Plaintiff asserts that his returns were not frivolous and that the frivolous return penalties were improperly imposed. However, plaintiff submitted tax returns for the years 1997, 1998, and 1999 with zeros in the income section, despite the fact that he received taxable income during such years. (SJ Dec., Exs. G, H, and I.) The Ninth Circuit "has repeatedly rejected the argument that wages are not income as frivolous." Olsen v. United States [85-1 USTC ¶9401 ], 760 F.2d 1003, 1005 (9th Cir. 1985). A person who files a frivolous tax return is liable for a penalty of five hundred dollars ($500.00). 26 U.S.C. §6702. "[Such] . . . penalties and liabilities . . . shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as taxes." 26 U.S.C. §6671. Plaintiff does not demonstrate any irregularity in the Appeals Officer's assessment procedure, and thus the presumption of a valid assessment remains intact. Because plaintiff filed frivolous returns, he is liable for the frivolous return penalties assessed against him. 26 U.S.C. §6702.

Plaintiff argues that the only legally valid assessment made was his original Form 1040, in which he inserted zeros as his income for 1997, 1998, and 1999. However, as reflected in plaintiff's W-2 and 1099 Forms, he earned taxable income during each of those years. (SJ Dec., Exs. G, H, and I.) Plaintiff contends that his place of work inaccurately described the money he was paid as "wages," when in fact the money he received in exchange for his work was "compensation." He argues further that, under Eisner v. Macomber [1 USTC ¶32], 252 U.S. 189, 207, 64 L.Ed.521, 40 S.Ct. 189 (1920). his "compensation" does not constitute income under the Supreme Court's definition of income as "a gain derived from property." The Eisner Court observed that "income may be defined as the gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets." Id. The statutory definition of income includes, "all income from whatever source derived, including (but not limited to) . . . compensation for services." 26 U.S.C. §61(a). Treasury Regulation §1.61-2(a) provides that compensation for services constitutes income to the recipient. Thus, whether the money Plaintiff received is called "wages" or "compensation," as "gain derived from . . . labor," it constitutes income.

26 U.S.C. §6065 provides that "any return, declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall contain or be verified by a written declaration that it is made under the penalties of perjury." Plaintiff argues that none of the correspondence, forms, or letters he has received from the IRS have had any such oath by an IRS employee. (Opposition at 2.) However, "the verification requirement in 26 U.S.C. §6065 applies to taxpayers, not the IRS." Pursell [95-1 USTC ¶50,184 ], 1995 U.S. Dist. LEXIS 2797, 1995 WL 273175 *6 (citing Borgeson v. United States [85-1 USTC ¶9307 ], 757 F.2d 1071, 1073 (10th Cir. 1985.)

b. Consideration of Issues Raised by Taxpayer

Plaintiff repeated throughout the hearing that there are no provisions that establish that wages are income or that individuals are required to pay taxes and that the payment of taxes is voluntary. (SJ Dec., Ex. Q at H.6:8-11; H.7:25-26; H.8:1-5, 7-9; H.10:11-14; H.14:13-21; H.22:1-4.) The Appeals Officer advised plaintiff that such issues were not proper issues to raise at a CDP hearing. (SJ Dec., Ex. Q at H.6:18-20; H.8:11-12; H.10:15-18.) "Plaintiff's argument regarding why he is not obligated to pay taxes, i.e. taxes are voluntary, is legally frivolous. Therefore, this argument was not relevant to the matters discussed at the CDP hearing. The hearing officer's alleged refusal to permit plaintiff to raise this argument was proper." Reinhert, 2002 WL 1095351 at *6.

A "person may [only] raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." 26 U.S.C. §6330(c)(2)(B). As discussed above, plaintiff received valid notices of deficiency issued by the Director of the Service Center who was delegated the authority to issue such notices, and thus plaintiff did not have the right to raise challenges to the existence or amount of the underlying tax liability at the CDP hearing. Thus, plaintiff failed to raise any non-frivolous issues at the CDP hearing.

c. Efficient, yet Unintrusive Collection of Taxes

Defendant contends that plaintiff has never offered to pay the penalties or provided alternatives to the levy. Instead, plaintiff insists that his returns are not frivolous. Thus, according to defendant, the Appeals Officer had no alternative but to conclude that the imposition of a levy to collect the outstanding penalties from Plaintiff was the only method by which payment could be obtained.

Defendant has demonstrated that there is no genuine issue as to any material fact regarding the CDP Appeals Officer's compliance with the requirements of 26 U.S.C. §6330. Thus, defendant is entitled to judgment as a matter of law.

III. CONCLUSION

Defendant's motion to dismiss that portion of plaintiff's complaint that seeks judicial review of the Internal Revenue Service Appeals Officer's CDP hearing determination with respect to proposed collection of income tax deficiencies, interest, and penalties for taxable years 1997 and 1998 (docket number 14) is GRANTED.

Defendant's motion for summary judgment (docket number 12) is GRANTED.

IT IS SO ORDERED.

JUDGMENT IN A CIVIL CASE

Decision by Court. This action came to trial or hearing before the Court. The issued have been tried or heard and a decision has been rendered.

¹ One of the Notices of Determination pertains to taxable years 1997 and 1998, (SJ Dec., Ex. R) and the other pertains to taxable year 1999. (SJ Dec., Ex. S.)

[2002-2 USTC ¶50,600] Larry Morgan, Plaintiff v. United States of America , Defendant

U.S. District Court, Dist. Nev., CV-S-01-1072-RLH (RJJ), 6/28/2002

[Code Secs. 6330 and 7402 ]

Jurisdiction: Collection Due Process hearing: District court: Tax Court: Primary jurisdiction.--Jurisdiction was lacking over an individual's claim for damages and injunctive relief, and a request that a Collection Due Process hearing determination issued against him for his failure to pay tax be set aside as invalid. The underlying issue set forth in the notice of determination involved income tax liability, over which the Tax Court had primary jurisdiction. As a court of law under the Appointments Clause, the Tax Court was not barred from ruling on such matters.

ORDER

HUNT, District Judge:

Before the Court is Defendant's Motion to Dismiss (#2), filed October 23, 2001 . The Court has also considered Plaintiff's Opposition (#6), filed December 7, 2001 .

BACKGROUND

On October 12, 2000 Defendant Internal Revenue Service ("IRS") sent Plaintiff via certified mail, a notice informing him of their intention to levy to collect his outstanding federal income tax liabilities. Included with the notice of intent to levy was information notifying Plaintiff of his right to request a Collection Due Process ("CDP") hearing pursuant to 26 U.S.C. §6330(a). On April 12, 2001 , a CDP hearing was held.

On August 15, 2001 , Defendant then sent Plaintiff a Notice of Determination concerning collection actions under 26 U.S.C. §6330. In this Notice, Defendant informed Plaintiff of his right to judicial review of the determination by the United States Tax Court pursuant to 26 U.S.C. §6330(d)(1)(A). On September 14, 2001 , Plaintiff filed a complaint in this Court for damages, injunctive relief and a request that the CDP determination be set aside as invalid. Defendant requests this Court to dismiss the complaint for lack of subject matter jurisdiction.

DISCUSSION

Under Fed. R. Civ. P. 12(h)(3), lack of subject matter jurisdiction, unlike many other objections to jurisdiction of a particular court, cannot be waived and can be raised at any time by a party to an action or by the court sua sponte. Csibi v. Fustos, 670 F.2d 134 (9th Cir. 1982).

In general, the United States is immune from suit under the doctrine of sovereign immunity unless it explicitly waives such immunity. United States v. Mitchell, 445 U.S. 535, 538 (1980). The plaintiff has the burden of establishing that the government has waived sovereign immunity and to identify the specific statutory provision containing the waiver. See Baker v. United States , 817 F.2d 560, 562 (9th Cir. 1987). The waiver must be express and will not be implied. Lane v. Pena, 518 U.S. 187, 192 (1996). The scope of a waiver of sovereign immunity is to be strictly construed in favor of the sovereign. Dep't of the Army v. Blue Vox, Inc., 525 U.S. 255, 261 (1999).

Title 26 U.S.C. §6330(d) provides a limited waiver of sovereign immunity to taxpayers who disagree with the outcome of a CDP hearing. Pursuant to 26 U.S.C. §6330(d)(1)(A), a person may, within 30 days of receiving a Notice of Determination, appeal such determination in a United States Tax Court, provided that the Tax Court has jurisdiction with respect to such matter. If the Tax Court does not have jurisdiction of the underlying tax liability, the appeal shall be made to a district court of the United States . 26 U.S.C. §6330(d)(1)(B). If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court so determines to file an appeal with the correct court. Id.

In his Opposition, Plaintiff contests the jurisdiction of the Tax Court, stating that the Tax Court is barred from ruling on matters of law. The Supreme Court has held, however, that the Tax Court, which is an Article I court, is a "Court of Law" under the Appointments Clause. Freytag v. Comm'r [91-2 USTC ¶50,321 ], 501 U.S. 868, 888, 891 (1991); see also Crawford v. C.I.R. [2001-2 USTC ¶50,648 ], 266 F.3d 1120, 1121 (9th Cir. 2001) ("The Tax Court is an Article I court created by Congress with limited jurisdiction to rule on deficiencies assessed by the government on taxpayers.").

Under 26 U.S.C. §7442, the U.S. Tax Court has jurisdiction over matters of federal income tax. Treas. Reg. §301.6330-1T(f)(2), Q-F3/A-F3 states that the Tax Court has jurisdiction over matters related to income tax, including levies imposed for the purpose of collecting taxes. See Krugman v. Comm'r [CCH Dec. 53,355 ], 112 T.C. 230, n.6 (1999) (noting that with respect to an underlying income tax liability, "the Tax Court has jurisdiction to review determinations under sec. 6330 relating to proposed levies").

Here, Defendant IRS sought to impose a levy on Plaintiff for failing to pay income tax. Although a court of limited jurisdiction, the Tax Court has primary jurisdiction over income tax disputes. Because the underlying issue set forth in the Notice of Determination involves income tax liability, this Court lacks jurisdiction. Plaintiff's failure to petition the proper court for review of the IRS' administrative determination is not fatal to his claim, since Section 6330(d) permits refiling in the correct court 30 days after this Court's determination.

CONCLUSION

Accordingly, and for good cause appearing,

IT IS HEREBY ORDERED that Defendant's Motion to Dismiss (#2) is GRANTED.

[2002-2 USTC ¶50,766] David L. Sager, Plaintiff v. Internal Revenue Service, Defendant

U.S. District Court, West. Dist. Pa. , CIV. 01-2220, 10/10/2002

[Code Sec. 6330 ]

Jurisdiction: District court: Collection Due Process hearing.--Jurisdiction was lacking over an individual's appeal of the IRS's alleged failure to produce requested materials during a Collection Due Process (CDP) hearing. The district court lacked jurisdiction to review an IRS administrative decision at a CDP hearing where the Tax Court has exclusive jurisdiction over the underlying income tax liability.

[Code Sec. 7421 ]

Jurisdiction: District court: Anti-Injunction Act.--The Anti-Injunction Act barred a court order preventing further collection actions against an individual who appealed his Collection Due Process hearing in the district court.

Paul E. Skirtich, Assistant United States Attorney, D. Brian Simpson, Department of Justice, Washington, D.C. 20530, for defendant.

OPINION

CERCONE, District Judge:

Plaintiff commenced this action seeking redress for defendant's alleged failure to produce certain requested material in conjunction with a collection due process ("CDP") hearing held pursuant to 26 U.S.C. §6330. Presently before the court is defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Plaintiff has filed two briefs in opposition to the motion, and the matter is ripe for disposition. For the reasons set forth below, the motion will be granted.

On March 29, 2001, the Internal Revenue Service ("IRS") issued to plaintiff a "Notice of Intent to Levy" under 26 U.S.C. §6331(d) for income taxes assessed for years 1996, 1998 and 1999. See Plaintiff's Verified Complaint at ¶1; exhibit C to Declaration of Settlement Officer Mark A. Kennedy attached to defendant's memorandum of law in support of its motion to dismiss (Doc. 15). The notice also advised plaintiff of his right under 26 U.S.C. §6330 to a CDP hearing before an officer of defendant's appeals office. Plaintiff's complaint at ¶2; exhibit C to Kennedy declaration. On April 23, 2001, plaintiff requested a CDP hearing and asked the appointed settlement officer to produce specific information and supporting legal authority at the hearing. Plaintiff's complaint at ¶3; exhibit D to Kennedy declaration. In response the settlement officer produced "a computerized printout of" the applicable tax assessments and identified the statutes and federal regulations authorizing (1) the assessment, (2) notice and demand and (3) lien and levy supporting defendant's collection actions. Plaintiff's complaint at ¶¶4 & 5; Kennedy declaration at ¶8. Plaintiff elected not to appear at the scheduled CDP hearing and instead submitted a "Declaration of Truth" in support of his position. Exhibit G and ¶¶10 & 11 of Kennedy declaration. As permitted under 26 U.S.C. §6330(c)(2)(A)(ii), plaintiff raised various challenges to the appropriateness of the collection action initiated by defendant. See exhibit G to Kennedy declaration. After considering plaintiff's submission, settlement officer Kennedy certified that all applicable legal and procedural requirements for defendant's proposed collection action had been met as required by 26 U.S.C. §§6320(c) & 6330(c)(1). Plaintiff's complaint at ¶7; Kennedy declaration at ¶12. Settlement officer Kennedy further concluded that plaintiff's submission did not raise a meritorious challenge to the correctness or amount of the tax liability in question and further determined that the notice of federal tax lien filed by defendant adequately balanced the need for efficient collection of federal taxes with the public policy that defendant's collection actions be no more intrusive than necessary. Kennedy declaration at ¶¶15 & 16. On October 26, 2001, settlement officer Kennedy forwarded to plaintiff a "Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330" and advised plaintiff that if he disputed the determination set forth therein, he was required to "file a petition with the United States Tax Court for a redetermination within 30 (thirty) days from the date of this letter." Exhibit H to Kennedy declaration. Plaintiff filed the instant action in this court on November 26, 2001.

In its motion to dismiss, defendant contends this court is without jurisdiction to hear plaintiff's appeal from the determination made at the CDP hearing, and any further relief sought by plaintiff is barred by the Anti-Injunction Act codified at 26 U.S.C. §7421. ¹ Defendant specifically asserts that 26 U.S.C. §6330(d)(1) vests jurisdiction over plaintiff's appeal in the United States Tax Court, and as a result this court is without jurisdiction to act on plaintiff's complaint. Plaintiff argues in his briefs in opposition to defendant's motion that (A) the Anti-Injunction Act does not apply where "all regulations were not properly followed by the IRS" and (B) his appeal to this court is proper because he has raised various challenges to the legal authority under which defendant has acted and the regulatory actions which defendant has undertaken to implement that legal authority. See, e.g., Plaintiff's First Brief in Opposition (Doc. 11) at p. 2; exhibit G to Kennedy declaration.

