JOHNSON v. COMMISSIONER, THE I.R.S. (D.S.C. 2003)

JOSEPH McCROREY, Magistrate Judge

The Plaintiff, Robert C. Johnson (Johnson) has brought this pro se action against the United States of America, and in particular the Commissioner of the Internal Revenue Service (IRS) as well as the Department of the Treasury (hereinafter, "the Defendants"). Pursuant to Title 28 United States Code section 636(b)(1)(B), and Local Rule 73.02(B)(2)(e) D.S.C., this magistrate judge is authorized to review pretrial matters in pro se cases and to submit findings and recommendations to the District Court.

BACKGROUND — TAX DISPUTES

This action involves Johnson's income tax returns from tax years 1981 and 1984. In particular, an assessed tax deficiency for 1984 in the amount of Twenty One Thousand Sixty Three Dollars ($21,063.00) is a central issue in this litigation and also in a dozen parallel cases brought by Johnson since February, 2002.

The 1984 tax deficiency resulted from Johnson's participation in Oasis Date Associates (ODA). Johnson's liability for this deficiency is now settled as a matter of law. See Johnson v. Commissioner, 55 Fed. Appx. 204 (4th Cir. 2003). It is res judicata in this and all his other cases. In fact, Johnson no longer contests the matter. Instead he believes that irregularities or missteps in the tax assessment process itself entitle him to recover damages. This theory of recovery is without merit for reasons set forth below. First, however, a review of the ODA tax proceedings is necessary, both for disposition of this action and Johnson's other pending cases.

— For convenience in discussing Johnson's parallel actions in this Court, the following numerical designations will be used after the initial reference to the given case: Johnson v. IRS, C/A No. 5:02-0304-22BC (Johnson One); Johnson v. Behrens, et al, C/A No. 5:02-1435-22BC (Johnson Two); Johnson v. Commissioner, C/A No. 5:02-3935-23BC (Johnson Three); Johnson v. Commissioner, 5:02-4291-23BC (Johnson Four); Johnson v. South Carolina, C/A No. 5:02-4292-23BC (Johnson Five); Johnson v. Commissioner, C/A No. 5:03-0303-23BC, the present case (Johnson Six); Johnson v. Commissioner, et al, C/A No. 5:03-2284-23BC (Johnson Seven); Johnson v. Ashcroft. et al, C/A No. 5:03-2559-23BC (Johnson Eight); Johnson v. Wells, et al, C/A No. 5:03-2923-17BD (Johnson Nine); Johnson v. Bush, et al, C/A No. 5:03-2996-23BC (Johnson Ten); Johnson v. South Carolina, C/A No. 5:03-3084-23BC (Johnson Eleven); Johnson v. Duffy, et al, C/A No. 5:03-3268-17BC (Johnson Twelve). Johnson's cases Six, Seven, Eight and Eleven have now been re-assigned from the Honorable Patrick M. Duffy, United States District Judge, to the Honorable Henry F. Floyd, United States District Judge.

OASIS DATE ASSOCIATES

In July, 1984, Johnson subscribed by mail to Oasis Date Associates (ODA), a California Limited Partnership, and thereafter made substantial capital contributions to the partnership. Johnson claimed tax deductions on his own subsequent income tax return(s), relying upon the 1984 ODA partnership return. [1-1, Exhibits F and G to the Complaint (excerpts from tax returns).]

— The foregoing history is derived from one of Johnson's prior cases. Eight (8) months before filing the present Complaint, Johnson brought action in this Court against certain principals of ODA and various affiliates of American Agri-Corp. Johnson, et al. v. Behrens, et al., (Johnson Two). The case was transferred from this Court to the United States District Court for the Central District of California by order of the Honorable Cameron M. Currie on October 15, 2002. In this prior action, Johnson attached several documents to his Complaint: Attachment "B" was a copy of the "Confidential Private Placement Memorandum" of Oasis Date Associates issued May 30, 1984, describing the organization of American Agri-Corp and the structure of the limited partnership; Attachment "D" consisted of correspondence reflecting Johnson's subscription to the partnership in July, 1984, and his subsequent capital contributions.
The Court may take judicial notice of this prior civil action and the information contained in its record. Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989); Shop v. Bell Howell, 872 F.2d 1178, 1182, 1989 (4th Cir. 1989); Days v. Bounds, 509 F.2d 66 (4th Cir. 1975); Mann v. Peoples First National Bank Trust Co., 209 F.2d 570, 572 (4th Cir. 1954).

— From Johnson's exhibits, it appears that in 1988 he filed an Amendment Return for tax year 1981 in which he claimed an investment credit carryback in the amount of Four Hundred Ninety One ($491.00) dollars attributable to his participation in ODA. Obviously, since Johnson did not subscribe to the limited partnership until July, 1984, he could not have made this credit investment claim on the original 1981 return at the time of its filing.

In September, 1989, Johnson received a "Notice of Beginning of an Administrative Proceeding," known as a 1787(C) Letter, from the TEFRA Section of the Office of the IRS District Director in Fresno, California. The letter advised Johnson that the ODA partnership return for tax year 1984 would be examined.

