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Hines v. United States

September 30, 2009


The opinion of the court was delivered by: Paul L. Friedman United States District Judge


Plaintiff filed suit against defendants on the ground that levies attached by the Internal Revenue Service to his retirement benefits and other property were unlawful. The United States has since counterclaimed against plaintiff to reduce plaintiff's allegedly unpaid taxes to a judgment and for a penalty against plaintiff for advancing what it contends is frivolous litigation. This matter is now before the Court on defendants' motion for summary judgment, plaintiff's motion to dismiss defendants' counterclaim, plaintiff's motion to strike the United States' affirmative defenses, and plaintiff's cross-claim. After careful consideration of the parties' papers, the attached exhibits, and the relevant statutes, regulations and case law, the Court will grant defendants' motion for summary judgment and deny plaintiff's motion to dismiss as to all issues, except that it will not award a penalty against plaintiff.*fn1


Plaintiff John T. Hines is a resident of St. Cloud, Florida. See Compl. at 1. Plaintiff last filed a federal tax return in September 2000. See Mot., Statement of Material Facts in Support of the United States' Motion for Summary Judgment ("Def. Facts") ¶ 14. The IRS assessed taxes, interest and penalties against plaintiff for tax years 1996, 1997, 1998, 1999, 2000, 2001, and 2003. See id. ¶ 1. The IRS possesses transcripts which show that notices of intent to levy (in order to collect the assessed taxes, interest and penalties) and right to a due process hearing were issued and sent to plaintiff on at least three occasions: August 23, 2004, December 26, 2005, and February 20, 2006. See id. ¶ 2. Beginning in October of 2006 the IRS attached levies to plaintiff's retirement benefits from the Social Security Administration. See id. ¶ 3. On March 19, 2007, the IRS also issued levies to Osceola Anesthesia Associates and to Mellon Investments for plaintiff's alleged tax liabilities. See Def. Facts ¶ 6.

On May 29, 2008, plaintiff filed suit in this Court, seeking damages for these alleged illegal levies and seeking to enjoin future levies. On July 24, 2008, plaintiff moved for a preliminary injunction. After oral argument, the Court denied plaintiff's motion. The United States answered and counterclaimed to reduce plaintiff's allegedly unpaid taxes to a judgment and to impose a penalty on plaintiff. Plaintiff has moved to dismiss the counterclaim, made a filing styled as a "cross-claim" in response to the counterclaim, and moved to strike the United States' affirmative defenses. The matter is now before the Court on the United States' motion for summary judgment in its favor on all outstanding issues as well as on plaintiff's multiple motions.


Summary judgment may be granted if "the pleadings, the discovery and disclosure materials on file, and any affidavits [or declarations] show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). "A fact is 'material' if a dispute over it might affect the outcome of a suit under the governing law; factual disputes that are 'irrelevant or unnecessary' do not affect the summary judgment determination." Holcomb v. Powell, 433 F.3d at 895 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248).

An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; Holcomb v. Powell, 433 F.3d at 895. When a motion for summary judgment is under consideration, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. at 255; see also Mastro v. Potomac Electric Power Co., 447 F.3d 843, 849-50 (D.C. Cir. 2006); Aka v. Washington Hospital Center, 156 F.3d 1284, 1288 (D.C. Cir. 1998) (en banc); Washington Post Co. v. U.S. Dep't of Health and Human Services, 865 F.2d 320, 325 (D.C. Cir. 1989). On a motion for summary judgment, the Court must "eschew making credibility determinations or weighing the evidence." Czekalski v. Peters, 475 F.3d 360, 363 (D.C. Cir. 2007).

The nonmoving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits, declarations or other competent evidence, setting forth specific facts showing that there is a genuine issue for trial. FED. R. CIV. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). He is required to provide evidence that would permit a reasonable jury to find in his favor. Laningham v. United States Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987). If the non-movant's evidence is "merely colorable" or "not significantly probative," summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. at 249-50; see Scott v. Harris, 550 U.S. at 380 ("[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is 'no genuine issue for trial.'") (quoting Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). To defeat a motion for summary judgment, a plaintiff must have more than "a scintilla of evidence to support his claims." Freedman v. MCI Telecommunications Corp., 255 F.3d 840, 845 (D.C. Cir. 2001).


Section 7433 of Title 26 of the United States Code provides taxpayers a remedy, civil damages, for unauthorized tax collection actions. Relying on this statute, plaintiff challenges both the procedures used to institute the levies - namely, that he allegedly did not receive notice as required by statute - and the amount levied from his Social Security retirement benefits.

Plaintiff has expressly styled his claim as one for civil damages from unauthorized collection activities. See Compl. ¶¶ 1, 32. According to plaintiff, it is not a claim for a refund under 26 U.S.C. § 7422. See Mot. to Strike at 3. Plaintiff maintains this position despite seeking a return of the funds levied. One of his motivations for doing so may be that it appears that he has not exhausted the administrative remedy requirement of 26 U.S.C. § 7422, which requires among other things, a payment of the amount owed. See Mot. at 4; see also Kim v. United States, 461 F. Supp. 2d 34, 38 (D.D.C. 2006). The United States urges the Court to treat this action as one brought under Section 7422 based on plaintiff's request for a return of the amounts levied in his demand for damages. Section 7433 is at least relevant to plaintiff's claim, however, because he seeks damages in addition to a return of the levied funds. See Compl. at 8-9. The Court determines that plaintiff's claim under Section 7433 is without merit, because the IRS did follow appropriate procedures and because the levy was lawful. The Court therefore need not resolve the question of whether the damages sought by plaintiff would even be available under Section 7433, or whether he was required to bring suit under Section 7422.

A. The IRS Complied with Notice Requirements

The United States moves for summary judgment on plaintiff's claim that the IRS did not properly issue notice as required by 26 U.S.C. § 6330(a) before attaching the levies. Levies may not be made on any "property or right to property" unless the "Secretary has notified such person in writing of their right to a hearing." 26 U.S.C. § 6330(a). Notice may be given in person, left at the dwelling or usual place of business of such person, or sent by certified or registered mail, return receipt requested, to such person's last known address, not less than 30 days before the day of the first levy. See id. So long as one of these methods is employed by the IRS, actual receipt by the intended recipient is not a requirement for the IRS to have complied with the notice ...

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