This court's jurisdiction over the proceedings below is governed by 26 U.S.C. §6330, which provides in pertinent part:

(1) Judicial review of determination.--The person may, within 30 days of a determination under this section, appeal such determination--

(A) To the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter); or

(B) If the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States .

26 U.S.C. §6330(d)(1). Thus, under this statutory scheme the court has jurisdiction to review the proceedings below only if the United States Tax Court does not have jurisdiction over the "underlying tax liability." 26 U.S.C. §6330(d); Hickey v. United States [2002-1 USTC ¶50,294 ], 2002 WL 471789 (D. Nev., February 14, 2002 ); Accord True v. Commissioner of Internal Revenue [2000-2 USTC ¶50,634 ], 108 F.Supp.2d 1361 (M. D. Fla. 2000) ("a claimant is required to bring a Section 6330 appeal in the Tax Court, as along as the Tax Court has jurisdiction of the underlying tax liability").

The United States Tax Court is an Article I court with limited jurisdiction to "rule on deficiencies assessed by the government on taxpayers." Crawford v. Commissioner of Internal Revenue [2001-2 USTC ¶50,648 ], 266 F.3d 1120, 1122 (9th Cir. 2001); 26 U.S.C. §7441. Not withstanding its limited jurisdiction, the Tax Court exercises federal judicial authority in a manner similar to the federal district courts and it may address issues raising statutory/regulatory and constitutional claims. Crawford [2001-2 USTC ¶50,648 ], 266 F.3d at 1123 ("we have previously held that Tax Courts, which are Article I courts, have jurisdiction to consider constitutional questions in the context of deciding deficiencies."); Rager v. Commission of Internal Revenue [85-2 USTC ¶9783 ], 775 F.2d 1081, 1083 (9th Cir. 1985) (same).

The Tax Court has jurisdiction to hear plaintiff's appeal, and therefore, this court lacks jurisdiction by operation of §6330(d)(1)(B). Plaintiff's complaint seeks relief as a result of a §6330 CDP hearing held in conjunction with a proposed levy by the IRS. The collection process was initiated as a consequence of alleged income tax deficiencies on plaintiff's prior federal returns. Plaintiff concedes that at least part of the alleged deficiencies constitute income tax liability. See Plaintiff's First Brief in Opposition (Doc. 11) at p.1. "This is precisely the kind of claim over which the Tax Court has jurisdiction." Hickey, surpa, at p.2 (citing Krugman v. Commissioner of Internal Revenue [CCH Dec. 53,355 ], 112 T.C. 230, 236 n.6 (1999) ("the Tax Court has jurisdiction to review determinations under sec. 6330 relating to proposed levies.")); Lunsford v. Commissioner of Internal Revenue [CCH Dec. 54,553 ], 117 T.C. 159, 161 (2001) (recognizing the jurisdiction of the Tax Court over §6330 determination arising from proposed levy to collect unpaid income taxes); Moore v. Commissioner of Internal Revenue [CCH Dec. 53,802 ], 114 T.C. 171, 175 (2000) (same). Accordingly, this court lacks statutory jurisdiction to entertain plaintiff's request for relief from the proceedings below.

The relief sought by plaintiff also is barred the Anti-Injunction Act. Plaintiff in effect requests this court to enter an order that essentially would enjoin the IRS from assessing or collecting the alleged deficiencies from plaintiff. The Act prohibits the maintenance of a "suit for the purpose of restraining the assessment or collection of any tax", and the statutory bar "equally [is] applicable to activities which are intended or may culminate in the assessment or collection of taxes." Dickens v. United States [82-1 USTC ¶16,377 ], 671 F.2d 969, 971 (6th Cir. 1982). In passing the Act Congress sought to withdraw jurisdiction from state and federal courts to entertain suits seeking orders that essentially would prohibit the collection of federal taxes. As a practical consequence, the "Act thus insulates the collection of taxes in most cases from judicial intervention, and requires that the legal right to disputed sums be determined in a suit for refund." Flynn v. United States , 786 F.2d 586, 588 (3d Cir. 1986).

Plaintiff seeks an order that prevents defendant from taking "further collection actions against" plaintiff unless defendant provides certain requested forms and identifies supporting "legislative regulations." Plaintiff's verified complaint at p.3. The relief sought by plaintiff in his verified complaint thus clearly falls within the purview of the Act. Under these circumstances further proceedings on plaintiff's complaint are barred by §6330(d)(1) and the Anti-Injunction Act. ²

Notwithstanding this court's lack of jurisdiction over plaintiff's complaint, plaintiff has an adequate remedy available to him even at this juncture because §6330 provides that if the Court determines that an appeal has been filed in the wrong forum, the taxpayer has 30 (thirty) days after that determination to file the appeal in the correct court. 26 U.S.C. §6330(d)(1).

For the reasons set forth above, defendant's motion to dismiss will be granted. An appropriate order will follow.

ORDER

AND NOW, this 10th day of October, 2002, for the reasons set forth in the opinion filed this day, it is ORDERED that defendant's motion to dismiss (document 14) be, and the same hereby is, GRANTED;

IT FURTHER IS ORDERED that the Clerk of Court shall close this case.

¹ The Anti-Injunction Act provides in pertinent part:

Except as provided in [specified sections of the Internal Revenue Code] no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.

26 U.S.C. §7421(a).

² The record likewise fails to contain any basis to warrant equitable jurisdiction under the judicially-created exception to the Anti-Injunction Act recognized in Enochs v. Williams Packing and Navigation Co. [62-2 USTC ¶9545 ], 370 U.S. 1 (1962). A taxpayer must meet two independent requirements before injunctive relief can be pursued under the exception. First, the facts and law when examined in the light most favorable to the government must indicate that the government can not prevail on the merits. Flynn, 786 F.2d at 589. Second, because Williams Packing did not alter the prerequisite for equitable relief, the record must contain an independent basis for the court to exercise its jurisdiction over the matter. Id. Plaintiff's complaint fails to contain facts that would satisfy either requirement.

[2002-2 USTC ¶50,713] Rainer B. Wagner and Sonja Wagner, Plaintiffs v. United States of America , Defendant

U.S. District Court, Dist. Nev., CV-S-01-1232-RLH(RJJ), 8/15/2002

[Code Secs. 6330 and 7442 ]

Collection Due Process: Notice of levy and right to hearing: Jurisdiction: District court v. Tax Court.--A federal district court lacked jurisdiction to review an IRS administrative decision made in connection with a Collection Due Process (CDP) hearing because the Tax Court has primary jurisdiction over matters relating to income tax, including levies imposed for tax collection purposes. The government's waiver of sovereign immunity under Code Sec. 6330(d) applies to taxpayers disagreeing with the outcome of CDP hearings, and permits them to appeal such determinations in the Tax Court. An appeal may be made to a district court only if the Tax Court does not have jurisdiction over the underlying tax liability. The taxpayers' contention that the Tax Court is barred from ruling on matters of law was rejected. They had 30 days after the entry of the district court's dismissal order to petition the Tax Court for review of the CDP determination.

ORDER

(Motion to Dismiss--#3)

HUNT, District Judge:

Before the Court is Defendant's Motion to Dismiss (#3), filed May 8, 2002 . The Court has also considered Plaintiff's Opposition (#5), filed May 17, 2002 .

BACKGROUND

For the calendar year 1997 Plaintiffs attached a statement to their return indicating that they were not required to file a federal income tax return, that they had "zero" income and that there was no U.S. Code section which made them "liable" for any income tax. The Defendant Internal Revenue Service ("IRS") assessed a penalty for filing a frivolous return.

On December 26, 2000 , the IRS sent Plaintiffs, via certified mail, a notice informing them of their intent to levy to collect the outstanding income tax and civil penalties assessed against them for their 1997 tax year pursuant to 26 U.S.C. §6330. The collection activity with respect to the civil penalty assessments resulted from the federal income tax returns filed by Plaintiffs for their 1997 tax year.

Included with the notice of intent to levy was information notifying Plaintiffs of their right to request a Collection Due Process ("CDP") hearing pursuant to 26 U.S.C. §6330(a). On July 30, 2001 , a CDP hearing was held. At the hearing, the appeals officer relied on IRS computer-generated documents that detailed the activity of the assessments made against Plaintiffs for the 1997 tax year.

On September 21, 2001 , pursuant to 26 U.S.C. §6330, Defendant then sent Plaintiffs a Notice of Determination concerning collection actions for the amount of unpaid income tax and civil penalties owed. In this Notice, Defendant informed Plaintiffs of their right to judicial review of the determination in the appropriate United States Tax Court. On October 19, 2001 , Plaintiffs filed a complaint asking that this Court set aside the CDP determination as invalid. Defendant requests this Court to dismiss the complaint for lack of subject matter jurisdiction.

DISCUSSION

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a court may dismiss a complaint for "failure to state a claim upon which relief can be granted." "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Yamaguchi v. U.S. Dept. of the Air Force, 109 F.3d 1475, 1481 (9th Cir. 1997). All factual allegations set forth in the complaint "are taken as true and construed in the light most favorable to [p]laintiffs." Epstein v. Washington Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1999). Dismissal is appropriate "only if it is clear that no relief could be granted under any set of facts that could be proven consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988).

Under Fed. R. Civ. P. 12(b)(3), lack of subject matter jurisdiction, unlike many other objections to jurisdiction of a particular court, cannot be waived and can be raised at any time by a party to an action or by the court sua sponte. Csibi v. Fustos, 670 F.2d 134 (9th Cir. 1982).

In general, the United States is immune from suit under the doctrine of sovereign immunity unless it explicitly waives such immunity. United States v. Mitchell, 445 U.S. 535, 538 (1980). The plaintiff has the burden of establishing that the government has waived sovereign immunity and to identify the specific statutory provision containing the waiver. See Baker v. United States , 817 F.2d 560, 562 (9th Cir. 1987). The waiver must be express and will not be implied. Lane v. Pena, 518 U.S. 187, 192 (1996). The scope of a waiver of sovereign immunity is to be strictly construed in favor of the sovereign. Dep't of the Army v. Blue Vox, Inc., 525 U.S. 255, 261 (1999).

Title 26 U.S.C. §6330(d) provides a limited waiver of sovereign immunity to taxpayers who disagree with the outcome of a CDP hearing. Pursuant to 26 U.S.C. §6330(d)(1)(A), a person may, within 30 days of receiving a Notice of Determination, appeal such determination in a United States Tax Court, provided that the Tax Court has jurisdiction with respect to such matter. If the Tax Court does not have jurisdiction of the underlying tax liability, the appeal shall be made to a district court of the United States . 26 U.S.C. §6330(d)(1)(B). If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court so determines, to file an appeal with the correct court. Id.

In their Opposition, Plaintiffs contest the jurisdiction of the Tax Court, stating that the Tax Court is barred from ruling on matters of law. The Supreme Court has held, however, that the Tax Court, which is an Article I court, is a "Court of Law" under the Appointments Clause. Freytag v. Comm'r [91-2 USTC ¶50,321 ], 501 U.S. 868, 888, 891 (1991); see also Crawford v. C.I.R. [2001-2 USTC ¶50,648 ], 266 F.3d 1120, 1121 (9th Cir. 2001) ("The Tax Court is an Article I court created by Congress with limited jurisdiction to rule on deficiencies assessed by the government on taxpayers.").

Under 26 U.S.C. §7442, the U.S. Tax Court has jurisdiction over matters of federal income tax. Treas. Reg. §301.6330-1T(f)(2), Q-F3/A-F3 states that the Tax Court has jurisdiction over matters related to income tax, including levies imposed for the purpose of collecting taxes. See Krugman v. Comm'r [CCH Dec. 53,355 ], 112 T.C. 230, n.6 (1999) (noting that with respect to an underlying income tax liability, "the Tax Court has jurisdiction to review determinations under sec. 6330 relating to proposed levies").

Here, Defendant IRS sought to impose a levy on Plaintiffs for failing to pay income tax and the corresponding penalties. Although a court of limited jurisdiction, the Tax Court has primary jurisdiction over income tax disputes. Because the underlying issue set forth in the Notice of Determination involves income tax liability and related penalties, this Court lacks subject matter jurisdiction. Plaintiffs' failure to petition the proper court for review of the IRS's administrative determination is not fatal to their claim, since Section 6330(d) permits refiling in the correct court within 30 days after this Court's determination.

CONCLUSION

Accordingly, and for good cause appearing,

IT IS HEREBY ORDERED that Defendant's Motion to Dismiss (#3) is GRANTED.

[2004-1 USTC ¶50,282] Donald A. Norsworthy, Plaintiff v. Chinchie C. Killfoil and Janet Day, Defendants.

U.S. District Court, West. Dist. Texas , San Antonio Div.; Civ. SA-03-CA-1053-XR, March 29, 2004 .

[ Code Sec. 6330]

Jurisdiction: Tax Court: Levy: Notice of determination: Collection Due Process hearing. --

A taxpayer's appeal of a Collection Due Process (CDP) hearing in district court was dismissed for lack of subject matter jurisdiction as a matter to be litigated in the Tax Court. The taxpayer sought to challenge his underlying income tax liability at a CDP hearing. The IRS terminated the hearing and later issued a notice of determination supporting a levy on taxpayer's property. The taxpayer appealed to the district court, which held that the Tax Court had exclusive jurisdiction over such an appeal.

ORDER

RODRIGUEZ, District Judge: On this day, the Court considered Defendant's Motion to Dismiss or in the alternative, Motion for Summary Judgment, and Plaintiff's Response. Defendants argue that because the Tax Court has exclusive jurisdiction of the underlying tax issue, this Court lacks subject matter jurisdiction. Although Plaintiff attempts to construe his complaint as one involving constitutional issues, rather than an appeal from a tax assessment, the Court GRANTS Defendants' Motion to Dismiss for lack of subject matter jurisdiction. The Court reminds Plaintiff that he has thirty (30) days from the date of this Order to refile in Tax Court (docket no. 3).

Standard of Review

"A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Ass'n of Miss. , Inc. v. City of Madison , 143 F.3d 1006, 1010 (5th Cir. 1998). Because federal courts are courts of limited jurisdiction, the court must diligently assure itself that it has the power to adjudicate the claim. However, "once challenged, the burden of establishing a federal courts jurisdiction rests on the party asserting the jurisdiction." McDaniel v. U.S. , 899 F.Supp. 305, 307 (E.D. Tex. 1995).

