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Barber v. United States

United States District Court, D. Maryland

August 15, 2019

ANGELA T. BARBER, Plaintiff,
v.
UNITED STATES OF AMERICA, et al., Defendants.

          MEMORANDUM OPINION

          Beth P. Gesner Chief United States Magistrate Judge

         Currently pending are the United States'[1] Motion to Dismiss (“Motion”) (ECF No. 15), plaintiff's Opposition to Defendant's Motion to Dismiss (“Opposition”) (ECF No. 17), and the United States' Reply in Support of Motion to Dismiss (“Reply”) (ECF No. 18). The United States asks this court to dismiss plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction or, in the alternative, Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. The issues are fully briefed, and no hearing is necessary. Loc. R. 105.6. For the reasons stated below, the United States' Motion (ECF No. 15) is granted and plaintiff's complaint is dismissed pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction.

         I. BACKGROUND

         Plaintiff timely filed an income tax return, Form 1040, for the tax year of 2014, which was considered received on April 15, 2015. (ECF No. 17 at 1). On October 19, 2015, plaintiff received a notice from the Internal Revenue Service (“IRS”) stating that her 2014 tax return was being audited. (Id.) The notice “asked the [p]laintiff to provide documentation pertaining to her Earned Income Credit, dependents, filing status, and the American Opportunity Credit” within 30 days of such notice. (ECF No. 1 at ¶¶ 8-9). On February 8, 2016, the IRS sent a Statutory Notice of Deficiency (“Notice of Deficiency”) informing plaintiff of her liability, as well as information about how to dispute that liability, to her last known address, although it was later returned to the IRS as undeliverable. (ECF No. 17 at 2). On or about June 20, 2016, the IRS notified plaintiff that her Earned Income Credit was denied for the 2014 tax year. (ECF No. 1 at ¶ 10). By separate letter, the IRS informed plaintiff that she owed $3, 719 due to a “decrease in credit” and $121.89 due to an “increase in interest, ” for a total liability of $3, 840.89. (Id. at ¶ 13). Starting August 5, 2016, plaintiff made periodic payments to the IRS through an installation agreement. (ECF No. 17 at 2). Plaintiff was also credited with payments taken from her 2015 and 2016 federal tax refunds. (ECF No. 1 at ¶ 18). To date, the payments made by plaintiff or on plaintiff's behalf totaled $4, 053.13. (Id. at ¶ 19).

         While plaintiff eventually paid her full amount due, the University of Baltimore Low-Income Taxpayer Clinic (“Clinic”) had previously, on November 21, 2017, sent a request to the IRS' Taxpayer Advocate Service (“TAS”) asking for an abatement of plaintiff's remaining liability and argued, in part, that the IRS did not issue a Notice of Deficiency to plaintiff for the 2014 tax year. (ECF No. 17 at 3). Additionally, on June 6 and October 24, 2018, the Clinic sent Freedom of Information Act (“FOIA”) requests for plaintiff's administrative file to the IRS “to determine whether a Notice of Deficiency had been issued and what adjustments had been made to her account for tax year 2014.” (Id.) The Clinic did not receive a response to either request. (Id. at 3-4). Plaintiff alleges that the only communication that she received from the IRS notifying her of her ability to dispute her liability was a letter sent to her, via the Clinic, in October of 2018 that informed her of her rights to a Collection Due Process hearing in October 2018.[2] (ECF No. 1 at ¶ 22). At the time that she received the letter, however, she had already paid her balance in full, and therefore did not have any further rights to such a hearing. (Id. at ¶ 23).

