Challenge to Taxes, Delinquent Tax Debt Certification Dismissed

WILLLIAM R. TINNERMAN,
Plaintiff,
v.
UNITED STATES OF AMERICA,¹
Defendant.

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION

ORDER

This tax case is before the Court on the United States' Motion to Dismiss plaintiff William R. Tinnerman's First Amended Complaint (Doc. 30). Tinnerman responded (Doc. 31), the government filed a reply (Doc. 34), and Tinnerman filed an amended sur-reply (Doc. 39). The Court has determined that oral argument is not necessary.

In his first amended complaint (Doc. 29), Tinnerman raises four counts. In his first count, Tinnerman seeks judicial review under the Administrative Procedure Act (“APA”) of the IRS's decision to deny his requests for an administrative appeal and for a hearing to contest determinations related to his 1999, 2000, 2001 and 2002 tax returns. In his second count, Tinnerman seeks declaratory, injunctive, and mandamus relief from a certification that he has a “seriously delinquent tax debt.” In his third count, Tinnerman seeks to recover sums “illegally assessed as taxes” for 1999. And in his fourth count, Tinnerman seeks to recover sums “illegally assessed as taxes” for 2000.² The government moves to dismiss the first, third, and fourth counts for lack of subject matter jurisdiction under Rule 12(b)(1) and moves to dismiss the second count for failure to state a claim under Rule 12(b)(6).³

I. Analysis

The government's Rule 12(b)(1) challenge is a facial attack, meaning the government is “challeng[ing] whether [Tinnerman] has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.” Kennedy v. Floridian Hotel, Inc., 998 F.3d 1221, 1230 (11th Cir. 2021) (quotation and citation omitted).With the government's Rule 12(b)(6) challenge for failure to state a claim, the Court accepts all well-pleaded factual allegations as true, drawing all reasonable inferences in the plaintiff's favor. Bickley v. Caremark RX, Inc., 461 F.3d 1325, 1328 (11th Cir. 2006). “To survive a [12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

A. Count I

In Count I, Tinnerman alleges that IRS agents proposed deficiencies of his 1999, 2000, 2001 and 2002 tax returns; Tinnerman protested the proposed deficiencies and requested a hearing; his requests were denied; the agents presented him with substitute returns; he refused to sign them; the IRS certified substitute returns; the IRS issued statutory notices of deficiency for 1999, 2000, 2001 and 2002; Tinnerman sought review in the United States Tax Court and lost,⁴ resulting in a deficiency judgment, which he did not appeal. Tinnerman alleges the IRS was without authority to take each of these actions because he did not owe the underlying taxes and the Tax Court therefore lacked subject matter jurisdiction over the deficiency case. He seeks judicial review under the APA.

The government argues the Court has no subject matter jurisdiction because the United States has not waived its sovereign immunity, and because the Anti-Injunction Act (26 U.S.C. § 7421) and the Declaratory Judgment Act (28 U.S.C. §§ 2201-02) bar the relief Tinnerman seeks. Tinnerman, as the plaintiff, bears the burden of showing that the government has waived sovereign immunity. Zelaya v. United States, 781 F.3d 1315, 1322 (11th Cir. 2015); see also United States v. Sherwood, 312 U.S. 584, 586 (1941) (“[T]he terms of [the government's] consent to be sued in any court define that court's jurisdiction to entertain the suit.”). “If there is no specific waiver of sovereign immunity as to a particular claim filed against the Government, the court lacks subject matter jurisdiction over the suit.” Zelaya, 781 F.3d at 1322.