An attack for lack of subject matter jurisdiction commonly takes two forms: facial attacks and factual attacks. Loofbourrow v. C.I.R. [ 2002-1 USTC ¶50,465], 208 F.Supp.2d 698, 704 (S.D. Tex. 2002); FED. R. CIV. P. 12(b)(1). A facial attack should be granted "only if it appears that the plaintiff cannot prove any set of facts in support of his claim that would entitle him to relief." Home Builders Ass'n of Miss. , Inc., 143 F.3d at 1010. Factual attacks however, challenge the very existence of subject matter jurisdiction and can be based on matters outside the pleadings. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981). Generally, a federal district court will not have jurisdiction over a suit complaining of income taxes that have been improperly assessed or collected unless the taxpayer has paid the taxes in full and filed a claim for a refund. Brown v. U.S. [ 90-1 USTC ¶50,026], 890 F.2d 1329, 1346 (5th Cir. 1989). Here, the Court construes Defendants' Motion to Dismiss for lack of subject matter jurisdiction as a factual attack against the Complaint.

Factual Background

On October 28, 2003, Plaintiff filed this action alleging that the Defendants violated his due process rights by not allowing him to record his Collection Due Process Hearing ("CDP") held at the Appeals Office of the Internal Revenue Service in San Antonio , Texas . After receiving various notices from the Internal Revenue Service ("IRS") that his property may be subject to seizure for unpaid taxes, Plaintiff scheduled his CDP for September 10, 2003. In his request for the hearing, he asserted, among other things, that he was not a taxpayer as that term is defined under the Internal Revenue Code and that the IRS denied him an opportunity to dispute the existence or amount of the underlying tax liability.

Prior to this hearing, Defendant Janet Day, an IRS settlement officer, advised Plaintiff that the "administrative appeal procedures do not extend to cases involving solely the failure or refusal to comply with the tax laws because of moral, religious, political, constitutional, conscience or similar grounds [sic]." (Plaintiff's Exhibit E). Defendant also advised Plaintiff that he would not be allowed to tape record the event. Id. Although appraised of this before hand, Plaintiff arrived on September 10, 2003, tape recorder in hand, and argued that his due process rights would be violated if he was not able to record the hearing.

Because Plaintiff insisted upon recording the hearing, the hearing was terminated before any substantive issues were addressed. Approximately two weeks later, on September 25, 2003, Defendant Chinchie Killfoil, an IRS Appeals Team Manager, issued a Notice of Determination finding that a levy in this circumstance was appropriate. Plaintiff argues that this action is not an appeal from that Notice of Determination but rather, an independent suit alleging a due process violation. ¹

Defendants assert that the District Court does not have jurisdiction over this matter. Defendants argue that Plaintiff was not entitled to tape record the hearing, and that because Plaintiff was attempting to argue the underlying liability, his action must be brought in Tax Court. By asserting lack of subject matter jurisdiction, Defendants seek to have this case dismissed without prejudice so that Plaintiff may bring his action in the proper forum. If this case is properly understood as an appeal from the Notice of Determination, the Tax Court would have exclusive jurisdiction.

Analysis

Defendants argue that Plaintiff's complaint attacks the underlying tax liability even though it is poised as attacking the validity of the CDP. Plaintiff dismisses this claim, arguing that by denying him the right to tape record the event, the Defendants, in their individual capacity, denied him due process of law. ² Plaintiff cites 26 U.S.C. §7521 which states;

(a)(1) Recording by taxpayer --Any officer or employee of the Internal Revenue Service in connection with any in-person interview with any taxpayer relating to the determination or collection of any tax shall, upon advance request of such taxpayer, allow the taxpayer to make an audio recording of such interview at the taxpayer's own expense and with the taxpayer's own equipment. ³

However, the regulations implementing the CDP hearing process, emphasize the informal nature of the hearing and its limited purpose. ⁴ The section Plaintiff relies on is actually limited to in-person interviews "relating to the determination or collection of any tax." ⁵ Thus, Plaintiff has no statutory right to a face-to-face appeals hearing that could be recorded. Id. See also Loofbourrow v. C.I.R. [ 2002-1 USTC ¶50,465], 208 F.Supp.2d 698, 707 (S.D. Tex. 2002).

Because the CDP hearing is limited to whether a levy action is appropriate, Plaintiff has no absolute right to record the event because it does not address his underlying liability. As the Plaintiff was told in a letter dated August 21, 2003, from Defendant Janet Day, "the underlying liability cannot be reviewed during the CDP hearing because [Plaintiff] had a prior opportunity to have it reviewed when [he was] issued Notices of Deficiency." (Plaintiff's Exhibit E). See also 26 U.S.C. §6330(c)(2)(B). Plaintiff has not disputed his prior opportunity to address his tax liability but instead continues to argue, among other things, that the Notices of Deficiency he received were invalid, that his wages did not emanate from a taxable source, and that he is exempt from taxation. (Plaintiff's Exhibit G) ("Your [the IRS's] unsubstantiated allegation that I am a `taxpayer' is WRONG!") (emphasis in original). These allegations are related to his underlying liability and as such, this action is properly understood as an appeal of those initial determinations. In addition, Plaintiff's Complaint addresses the underlying liability even when discussing his alleged due process violation. (Plaintiff's Complaint, para. 7) ("This action is not to contest unpaid liability, but to contest a wrongful verification that any applicable law or administrative procedure has been met. 26 U.S.C. §6330(c)(1)"). Thus, the Tax Court has exclusive jurisdiction and this cause is DISMISSED without prejudice for lack of subject matter jurisdiction.

In the alternative, Plaintiff argues his tax liability is an employment tax and that the Tax Court does not have jurisdiction over suits involving liability for employment taxes. 26 C.F.R. §601.102(b)(2)(i). Defendants point out that although Plaintiff urges this Court to view the liability as one involving employment taxes, in actuality, the tax liability comes from Plaintiff's income taxes. It appears that Plaintiff argues his employer incorrectly withheld taxes and that because he does not qualify as a taxpayer, those "employment" taxes were improper. Without adjudicating Plaintiff's underlying tax liability, this Court does not construe the underlying liability as one emanating from employment taxes. Thus, the Tax Court has exclusive jurisdiction of the underlying liability.

Conclusion

Because Plaintiff has no statutory right to record his CDP hearing, there is no due process violation. Because Plaintiff disputes the underlying liability of his tax assessment, the Tax Court has exclusive jurisdiction over this appeal. Thus, the Court GRANTS Defendants' Motion to Dismiss for lack of subject matter jurisdiction (docket no. 3).

¹ Plaintiff's complaint references the appeal process from a Notice of Determination found under 26 U.S.C. §6330 and asserts this Court's jurisdiction as emanating, in part, from that provision. (Plaintiff's Complaint, para. 6). Because Plaintiff's Notice of Determination was dated September 25, 2003, the Court notes this Complaint did not comply with the 30 day deadline under that provision.

² Because the Court dismisses the action for lack of subject matter jurisdiction, it only notes that the United States is the proper party in interest. The Court does not address whether these IRS agents could be sued in their individual capacities.

³ The Court also notes that although Plaintiff disputes the tax liability because he claims he is not a taxpayer, he wishes to avail himself of all the protections guaranteed to taxpayers. Because the IRS has determined Plaintiff to be a taxpayer, the Court will assume these laws apply to him.

⁴ "A CDP hearing may, but is not required to, consist of a face-to-face meeting.... A transcript or recording of any face-to-face meeting or conversation between an Appeals officer or employee and the taxpayer or the taxpayer's representative is not required." 26 C.F.R. §301.6330-1(d)(2)(A-D(6))

⁵ For example, in an "interview" relating to the determination of any tax, an IRS officer must explain the audit process. Alternatively, in an "interview" relating to the collection of any tax, an IRS officer must explain the collection process and the taxpayer's rights under such process. 26 U.S.C. §7521(b)(1)(A-B).

[2004-2 USTC ¶50,323] David N. Peterson, Plaintiff v. Chester Kreidich and Edward Blum, Defendants.

U.S. District Court, So. Dist. Fla. , Miami Div.; 03-23147-CIV-MORENO, May 27, 2004 .

[ Code Sec. 6330]

Collection: Collection Due Process hearing: Equivalent hearing: Judicial review of appeals. --

An IRS Office of Appeals decision at an individual's equivalent hearing for one of the tax years at issue was not appealable. Furthermore, the Appeals office decision following a Collection Due Process hearing for other years at issue was only appealable to the Tax Court. That decision was not appealable to federal district court, as the tax at issue, income tax, was a type of tax over which the Tax Court had jurisdiction.

[ Code Sec. 7402]

Jurisdiction: Federal district court: Federal Tort Claims Act: Government officers. --

A lawsuit against officers of the United States government for actions taken in their official capacity was not filed against the proper party. Such lawsuits are properly held against the U.S. , not the individual official. The Federal Torts Claims Act (FTCA) did not serve as a basis for the suit because that Act precludes suits for equitable relief, as well as lawsuits for all claims arising with respect to the assessment or collection of tax. Moreover, courts have routinely dismissed constitutional claims brought under the FTCA based on allegations of misconduct during Collection Due Process hearings.

[ Code Sec. 7421]

Collection: Injunction prohibited: Anti-Injunction Act: Declaratory Judgment Act. --

A district court denied a taxpayer's request for a declaratory judgment that IRS Appeals officers violated his rights to a fair hearing regarding a collection action. The taxpayer's claims for declaratory relief were statutorily barred by the Declaratory Judgement Act, which specifically bars declaratory relief with respect to federal taxes. Furthermore, the Anti-Injunction Act bars injunctive relief for the purpose of restraining the assessment or collection of tax.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

MORENO , District Judge: Before the Court is an action brought by Plaintiff David N. Peterson for the violation of his statutory and constitutional due process rights arising from the denial of a fair collection due process hearing. Plaintiff seeks a declaratory judgment that Defendants Chester Kreidich and Edward Blum, violated his statutory and constitutional due process rights to a fair hearing as well as an order compelling the Defendants to provide such a fair hearing. Defendants urge the Court to dismiss the action for lack of subject matter jurisdiction. For the reasons set forth below, the Court GRANTS Defendants' motion.

I. BACKGROUND

The present action involves the collection of income taxes from Plaintiff for the tax years 1993, 1994, and 1995. The IRS has made assessments for these three income tax years in the amount of over $40,000. Complaint, Exhibit A. After making assessments, the IRS instituted collection actions against Plaintiff. On December 24, 2002, the IRS sent Plaintiff a notice of intent to levy for Plaintiff's tax liability for the year 1993. Following, on February 27, 2003, the IRS sent Plaintiff a second notice of intent to levy for Plaintiff's tax liability for the years 1994 and 1995. On March 27, 2003, Plaintiff requested a collection due process hearing to challenge the notice of intent to levy for the years 1994 and 1995. Accordingly, the Office of Appeals scheduled a collection due process hearing for September 18, 2003. At the hearing, Plaintiff appeared but refused to proceed because the IRS refused to allow him to record the hearing. Kreidich Declaration at ¶6; Peterson Affidavit, Exhibit G to Complaint. Subsequently, on October 31, 2003 the Office of Appeals issued a Notice of Determination for the tax years 1994 and 1995, sustaining the proposed collection action.

Plaintiff failed to request a collection due process hearing for the tax year 1993. As a result, on October 23, 2003, an equivalency hearing considered the matter and the Office of Appeals issued a Decision Letter sustaining the collection process proposed by the IRS. Kreidich Declaration at ¶7.

Shortly thereafter, on November 26, 2003, Plaintiff filed his complaint against Defendants Kreidich and Blum. Kreidich is an Appeals Team Manager for the IRS and Blum is an IRS Appeals Officer. Kreidich Declaration at ¶¶1-2.

II. ANALYSIS

Defendants urge the Court to dismiss Plaintiff's complaint for the following reasons: (1) the Court has no jurisdiction to hear an appeal that is properly before the United States Tax Court; (2) Plaintiff's claims for declaratory relief are barred by the Declaratory Judgment Act; and (3) the United States , not Kreidich and Blum, is the proper party Defendant. In response, Plaintiff contends that suit against Kreidich and Blum is proper under the Federal Tort Claims Act and that his claim for declaratory judgment is not barred by the Declaratory Judgment Act.

A. Appealability of IRS Office of Appeals Decisions

With respect to the tax year 1993, Plaintiff failed to request a collection due process hearing. Where as here, the taxpayer fails to timely request a collection due process hearing, the taxpayer may appear at the equivalency hearing. Treas. Reg. §301.6330-1(I)(1). However, the taxpayer is not entitled to appeal the resulting decision. Treas. Reg. §301.6330-1(I)(2), Q-15, A-15.

With respect to the tax years 1994 and 1995, Plaintiff may appeal his Notice of Determination from the IRS Office of Appeals within thirty (30) days of the notice. IRC §6330(d); Treas. Reg. §301.6330[-]1(f). If the tax is of a type over which the United States Tax Court has jurisdiction, the taxpayer must direct his appeal to the Tax Court. IRC §6330(d)(1); Treas. Reg. §301.6330-1(f)(2), Q-F3, A-F3. Moreover, where the taxpayer improperly files an appeal that is properly before the Tax Court in the district court, the district court must dismiss the appeal for lack of subject matter jurisdiction. See Diefenbaugh v. Weiss [ 2000-2 USTC ¶50,839], 2000 WL 1679510 *2 (6th Cir. 2000); True v. Commissioner [ 2000-2 USTC ¶50,634], [108] F.Supp.2d 1361, 1364 (M.D. Fla. 2000); Helvie v. Beach [ 2003-2 USTC ¶50,630], 2003 WL 22073142 *3 (S.D. Fla. 2003) (Hurley, J.).

As a result, Plaintiff may not seek judicial review of the IRS Office of Appeals decisions. The Office of Appeals decision at the equivalency hearing is not appealable and its decision following the collection due process hearing is only appealable to the Tax Court, as the tax at issue is a type over which the Tax Court has jurisdiction.

B. Declaratory Judgment and Injunction

The relief sought by Plaintiff of a declaratory judgment and injunction are not available in actions such as these. First the Declaratory Judgment Act §2201(a) specifically bars declaratory relief with respect to federal taxes. In addition, the Anti-Injunction Act specifically bars injunctive relief "for the purpose of restraining the assessment or collection of any tax". 26 U.S.C. §7421(a).

