This is one of numerous boilerplate complaints that have recently been filed in the this Court complaining of disclosure violations under § 7433. See, e.g., Gaines v. United States, 424 F. Supp. 2d 219, 221 (D.D.C. 2006) (collecting cases); Ross v. United States, 460 F. Supp. 2d 139, 141 (D.D.C. 2006) (dozens of individuals have filed similar complaints in a pro se capacity in the D.C. District Court). Plaintiffs seek monetary damages amounting to $10,000 per "disregard with intent to defeat the provisions" of the Internal Revenue Code. Compl. at 19, Remedy ¶ 1. Plaintiffs also seek "replevin" of "any and all property taken" from them without due process of law, further damages as the court sees as proper, and an injunction to prevent defendants from "further acting in disregard of law or regulation." Id., ¶¶ 2-4.

The Government now moves to dismiss the Complaint on the grounds that this Court lacks subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) or alternatively, that Plaintiffs have failed to state a damages claim on which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). See Def.'s Mot. at 1. The Court will grant the Government's motion and will dismiss Plaintiffs' damages claim under Rule 12(b)(6) because Plaintiffs failed to exhaust their administrative remedies, a prerequisite to a civil suit for damages under 26 U.S.C. § 7433, and will dismiss Plaintiffs' claim for injunctive relief under Rule 12(b)(1) for lack of subject matter jurisdiction.

I. LEGAL STANDARDS

The Government moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) and, in the alternative, pursuant to Rule 12(b)(6). "[I]n passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993). Under Rule 12(b)(1), which governs motions to dismiss for lack of subject matter jurisdiction, a plaintiff bears the burden of establishing by a preponderance of the evidence that the Court possesses jurisdiction. See Shekoyan v. Sibley Int'l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002); Pitney Bowes, Inc. v. U.S. Postal Serv., 27 F. Supp. 2d 15, 19 (D.D.C. 1998). It is well established that, in deciding a motion to dismiss for lack of subject matter jurisdiction, a court is not limited to the allegations set forth in the complaint "but may also consider material outside of the pleadings in its effort to determine whether the court has jurisdiction in the case." Alliance for Democracy v. Fed. Election Comm'n, 362 F. Supp. 2d 138, 142 (D.D.C. 2005); see Lockamy v. Truesdale, 182 F. Supp. 2d 26, 30-31 (D.D.C. 2001).

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the legal sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). "[A] plaintiff's obligation to provide the 'grounds' for 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise the right of relief above a speculative level." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (internal citations omitted). The Court must treat the complaint's factual allegations - including mixed questions of law and fact - as true, drawing all reasonable inferences in the plaintiff's favor. See Macharia v. United States, 334 F.3d 61, 64, 67 (D.C. Cir. 2003); Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 165 (D.C. Cir. 2003). But the Court need not accept as true inferences unsupported by facts set out in the complaint or legal conclusions cast as factual allegations. Browning, 292 F.3d at 242.In deciding a 12(b)(6) motion, 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." Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002) (citation omitted).

II. DISCUSSION

A. Damages Claim

Plaintiffs invoke the subject matter jurisdiction of the Court pursuant to 26 U.S.C. § 7433, which provides a cause of action to taxpayers for certain violations of Title 26 of the U.S. Code. Compl. ¶ 1. That statute provides:

If, in connection with any 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, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Except as provided in [26 U.S.C. §] 7432, such civil action shall be the exclusive remedy for recovering damages resulting from such actions.

26 U.S.C. § 7433(a). Plaintiffs also invoke this Court's jurisdiction pursuant to the Administrative Procedure Act (28 U.S.C. § 1361) and the All Writs Act (28 U.S.C. § 1651). Compl. at 4, ¶¶ 2, 3. Plaintiffs then allege a litany of 41 counts against the Government, the crux of which is that the IRS disregarded and continues to disregard certain sections of the IRS Code while engaged in collection activity.

First, it should be noted that, because Section 7433 is an aggrieved taxpayer's "exclusive remedy for recovering damages," neither the Administrative Procedure Act nor the All Writs Act can provide a basis for jurisdiction over a taxpayer's damages claims. Ross v. United States, 460 F. Supp. 2d 139, 148-49 (D.D.C. 2006). Thus, the Court has no jurisdiction over Plaintiffs' damages claims under those statutes.

Second, Section 7433 allows suits for damages against the United States; however, it explicitly requires that "[a] judgment for damages shall not be awarded . . . unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service." Id. § 7433(d)(1). The IRS, in turn, has promulgated regulations that mandate that damages actions under Section 7433 "may not be maintained unless the taxpayer has filed an administrative claim." 26 C.F.R. § 301.7433-1(e). A plaintiff claiming actual, direct economic damages as in this case must submit an administrative claim "in writing to the Area Director, Attn: Compliance Technical Support Manager of the area in which the taxpayer currently resides," and include (1) the taxpayer's name and contact information, (2) the grounds for the claim, (3) a description of the injuries incurred by the taxpayer, (4) the dollar amount of the claim, and (5) the signature of the taxpayer or duly authorized representative. 26 C.F.R. § 301.7433-1(e)(1), (2). The regulations also make clear that the taxpayer should include any supporting documentation, evidence, and correspondence with the IRS. Id. Until the IRS rules on a properly filed claim, or six months pass without a ruling, no civil action for damages will lie. 26 C.F.R. § 301.7433-1(d), (e)(2)); see also Gaines, 424 F. Supp. 2d at 221-22; Turner v. United States, 429 F. Supp. 2d 149, 151 (D.D.C. 2006).

Plaintiffs do not allege in their Complaint or Opposition to the Government's Motion to Dismiss that they filed the appropriate administrative claim in accordance with 26 C.F.R. § 301.7433-1(e).*fn1 Pursuing administrative remedies is an element of the claim. Therefore, the burden is on Plaintiffs to present some non-conclusory factual allegations that they exhausted their administrative remedies. Twombly, 127 S. Ct at 1965. Because Plaintiffs ...


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