McNeil v. Commissioner of Internal Revenue ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
JERRY P. MCNEIL, )
)
Plaintiff, )
)
v. ) Civil Action No. 09-2376 (ESH)
)
COMMISSIONER OF INTERNAL REVENUE, )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiff, Jerry P. McNeil, has two cases pending before this Court, both arising out of the
Internal Revenue Service’s attempts to collect unpaid taxes and penalties by imposing tax levies
against plaintiff’s federal retirement annuity. Before the Court is the United States’1 motion to
dismiss the complaint in the above-captioned matter for lack of subject matter jurisdiction
pursuant to Federal Rule of Civil Procedure 12(b)(1) and plaintiff’s motion to strike or quash
defendant’s motion. For the reasons stated herein, defendant’s motion will be granted and
plaintiff’s motion will be denied.2
1
The proper defendant in a § 7429 suit is the United States, not the Commisioner of
Internal Revenue. See 26 U.S.C. §7429(b)(1) (granting jurisdiction for proceedings “against the
United States”).
2
Plaintiff’s other pending case was filed against three employees of the Office of
Personnel Management (“OPM”), alleging that they committed embezzlement and are
individually liable to the plaintiff for the money paid by OPM to the IRS. See Complaint,
McNeil v. Whipple, Civil Action No. 09-2154 (filed Nov. 12, 2009). Plaintiff has not yet
properly served the defendants in that case.
BACKGROUND
Plaintiff retired under the Civil Service Retirement System (“CSRS”) on February 2,
1987, and since then he has received retirement benefits in the form of payments from his Civil
Service Annuity. (Compl. ¶ 7); see also McNeil v. United States, 78 Fed. Cl. 211, 213 (Fed.
Claims Ct. 2007), aff’d, 293 Fed. Appx. 758 (C.A. Fed. 2008).3 The Office of Personnel
Management (“OPM”) is responsible for making these payments to the plaintiff. Id.On November 27, 2009, the IRS sent a letter to plaintiff. (Compl., Ex. 1.) According to
that letter, the IRS mailed plaintiff a “final notice of intent to levy” on November 19, 2009, based
on taxes, penalties and interest plaintiff owed for tax years 2004-2006. (Id., Ex. 1.) The letter
also informed plaintiff that he had “thirty days from the date on the notice to appeal it” through
the IRS’s administrative appeal procedure. (Id., Ex. 1.)
On December 15, 2009, plaintiff, proceeding pro se, filed suit against the Commissioner
of Internal Revenue challenging this levy. The complaint alleges that the “Commissioner of
Internal Revenue, acting through his agents, employed by the Federal Reserve Bank of
Philadelphia, has provided [plaintiff] with good and sufficient notice of the Commissioner’s
intent to seize private property” – his federal retirement annuity – and “to do so without due
process of law” (Id. ¶¶ 2-3) because he “is not in receipt of the notice . . . required under express
terms of 26 U.S.C. § 7429 requiring signature of the Chief Counsel or his delegate.” (Id. ¶ 5.)
Plaintiff, therefore, asks the Court to “enjoin[] the Internal Revenue Service, and its Fiscal
3
Although plaintiff’s pending complaint lacks a clear statement of the underlying facts,
the Court takes judicial notice of decisions in cases filed by the plaintiff in other jurisdictions as
needed to clarify plaintiff’s claims. See McNeil v. Doe, 2006 WL 2054082 (N.D. Okla. 2006);
see McNeil v. United States, 78 Fed. Cl. 211, 213 (Fed. Cl. 2007).
2
Agents in the Federal Reserve Bank” from imposing or executing any tax levies against his
federal retirement annuity due to the IRS’s alleged failure to provide notice as required by 26
U.S.C. § 7429. (Id. ¶¶ 7-10.) He alleges that this Court has jurisdiction over his complaint
“under the [s]tatutory authority of 26 U.S.C. § 7429(b)(2)(A) granting the District Courts of the
United States exclusive jurisdiction to determine the Commissioner’s authority to levy property
under § 6331.” (Id. ¶ 6.)4
Defendant has moved to dismiss for lack of subject matter jurisdiction. (United States’
Mot. to Dismiss, Mar. 2, 2010 [dkt. #5]). Plaintiff’s only response to defendant’s motion was a
motion to quash or strike [dkt. #7], which the Court will treat as plaintiff’s opposition to
defendant’s motion. (Mot. to Strike or Quash Def.’s Mot. to Dismiss, Mar. 17, 2010.)