C. Suits Against Officials of the United States

Suits against an officer or agent of the United States for actions taken in his official capacity are properly held against the United States , not the individual official. See Dugan v. Rank, 372 U.S. 609 (1962); Atkinson v. O'Neill, 867 F.2d 589, 590 (10th Cir. 1989).

Plaintiff claims that Kreidich and Blum are the appropriate parties because the Federal Tort Claims Act ("FTCA") allows suits against officers of the United States for tortious conduct. However, the FTCA does not allow suits for equitable relief. See Morelli v. United States , 1993 WL 313094 *1 (S.D. N.Y. 1993). More specifically, the FTCA precludes suit under the act for all claims arising with respect to the assessment or collection of a tax. 28 U.S.C. §2680(c). Moreover, courts have routinely dismissed constitutional claims brought under the FTCA and based upon allegations of misconduct during collection due process hearings. See Fingado v. Mares, 2003 WL 22384757 *3 (D. N.M. 2003); Tornichio v. United States [ 2003-1 USTC ¶50,285], 263 F.Supp.2d 1090, 1099 (N.D. Ohio 2002).

III. CONCLUSION

Because this Court is not the proper court for such an appeal, the declaratory and injunctive relief Plaintiff seeks is barred, and suit against Defendants Kreirich and Blum is properly against the United States , this Court is left with no conclusion but to DISMISS Plaintiff's claim for lack of subject matter jurisdiction. Accordingly, it is

ADJUDGED that Defendants Motion to Dismiss (D.E. No. 5), filed on March 23, 2004 is GRANTED. As a result, it is

ADJUDGED that Plaintiff's complaint is DISMISSED for lack of subject matter jurisdiction. Finally, it is

ADJUDGED that all pending motions in this action are DENIED as moot.

DONE AND ORDERED.

[2005-1 USTC ¶50,356] David N. Peterson, Plaintiff-Appellant v. Chester Kreidich, Edward Blum, United States of America , Defendants-Appellees.

U.S. Court of Appeals, 11th Circuit; 04-14074, May 13, 2005 .

Unpublished opinion affirming, per curiam, DC Fla., 2004-2 USTC ¶50,323.

[ Code Secs. 6330, 7402, 7421 and 7442]

CDP hearing: Appeal: Due process.

A federal district court lacked subject matter jurisdiction over an individual's challenge to an adverse Collection Due Process (CDP) determination. The case involved the assessment of income taxes; therefore, the Tax Court had exclusive jurisdiction. The court rejected the taxpayer's claim that a due process claim regarding the determination of income taxes confers jurisdiction on a district court.

Before: Dubina, Hull and Wilson , Circuit Judges.

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

PER CURIAM: Appellant David N. Peterson appeals pro se the district court's dismissal for lack of subject matter jurisdiction of his complaint seeking judicial review of an administrative determination by the Internal Revenue Service (IRS) under 26 U.S.C §6330 and alleging a due process violation.

Peterson argues that the district court erred by dismissing his complaint for lack of subject matter jurisdiction as his complaint raised a violation of due process, not an income tax dispute. Further, he contends that the district court erred by finding that the United States Tax Court had jurisdiction over his due process claims. Peterson also argues that individual defendants Chester Kreidrich and Edward Blum violated his due process rights by terminating his collection due process (CDP) hearing and not allowing him to present any issues or record the hearing. Finally, he maintains that the district court erred by relying on the Notice of Determination without holding a hearing because the notice erroneously stated that all procedural requirements had been followed.

We review questions of subject matter jurisdiction de novo. Palmer v. Braun, 376 F.3d 1254, 1257 (11th Cir. 2004).

Section 6321 of the Internal Revenue Code provides that "[i]f any person liable to pay any tax neglects or refuses to pay the same after demand, the amount ... shall be a lien in favor of the United States." 26 U.S.C. §6321. If a person refuses to pay such tax within ten days of notice and demand for payment, the IRS may collect the tax by a levy on the taxpayer's property. 26 U.S.C. §6331(a). However, the IRS cannot collect taxes by levy until the taxpayer is notified of the right to request a CDP hearing within 30 days of the notice. 26 U.S.C. §6330(a)(1), (2); Roberts v. Comm'r [ 2003-1 USTC ¶50,359], 329 F.3d 1224, 1227 (11th Cir. 2003). Such notice is required only once for each taxable period. 26 U.S.C. §6330(a)(1). When a taxpayer's request for a CDP hearing is untimely, the taxpayer is granted an administrative hearing called an "equivalent hearing." 26 C.F.R. §301.6330-1(i)(1). An equivalent hearing generally follows the procedures for a CDP hearing, except the IRS appeals office will issue a Decision Letter instead of a Notice of Determination, and there is no right to appeal an equivalent hearing decision. 26 C.F.R. §301.6330-1(i)(1)(2) (Q & A I-5).

Where the taxpayer timely requested a CDP hearing, he or she may appeal within 30 days of the decision. 26 U.S.C. §6330(d)(1). Such appeal must be filed in tax court unless the tax court "does not have jurisdiction of the underlying tax liability," in which case the appeal is filed in district court. 26 U.S.C. §6330(d)(1)(A), (B).

The tax court has exclusive jurisdiction over challenges to an IRS determination of income tax liability. See 26 U.S.C. §§6212(a), 6213(a), 7442; 26 C.F.R. §§301.6330-1(f)(2) (Q & A F-3), 601.102(b)(1)(i). Additionally, although we have not decided the question whether a due process violation in the determination of income taxes will confer subject matter jurisdiction on a district court, other circuits that have addressed the issue have reached the conclusion that such an alleged violation does not confer subject matter jurisdiction on the district court if the underlying claim involves income tax issues. See e.g., Voelker v. Nolen, 365 F.3d 580, 581 (7th Cir. 2004) (finding that the district court lacked subject matter jurisdiction over appellant's due process challenge relating to his CDP hearing because the tax court has jurisdiction over cases involving income taxes); Martin v. C.I.R. [ 85-1 USTC ¶9238], 756 F.2d 38, 40 (6th Cir. 1985) (finding that although appellant asserted constitutional violations, the claim was one for determination of his income tax liability, which is properly within the jurisdiction of the tax court); Manino v. Brown [ 2004-1 USTC ¶50,168], 357 F.3d 143, 146 (1st Cir. 2004) (finding tax protester's challenge plus notice of determination upholding lien based on her income tax liability could only be reviewed by the Tax Court as it has exclusive jurisdiction. ¹ We find persuasive and adopt the reasoning of our sister circuits in the present case.

Accordingly, we conclude from the record that the district court did not err in dismissing Peterson's complaint for lack of subject matter jurisdiction because (1) with respect to tax year 1993, he was entitled to only an equivalent hearing because he did not timely request a CDP hearing, and a taxpayer is not entitled to judicial review of a decision following an equivalent hearing; and (2) with respect to tax years 1994 and 1995, Peterson was required to file his appeal in tax court because the tax court has jurisdiction over income tax liability, the underlying tax liability in his case.

AFFIRMED.

¹ See also Steidel v. Evans [ 2003-1 USTC ¶50,295], No. 02-35733, 2003 WL 342339, at (9th Cir. Feb. 12, 2003) ( "when the underlying taxes are income taxes, the Tax Court has ... exclusive jurisdiction." (citing 26 C.F.R. §601.102(b)(F)(i)).

[2005-1 USTC ¶50,203] Larry R. Johnston, Plaintiff-Appellant v. United States of America , Defendant-Appellee.

U.S. Court of Appeals, 9th Circuit; 04-15805, January 13, 2005 .

Affirming an unreported District Court decision.

[ Code Secs. 6320, 6330, 6673 and 7442]

Collection Due Process: Lien for taxes: District Court jurisdiction: Subject matter jurisdiction: Meritless claims. --

The District Court properly ruled that it lacked subject matter jurisdiction over a taxpayer's action to set aside an IRS appeals determination allowing a federal tax lien. There was no merit in the taxpayer's argument that the District Court had jurisdiction because he was challenging procedural irregularities and not the underlying tax liabilities.The District Court lacked jurisdiction because the Tax Court has exclusive jurisdiction over the underlying income tax liabilities.

Before: Beezer, Hall and Silverman, Circuit Judges. ^*

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

MEMORANDUM ^**

Larry R. Johnston appeals pro se the district court's dismissal for lack of subject matter jurisdiction of his action seeking to set aside an appeals determination by the Internal Revenue Service, upholding a notice of federal tax lien securing Johnston's income tax liabilities.

Johnston 's contention that the district court had jurisdiction because he challenged only procedural irregularities in his Collection Due Process hearing and not the underlying tax liabilities lacks merit. The district court properly concluded that it lacked jurisdiction, because the Tax Court has exclusive jurisdiction over the underlying income tax liabilities. 26 U.S.C. §6330(d)(1).

AFFIRMED.

^* The panel unanimously finds this case suitable for decision without oral agrument. See Fed.R.App.P 34(a)(2).

^** This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.

[Dec. 55,766(M)] Larry R. Johnston v. Commissioner.

Dkt. No. 5380-04L , TC Memo. 2004-224, October 5, 2004 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Secs. 6320, 6330 and 6673]
Collection Due Process: Issues raised at hearing: Frivolous arguments: Sanctions.

An IRS Appeals officer's determination to proceed with collection of an individual's unpaid tax liability was not an abuse of discretion. The taxpayer, who had failed to file federal income tax returns for several years and whose liability arose from substitute returns prepared by the IRS, advanced only frivolous arguments against the collection action during his Collection Due Process hearing and in the Tax Court. In addition, the Tax Court awarded the IRS damages under Code Sec. 6673 because the taxpayer brought the action primarily for delay.

Larry R. Johnston, pro se; Jonae A. Harrison, for respondent.

P filed a petition for judicial review pursuant to secs. 6320 and 6330, I.R.C., in response to a determination by R to leave in place a filed notice of Federal tax lien.

Held: Because P has advanced solely groundless complaints in dispute of the notice of lien, R's determination to proceed with collection action is sustained.

Held, further, damages under sec. 6673, I.R.C., are due from P and are awarded to the United States in the amount of $3,000.

MEMORANDUM OPINION

WHERRY, Judge: This case is before the Court on respondent's motion for summary judgment pursuant to Rule 121 and to impose a penalty under section 6673.¹ The instant proceeding arises from a petition for judicial review filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. The issues for decision are: (1) Whether respondent may proceed with collection action as so determined, and (2) whether the Court should impose a penalty under section 6673.

Background

Petitioner did not file a Federal income tax return for the taxable years 1993, 1994, 1995, 1996, or 1997. Respondent prepared substitutes for return and on September 14, 2000 , issued to petitioner notices of deficiency with respect to each of the years 1993 through 1997. The notices were addressed to petitioner at 1523 East Harmony, Mesa , Arizona 85204 , petitioner's last known address and the current address reflected on his Tax Court petition.

Petitioner responded to the notices with a letter dated December 12, 2000 , referencing, inter alia, attempts by the Internal Revenue Service (IRS) "to circumvent taxpayers' rights by prompting them to petition the U.S. Tax Court".² Petitioner at no time petitioned this Court for redetermination of the amounts reflected in the notices. Respondent assessed the tax, additions to tax, and interest amounts due for each year on February 12, 2001 . These assessments for the 5 years in issue totaled $1,472,914.84. Respondent also sent notices of balance due with respect to each year on February 12 and March 19, 2001 .

On January 11, 2002 , respondent issued to petitioner a Final Notice --Final Notice of Intent To Levy and Notice of Your Right To a Hearing with respect to his unpaid income tax liabilities for 1993 through 1997. Respondent then on February 5, 2002 , issued to petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. A Form 12153, Request for a Collection Due Process Hearing, signed by petitioner on March 10, 2002 , was apparently received by the IRS on March 12, 2002 . Petitioner checked boxes on the Form 12153 indicating disagreement with both a "Filed Notice of Federal Tax Lien" and a "Notice of Levy/Seizure". He also apparently attached a statement setting forth frivolous arguments; e.g., "There is no statute requiring me `to pay' the income taxes at issue."³

Settlement Officer Thomas L. Tracy (Mr. Tracy), of the IRS Office of Appeals in Phoenix, Arizona, sent petitioner a letter dated November 19, 2002 , scheduling a hearing for December 10, 2002 . The letter briefly outlined the hearing process, advised that audio or stenographic recording of hearings was not allowed, and explained the circumstances in which challenges to the underlying liability would be barred by section 6330(c)(2)(B). The letter also warned petitioner with respect to frivolous arguments and sanctions therefor, citing pertinent cases and administrative materials. Mr. Tracy enclosed with the letter copies of, among other things, transcripts of petitioner's accounts, financial forms for petitioner's completion, and Pierson v. Commissioner [Dec. 54,152], 115 T.C. 576 (2000) (discussing the potential application of penalties where tax protesters persist in bringing frivolous cases to this Court).

The hearing was subsequently rescheduled for January 7, 2003 , and a face-to-face conference between petitioner and Mr. Tracy was held on that date. Following the hearing, respondent on January 23, 2003 , issued to petitioner the aforementioned Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, sustaining the lien action.⁴ An attached Collection Due Process Appeals Case Memorandum addressed the verification of legal and procedural requirements, the issues raised by the taxpayer, and the balancing of efficient collection and intrusiveness. In light of the frivolous nature of the arguments advanced by petitioner, the attachment also contained a "Litigation Note" reading in part as follows: "At the hearing on January 7, 2003 , the taxpayer acknowledged receipt of the documents sent with the appointment letter. I gave him another copy of Pierson and again warned him of the potential for sanctions upon frivolous litigation."

Petitioner's petition disputing the notice of determination was filed with the Court on March 24, 2004 . The petition makes two assignments of error vis-a-vis respondent's determination:

a. Error in failing to produce evidence that the Commissioner certified and transmitted the supplemental assessments list in accordance with 26 U.S.C. §6204.

b. Error in failing to prove actual mailing of the Notice of Assessment upon the Petitioner's denial of receipts of the Notice of Assessment.

Petitioner prays that this Court issue an order requiring respondent to show cause why the determination should not be vacated; find the determination arbitrary, capricious, not supported by the evidence, and unreasonable; vacate the January 23, 2003 , determination; award petitioner costs and fees incurred in the prosecution of this action; and afford such other relief as the Court deems just and proper.⁵

After the pleadings were closed in this case, respondent on August 26, 2004 , filed the subject motion for summary judgment and to impose a penalty. Petitioner filed a response objecting to respondent's motion on September 20, 2004 . In the response, petitioner focuses on contentions that respondent's failure to permit recording of the hearing necessitates a remand and that his allegations and supporting affidavit of nonreceipt of the "Notice of Assessment" require respondent to produce evidence of proof of mailing.

