19-3379-cv
Bernholz v. IRS

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT
ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
20th day of April, two thousand twenty.

Present:
            GUIDO CALABRESI,
            BARRINGTON D. PARKER,
            DEBRA ANN LIVINGSTON,
                  Circuit Judges.
_____________________________________

RICHARD BERNHOLZ,

                       Plaintiff-Appellant,

                  v.                                                 19-3379-cv

UNITED STATES INTERNAL REVENUE SERVICE,

                  Defendant-Appellee.
_____________________________________

For Plaintiff-Appellant:                      PAUL S. VOLK, Blodgett, Watts & Volk, P.C.,
                                              Burlington, VT

For Defendant-Appellee:                       IVAN C. DALE (Thomas J. Clark, on the brief), Tax
                                              Division, U.S. Department of Justice, for Richard E.
                                              Zuckerman, Principal Deputy Assistant Attorney
                                              General, Washington, DC




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       Appeal from a judgment of the United States District Court for the District of Vermont

(Crawford, C.J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

       Plaintiff-Appellant Richard Bernholz (“Bernholz”) appeals from a September 25, 2019

judgment of the United States District Court for the District of Vermont (Crawford, C.J.), granting

the motion of Defendant-Appellee, United States Internal Revenue Service (“IRS”), to dismiss

Bernholz’s complaint (the “Complaint”) for lack of subject matter jurisdiction pursuant to Federal

Rule of Civil Procedure 12(b)(1). Bernholz brought the underlying action pursuant to the Federal

Tort Claims Act (“FTCA”) and state law, alleging that the IRS engaged in negligent and grossly

negligent conduct following Bernholz’s payment of nearly $10,000 in past taxes, interest, and

penalties as a negotiated condition of a 2013 plea agreement. The Complaint alleges that the IRS

erroneously sent him tax refund checks in each of the three years following his satisfaction of this

negotiated tax liability. It further alleges that some time after Bernholz attempted to address the

erroneous refunds with the IRS, he received “a myriad of statements and notices from [the] IRS

indicating that he owed thousands of dollars in unpaid taxes, fines, and penalties.” J.A. 5–6. We

assume the parties’ familiarity with the underlying facts, the procedural history of the case, and

the issues on appeal.

                                          *      *       *

       We review a district court’s dismissal of a complaint pursuant to Rule 12(b)(1) de novo,

accepting as true all factual allegations in the complaint and drawing all reasonable inferences in

the plaintiff’s favor. Carter v. HealthPort Techs., LLC, 

, 56 (2d Cir. 2016). The

plaintiff, however, must allege facts sufficient to establish subject matter jurisdiction. See Broidy


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Capital Mgmt. LLC v. Benomar, 

, 439 (2d Cir. 2019); see also Katz v. Donna Karan

Co., 

, 121 (2d Cir. 2017). In resolving the jurisdictional inquiry, “[i]t is axiomatic

that the United States may not be sued without its consent and that the existence of consent is a

prerequisite for jurisdiction.” United States v. Mitchell, 

, 212 (1983); see also Block

v. North Dakota, 

, 287 (1983). The same limits apply in actions against federal

agencies or federal officers in their official capacities. Robinson v. Overseas Military Sales Corp.,

, 510 (2d Cir. 1994). Congress may waive the federal government’s sovereign

immunity, but any “waiver . . . must be unequivocally expressed in statutory text,” Lane v. Pena,

, 192 (1996), and we must “constru[e] ambiguities in favor of immunity,” United

States v. Williams, 

, 531 (1995).