Tinnerman alleges the Court has subject matter jurisdiction as to Count I under 28 U.S.C. § 1331 (federal question jurisdiction) and alleges the government has waived its sovereign immunity via the APA, 5 U.S.C. § 702. See Amended Complaint (Doc. 29) at ¶¶ 3, 4. The relief Tinnerman seeks is judicial review of a decision by the Tax Court related to the assessment and collection of Tinnerman's tax liabilities for 1999, 2000, 2001 and 2002. Tinnerman can only succeed on this count if the Court voids that court decision. But the Anti-Injunction Act (which prohibits suit to restrain the assessment or collection of taxes) and Declaratory Judgment Act (which likewise bars relief in suits involving federal tax matters) both preclude the Court from taking that action. See Alexander v. Americans United Inc., 416 U.S. 752, 760 (1974) (discussing “sweeping” prohibitions of Anti-Injunction Act which deprives federal courts from hearing any suit for the purpose of restraining the assessment or collection of any tax); Gulden v. United States, 287 F. App'x 813 (11th Cir. 2008) (holding court lacked subject matter jurisdiction under Anti-Injunction Act to hear taxpayer suit alleging IRS unlawfully filed substitute tax returns and made assessments thereon); Mobile Republican Assembly v. United States, 353 F.3d 1357, 1362 n.6 (11th Cir. 2003) (explaining that “the federal tax exception to the Declaratory Judgment Act is at least as broad as the prohibition of the Anti-Injunction Act”); Hancock Cnty. Land Acquis., LLC v. United States, ___ F. Supp. 3d ___, 2021 WL 3197336, at *10 (N.D. Ga. July 7, 2021) (holding Anti-Injunction Act and Declaratory Judgment Act deprived court of jurisdiction to hear suit for review of appeals office decision which would ultimately restrain activities affecting the assessment or collection of taxes), appeal docketed, No. 21-12508 (11th Cir. July 22, 2021); Slayman v. U.S. I.R.S., No. 4:19-cv-74, 2021 WL 1187081, at *2 (S.D. Ga. Mar. 29, 2021) (dismissing claims where both Anti-Injunction Act and Declaratory Judgment Act deprived court of subject matter jurisdiction, explaining that “taxes ordinarily may be challenged only after they are paid, by suing for a refund”) (quoting In re Walter Energy, Inc., 911 F.3d 1121, 1136 (11th Cir. 2018)).

The Anti-Injunction Act bars this claim regardless of Tinnerman's effort to frame it as a due process issue. See United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 9-10 (2008) (explaining that taxpayer constitutional claims are subject to the prohibition against tax injunctions); Alexander, 416 U.S. at 760-61 (“[D]ecisions of [the Supreme Court] make it unmistakably clear that the constitutional nature of a taxpayer's claim . . . is of no consequence under the Anti-Injunction Act”). Nor is the Anti-Injunction Act avoided by Tinnerman's effort to mold this claim into an exception under Enochs v. Williams Packing & Nav. Co., 370 U.S. 1 (1962), which permits an exception if the taxpayer establishes both that (1) “under no circumstances could the Government ultimately prevail” and (2) equity jurisdiction exists because there is no adequate remedy at law and irreparable harm will otherwise ensue. 370 U.S. at 6-7. Here, the Tax Court has already upheld the very decision Tinnerman seeks to undo in Count I. Thus, he cannot meet the Williams Packing exception. See Gulden, 287 F. App'x at 817-18 (affirming dismissal where Williams Packing exception did not apply because the government would likely prevail in light of IRS's statutory authority to issue substitute returns). Additionally, Tinnerman has an adequate remedy at law in that he can pay his disputed tax liabilities and sue for a refund under 28 U.S.C. § 1346.⁵ Because the Anti-Injunction Act and the Declaratory Judgment Act present a bar to this claim, section 702 of the APA does not permit a waiver of the government's sovereign immunity.⁶ See, e.g., Smith v. Booth, 823 F.2d 94, 97 (5th Cir. 1987) (finding Anti-Injunction Act and Declaratory Judgment Act barred APA review in suit challenging IRS interpretation of statute which led to IRS filing tax lien against property); Cypress v. United States, No. 14-cv-22066-WILLIAMS, 2014 WL 11268558, at *2-4 (S.D. Fla. Dec. 15, 2014) (explaining that APA's waiver of sovereign immunity is expressly excepted for statutes, like the Anti-Injunction Act and Declaratory Judgment Act, which forbid the requested relief). Accordingly, Tinnerman has not shown that the government waived its sovereign immunity to pursue this claim and Count I must be dismissed for lack of subject matter jurisdiction.⁷