Discussion

Rule 121(a) allows a party to move "for a summary adjudication in the moving party's favor upon all or any part of the legal issues in controversy." Rule 121(b) directs that a decision on such a motion shall be rendered "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law."

The moving party bears the burden of demonstrating that no genuine issue of material fact exists and that he or she is entitled to judgment as a matter of law. Sundstrand Corp. v. Commissioner [Dec. 48,191], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994). Facts are viewed in the light most favorable to the nonmoving party. Id. However, where a motion for summary judgment has been properly made and supported by the moving party, the opposing party may not rest upon mere allegations or denials contained in that party's pleadings but must by affidavits or otherwise set forth specific facts showing that there is a genuine issue for trial. Rule 121(d).


I. Collection Actions

A. General Rules

Section 6321 imposes a lien in favor of the United States upon all property and rights to property of a taxpayer where there exists a failure to pay any tax liability after demand for payment. The lien generally arises at the time assessment is made. Sec. 6322. Section 6323, however, provides that such lien shall not be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until the Secretary files a notice of lien with the appropriate public officials. Section 6320 then sets forth procedures applicable to afford protections for taxpayers in lien situations. Section 6320(a)(1) establishes the requirement that the Secretary notify in writing the person described in section 6321 of the filing of a notice of lien under section 6323. This notice required by section 6320 must be sent not more than 5 business days after the notice of tax lien is filed and must advise the taxpayer of the opportunity for administrative review of the matter in the form of a hearing before the Internal Revenue Service Office of Appeals. Sec. 6320(a)(2) and (3). Section 6320(b) and (c) grants a taxpayer, who so requests, the right to a fair hearing before an impartial Appeals officer, generally to be conducted in accordance with the procedures described in section 6330(c), (d), and (e).

Section 6330(c) addresses the matters to be considered at the hearing:

SEC. 6330(c). Matters Considered at Hearing. --In the case of any hearing conducted under this section --

(1) Requirement of investigation. --The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

(B) Underlying liability. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

Once the Appeals officer has issued a determination regarding the disputed collection action, section 6330(d) allows the taxpayer to seek judicial review in the Tax Court or a District Court, depending upon the type of tax. In considering whether taxpayers are entitled to any relief from the Commissioner's determination, this Court has established the following standard of review:

where the validity of the underlying tax liability is properly at issue, the Court will review the matter on a de novo basis. However, where the validity of the underlying tax liability is not properly at issue, the Court will review the Commissioner's administrative determination for abuse of discretion. [Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000).]

B. Analysis

1. Appeals Hearing

The petition emphasizes petitioner's claim that he was denied the collection hearing to which he was entitled and seeks a remand to Appeals in order to allow a conference to be held. Relevant caselaw precedent and regulatory authority, however, indicate that the circumstances here are not such as to render remand appropriate.

Hearings conducted under sections 6320 and 6330 are informal proceedings, not formal adjudications. Katz v. Commmissioner [Dec. 54,081], 115 T.C. 329, 337 (2000); Davis v. Commissioner [Dec. 53,969], 115 T.C. 35, 41 (2000). There exists no right to subpoena witnesses or documents in connection with these hearings. Roberts v. Commissioner [Dec. 54,733], 118 T.C. 365, 372 (2002), affd. [2003-1 USTC ¶50,359] 329 F.3d 1224 (11th Cir. 2003); Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166-167 (2002); Davis v. Commissioner [Dec. 53,969], supra at 41-42. Taxpayers are entitled to be offered a face-to-face hearing at the Appeals Office nearest their residence. Where the taxpayer declines to participate in a proffered face-to-face hearing, hearings may also be conducted telephonically or by correspondence. Katz v. Commissioner [Dec. 54,081], supra at 337-338; Dorra v. Commissioner [Dec. 55,517(M)], T.C. Memo. 2004-16; sec. 301.6330-1(d)(2) Q&A-D6 and D7, Proced. & Admin. Regs. Furthermore, once a taxpayer has been given a reasonable opportunity for a hearing but has failed to avail himself or herself of that opportunity, we have approved the making of a determination to proceed with collection based on the Appeals officer's review of the case file. See, e.g., Taylor v. Commissioner [Dec. 55,528(M)], T.C. Memo. 2004-25; Leineweber v. Commissioner [Dec. 55,518(M)], T.C. Memo. 2004-17; Armstrong v. Commissioner [Dec. 54,865(M)], T.C. Memo. 2002-224; Gougler v. Commissioner [Dec. 54,824(M)], T.C. Memo. 2002-185; Mann v. Commissioner [Dec. 54,658(M)], T.C. Memo. 2002-48. Thus, a face-to-face meeting is not invariably required.

Regulations promulgated under sections 6320 and 6330 likewise incorporate many of the foregoing concepts, as follows:

Q-D6. How are CDP hearings conducted?

A-D6. * * * CDP hearings * * * are informal in nature and do not require the Appeals officer or employee and the taxpayer, or the taxpayer's representative, to hold a face-to-face meeting. A CDP hearing may, but is not required to, consist of a face-to-face meeting, one or more written or oral communications between an Appeals officer or employee and the taxpayer or the taxpayer's representative, or some combination thereof. * * *

Q-D7. If a taxpayer wants a face-to-face CDP hearing, where will it be held?

A-D7. The taxpayer must be offered an opportunity for a hearing at the Appeals office closest to taxpayer's residence or, in the case of a business taxpayer, the taxpayer's principal place of business. If that is not satisfactory to the taxpayer, the taxpayer will be given an opportunity for a hearing by correspondence or by telephone. If that is not satisfactory to the taxpayer, the Appeals officer or employee will review the taxpayer's request for a CDP hearing, the case file, any other written communications from the taxpayer (including written communications, if any, submitted in connection with the CDP hearing), and any notes of any oral communications with the taxpayer or the taxpayer's representative. Under such circumstances, review of those documents will constitute the CDP hearing for the purposes of section 6330(b). [Sec. 301.6330-1(d)(2) Q&A-D6 and D7, Proced. & Admin. Regs.]

See also sec. 301.6320-1(d)(2) Q&A-D6 and D7, Proced. & Admin. Regs. (nearly identical language except for final reference to "section 6320(b)". This Court has cited the above regulatory provisions with approval. See, e.g., Taylor v. Commissioner, supra; Leineweber v. Commissioner, supra; Dorra v. Commissioner, supra; Gougler v. Commissioner, supra.

With respect to the instant matter, the record reflects that petitioner and Mr. Tracy participated in a face-to-face hearing on January 7, 2003 . As regards petitioner's complaints concerning recording, on July 8, 2003 , this Court issued Keene v. Commissioner [Dec. 55,213], 121 T.C. 8, 19 (2003), in which it was held that taxpayers are entitled, pursuant to section 7521(a)(1), to audio record section 6330 hearings. The taxpayer in that case had refused to proceed when denied the opportunity to record, and we remanded the case to allow a recorded Appeals hearing. Id.

In contrast, we have distinguished, and declined to remand, cases where the administrative proceedings took place prior to our opinion in Keene v. Commissioner, supra; where the taxpayer had participated in an Appeals Office hearing, albeit unrecorded; and where all issues raised by the taxpayer could be properly decided from the existing record. E.g., id. at 19, 20; Frey v. Commissioner [Dec. 55,601(M)], T.C. Memo. 2004-87; Durrenberger v. Commissioner [Dec. 55,552(M)], T.C. Memo. 2004-44; Brashear v. Commissioner [Dec. 55,215(M)], T.C. Memo. 2003-196; Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195. Stated otherwise, cases will not be remanded to Appeals, nor determinations otherwise invalidated, merely on account of the lack of a recording when to do so is not necessary and would not be productive. See, e.g., Frey v. Commissioner, supra; Durrenberger v. Commissioner, supra; Brashear v. Commissioner, supra; Kemper v. Commissioner, supra; see also Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 189 (2001).

A principal scenario falling short of the necessary or productive standard exists where the taxpayers rely on frivolous or groundless arguments consistently rejected by this and other courts. See, e.g., Frey v. Commissioner, supra; Brashear v. Commissioner, supra; Kemper v. Commissioner, supra. Here, because the contentions advanced by petitioner throughout the administrative process and before the Court are of this nature, and because petitioner in fact received an in-person conference, this case is closely analogous to those just cited. The record does not indicate that any purpose would be served by remand. We conclude that all pertinent issues relating to the propriety of the collection determination can be decided through review of the materials before us.

2. Review of Underlying Liabilities

Statutory notices of deficiency for 1993, 1994, 1995, 1996, and 1997 were issued to petitioner. Petitioner has at no time alleged that he did not receive these notices, and the record indicates that petitioner sent communications referencing the notices, making clear that these documents were received.

Hence, because petitioner received valid notices of deficiency and did not timely petition for redetermination, he is precluded under section 6330(c)(2)(B) from disputing his underlying tax liabilities in this proceeding. Any remaining contentions raised during the administrative proceedings generally challenging the "existence" of any statute imposing or requiring him to pay income tax warrant no further comment. See Crain v. Commissioner [84-2 USTC ¶9721], 737 F.2d 1417, 1417 (5th Cir. 1984) ("We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit.")

3. Review for Abuse of Discretion

Petitioner has also made various arguments relating to aspects of the assessment and collection procedures that we review for abuse of discretion. Action constitutes an abuse of discretion under this standard where arbitrary, capricious, or without sound basis in fact or law. Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 23 (1999).

Federal tax assessments are formally recorded on a record of assessment in accordance with section 6203. The Commissioner is not required to use Form 23C in making an assessment. Roberts v. Commissioner [Dec. 54,733], 118 T.C. at 369-371. Furthermore, section 6330(c)(1) mandates neither that the Appeals officer rely on a particular document in satisfying the verification requirement nor that the Appeals officer actually give the taxpayer a copy of the verification upon which he or she relied. Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 262 (2002); Nestor v. Commissioner [Dec. 54,655], 118 T.C. at 166.

A Form 4340, for instance, constitutes presumptive evidence that a tax has been validly assessed pursuant to section 6203. Davis v. Commissioner [Dec. 53,969], 115 T.C. at 40 (and cases cited thereat). Consequently, absent a showing by the taxpayer of some irregularity in the assessment procedure that would raise a question about the validity of the assessments, a Form 4340 reflecting that tax liabilities were assessed and remain unpaid is sufficient to support collection action under section 6330. Id. at 40-41. We have specifically held that it is not an abuse of discretion for an Appeals officer to rely on Form 4340, Nestor v. Commissioner [Dec. 54,655], supra at 166; Davis v. Commissioner [Dec. 53,969], supra at 41, or a computer transcript of account, Schroeder v. Commissioner [Dec. 54,829(M)], T.C. Memo. 2002-190; Mann v. Commissioner [Dec. 54,658(M)], T.C. Memo. 2002-48, to comply with section 6330(c)(1).

Here, the record contains Forms 4340 for 1993, 1994, 1995, 1996, and 1997, indicating that assessments were made for the year and that taxes remain unpaid. Petitioner has cited no irregularities that would cast doubt on the information recorded thereon.

In addition to the specific dictates of section 6330, the Secretary, upon request, is directed to furnish to the taxpayer a copy of pertinent parts of the record of assessment setting forth the taxpayer's name, the date of assessment, the character of the liability assessed, the taxable period, if applicable, and the amounts assessed. Sec. 6203; sec. 301.6203-1, Proced. & Admin. Regs. A taxpayer receiving a copy of Form 4340 has been provided with all the documentation to which he or she is entitled under section 6203 and section 301.6203-1, Proced. & Admin. Regs. Roberts v. Commissioner [Dec. 54,733], supra at 370 n.7. This Court likewise has upheld collection action where taxpayers were provided with literal transcripts of account (so-called MFTRAX). See, e.g., Frank v. Commissioner [Dec. 55,096(M)], T.C. Memo. 2003-88; Swann v. Commissioner [Dec. 55,078(M)], T.C. Memo. 2003-70. The November 19, 2002 , letter to petitioner from Mr. Tracy enclosed copies of transcripts of account for the relevant years.

Furthermore, petitioner's argument with regard to section 6204 is groundless. Section 6204(a) addresses supplemental assessments and specifies: "The Secretary may, at any time within the period prescribed for assessment, make a supplemental assessment whenever it is ascertained that any assessment is imperfect or incomplete in any material respect." Section 6204(b) renders supplemental assessment of deficiencies subject to the restrictions of section 6213. Section 6204 has no bearing here in that respondent assessed petitioner's liabilities for each year in issue on February 12, 2001 , after following standard deficiency procedures. The Court concludes that petitioner's complaints regarding the assessments or verification are meritless.

Petitioner has denied receiving "the Notice of Assessment", apparently referring to the notice and demand for payment that section 6303(a) establishes should be given within 60 days of the making of an assessment. However, a notice of balance due constitutes a notice and demand for payment within the meaning of section 6303(a). Craig v. Commissioner [Dec. 54,933], supra at 262-263. The Forms 4340 indicate that petitioner was sent such notices of balance due for each of the tax years involved.

Petitioner argues that his sworn denial of receipt of the "Notice of Assessment" shifts to respondent the burden of proving actual mailing of these notices. Yet petitioner has never addressed, much less denied, receipt of the notices of balance due reflected in the Forms 4340. Accordingly, he has raised no genuine issue of material fact as to the accuracy of the Forms 4340 showing compliance with the pertinent statutory requirements.

Thus, with respect to those issues enumerated in section 6330(c)(2)(A) and subject to review in collection proceedings for abuse of discretion, petitioner has not raised any spousal defenses, valid challenges to the appropriateness of the collection action, or collection alternatives. As this Court has noted in earlier cases, Rule 331(b)(4) states that a petition for review of a collection action shall contain clear and concise assignments of each and every error alleged to have been committed in the notice of determination and that any issue not raised in the assignments of error shall be deemed conceded. See Lunsford v. Commissioner [Dec. 54,553], 117 T.C. at 185-186; Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 183 (2000). For completeness, we have addressed various points advanced by petitioner during the administrative process, but the items listed in section 6330(c)(2)(A) were not pursued even during those proceedings. Accordingly, the Court concludes that respondent's determination to proceed with collection of petitioner's tax liabilities was not an abuse of discretion. The Court will grant respondent's motion for summary judgment.⁶

II. Section 6673 Penalty

Section 6673(a)(1) authorizes the Court to require the taxpayer to pay a penalty not in excess of $25,000 when it appears to the Court that, inter alia, proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless. In Pierson v Commissioner [Dec. 54,152], 115 T.C. at 581, we warned that taxpayers abusing the protections afforded by sections 6320 and 6330 through the bringing of dilatory or frivolous lien or levy actions will face sanctions under section 6673. We have since repeatedly disposed of cases premised on arguments akin to those raised herein summarily and with imposition of the section 6673 penalty. See, e.g., Craig v. Commissioner [Dec. 54,933], 119 T.C. at 264-265 (and cases cited thereat).

