LAUREL BEELER, Magistrate Judge.
This case involves a delinquent taxpayer suing the Internal Revenue Service ("IRS") for damages and injunctive relief for alleged overreach and bad faith in its efforts to collect a tax debt. The petitioner and taxpayer, Mr. Jason, seeks damages for deprivation of due process, deceptive business practices, fraud, perjury, and intentional and negligent infliction of emotional distress.
Brent Jason owes over $20,000 in back taxes, and beginning in March 2015, he attempted to set up a payment plan with the IRS.
In August 2015, Mr. Jason received a notice of forfeiture from the IRS, which he alleges did not include particular details regarding what property was to be seized, when the forfeiture would occur, or any opportunity for a hearing.
Mr. Jason states that he received a letter dated December 31, 2015, which denied his appeal.
Mr. Jason claims that because of his treatment by the IRS, he has suffered severe emotional distress, which has caused the symptoms of "depression, lack of sleep, headaches, pain associated or typically related to cardiac issues in the chest, arms, neck, and head, lack of self-confidence, thoughts of helplessness, and fear."
To remedy these afflictions, Mr. Jason makes a number of claims, including violation of due-process rights, First Amendment rights, deceptive and misleading business practices, fraud and misrepresentation, perjury, intentional infliction of emotional distress, and negligent infliction of emotional distress. Mr. Jason requests damages, stay of forfeiture, an injunction forcing the IRS to accept his payment plan, and leave to file bankruptcy.
The government moved to dismiss the case for lack of subject-matter jurisdiction, citing sovereign immunity and the Tax Anti-Injunction Act as bars to Mr. Jason's suit.
A complaint must contain a short and plain statement of the ground for the court's jurisdiction. Fed. R. Civ. P. 8(a)(1). The plaintiff has the burden of establishing jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Farmers Ins. Exchange v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). A defendant's Rule 12(b)(1) jurisdictional attack can be either facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). "A `facial' attack asserts that a complaint's allegations are themselves insufficient to invoke jurisdiction, while a `factual' attack asserts that the complaint's allegations, though adequate on their face to invoke jurisdiction, are untrue." Courthouse News Serv. v. Planet, 750 F.3d 776, 780 n.3 (9th Cir. 2014). This is a facial attack; the court thus "accept[s] all allegations of fact in the complaint as true and construe[s] them in the light most favorable to the plaintiffs." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003).
If a court dismisses a complaint, it should give leave to amend unless the "the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).
"It is axiomatic that the United States may not be sued without its consent and that the existence of consent is a prerequisite for jurisdiction." Jachetta v. United States, 653 F.3d 898, 903 (9th Cir. 2011) (quoting United States v. Mitchell, 463 U.S. 206, 212 (1983)). This is the doctrine of sovereign immunity. The Ninth Circuit has explained: "Before we may exercise jurisdiction over any suit against the government, we must have `a clear statement from the United States waiving sovereign immunity, together with a claim falling within the terms of the waiver.'" Id. (quoting in part United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003)). "[L]imitations and conditions upon which the Government consents to be sued must be strictly observed and exceptions thereto are not to be implied." Mollison v. United States, 568 F.3d 1073, 1075 (9th Cir. 2009) (citing Soriano v. United States, 352 U.S. 270, 276 (1957)) (internal quotations omitted; alteration in original).
Absent a waiver, "a court does not have authority to award relief against the United States or a federal agency. . . ." Isaacs v. United States, No. 13-cv-01394-WHO, 2013 WL 4067597, at *1 (N.D. Cal. Aug. 1, 2013). "As the party asserting a claim against the United States, [the plaintiff] has the burden of `demonstrating unequivocal waiver of immunity.'" United States v. Park Place Assocs., Ltd., 563 F.3d 907, 924 (9th Cir. 2009) (quoting Cunningham v. United States, 786 F.2d 1445, 1446 (9th Cir. 1986)).
Sovereign immunity should be decided on the merits and can be raised at any time because it speaks to a court's jurisdiction. Tobar v. United States, 639 F.3d 1191, 1195 (9th Cir. 2011) (citing I.R.S. v. Fed. Labor Relations Auth., 521 F.3d 1148, 1152 (9th Cir. 2008)).