         Plaintiff filed the instant suit against the United States of America and the IRS (collectively, “defendants”) on December 10, 2018, alleging that the “additional income taxes and interest were erroneously and illegally assessed and collected and in violation of the right to appeal an IRS decision in an independent forum, as guaranteed by the Taxpayer Bill of Rights.” (Id. at ¶ 25 (citing 26 U.S.C. § 7803(a)(3)). Plaintiff's first count asserts a violation of the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 702, 704. (Id. at ¶ 27). Plaintiff claims that the IRS improperly assessed her 2014 federal income tax liability by failing to send a Notice of Deficiency prior to assessing a liability against plaintiff. (Id. at ¶ 29). In the second count of the Complaint, plaintiff alternatively seeks a Writ of Mandamus pursuant to 28 U.S.C. § 1361 to compel the IRS “to abate the assessment issued for the tax year in question, due to the procedural defects in not issuing a Statutory Notice of Deficiency as prescribed in 26 U.S.C. § 6203, and issue a refund in accordance with their established protocol.” (Id. at ¶ 50). Plaintiff's third count asserts an additional alternative claim for “refund of all income taxes and interest collected in satisfaction of the erroneously and illegally assessed 2014 federal income tax liability” pursuant to 26 U.S.C. § 7422. (Id. at ¶ 52).

         II. STANDARD OF REVIEW

         Defendants argue that this court “lacks subject matter jurisdiction over [plaintiff's suit] because [plaintiff] has not first filed a claim for a refund with the [IRS], as required by 26 U.S.C. § 7422(a).” (ECF No. 15-1 at 1). Accordingly, defendants move to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction.[3] (ECF No. 15 at 1). When, as here, “a Rule 12(b)(1) motion challenge is raised to the factual basis for subject matter jurisdiction, the burden of proving subject matter jurisdiction is on the plaintiff.” Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)).

         When ruling on a motion to dismiss a complaint lack of jurisdiction pursuant to Rule 12(b)(1), “the district court is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Id. (citing Adams, 697 F.2d at 1219, Trentacosta v. Frontier Pac. Aircraft Indus., 813 F.2d 1553, 1558 (9th Cir. 1987)). “The district court should apply the standard applicable to a motion for summary judgment, under which the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists.” Id. (citing Trentacosta, 813 F.2d at 1559). Accordingly, defendants, as the moving party, “should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Id. (citing Trentacosta, 813 F.2d at 1558).

         As noted by defendants, while plaintiff brought suit against the United States and the IRS, by seeking a refund of her payment of federal taxes, plaintiff's suit is necessarily one against the United States. (ECF No. 15-1 at 2 (citing 26 U.S.C. § 7422(f)(1) (“A suit or proceeding [for refund of internal revenue tax] may be maintained only against the United States and not against any officer or employee of the United States (or former officer or employee) or his personal representative.”))) “Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit.” F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994) (citing Loeffler v. Frank, 486 U.S. 549, 554 (1988); Fed. Hous. Admin. v. Burr, 309 U.S. 242, 244 (1940)). Accordingly, to establish subject matter jurisdiction over this case, plaintiff bears the burden of showing that the United States has waived its sovereign immunity. Robinson v. United States Dep't of Educ., 917 F.3d 799, 802 (4th Cir. 2019) (citing Williams v. United States, 50 F.3d 299, 304 (4th Cir. 1995)). Here, the material jurisdictional facts are not in dispute. Rather, the parties disagree whether, as a matter of law, under the facts and circumstances of this case, the United States has waived its sovereign immunity.

         III. DISCUSSION

         Plaintiff asserts three claims pursuant to (1) 26 U.S.C. § 7422 (Count III); (2) the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 702, 704 (Count I); and (3) the All Writs Act, 28 U.S.C. § 1651 (Count II). (ECF No. 1 at 4-8). Plaintiff argues that the United States has waived its sovereign immunity and that the court therefore has subject matter jurisdiction to hear her claims. (ECF No. 17 at 5, 11).

         A. 26 U.S.C. § 7422 (Plaintiff's Count III)

         In Count III of her Complaint, plaintiff seeks “a refund of all income taxes and interest collected in satisfaction of the erroneously and illegally assessed 2014 federal income tax liability” pursuant to 26 U.S.C. § 7422. (ECF No. 1 at 7). Defendants argue that this case must be dismissed for lack of subject matter jurisdiction because plaintiff failed to submit a claim for refund with the IRS prior to bringing the instant suit. (ECF No. 15-1 at 2). While defendants note that the United States has waived its sovereign immunity to tax refund suits “for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed ...


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