Couple Files for Injunction Against IRS Levy, Claiming Due Process Was Denied Because of Shutdown

3. The Commissioner is the officer of the United States Government charged with executing the nation's laws with respect to taxation, and is the chief executive officer of the Internal Revenue Service ("IRS"), a part of the Department of the Treasury.

4. This action raises a question of federal law, relating to laws providing for internal revenue, and accordingly this Court enjoys subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1340.

5. This Court enjoys personal jurisdiction over the Commissioner and the IRS because they are, respectively, an officer and an agency and instrumentality of the United States whose actions have caused and are causing injury to the plaintiffs within this judicial district.

6. Venue is proper in this district pursuant to 28 U.S. C. § 1396 because this is a matter relating to internal revenue, the liability for the taxes placed at issue accrued in this district and the residence of the plaintiff-taxpayers is within this district. Divisional venue is proper in this division because the liability for the taxes placed at issue accrued within this division and the residence of the plaintiff-taxpayers is within this division.

8. Betty Johnson is 74 years old and her only source of income consists of monthly Social Security benefits.

9. On September 9, 2013, IRS issued a Notice of Intent to Levy (the "Notice of Levy") informing the Johnsons notice that, after 30 days, unless the Johnsons filed for an administrative hearing, they will be subject to IRS levies. A true and complete copy of the Notice of Levy is appended as Exhibit A.

10. The Johnsons contacted The Community Tax Law Project, a low income taxpayer clinic established pursuant to § 7526 of the Internal Revenue Code (26 U.S.C. § 7526) that provides pro bono publico assistance to qualifying taxpayers, for assistance in challenging and/or seeking a hardship exemption to the levy.

11. On October 1, 2013, Nancy Porcari, Esquire, an attorney with The Community Tax Law Project, filed properly-executed Powers of Attorney with the IRS (Forms 2848) (the "Powers of Attorney") on behalf of the Johnsons, and began seeking relief on their behalf. A true and complete copy of the respective Powers of Attorney are appended as Exhibit B.

12. On October 7, 2013, on the Johnsons' behalf, attorney Porcari filed a timely request for a hearing (the "Hearing Request") with Internal Revenue Service. A true and complete copy of the Hearing Request is appended as Exhibit C.

13. As part of the comprehensive shutdown of most activities of the United States Government that occurred on October 1, 2013, as a result of the expiry of appropriations authority and the failure to enact new appropriations authority for the federal fiscal year commencing on October 1, 2013, approximately 90% of the IRS workforce has been furloughed. All of the employees of the Taxpayer Advocate Service, including the National Taxpayer Advocate, are presently furloughed.

14. As a result of the furloughs described in the preceding paragraph, there is quite literally no one at the IRS to stop the issuance of the levy against the Johnsons, to schedule a pre-levy hearing for the Johnsons, or to release the levy against the Johnson's Social Security benefits, and it is likely that, once imposed, there is no one at the Social Security Administration available to process a release of the levy even if such levy were to be released.

15. Pursuant to § 7803(c) of the Internal Revenue Code (26 U.S.C. § 7803(c)), the Office of the Taxpayer Advocate (the "Taxpayer Advocate") was created within the IRS in 1998 to protect taxpayer rights.

16. Pursuant to statute and the IRS's operating procedures, a taxpayer facing economic hardship who cannot get relief through IRS administrative procedures is entitled request help from the Taxpayer Advocate to obtain relief.

17. Once a Social Security levy is imposed, substantial time, often measured in months, is required to obtain a release of the levy.

18. Notwithstanding the shutdown of most activities of the United States Government, and notwithstanding the absence of any IRS personnel to schedule hearings, hear challenges to such levies, evaluate claims of hardship, or release or modify such levies under appropriate circumstances, automated levies, like those which are threatened with respect to the Johnsons, such automated levies, including those on Social Security benefits, are being issued automatically through the use of various computer programs that operate without any need for human intervention. The Commissioner has knowingly and willfully failed and refused to take any action to stop the issuance of these automatic levies, even though it is beyond dispute that the due process mechanisms established by statute with respect to these levies are, as a practical matter, wholly unavailable to taxpayers.

19. Upon information and belief, during the shutdown, the IRS is not processing incoming correspondence, except for remittances, and thus the Johnsons' Hearing Request is sitting, unacted upon, in an IRS office.¹ As a result, IRS cannot and will not take any timely action to freeze the levy action and schedule the hearing that the Johnsons have timely and properly requested through counsel.² Instead, the IRS's computers, with no human intervention, are currently proceeding toward a levy on the Johnsons' Social Security benefits.

20. Issuance of the levy against the Johnsons without any opportunity for hearing is in direct violation of § 6330 of the Internal Revenue Code, which provides that taxpayers must be given notice and an opportunity for a hearing prior to the effective date of any levy, and that any levy as to which a hearing has been requested shall be suspended during the pendency of the hearing and adjudication:

21. The horrific "Catch-22" described in this Complaint -- a computerized levy that, once set into motion, cannot be stopped -- will have immediate, and devastating, impacts upon the Johnsons. Already under substantial financial strain, as described in their sworn declaration appended as Exhibit D,³ if the Johnsons' only sources of income are taken away, they will be unable to pay for food, medicine and other necessary living expenses. Because of the Johnsons' serious medical conditions, including diabetes and glaucoma, this deprivation threatens to have serious, and even life-threatening, negative effects on their health and well-being.

22. The injuries suffered and to be suffered by the Johnsons, described herein, will cause irreparable injury to them.

23. The Johnsons have no adequate remedy at law for the injury that they are experiencing and will experience. Indeed, given the furlough of the National Taxpayer Advocate and all employees of the National Taxpayer Advocate, the Johnsons have no remedy at law whatsoever, available to them under the present circumstances.

25. The denial of the Johnsons' statutory right to hearing with respect to the levy, prior to its effective date, and denial of their statutory right to a suspension of the levy during the pendency of the hearing. is a complete deprivation of due process of law in violation of the Fifth Amendment to the Constitution of the United States of America.

26. The Anti-Injunction Law (26 U.S.C. § 7421 et seq.) generally bars suits to restrain assessment or collection of federal taxes. However, there are limited circumstances when such a suit may be brought. Among those actions specifically exempted from the Anti-Injunction Law are actions to enforce rights to notice and hearing prior to the implementation of a levies, provided pursuant to 26 U.S.C. § 6330.

27. On these facts and circumstances, the Johnsons are entitled, as a matter of law, to entry of a temporary restraining order, and to a grant of temporary and permanent injunctive relief that (a) bars the Commissioner and the IRS from placing any levy upon their Social Security benefits until such time as notice and an opportunity to be heard have been afforded, and (b) orders the Commissioner and the IRS to take all such steps as may be necessary to procure an immediate release of any levy that has been placed against the Johnsons' Social Security benefits during the pendency of this action and the hearing that the Johnsons have demanded pursuant to 26 U.S. C. § 7421

² Section 5.11.7 of the Internal Revenue Manual establishes the procedures for automatic levies on Social Security benefits. As these procedures make clear, once a Social Security levy is set into motion, human intervention is required to stop it. In particular, a human must input a code into the IRS computer system to block the issuance of the levy. In the absence of such human intervention, the levy is issued automatically and Social Security benefits will be frozen.

³ Plaintiffs will submit separately, under seal, or in the alternative seek to present in camera at the hearing on their request for temporary restraining order herein, further details of their personal financial situation.