A taxpayer may bring suit against the United States for civil damages in relation to collection efforts of federal tax liabilities. 26 U.S.C. § 7433(a). Liability requires an officer or employee of the IRS to recklessly, intentionally, or negligently violate a provision of the Tax Code. Id. A suit under § 7433 is the exclusive remedy regarding civil suits for violations of the Tax Code. Id.
Damages under § 7433 are limited to the lesser of $1,000,000 for intentional and reckless violations and $100,000 for negligent violations, or the sum of actual damages proximately caused by the IRS employee or officer and costs of the action. 26 U.S.C. § 7433(b).
To file a claim under § 7433, the taxpayer must first exhaust all administrative remedies available. 26 U.S.C. § 7433(d)(1). A suit may not be filed in a federal district court until the earlier of two dates: the date of the decision of an administrative claim, or six months after the filing date of an administrative claim. 26 C.F.R. § 301.7433-1(d)(1). The administrative claim must be filed pursuant to 26 C.F.R. § 301.7433-1(e). The district court suit following exhaustion of administrative remedies cannot seek greater damages than sought in the administrative claim. 26 C.F.R. § 301.7433-1(f). The taxpayer has two years from the time the cause of action accrues until he or she files suit in federal court. 26 C.F.R. § 301.7433-1(g)(1).
Lawsuits against the United States government regarding federal tax matters may not seek to restrain "the assessment or collection of any tax. . . ." 26 U.S.C. § 7421(a). There are "several statutory exceptions and one judicial exception" to this rule. Elias v. Connett, 908 F.2d 521, 523 (9th Cir. 1990). A district court "must dismiss for lack of subject-matter jurisdiction any suit that does not fall within one of the exceptions to the [Tax Anti-Injunction] Act." Id. (citing Alexander v. Americans United, Inc., 416 U.S. 752, 757-58 (1974)).
The government correctly states that "no suit can be maintained against the United States unless it is in exact compliance with the terms of a statute under which sovereign immunity has been waived."
In its reply brief, the government argues that Mr. Jason cannot rely on § 7433 to establish waiver of sovereign immunity because he addressed the statute for the first time in his response brief, rather than in the complaint.
Because the court dismisses the complaint with leave to amend for other reasons described below, there is no need to dismiss on this technicality.
In order to file a lawsuit in this court for damages under § 7433, Mr. Jason must first exhaust his administrative remedies by following the regulatory procedure provided in 26 C.F.R. § 301.7433-1(d) & (e).
The court dismisses Mr. Jason's claims without prejudice for failure to exhaust his administrative remedies, except as discussed below.
In addition to damages for alleged violations of his civil rights and for emotional distress, Mr. Jason requests five forms of injunctive relief: (1) stay of all forfeiture; (2) mandated institution of a payment plan for his delinquent taxes; (3) leave to file bankruptcy; (4) leave to obtain counsel; and (5) an order or recommendation to the IRS requesting policy changes in the way it handles appeals.
The first two requested injunctions relate directly to Mr. Jason's efforts to restrain the IRS's collection of his delinquent taxes. This falls squarely into the type of relief prohibited by the Tax Anti-Injunction Act. See 26 U.S.C. § 7421(a). Although there are a number of exceptions to this act, none of them apply here. No additional facts that Mr. Jason could allege would change this fact. Therefore, this court does not have jurisdiction to grant this relief, and dismisses with prejudice Mr. Jason's requests to stay forfeiture and mandate a payment plan.
Regarding Mr. Jason's requests for leave to file bankruptcy and to obtain counsel, the court dismisses these claims with prejudice because Mr. Jason can do either or both of these things at any time.
Regarding Mr. Jason's final request for injunctive relief, making policy requests is generally not within courts' jurisdiction. To the extent that the court is able to make policy recommendations, it declines to do so and dismisses this request with prejudice.
The court dismisses without prejudice Mr. Jason's claims for damages against the IRS because he has not exhausted administrative remedies. The court dismisses with prejudice Mr. Jason's requests for injunctive relief.