       When it enacted the FTCA, Congress explicitly waived the federal government’s sovereign

immunity, see 28 U.S.C. § 2674, in connection with certain “claims against the United States . . .

under circumstances where the United States, if a private person, would be liable to the claimant

in accordance with the law of the place where the act or omission occurred,”

see

also Kosak v. United States, 

, 851–52 (1984). But the FTCA’s “broad waiver of

sovereign immunity is . . . subject to 13 enumerated exceptions,” 

, including

one that preserves the government’s immunity in connection with “[a]ny claim arising in respect

of the assessment or collection of any tax or customs duty,” 28 U.S.C. § 2680(c). Both the Supreme

Court and our Circuit have construed this exception broadly. See, e.g., 

;

Aetna Cas. & Sur. Co. v. United States, 

, 478 (2d Cir. 1995). In Weiner v. IRS, we held

that § 2680(c) bars tort claims related to “erroneous and improperly executed [tax] levies.” 

, 12 (2d Cir. 1993) (per curiam). In Aetna, we held that it also bars claims related to the

payment of tax 

.


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       Citing Weiner and Aetna, the district court held that Bernholz’s claims arise out of the

assessment or collection of a tax and therefore may not proceed in an action under the FTCA. On

appeal, Bernholz argues that the district court’s reliance on this “factually inapposite” precedent

was error. Appellant’s Br. at 13. He contends that the conduct alleged in the Complaint could not

have arisen from the assessment or collection of a tax because the IRS had negotiated and collected

the amount of Bernholz’s tax liability prior to issuing the erroneous refunds and delinquency

notices. In other words, Bernholz argues that since he no longer owed the tax in question, the IRS’s

mistaken attempts to collect or refund it could not “aris[e] in respect of” its assessment or

collection. We disagree. As we explained in Aetna, “[w]e understand the § 2680(c) exception to

cover claims arising out of the operation of the government’s mechanism for assessing and

collecting taxes.” 

(emphasis added). That mechanism includes attempts to collect

tax deficiencies that have already been satisfied, see 

, 2 as well as the

misdirection of tax refunds, see 

. 3 The district court therefore correctly

concluded that it lacked subject matter jurisdiction over Bernholz’s claims under § 2680(c). 4


1
  For this proposition, Aetna cited, inter alia, Interfirst Bank Dallas, N.A. v. United States, 

, 307 (5th Cir. 1985) (“[The § 2680(c) exemption] specifically applies to all tax-related
claims.”).
2
  The taxpayer in Weiner, like Bernholz, pleaded that “the levy [was] unauthorized because [she]
had in fact paid the tax deficiency.” Weiner v. Internal Revenue Serv.—Collections Div., 789 F.
Supp. 655, 656 (S.D.N.Y. 1992).
3
  In Aetna, the alleged tortious conduct was the failure to offset a portion of one taxpayer’s refund
for the benefit of 

. For purposes of interpreting § 2680(c), we discern no
distinction between the failure to issue a refund where one is due and the affirmative issuance of a
refund where one is not. Both constitute failures in “the operation of the government’s mechanism
for . . . the payment of refunds when due.”

4
   Bernholz also argues that in determining that the IRS’s alleged conduct amounted to acts
involving the assessment and collection of taxes, the district court erroneously failed to accept the
facts pleaded in the Complaint. In particular, he claims that the district court “ignored” his
allegations that the IRS was involved in his plea negotiations and that Bernholz had paid the entire

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       We have considered Bernholz’s remaining arguments and find them to be without merit.

Accordingly, we AFFIRM the judgment of the district court.

                                                     FOR THE COURT:
                                                     Catherine O’Hagan Wolfe, Clerk




amount owed prior to the IRS’s allegedly tortious conduct. But nothing in the district court’s
decision suggests that it did anything less than “accept the complaint’s material allegations as
true.” J.A. 37 (quoting Raymond Loubier Irrevocable Tr. v. Loubier, 

, 725 (2d Cir.
2017)). Having done so, it had no obligation to accept Bernholz’s conclusion that those allegations
described activity outside the scope of the § 2680(c) exemption. See Ashcroft v. Iqbal, 

, 678 (2009) (“Although for the purposes of a motion to dismiss we must take all of the factual
allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched
as a factual allegation.” (internal quotation marks omitted)).


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