With respect to the instant matter, we are convinced that petitioner instituted this proceeding primarily for delay. Throughout the administrative and pretrial process, petitioner advanced contentions and demands previously and consistently rejected by this and other courts. He submitted lengthy communications quoting, citing, using out of context, and otherwise misapplying portions of the Internal Revenue Code, regulations, court decisions, and other authorities. Moreover, petitioner has explicitly been alerted to Pierson v. Commisssioner, supra, and use of sanctions in analogous situations. It is inappropriate that taxpayers who promptly pay their taxes should have the cost of government and tax collection improperly increased by frivolous arguments already fully considered and rejected by the courts.

Hence, petitioner received fair warning but has persisted in disputing respondent's determination. The Court concludes that a section 6673 penalty of $3,000 should be awarded to the United States in this case. To reflect the foregoing,

An appropriate order granting respondent's motion and decision for respondent will be entered.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

² Neither the letter sent by petitioner in response to the notices of deficiency nor the attachment to his Form 12153, Request for a Collection Due Process Hearing, has been made a part of the record in this case. Information regarding the existence and contents of these documents is derived from excerpts quoted in the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. Petitioner has not alleged that the notice of determination is in any way inaccurate in its recitation of such background information.

³ See supra note 2.

⁴ The Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 also explained that because petitioner's Form 12153 was untimely with respect to the notice of intent to levy, petitioner was entitled only to an "equivalent hearing", which is not subject to judicial review. The resultant decision was that the proposed levy action should be sustained.

⁵ The Court notes that to the extent that the petition seeks reasonable administrative and/or litigation costs pursuant to sec. 7430, any such claim is premature and will not be further addressed. See Rule 231.

⁶ To the extent that petitioner in his response to respondent's motion argues that summary judgment should be granted sua sponte in his favor as the nonmoving party, any such action would be unwarranted for the reasons discussed in the text.

[2005-1 USTC ¶50,383] Larry R. Johnston, Plaintiff v. United States of America , Defendant.

U.S. District Court, Dist. Ariz. ; CIV. 03-0343-PHX-MHM, February 20, 2004 .

Related Tax Court decision, 88 TCM 318, Dec. 55,766(M), TC Memo. 2004-224.

[ Code Sec. 6330]

Hearing before levy: Appeal from adverse decision: District Court jurisdiction: Appeal filed in wrong court. --

The district court lacked jurisdiction over a pro se taxpayer's complaint seeking to set aside an IRS Appeals determination. The taxpayer sought judicial review in district court of an IRS determination upholding a notice of federal tax lien securing the taxpayer's income tax liabilities. The taxpayer argued that he was not challenging the underlying tax liability, but that the IRS Appeals determination was defective because he had not received proper notice. The Tax Court, however, has the exclusive authority to review such determinations arising out of federal income tax liability. The taxpayer had 30 days from the district court's decision to file his appeal with the Tax Court. .

Larry R. Johnston, pro se. Daniel Bogden, Richard A. Latterell, Department of Justice, for defendant.

ORDER

MURGUIA, District Judge: Plaintiff pro se filed this action seeking to set aside an alleged invalid appeals determination by the Internal Revenue Service ("IRS") upholding a Notice of Federal Tax Lien securing Plaintiff's income tax liabilities for tax years 1993 through 1997 (Dkt. no. 1, Complaint, ¶¶1, 6, 8, 11). The Court has liberally construed the allegations contained in the Complaint. Bernhardt v. Los Angeles County, 339 F.3d 920, 925 (9 ^th Cir. 2003) (courts have a duty to construe pro se pleadings liberally, affording the pro se plaintiff the benefit of any doubt). Plaintiff contends that the IRS appeals determination was an abuse of discretion, arbitrary, capricious, unreasonable and unsupported by evidence ( id., Complaint, ¶12). Plaintiff has challenged the procedures relevant to the hearing as defective because he allegedly did not receive proper Notices for the Assessments ( id., Complaint, ¶¶8-11). He further contends that this Court, rather than the United States Tax Court, has jurisdiction over his claim because he is not challenging the underlying tax liability ( id., Complaint, ¶2). Plaintiff alleges jurisdiction based on 28 U.S.C. §1331, federal question, and 28 U.S.C. §1340 which provides as follows:

The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue, or revenue from imports or tonnage except matters within the jurisdiction of the Court of International Trade.

28 U.S.C. §1340.

Defendant has filed a motion to dismiss Plaintiff's Complaint, claiming that this Court lacks subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) (Dkt. nos. 6-8). Plaintiff has filed a response to Defendant's motion to dismiss (Dkt. no. 11) and Defendant has filed a reply (Dkt. no. 12). The Court has considered the parties' arguments and enters the following Order.

A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9 ^th Cir. 2003). When a question of the district court's jurisdiction is raised the court may inquire into the facts as they exist and may review extrinsic evidence to resolve factual disputes concerning the existence of jurisdiction. McCarthy v. United States , 850 F.2d 558, 560 (9 ^th Cir. 1988). "Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Savage v. Glendale Union High School, Distr. No. 205, 343 F.3d 1036, 1040 n. 2 (9 ^th Cir. 2003) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9 ^th Cir. 1989)).

In support of its motion to dismiss, Defendant has submitted the Declaration of Richard A. Latterell, Trial Attorney, Tax Division, Department of Justice (Dkt. no. 7). Mr. Latterell has attached to his Declaration documents relevant to the IRS appeals determination concerning Plaintiff's income tax liabilities (Dkt. no. 7, Exhibit A). The Court may consider this information on its determination of jurisdiction. On January 23, 2003, the IRS notified Plaintiff in a "Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330", sent certified mail, that the IRS's Notice of Federal Tax Lien recorded against him had been upheld. The "Collection Due Process Appeals Case Memorandum" was attached to the "Notice of Determination" sent to the Plaintiff. The "Appeals Case Memorandum" indicated that the matter at issue concerned the IRS's proposed collection activity regarding Plaintiff's individual income tax for the tax years 1993 through 1997. The "Notice of Determination" explained that the IRS appeals officer had determined that the IRS had complied with all applicable laws, regulations and administrative procedures and that if Plaintiff desired to dispute the determination in court, he "must file a petition in the United States Tax Court" (Dkt. no. 7, Exhibit A). ¹

On February 21, 2003, Plaintiff filed his Complaint in this Court seeking review of the appeals determination (Dkt. no. 1). Plaintiff indicates in the Complaint that the type of tax specified in the appeals determination was "income tax assessments" (Dkt. no. 1, Complaint, ¶11).

Defendant contends that, pursuant to 26 U.S.C. §§6320(c) and 6330(d)(1)(A)(B), judicial review over an IRS appeals determination lies with the Untied States Tax Court if the Notice of Federal Tax Lien at issue secures an underlying income tax liability. According to the Defendant, the Tax Court has jurisdiction over re-determinations of income tax. See 26 U.S.C. §§6211, 6213(a). Defendant also cites the following regulation in support of its argument:

If the Tax Court would have jurisdiction over the type of tax specified in the collection due process notice (for example, income and estate taxes), then the taxpayer must seek judicial review by the Tax Court. If the tax liability arises from a type of tax over which the Tax Court would not have jurisdiction then the taxpayer must seek judicial review by a district court of the United States in accordance with Title 28 of the United States Code.

Treas. Regs. §§301.6330-IT, A-F3.

In True v. Commissioner [ 2000-2 USTC ¶50,634], 108 F.Supp.2d 1361, 1364 (M.D. Fla. 2000), the district court held that a claimant is required to bring a §6330 appeal in the Tax Court, so long as the Tax Court has jurisdiction over the underlying tax liability. The tax liabilities at issue in True were "income tax" liabilities over which the Tax Court had exclusive jurisdiction. The district court therefore ruled that it lacked jurisdiction to hear the claim.

Similarly, in the instant case, the underlying tax liabilities involve income tax liabilities. The Tax Court therefore has exclusive jurisdiction over an action seeking judicial review of an IRS appeals determination upholding a Notice of Federal Tax Lien securing Plaintiff's income tax liabilities. Pursuant to 26 U.S.C. §6330(d)(1), where, as her, a court determines that the appeal was to an incorrect court, a person may file the appeal with the correct court within 30 days after the court's determination.

Accordingly,

IT IS ORDERED that Defendant's motion to dismiss Plaintiff's Complaint for lack of subject matter jurisdiction (Dkt. no. 6, 8) is granted.

IT IS FURTHER ORDERED that Plaintiff's Complaint and action are dismissed for lack of subject matter jurisdiction.

IT IS FURTHER ORDERED that pursuant to 26 U.S.C. §6330, Plaintiff shall have 30 days from the entry date of this Order to file his appeal with the appropriate court.

¹ The "Appeals Case Memorandum" indicates that a hearing was held on January 7, 2003 (Dkt. no. 7, Exhibit A). Plaintiff in his Complaint has referred to a hearing held on January 7, 2002 (Dkt. no. 1, Complaint, ¶8). Both references appear to be to the same hearing.

[2005-1 USTC ¶50,383] James R. Kupcho, Plaintiff v. Jesse Voysest, Defendant.

U.S. District Court, Dist. N.J. ; Civ. 04-5336 (KSH), February 16, 2005 .

[ Code Sec. 6330]

Collection Due Process hearing: District court jurisdiction: Procedural challenge to hearing.

A district court did not have subject matter jurisdiction to review a challenge to a Collection Due Process hearing that was based on the hearing officer's refusal to conduct an in-person hearing. Contrary to the taxpayer's contention, a challenge based on a procedural irregularity does not fall within the exclusive jurisdiction of the district courts. Jurisdiction is based on the type of tax and not the type of claim (i.e., procedural vs. substantive). Since the underlying tax liability related to an income tax deficiency over which the Tax Court is given jurisdiction, the district court lacked jurisdiction to consider the case.

OPINION & ORDER

HAYDEN, .District Judge: Pro se plaintiff James R. Kupcho ("Kupcho") filed a complaint alleging defendant Jesse Voysest ("Voysest"), an Internal Revenue Service ("IRS") Settlement Officer, deprived him of due process of law under the Fifth Amendment by not granting his request for a face-to-face collection due process hearing. On behalf of Voysest, the United States has filed a motion to dismiss for lack of subject matter jurisdiction. The Government argues that the United States Tax Court, not the district court, has jurisdiction over this matter because 26 U.S.C. §6330(d)(1)(A) grants the Tax Court exclusive jurisdiction to review determinations involving an underlying income tax liability. ¹ The Court agrees.

After Kupcho received a "Final Notice of Intent to Levy and Notice of Your Rights to a Hearing" letter from the IRS, he asserts he made a request for an in-person collection due process hearing pursuant to 26 U.S.C. §6330(b). (Compl. ¶13.) Voysest granted him a telephone conference in lieu of a face-to-face hearing, and informed Kupcho that his request was denied based on policy promulgated by the IRS Office of Appeals. (Compl. ¶15.) Following the phone conference, Voysest issued a "Notice of Determination," which Kupcho now argues is null and void because the IRS Office of Appeals did not comply with proper procedure, in violation of his due process rights, by denying him a face-to-face hearing.

Neither party disputes that Kupcho was entitled to the protections afforded by 26 U.S.C. 6330. Under this statute, a taxpayer may request a collection due process hearing before a levy determination is made by the IRS. See 26 U.S.C. §6330(b)(1). The IRS Office of Appeals is responsible for holding these collection due process hearings and issuing levy determinations. See 26 U.S.C. §§6330(b)(1), 6330(c)(3). After a determination has been issued, a taxpayer may seek judicial review of the determination pursuant to §6330(d)(1), which provides, in relevant part:

(d)(1) the person may, within 30 days of a determination under this section, appeal such determination-

(A) to the Tax Court (and the Tax Court shall have jurisdiction to hear such matter); or

(B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States .

26 U.S.C. §6330(d)(1)(A), (B).

The Government argues that the district court does not have subject matter jurisdiction because Kupcho is seeking judicial review of an IRS determination involving underlying income tax liabilities, thereby invoking §6330(d)(1), which gives exclusive jurisdiction to the Tax Court. ( See United States ' Brief in Support of Motion to Dismiss, at 5.) To avoid this conclusion, Kupcho asserts he is not substantively challenging his underlying tax liability, but rather is challenging procedural irregularities, i.e., the denial of an in-person hearing. The Court agrees with the Government that Kupcho, by challenging the process of his collection due process hearing, is in fact seeking review of the determination itself. ( See United States ' Reply Brief, at 1.)

Nothing in the language of §6330(d)(1) supports Kupcho's argument that the Tax Court's jurisdiction is limited to substantive review of a levy, while the district court has jurisdiction to hear all procedural challenges. To the contrary, jurisdiction is divided by the type of tax, not the type of claim. Moreover, implicit in the Tax Court's grant of power to make substantive decisions is the authority to hear procedural challenges to matters within the court's jurisdiction. See Crawford v. Commissioner [ 2001-2 USTC ¶50,648], 266 F.3d 1120, 1123 (9th Cir. 2001) (reiterating Tax Court's jurisdiction to consider constitutional questions in the context of hearing deficiency challenges). The statutory mandate in 26 U.S.C. §6330(d)(1) vests in the Tax Court exclusive jurisdiction over both procedural and substantive challenges to collection due process hearings, where the underlying tax liability falls within the Court's deficiency jurisdiction. See White v. U.S. [ 2003-1 USTC ¶50,259], 250 F.Supp2d 919, 922 (M.D. Tenn. 2003).

While Kupcho would have the Court focus on Voysest's denial of a procedural request - for an in-person hearing - the fact remains that when he said no to the in-person hearing, Voysest was making a determination in a collection due process hearing that involved underlying income tax liabilities. ² Thus under 26 U.S.C. §6330(d)(1)(A), Kupcho is entitled to judicial review by the Tax Court. It should be noted that Kupcho will not be materially prejudiced by this decision because 26 U.S.C. §6330(d)(1) allows him to bring his claim in the appropriate court within thirty days of dismissal of this action.

CONCLUSION

For the foregoing reasons, this Court finds it lacks subject matter jurisdiction to decide this matter and accordingly the United States ' motion to dismiss is granted.

