COBIN v. U.S

BRUCE HENDRICKS, Magistrate Judge

This matter is before the court on motion of defendant United States of America ("defendant" or "USA") to dismiss for insufficiency of process, insufficiency of service of process, and lack of jurisdiction over the subject matter. Fed.R.Civ.P. 12(b)(1), (4), (5). In his complaint, the plaintiff, who is proceeding pro se, challenges two Notices of Determination issued by the Internal Revenue Service's ("IRS") Office of Appeals.

Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A), and Local Rule 73.02(B)(2)(e), D.S.C., all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration.

On September 21, 2004, the defendant filed a motion to dismiss. By order filed September 21, 2004, pursuant to Roseboro v. Garrison, 528 F.2d 309 (4^th Cir. 1975), the plaintiff was advised of the summary judgment dismissal procedure and the possible consequences if he failed to adequately respond to the motion. On October 4, 2004, the plaintiff filed a response to the motion to dismiss, and on October 12, 2004, the defendant filed a reply brief. In its reply, the defendant noted that both the United States Attorney and the IRS had been served with a valid summons and complaint subsequent to the filing of the motion to dismiss. Accordingly, the USA has withdrawn its motion to dismiss for insufficiency of process and insufficiency service of process (reply at 2). Therefore, the only remaining issue is whether this court has subject matter jurisdiction over the plaintiff's claims.

The IRS contends that the plaintiff is liable for unpaid federal income taxes for the years 1991 and 1992 and also a penalty due for filing a frivolous tax return for the tax year 1991. The IRS advised the plaintiff that it intended to administratively collect these liabilities and also to file a Notice of Federal Tax lien. In response to these notices, the plaintiff requested administrative hearings from the IRS Office of Appeals, wherein he contended that both the proposed collection action and the filing of the Notice of Federal Tax Lien were in error.

On July 8, 2004, the IRS Office of Appeals issued two "Notices of Determination" denying the plaintiff's request for relief (comp., ex. A1, A2). The notice issued to the plaintiff with respect to the income taxes notes that judicial review must be sought in the Tax Court (comp., ex. A2). The notice issued with respect to the frivolous return penalty notes that judicial review must be sought in the appropriate United States District Court (comp., ex. A1). The plaintiff filed a complaint on July 23, 2004, in this court challenging both Notices of Determination.

The defendant argues that this court lacks subject matter jurisdiction over the plaintiff's challenge to the notice issued with respect to his 1991 and 1992 income tax liabilities (comp., ex. A2). According to the defendant, the reason two separate notices were issued is that under the Internal Revenue Code "the Tax Court has jurisdiction to hear challenges to adverse determinations relating to income taxes, and the district courts have jurisdiction to hear challenges to adverse determinations relating to frivolous return penalties" (m. to dismiss at 2).

Section 6330 of the Internal Revenue Code provides in pertinent part:

SUBCHAPTER D — SEIZURE OF PROPERTY FOR COLLECTION OF TAXES

PART I. DUE PROCESS FOR COLLECTIONS

§ 6330. Notice and opportunity for hearing before levy

(a) Requirement of notice before levy. —

(1) In general. — No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. Such notice shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates.

* * *

(b) Right to fair hearing. —

(1) In general. — If the person requests a hearing under subsection (a)(3)(B), such hearing shall be held by the Internal Revenue Service Office of Appeals.

* * *

(d) Proceeding after hearing. —

(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. If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court determination to file such appeal with the correct court.

Treasury Regulations Section 301.6330-1(f)(2) QA F3 explains that Section 6330 grants the Tax Court jurisdiction over a taxpayer's appeal of the determination reached following a collection due process hearing so long as the Tax Court normally would have jurisdiction over the tax for which the collection determination had been made (e.g., income and estate taxes). 26 C.F.R. § 301.6330-1(f)(3) QA F3. See Goza v. Commissioner, 114 T.C. 176, 179-82 (2000); Moore v. Commissioner, 114 T.C. 171, 175 (2000); True v. Commissioner, 108 F.Supp.2d 1361, 1363-64 (M.D.Fla. 2000); Anderson v. Commissioner, 80 TCM (CCH) 461, 462-63 (2000). As the Tax Court ordinarily has jurisdiction over income taxes, it is the proper venue to hear the plaintiff's appeal of the collection due process determination respecting his 1991 and 1992 income tax liabilities. See 26 U.S.C. §§ 6212(a), 6213(a), 7442; 26 C.F.R. §§ 301.6330-1(f)(2) QA F3, 601.102(b)(1)(I). Accordingly, to the extent the plaintiff seeks judicial review of the Notice of Determination relating to his income tax liability for the tax years 1991 and 1992, this court does not have jurisdiction, and dismissal is appropriate.

As noted by the defendant, the plaintiff will not be materially prejudiced by this decision because the Code provides that if a court determines that a collection due process case is filed in the wrong court, "the taxpayer will have 30 days after the court's determination to that effect within which to file an appeal to the correct court." See 26 U.S.C. § 6330(d)(1); 26 C.F.R. § 301.6330-1(f)(2) QA F4.

Based upon the foregoing, this court recommends that the defendant's motion to dismiss for lack of subject matter jurisdiction be granted with respect to the plaintiff's challenge of the Notice of Deficiency issued as to his 1991 and 1992 income tax liabilities. The defendant does not contest this court's jurisdiction over the notice relating to the plaintiff's frivolous return penalty. As discussed above, the defendant has withdrawn its motion on the bases of insufficiency of process and insufficiency service of process.

IT IS SO RECOMMENDED.