DISCUSSION
I. Statutory Framework
Section 6331(a) of the Internal Revenue Code provides, in relevant part:
4
Plaintiff has a long history of not paying federal taxes and/or civil penalties, resulting in
the IRS issuing levies against plaintiff’s property. For example, in September 2004, the IRS
served a Notice of Levy against plaintiff’s federal credit union account to collect unpaid civil
penalties for tax years 1999-2001. See McNeil v. Doe, 2006 WL 2054082, No. 05-CV-0579
(N.D. Okla. July 21, 2006). Plaintiff filed a complaint challenging the levy in federal district
court in Oklahoma, but the case was dismissed for lack of subject matter jurisdiction due to
plaintiff’s failure to follow prescribed administrative procedures prior to filing his claim in
federal district court. Id. at *1-*2. In July 2006, the IRS served a Notice of Levy on the OPM
against plaintiff’s retirement annuity to collect unpaid taxes for tax years 2002 and 2003 and civil
penalties for tax years 1999-2003. McNeil v. United States, 78 Fed. Cl. at 214. Plaintiff filed a
complaint in the Court of Federal Claims challenging the levy on multiple grounds, but that case
was also dismissed for lack of subject matter jurisdiction. In concluding that there was no
subject matter jurisdiction, the court rejected a number of plaintiff’s argument as meritless.
McNeil v. United States, 78 Fed. Cl. 211 (Fed. Cl. 2007). Plaintiff’s other case now pending
before the Court, McNeil v. Whipple, Civil Action No. 09-2154, is also based on the July 2006
levy.
3
If any person liable to pay any tax neglects or refuses to pay the same within 10
days after notice and demand, it shall be lawful for the Secretary to collect such
tax (and such further sum as shall be sufficient to cover the expenses of the levy)
by levy upon all property and rights to property . . . belonging to such person . . . .
Levy may be made upon the accrued salary or wages of any officer, employee, or
elected official, of the United States, the District of Columbia, or any agency or
instrumentality of the United States or the District of Columbia, by serving a
notice of levy on the employer (as defined in section 3401(d)) of such officer,
employee, or elected official. If the Secretary makes a finding that the collection
of such tax is in jeopardy, notice and demand for immediate payment of such tax
may be made by the Secretary and, upon failure or refusal to pay such tax,
collection thereof by levy shall be lawful without regard to the 10-day period
provided in this section.
26 U.S.C. § 6331(a). Section 6331(d) provides:
(d) Requirement of notice before levy.--
(1) In general.--Levy may be made under subsection (a) upon the salary or
wages or other property of any person with respect to any unpaid tax only
after the Secretary has notified such person in writing of his intention to
make such levy.
(2) 30-day requirement.--The notice required under paragraph (1) shall
be--
(A) given in person,
(B) left at the dwelling or usual place of business of such person, or
(C) sent by certified or registered mail to such person's last known
address, no less than 30 days before the day of the levy.
(3) Jeopardy.--Paragraph (1) shall not apply to a levy if the Secretary has
made a finding under the last sentence of subsection (a) that the collection
of tax is in jeopardy.
26 U.S.C. § 6331(d).
Section 7429 of the Internal Revenue Code is entitled “Review of jeopardy levy or
assessment procedures.” 26 U.S.C. § 7429. It provides for both “administrative review” and
4
“judicial review” of a “jeopardy levy” as follows:
(a) Administrative review.
(1) Administrative review.
(A) Prior approval required. . . . [N]o levy may be made under
section 6331(a) less than 30 days after notice and demand for
payment is made, unless the Chief Counsel for the Internal
Revenue Service (or such Counsel's delegate) personally approves
(in writing) such . . . levy.
(B) Information to taxpayer.--Within 5 days after the day on which such . .
. levy is made, the Secretary shall provide the taxpayer with a written
statement of the information upon which the Secretary relied in making
such . . . levy.