B. Counts III and IV

As to Counts III and IV, the government likewise argues that the Court lacks subject matter jurisdiction.In these two claims, Tinnerman seeks restitution of $2,449 plus interest for taxes paid in 1999 (Count III) and $2,629 plus interest for taxes paid in 2000 (Count IV), sums which Tinnerman alleges were erroneously assessed and collected.While a taxpayer can bring a suit under 28 U.S.C. § 1346 for the recovery of taxes alleged to be erroneously assessed and collected, the taxpayer must satisfy two prerequisites: first, the taxpayer must make “full payment” of the assessed tax; and second, a claim for refund must first be filed with the IRS. Lawrence v. United States, 597 F. App'x 599, 602-03 (11th Cir. 2015) (citing Flora v. United States, 357 U.S. 63, 68-70 (1958), aff'd on reh'g, 362 U.S. 145 (1960); 26 U.S.C. § 7422(a)). Here, Tinnerman did not make “full payment” of the amount the IRS says he owed; rather, he paid (and seeks restitution of) the amount he decided he owed. See Doc. 3, Ex. J (showing account balance for 1999 in amount of $248,513.76 (plus accrued interest) and account balance for 2000 in amount of $203,618.57 (plus accrued interest)).⁸ Thus, Tinnerman fails to satisfy the prerequisites to file suit under 26 U.S.C. § 1346 and both Counts III and IV are due to be dismissed for lack of subject matter jurisdiction. See Flora, 357 U.S. at 68-70; Lawrence, 597 F. App'x at 602.

C. Count II

In Count II, Tinnerman seeks reversal of the IRS's certification of him as having a “seriously delinquent tax debt” for the years 1999, 2000, 2001 and 2002.⁹ This designation is reported to the Secretary of State who uses it with respect to decisions regarding the taxpayer's passport. See 26 U.S.C. § 7345(a). Judicial review of this designation is permitted by statute, but is limited to determining “whether the certification was erroneous or whether the Commissioner has failed to reverse the certification.” 26 U.S.C. § 7345(e). And relief is limited to ordering the Secretary of the Treasury to notify the Secretary of State that the certification was erroneous. Id. Tinnerman alleges the designation must be reversed because the IRS released the lien that was supported by the tax debt and because the tax debt is no longer legally enforceable based on the lapse of time.

The government moves to dismiss this count for failure to state a claim under Rule 12(b)(6), arguing that the removal of the lien does not mean the unpaid tax debt is no longer enforceable, and because the 10-year statute of limitations for collection following assessment was tolled while Tinnerman litigated the debt in Tax Court.

While the statute does require the filing of a notice of lien (and that the taxpayer's administrative rights as to such filing have been exhausted or have lapsed), 26 U.S.C. § 7345(b)(1)(C)(i), the statute does not state that the certification of a seriously delinquent tax debt is contingent on the lien remaining in place. Rather, the exceptions to certification involve the taxpayer engaging with the IRS to make payment on the debt or have a hearing, and reversal of the certification is warranted where the debt is paid in full or is legally unenforceable. 26 U.S.C. §§ 7345(b)(2) and (c). The removal of the lien does not trigger any of these and is therefore not a basis to reverse the certification.¹⁰ Cf., McNeil v. United States, No. 20-329(JDB), 2021 WL 1061221, at *5 (D.D.C. Mar. 18, 2021) (dismissing complaint on 12(b)(6) motion and rejecting argument that actual notice was a prerequisite to certification for seriously delinquent tax debt because § 7435 does not include that as an element), appeal docketed, No. 21-5161 (D.C. Cir. filed July 14, 2021); Kaebel v. Comm'r of Int. Rev., T.C. Memo. 2021-109, 2021 WL 4101702, at *5 (Sept. 9, 2021) (holding there was “nothing erroneous in the certification” where record showed taxpayer met each criteria for certification — “That is all that was required for [the IRS] to have certified [the taxpayer] as having a seriously delinquent tax debt”).

The Court further rejects Tinnerman's argument that the IRS assessments are unenforceable based on a ten-year statute of limitations. That period was tolled while Tinnerman was seeking relief in the Tax Court and remain enforceable at this time. See 26 U.S.C. §§ 6503(a)(1), 6330(e)(1); Doc. 3, Exs. J, M (exhibits filed by Tinnerman in support of his original complaint).¹¹ See also Rowen v. Comm'r, 156 T.C. No. 8, 2021 WL 1197663 (Mar. 30, 2021) (rejecting challenge to certification of seriously delinquent tax debt where record confirmed limitations period had not expired). Count II is dismissed with prejudice for failure to state a claim.

II. Conclusion

The four counts of Tinnerman's Amended Complaint are due to be dismissed. Although Tinnerman response to the motion to dismiss seeks leave to again amend his complaint in the event the Court grants the motion, the Court finds further amendment is not warranted. Tinnerman filed his amended complaint after the government moved to dismiss his original complaint so was well aware of the arguments against his positions. Further amendment would be futile.

Accordingly, it is hereby

ORDERED:

DONE AND ORDERED in Jacksonville, Florida this 27th day of September, 2021.

TIMOTHY J. CORRIGAN
United States District Judge

Copies:
Counsel of record