SO ORDERED

¹ It should be noted that the Government also raises the argument that Kupcho improperly named Voysest in his individual capacity as the defendant. The Court does not reach whether or not Voysest is a proper party to this proceeding due to its finding that the Court lacks subject matter jurisdiction.

² It is not in dispute that income tax liabilities are within the deficiency jurisdiction of the Tax Court.

[2005-1 USTC ¶50,238] James R. Kupcho, Plaintiff v. Jesse Voysest, Defendant.

U.S. District Court, Dist. N.J. ; Civ. 04-5336 (KSH), February 16, 2005 .

[ Code Sec. 6330]

Collection Due Process hearing: District court jurisdiction: Procedural challenge to hearing. --

A district court did not have subject matter jurisdiction to review a challenge to a Collection Due Process hearing that was based on the hearing officer's refusal to conduct an in-person hearing. Contrary to the taxpayer's contention, a challenge based on a procedural irregularity does not fall within the exclusive jurisdiction of the district courts. Jurisdiction is based on the type of tax and not the type of claim (i.e., procedural vs. substantive). Since the underlying tax liability related to an income tax deficiency over which the Tax Court is given jurisdiction, the district court lacked jurisdiction to consider the case.

OPINION & ORDER

HAYDEN, .District Judge: Pro se plaintiff James R. Kupcho ("Kupcho") filed a complaint alleging defendant Jesse Voysest ("Voysest"), an Internal Revenue Service ("IRS") Settlement Officer, deprived him of due process of law under the Fifth Amendment by not granting his request for a face-to-face collection due process hearing. On behalf of Voysest, the United States has filed a motion to dismiss for lack of subject matter jurisdiction. The Government argues that the United States Tax Court, not the district court, has jurisdiction over this matter because 26 U.S.C. §6330(d)(1)(A) grants the Tax Court exclusive jurisdiction to review determinations involving an underlying income tax liability. ¹ The Court agrees.

After Kupcho received a "Final Notice of Intent to Levy and Notice of Your Rights to a Hearing" letter from the IRS, he asserts he made a request for an in-person collection due process hearing pursuant to 26 U.S.C. §6330(b). (Compl. ¶13.) Voysest granted him a telephone conference in lieu of a face-to-face hearing, and informed Kupcho that his request was denied based on policy promulgated by the IRS Office of Appeals. (Compl. ¶15.) Following the phone conference, Voysest issued a "Notice of Determination," which Kupcho now argues is null and void because the IRS Office of Appeals did not comply with proper procedure, in violation of his due process rights, by denying him a face-to-face hearing.

Neither party disputes that Kupcho was entitled to the protections afforded by 26 U.S.C. 6330. Under this statute, a taxpayer may request a collection due process hearing before a levy determination is made by the IRS. See 26 U.S.C. §6330(b)(1). The IRS Office of Appeals is responsible for holding these collection due process hearings and issuing levy determinations. See 26 U.S.C. §§6330(b)(1), 6330(c)(3). After a determination has been issued, a taxpayer may seek judicial review of the determination pursuant to §6330(d)(1), which provides, in relevant part:

(d)(1) the person may, within 30 days of a determination under this section, appeal such determination-

(A) to the Tax Court (and the Tax Court shall have jurisdiction to hear such matter); or

(B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States .

26 U.S.C. §6330(d)(1)(A), (B).

The Government argues that the district court does not have subject matter jurisdiction because Kupcho is seeking judicial review of an IRS determination involving underlying income tax liabilities, thereby invoking §6330(d)(1), which gives exclusive jurisdiction to the Tax Court. ( See United States ' Brief in Support of Motion to Dismiss, at 5.) To avoid this conclusion, Kupcho asserts he is not substantively challenging his underlying tax liability, but rather is challenging procedural irregularities, i.e., the denial of an in-person hearing. The Court agrees with the Government that Kupcho, by challenging the process of his collection due process hearing, is in fact seeking review of the determination itself. ( See United States ' Reply Brief, at 1.)

Nothing in the language of §6330(d)(1) supports Kupcho's argument that the Tax Court's jurisdiction is limited to substantive review of a levy, while the district court has jurisdiction to hear all procedural challenges. To the contrary, jurisdiction is divided by the type of tax, not the type of claim. Moreover, implicit in the Tax Court's grant of power to make substantive decisions is the authority to hear procedural challenges to matters within the court's jurisdiction. See Crawford v. Commissioner [ 2001-2 USTC ¶50,648], 266 F.3d 1120, 1123 (9th Cir. 2001) (reiterating Tax Court's jurisdiction to consider constitutional questions in the context of hearing deficiency challenges). The statutory mandate in 26 U.S.C. §6330(d)(1) vests in the Tax Court exclusive jurisdiction over both procedural and substantive challenges to collection due process hearings, where the underlying tax liability falls within the Court's deficiency jurisdiction. See White v. U.S. [ 2003-1 USTC ¶50,259], 250 F.Supp2d 919, 922 (M.D. Tenn. 2003).

While Kupcho would have the Court focus on Voysest's denial of a procedural request - for an in-person hearing - the fact remains that when he said no to the in-person hearing, Voysest was making a determination in a collection due process hearing that involved underlying income tax liabilities. ² Thus under 26 U.S.C. §6330(d)(1)(A), Kupcho is entitled to judicial review by the Tax Court. It should be noted that Kupcho will not be materially prejudiced by this decision because 26 U.S.C. §6330(d)(1) allows him to bring his claim in the appropriate court within thirty days of dismissal of this action.

CONCLUSION

For the foregoing reasons, this Court finds it lacks subject matter jurisdiction to decide this matter and accordingly the United States ' motion to dismiss is granted.

SO ORDERED

¹ It should be noted that the Government also raises the argument that Kupcho improperly named Voysest in his individual capacity as the defendant. The Court does not reach whether or not Voysest is a proper party to this proceeding due to its finding that the Court lacks subject matter jurisdiction.

² It is not in dispute that income tax liabilities are within the deficiency jurisdiction of the Tax Court.

[2005-2 USTC ¶50,457] John R. MacKinnon, Plaintiff v. Kent Fredrickson and Les L. Lucas, Defendants.

U.S. District Court, Dist. Ore. ; 04-598-KI, March 29, 2005 .

[ Code Secs. 6330 and 7442]

Collection Due Process hearing: Jurisdiction: District court. --

A federal district court lacked jurisdiction to consider any improprieties in an individual's Collection Due Process (CDP) hearing that related to income tax liabilities. Rather, the Tax Court has jurisdiction over all determinations related to income tax, including the taxpayer's request for review of the notice of determination, based on the constitutional claim that his due process rights were denied.

[ Code Sec. 7402]

Jurisdiction: District court: Service of complaint. --

An individual's delayed service of his complaint on two IRS employees was timely because the district court extended the time for service retroactively after the 120-day service period had expired.
[ Code Sec. 7804]

Internal Revenue Service: Employee termination: Private right. --

An individual did not have the right to assert a private claim to force the termination of an IRS employee's employment on charges of misconduct. Only the IRS Commissioner has the express and nondelegable discretion to terminate the employment of an IRS employee.

John R. MacKinnon, pro se. Karin J. Immergut, United States Attorney, Jeremy N. Hendon, Department of Justice, for defendants.

OPINION AND ORDER

KING, Judge: John R. MacKinnon, proceeding pro se, brings this action against the Internal Revenue Service ("IRS") appeals officers for a judgment that the appeals officers deprived him of his due process right to a face-to-face collection hearing, that their employment should be terminated as a result of that violation, and that MacKinnon should be provided a fair hearing. Before me is the Government's motion to dismiss (#8) under Federal Rule of Civil Procedure ("Rule") 12(b)(5) for failure to properly serve defendants, for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), and for failure to state a claim under Rule 12(b)(6).

BACKGROUND

MacKinnon failed to pay his federal income liabilities for the 1997 and 1998 tax years. By letter dated November 26, 2001, the IRS notified MacKinnon of its intent to levy under 26 U.S.C. §6331 to collect his outstanding federal income tax liabilities and notified MacKinnon of his right to request an Appeals consideration prior to the levies. MacKinnon did not respond and on August 1, 2002, the IRS filed a Notice of Federal Tax Lien.

On August 8, 2002, the IRS sent MacKinnon Letter 3172 informing him of his right to a collection due process hearing. By letter dated August 26, 2002, MacKinnon notified the IRS of his desire to have an Appeals consideration under 26 U.S.C. §§6320, 6330 and his desire to audio record the hearing. By letter dated February 9, 2004, the IRS notified MacKinnon that he was not entitled to audio record his hearing because such action is only allowed in face-to-face conferences and that MacKinnon was not entitled to a face-to-face conference because the issues he raised in his Appeals consideration letter did not require one. The IRS offered MacKinnon the opportunity to have a telephone conference on March 10, 2004. MacKinnon responded by letter dated February 13, 2004, demanding a face-to-face hearing and expressing his continued intent to audio record such a hearing. MacKinnon did not participate in the March 10, 2004 scheduled telephonic conference.

On April 2, 2004, the IRS sent MacKinnon, by certified mail, a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 ("Notice of Determination") for the underlying income tax liabilities. The Notice of Determination informed him that the arguments he had raised in his request for Appeals consideration were frivolous and did not raise any collection alternatives, and that the proposed levy to collect the income taxes would not be restricted. Attached to the Notice of Determination was Attachment-Letter 3193, Notice of Determination, which outlined the reasons for the IRS's decision. As the attachments explained, the IRS appeals officer determined that the IRS complied with all applicable laws, regulations and administrative procedures. The appeals officer further found that MacKinnon's allegations concerning the liabilities were meritless.

LEGAL STANDARDS

A motion to dismiss brought pursuant to Rule 12(b)(1) addresses the court's subject matter jurisdiction. The party asserting jurisdiction bears the burden of proving that the court has subject matter jurisdiction over his claims. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

A Rule 12(b)(1) motion may attack the substance of the complaint's jurisdictional allegations even though the allegations are formally sufficient. St. Clair v. City of Chico , 880 F.2d 199, 201 (9th Cir. 1989). In deciding a Rule 12(b)(1) motion to dismiss, the court is not restricted to the pleadings but may rely on any evidence, including affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction. McCarthy v. United States , 850 F.2d 558, 560 (9th Cir. 1988).

A motion to dismiss under Rule 12(b)(6) will only be granted if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Gibson v. United States , 781 F.2d 1334, 1337 (9th Cir. 1986). The review is limited to the complaint, and all allegations of material fact are taken as true and viewed in the light most favorable to the non-moving party. Cassettari v. Nevada County , Cal. , 824 F.2d 735, 737 (9th Cir. 1987).

DISCUSSION

The Government contends that MacKinnon's complaint must be dismissed on the basis that he did not properly serve the complaint within 120 days after filing it, that MacKinnon brought his case in the wrong court, and that he failed to state a due process claim upon which relief may be granted. The Government also argues that MacKinnon does not have a private right of action to seek the termination of the appeals officers' employment with the IRS.

I. Service of Process

The Government contends that plaintiff's action ought to be dismissed for insufficiency of process under Rule 12(b)(5). Rule 4(i)(1) provides that service upon the United States is effected by delivering a copy of the complaint to the United States Attorney in the district in which the action is brought, by sending a copy to the Attorney General of the United States and to the officer or agency. The complaint was filed on May 3, 2004, but the United States Attorney's Office in Portland , Oregon , the Attorney General of the United States , and the federal defendants were not served until October 14, 2004. Under Rule 4(m), plaintiff was required to serve the complaint no later than August 31, 2004.

Rule 4(m) permits the court to dismiss the action without prejudice or to direct that service be effected within a specified time, if service is not made within 120 days. The Ninth Circuit has recently reiterated that district courts have broad discretion under Rule 4(m), even without a showing of good cause, to extend the time within which to serve. United States v. 2,164 Watches, More or Less Bearing a Registered Trademark of Guess?, Inc., 366 F.3d 767, 772 (9th Cir. 2004). For example, a district court may extend time for service retroactively after the 120-day service period has expired. Id. I previously issued an order giving plaintiff until December 22, 2004 to serve the defendants in this case. Therefore, I do not dismiss plaintiff's complaint on the basis of failure to serve.

II. Filing in Wrong Court

The Government contends that this court lacks jurisdiction because MacKinnon is arguing that he was not afforded a proper hearing under Section 6330, a claim which should properly be brought in the tax court not in the district court.

26 U.S.C. §6330(d)(1) provides that a taxpayer may appeal a determination made by an appeals officer to the tax court, or, if the tax court does not have jurisdiction of the underlying tax liability, to a district court. Here, although MacKinnon alleges that this case involves a determination on employment taxes, for which jurisdiction over the appeal is vested in the district courts, the underlying tax liability actually involves income taxes. See 26 C.F.R. §601.102(b)(2)(i) (employment taxes not within the jurisdiction of the tax court). The Notice of Determination sent to MacKinnon by the IRS on April 2, 2004, specifies that the type of tax is "1040A," which refers to income taxes, not employment taxes. See 26 C.F.R. §1.6012-1(b)(6). Thus, jurisdiction does not lie with the district court.

MacKinnon also argues that he is not in fact appealing the Notice of Determination made by the appeals officer. Instead, he is appealing the denial of due process in the hearing procedures. However, contrary to MacKinnon's reading of the statute, 26 U.S.C. §6330 was enacted for taxpayers to challenge not only the determination made by the IRS, but also to challenge any improprieties in the hearing itself. See Crawford v. Commissioner [ 2001-2 USTC ¶50,648], 266 F.3d 1120, 1123 (9th Cir. 2001) (tax court has jurisdiction to consider constitutional issues asserted in context of deficiency challenges).

Furthermore, although MacKinnon denies that he is appealing the Notice of Determination with respect to tax liability, he does seek another collection due process hearing, presumably to contest his tax liability. Again, under 26 U.S.C. §6330(d), when the proposed collection action at issue in a collection due process hearing involves an underlying income tax liability, as it does in this case, judicial review over any determination made in the hearing lies with the tax court, not the district court.

MacKinnon's failure to petition the proper court for review of the IRS's determination with respect to income tax liabilities is not, by itself, fatal to these claims, however, since section 6330(d) permits refiling in the proper court.

III. Fifth Amendment Violation

MacKinnon also asserts that he is seeking relief against the individual IRS agents for violating his Fifth Amendment right to procedural due process. Normally, that relief is available under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971):

In Bivens, the United States Supreme Court held that, in appropriate cases, government officials may be held personally liable for violations, committed under the color of government authority, of citizens' constitutional rights. Bivens gives an individual a federal common law basis to sue federal government actors if they violate the individual's constitutional rights.