(2) Request for review.--Within 30 days after the day on which the
taxpayer is furnished the written statement described in paragraph (1), or
within 30 days after the last day of the period within which such statement
is required to be furnished, the taxpayer may request the Secretary to
review the action taken.
(3) Redetermination by Secretary.--After a request for review is made
under paragraph (2), the Secretary shall determine--
...
(B) whether or not the levy described in subsection (a)(1) is
reasonable under the circumstances.
(b) Judicial review.--
(1) Proceedings permitted.--Within 90 days after the earlier of--
(A) the day the Secretary notifies the taxpayer of the Secretary's
determination described in subsection (a)(3), or
(B) the 16th day after the request described in subsection (a)(2)
was made,
the taxpayer may bring a civil action against the United States for a
determination under this subsection in the court with jurisdiction
5
determined under paragraph (2).
(2) Jurisdiction for determination.--
(A) In general.--Except as provided in subparagraph (B), the
district courts of the United States shall have exclusive jurisdiction
over any civil action for a determination under this subsection.
....
26 U.S.C. § 7429.5II. The Court Does Not Have Subject Matter Jurisdiction
Plaintiff’s complaint asserts that this Court has jurisdiction under 26 U.S.C. §
7429(b)(2)(A). Defendant moved to dismiss for lack of subject matter jurisdiction on the ground
that § 7429 only grants federal district courts jurisdiction to review a levy made less than 30 days
before notice and demand for payment and the complaint does not allege such a levy. As
plaintiff is proceeding pro se, his complaint “however inartfully pleaded” is held “to less
stringent standards than formal pleadings drafted by lawyers.” Hughes v. Rowe, 449 U.S. 5, 9
(1980). However, even the most liberal reading of plaintiff’s complaint (and his opposition to
defendant’s motion to dismiss) does not establish jurisdiction under § 7429. Plaintiff’s
complaint alleges that the defendant failed to comply with the “signature” requirements in §
7429(a)(1)(A). (Compl. ¶ 5.) Nowhere, however, does it allege that the IRS levied against his
federal retirement annuity less than 30 days after the notice and demand for payment was made.
Accordingly, the Court does not have jurisdiction under § 7429(b)(2). Cf. Bennett-Bey v.
Shulman, 2010 WL 711866, Civil Action No. 09-0963 (D.D.C. Mar. 3, 2010) (no jurisdiction
5
Subparagraph B provides for Tax Court jurisdiction of a petition for redetermination of a
deficiency under § 6213(a). 26 U.S.C. § 7249(b)(2)(B).
6
under § 7429 where complaint fails to allege a levy made under § 6331(a) less than 30 days after
a notice and demand).
Indeed, plaintiff’s opposition to defendant’s motion to dismiss appears to concede that §
7429 is not a proper basis for jurisdiction, but asserts that the Court has “federal common-law
jurisdiction” because defendant’s levy violates his rights under the Fourth and Fifth Amendments
to the Constitution. Plaintiff’s argument fails. “‘Federal courts lack subject matter jurisdiction
over suits against the United States in the absence of a waiver.’” Stephens v. United States, 514
F. Supp. 2d 70, 72 (D.D.C. 2007) (quoting Buaiz v. United States, 471 F. Supp. 2d 129, 134
(D.D.C. 2007)). Moreover, under the Anti-Injunction Act, “no suit for the purpose of restraining
the assessment or collection of any tax shall be maintained in any court by any person.” 26
U.S.C. § 7421(a). As that is precisely the relief plaintiff seeks, absent some other statutory basis
for jurisdiction, his suit cannot be maintained. Cf. Pollinger v. United States, 539 F. Supp. 2d
242, 254-55 (D.D.C. 2008) (no jurisdiction over plaintiff’s complaint seeking injunctive relief
barring collection of taxes via federal tax lien despite “creative” attempt to characterize suit as
not based on the assessment or collection of taxes but rather limited to challenging procedural
validity of assessement”).
CONCLUSION
For the reasons stated herein, defendant’s motion to dismiss for lack of subject matter
jurisdiction will be GRANTED, plaintiff’s motion to strike or quash DENIED, and the above-
captioned case DISMISSED WITH PREJUDICE.
/s/
ELLEN SEGAL HUVELLE
United States District Judge
DATE: April 21, 2010
7