Adams v. Johnson [ 2004-1 USTC ¶50,132], 355 F3d 1179, 1183 (9th Cir. 2004) (citations omitted).

However, MacKinnon argues that this is not a Bivens action because he is not "expanding any constitutionally based remedy" and he is not requesting monetary damages. In essence, he seeks review of the Notice of Determination by requesting that I direct the use of procedural protections he claims that defendants denied to him in the appeals proceeding. However, as explained above, I am powerless to do so.

Furthermore, to the degree any of MacKinnon's allegations may broadly be construed to request relief appropriate in a Bivens action against the individual defendants, the Ninth Circuit has foreclosed that opportunity. Adams [ 2004-1 USTC ¶50,132], 355 F3d at 1186 ("Because the Internal Revenue Code gives taxpayers meaningful protections against government transgressions in tax assessment and collection, we hold that Bivens relief is unavailable for plaintiffs' suit against IRS auditors and officials.").



IV. No Private Right of Action to Force Termination of Employment of the IRS Agents

The only remaining issue is whether MacKinnon can obtain the additional relief he seeks: termination of the employment of the two IRS appeals officers. ¹

Public Law No. 105-206, Section 1203(a) (codified as a note to 26 U.S.C. §7804), authorizes the Commissioner of the IRS to terminate the employment of any IRS employee for cause on charges of misconduct "if there is a final administrative or judicial determination that [the] employee [among other things, violated the federal constitutional rights of a taxpayer] in the performance of the employee's official duties." The decision whether to exercise the authority is expressly delegated to the Commissioner of the IRS, and the Commissioner's determination may not be appealed. Public Law No. 105-206, Section 1203(c). Given this express and non-delegable grant of discretion to the Commissioner of the IRS, and given the failure of Congress to otherwise provide for a private right of action to enforce Section 1203, a private party such as MacKinnon may not assert a claim to force the termination of an IRS employee's employment under that section.

CONCLUSION

For the foregoing reasons, I grant the Government's motion to dismiss (#8).

_____IT IS SO ORDERED.

JUDGMENT

Based on the record,

IT IS ORDERED AND ADJUDGED that this action is dismissed.

¹ To the extent MacKinnon seeks a declaratory judgment that the appeals officers violated his right to due process, this court does not have jurisdiction under the Declaratory Judgment Act. While generally the Declaratory Judgment Act provides any court with the authority to "declare the rights and other legal relations of any interested party," an exception excludes controversies "with respect to Federal taxes ...." 28 U.S.C. §2201(a).

[2001-1 USTC ¶50,184] AJP Management v. United States of America

U.S. District Court, Cent. Dist. Calif. , So. Div., SA CV 99-1541 AHS (ANx), 11/21/2000

[Code Sec. 6330 ]

Collection due process hearing: District court review, standard: Abuse of discretion.--A de novo standard of review was not the proper standard to be applied to Appeals determinations made at the taxpayer's collection due process hearing. Although Code Sec. 6330 is silent as to the proper standard of review, the legislative history clearly indicated that Congress intended review to be based on an abuse of discretion standard when the amount of tax liability was not in issue.

[Code Sec. 6330 ]

Collection due process hearing: Office of Appeals: Jurisdiction: District court: Rehearing, order for.--The district court did not have authority to order the IRS Office of Appeals to grant a taxpayer another hearing in connection with the taxpayer's compromise offer in satisfaction of its past-due payroll taxes. The Office of Appeals still had jurisdiction over the matter pursuant to Code Sec. 6330(d)(2) . Neither the statute nor its legislative history suggested that a district court had authority to order Appeals to reconsider its decisions.

[Code Sec. 7121 ]

Settlement agreement: Offer in compromise: Appeals officer: Abuse of discretion.--An appeals officer did not abuse his discretion when he did not accept a taxpayer's offer-in-compromise and instituted collection proceedings for past-due payroll taxes. The taxpayer had a long history of noncompliance with payroll tax laws. In addition, it was not meeting current payroll tax obligations at the time of the appeals hearing. Similarly, the officer's decision not to give the taxpayer a full quarter to demonstrate an ability to comply was not an abuse of discretion.

ORDER: (1) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND (2) GRANTING DEFENDANT'S MOTION TO STRIKE THE TAYLOR DECLARATION AS UNTIMELY

I. Procedural History

STOTLER, Judge:

On December 29, 1999 , plaintiff AJP Management filed a corrected Complaint for Lien or Levy Action under 26 U.S.C. §6330(d). In its Complaint, plaintiff appeals the December 1, 1999 Notice of Determination of the Internal Revenue Service ("IRS") Appeals Office to undertake a levy action against plaintiff's hair salons at 30035 Alicia Parkway in Laguna Niguel, California, and 26878 La Paz Road in Alisio Viejo, California.

On September 25, 2000 , defendant United States of America filed a motion for summary judgment that the Appeals Officer did not abuse his discretion by making the determination set forth in the Notice of Determination. Plaintiff filed its opposition to defendant's motion on October 24, 2000 . Defendant filed its reply on November 6, 2000 . Hearing on the matter was set on the Court's November 13, 2000 hearing calendar. On November 6, 2000 , plaintiff filed the declaration of A. Lavar Taylor in support of its opposition to the motion. On November 7, 2000 , defendant filed a motion to strike the Taylor declaration as untimely filed.

The Court took defendant's motion for summary judgment and motion to strike under submission, and removed both motions from the Court's November 13, 2000 hearing calendar.

II. Rulings

1. Jurisdiction

Pursuant to 26 U.S.C. §6330(d)(1), the Court may review a timely-filed appeal of an IRS Notice of Determination. On appeal to this Court, plaintiff may raise only those issues raised with the Appeals Office at the Collection Due Process Hearing. See Temporary Treasury Regulation §301.6320-1T, Q & A F5. The parties do not dispute that plaintiff asked Appeals Officer Robert Bottoms to consider an installment plan or offer-in-compromise as an alternative to a levy action for collection of plaintiff's past-due payroll taxes. This Court, therefore, has jurisdiction to review the Appeals Office's rejection of these alternatives.

2. Standard of Review

Plaintiff urges the Court to apply a de novo standard of review, on the ground that the circumstances of plaintiff have changed since the Appeals Office issued the Notice of Determination, i.e, plaintiff has been in compliance with its employment tax obligations for the last three consecutive quarters. Opp'n at 17:23-18:3.

Although section 6330(d) does not specify the standard of review a district court should apply to an appeal of a Notice of Determination by the IRS Appeals Office, the legislative history unequivocally indicates that Congress intended the Court to review Appeals Office decisions for abuse of discretion where, as here, the amount of the tax liability was not in dispute at the hearing. See H. Conf. Rept. 105-599, at 266 (1998) ("Where the validity of the tax liability is not properly part of the appeal, the taxpayer may challenge the determination of the appeals officers for abuse of discretion."); see also Goza v. Commissioner of Internal Revenue [CCH Dec. 53,803], 114 T.C. 176, 179-80 (2000); and Sego v. Commissioner [CCH Dec. 53,938], 114 T.C. No. 603 (2000). The Court will not substitute such a clear congressional statement of legislative intent for a de novo standard of review unsupported by any legislative history or statutory language.

The Court reviews the decision of the Appeals Office as outlined in the Notice of Determination for abuse of discretion. An abuse of discretion is "a plain error, discretion exercised to an end not justified by the evidence, a judgment that is clearly against the logic and effect of the facts as are found." Wing v. Asarco, Inc., 114 F.3d 986 (9th Cir. 1997).

3. No Abuse of Discretion

Plaintiff contends that Appeals Officer Bottoms abused his discretion by not considering an installment plan or offer-in-compromise as an alternative to a levy action to collect the overdue payroll taxes.

The Court finds that the Appeals Officer did consider plaintiff's suggestion that the IRS select an installment plan or offer-in-compromise to collect plaintiff's overdue taxes. Bottoms and plaintiffs' counsel discussed these two alternatives in telephonic conversations prior to the August 2, 1999 meeting, conversations that both parties concede were part of the "hearing" by the Appeals Office. Opp'n at 13:11-25; Linas Udrys Decl. at ¶14; Robert Bottoms Decl. at 11:3-12. Bottoms and plaintiffs' counsel also discussed the installment plan and offer-in-compromise options at the August 2, 1999 hearing. Opp'n 13:11-15, 18-25; Udrys Decl. at ¶16:14-20; Bottoms' Decl. at ¶11:12-5. By informing plaintiff in these conversations that the proposed alternatives was not appropriate, and by explaining his rationale for not selecting those alternatives, Bottoms clearly considered and rejected the installment plan and offer-in-compromise options, despite Bottoms' choice of words in his declaration and misunderstanding of "hearing" to mean only the August 2, 1999 in-person meeting with plaintiff's counsel.

Furthermore, the decision to reject the installment plan and offer-in-compromise alternatives was not an abuse of discretion. At the time of the appeals hearing, plaintiff had a long history of non-compliance with payroll tax laws, had failed to pay payroll for every quarter since its inception in May 1997, and was not in compliance for the then-current quarter. Bottoms' Decl. at ¶4(d)-(e). The Court finds that Bottoms did not abuse his discretion to reject the proposed collection alternatives for past liabilities when the plaintiff was not meeting its current payroll tax obligations.

In addition, plaintiff contends that the Appeals Officer abused his discretion by not giving plaintiff one full financial quarter after the August 2, 1999 meeting to show compliance. Opp'n at 21:12-5. The parties do not dispute that during and after the August 2, 1999 in-person meeting, Bottoms stated that he might approve an installment agreement if plaintiff could show one quarter of compliance. Udrys Decl. ¶16:19-20, ¶17:3-8. To show compliance, a taxpayer must be making timely payroll deposits for the current quarter. Mot. at 4 n.1. The parties also do not dispute that Bottoms advised plaintiff at the August 2, 1999 and in telephone conversations with plaintiff's counsel thereafter that the Notice of Determination would be issued "soon." Plaintiff contends that Bottoms should have waited 180 days, at least, for plaintiff to show compliance.

However, the Court cannot find an abuse of discretion because the Appeals Officer did not wait. Nor did the Appeals Officer agree to wait for one full quarter to show compliance. The August 2, 1999 hearing occurred during the third financial quarter ending September 30, 1999 . Plaintiff did not show compliance for that quarter despite having nearly two months after the August 2 meeting to do so and receiving Bottoms' warning that the Notice would be issued "shortly." Udrys Decl. at ¶17. In fact, the Notice of Determination was not issued until December 1, 2000 . Therefore, the Appeals Office waited nearly four months, or over half of the third quarter and most of the fourth, for plaintiff to pay accruing payroll taxes.

Furthermore, plaintiff's hiring of a service to pay plaintiff's payroll taxes automatically to the IRS when due did not require the Appeals Office to continue to wait for timely payments, particularly given plaintiff's long-standing record of delinquency. Plaintiff has presented no evidence that plaintiff informed the Appeals Office that plaintiff had hired this payroll service to ensure future compliance, although the Notice of Determination was not mailed for at least a month after plaintiff hired the payroll service. In short, the Court finds that the Appeals Office did not abuse its discretion by giving plaintiff no more than part of one and most of another financial quarter to show compliance.

Finally, plaintiff urges the Court to order the IRS to allow the Appeals Office to reconsider its Notice of Determination given plaintiff's compliance for the last three quarters. Opp'n at 23:21-25. The IRS Office of Appeals retains jurisdiction over its Notice of Determination pursuant to 26 U.S.C. §6330(d)(2). Absent any indication in the Internal Revenue Code or its legislative history that a district court can or should order the IRS to reconsider a Notice of Determination in light of "changed circumstances," this Court declines plaintiff's invitation to order the IRS Appeals Office to exercise its jurisdiction.

4. Taylor Declaration

Plaintiff's opposition papers to defendant's motion for summary judgment were due on October 24, 2000 , pursuant to Local Rule 7.6. Plaintiff did not file the declaration of A. Lavar Taylor until November 6, 2000 , the day before defendant's reply was due. The Court grants defendant's request to strike the Taylor declaration as untimely.

III. Conclusion

In light of the uncontroverted evidence, the Court finds that plaintiff has raised no triable issue of fact indicating that the Appeals Officer abused his discretion by making the determination set forth in the Notice of Determination. The Court, therefore, grants defendant's motion for summary judgment and enters judgment for defendant.

The Court has this date signed and filed the proposed Judgment lodged by defendant on September 25, 2000 . Defendant's proposed Statement of Uncontroverted Facts and Conclusions of Law lodged on September 25, 2000 , has been modified by strike-outs and interlineations in accordance with the foregoing ruling, and, as modified, is adopted by the Court.

The Clerk shall serve this minute order on counsel for all parties in this action and provide an advance copy by telecopier.

[2001-1 USTC ¶50,185] TTK Management v. United States of America

U.S. District Court, Cent. Dist. Calif. , So. Div., SA CV 99-1542 AHS (ANx), 11/21/2000

[Code Sec. 6330 ]

Collection due process hearing: District court review, standard: Abuse of discretion.--A de novo standard of review was not the proper standard to be applied to Appeals determinations made at the taxpayer's collection due process hearing. Although Code Sec. 6330 is silent as to the proper standard of review, the legislative history clearly indicated that Congress intended review to be based on an abuse of discretion standard when the amount of tax liability was not in issue.

[Code Sec. 6330 ]

Collection due process hearing: Office of Appeals: Jurisdiction: District court: Rehearing, order for.--The district court did not have authority to order the IRS Office of Appeals to grant a taxpayer another hearing in connection with the taxpayer's compromise offer in satisfaction of its past-due payroll taxes. The Office of Appeals still had jurisdiction over the matter pursuant to Code Sec. 6330(d)(2) . Neither the statute nor its legislative history suggested that a district court had authority to order Appeals to reconsider its decisions.

[Code Sec. 7121 ]

Settlement agreement: Offer in compromise: Appeals officer: Abuse of discretion.--An appeals officer did not abuse his discretion when he did not accept a taxpayer's offer-in-compromise and instituted collection proceedings for past-due payroll taxes. The taxpayer had a long history of noncompliance with payroll tax laws. In addition, it was not meeting current payroll tax obligations at the time of the appeals hearing. Similarly, the officer's decision not to give the taxpayer a full quarter to demonstrate an ability to comply was not an abuse of discretion.

ORDER: (1) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND (2) GRANTING DEPENDANT'S MOTION TO STRIKE THE TAYLOR DECLARATION AS UNTIMELY