— TEFRA is the acronym for the Tax Equity and Fiscal Responsibility Act of 1982, Pub.L. 97-248, September 3, 1982. Johnson attaches a copy of the Notice to a Motion to Consolidate. [12-1, pp. 63-64]

The Internal Revenue Code (IRC) devotes a Sub-Chapter of Chapter 63 to the "Tax Treatment of Partnership Items." See 26 U.S.C. § 6221 through § 6234. Under 26 U.S.C. § 6223(a) partners must receive notice both of the beginning and the completion of administrative proceedings. This duty of notice is limited if a partnership has more than one hundred (100) partners and a given partner owns less than a one percent (1%) interest. It is not clear whether ODA had at least one hundred partners. Similarly, Johnson's interest as a percentage of the partnership is not known. The important point is that Johnson indisputably received the initial notice of an administrative proceeding.

In partnership administrative proceedings, the "tax matters partner" plays the leading role. The tax matters partner can enter into settlement agreements which, with certain exceptions, can bind all other partners. Direct participation by these other partners is allowed, of course. It may also be waived. One or more partners also have the option to enter into settlement agreements separate from agreements reached by the tax matters partner

— The governing statute is 26 U.S.C. § 6224, which provides in pertinent part:

(a) Participation in administrative proceedings. — Any partner has the right to participate in any administrative proceeding relating to the determination of partnership items at the partnership level.

(b) Partner may waive rights. —

(1) In general. — A partner may at any time waive —

(A) any right such partner has under this subchapter, and

(B) any restriction under this subchapter on action by the Secretary.

(2) Form. — Any waiver under paragraph (1) shall be made by a signed notice in writing filed with the Secretary.

(c) Settlement agreement. — In the absence of a showing of fraud, malfeasance, or misrepresentation of fact —

(1) Binds all parties. — A settlement agreement between the Secretary or the Attorney General (or his delegate) and 1 or more partners in a partnership with respect to the determination of partnership items for any partnership taxable year shall (except as otherwise provided in such agreement) be binding on all parties to such agreement with respect to the determination of partnership items for such partnership taxable year. An indirect partner is bound by any such agreement entered into by the pass-thru partner unless the indirect partner has been identified as provided in section 6223(c)(3).

(2) Other partners have right to enter into consistent agreements. — If the Secretary or the Attorney General (or his delegate) enters into a settlement agreement with any partner with respect to partnership items for any partnership taxable year, the Secretary or the Attorney General (or his delegate) shall offer to any other partner who so requests settlement terms for the partnership taxable year which are consistent with those contained in such settlement agreement. Except in the case of an election under paragraph (2) or (3) of section 6223(e) to have a settlement agreement described in this paragraph apply, this paragraph shall apply with respect to a settlement agreement entered into with a partner before notice of a final partnership administrative adjustment is mailed to the tax matters partner only if such other partner makes the request before the expiration of 150 days after the day on which such notice is mailed to the tax matters partner.

(3) Tax matters partner may bind certain other partners. —

(A) In general. — A partner who is not a notice partner (and not a member of a notice group described in subsection (b)(2) of section 6223) shall be bound by any settlement agreement —

(i) which is entered into by the tax matters partner, and

(ii) in which the tax matters partner expressly states that such agreement shall bind the other partners.

(B) Exception. — Subparagraph (A) shall not apply to any partner who (within the time prescribed by the Secretary) files a statement with the Secretary providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such partner.

There is no evidence that Johnson took part in the ODA administrative proceedings. He does not claim to have done so. Johnson does not allege that he was a "notice partner" or member of a "notice group," both of which are exempt from the binding authority of the tax matters partner under § 6224(c)(3)(A). Johnson does not claim that he formally disavowed the authority of the tax matters partner to enter into a settlement agreement under § 6224(c)(3)(B). The inference arises, therefore, that Johnson was bound by any settlement agreement made by the tax matters partner.

On May 13, 1991, the TEFRA Section of the Office of the IRS District Director in Fresno, California, sent to Johnson its "Notice of Final Partnership Administrative Adjustment (FPAA). [12-1, pp. 65-72] The Notice indicates that a copy was mailed to the tax matters partner on April 10, 2001. This letter disallowed two items: (1) an investment expense of more than Four Million Dollars ($4,000,000.00) in tax year 1984; and (2) qualified investment income of almost Twenty Four Thousand Dollars ($24,000.00) for the same tax year.

The FPAA was not necessarily the final word. FPAAs are subject to judicial review under 26 U.S.C. § 6226. The tax matters partner must file a petition within ninety (90) days after mailing of the FPAA. See 26 U.S.C. § 6226(a). "Notice" partners may also seek judicial review by filing their own petitions no later than sixty (60) days after the deadline for tax matters partners, which is to say a total of one hundred fifty (150) days from mailing of the FPAA. As mentioned above, remaining partners have the option to enter into separate agreements with respect to their partnership interests. These agreements can be given retroactive effect, if the request is made within the one hundred fifty (150) period after mailing of the FPAA. 26 U.S.C. § 6224(c). Thus, Johnson had the option to enter into such a separate agreement at any time during the five months following April 10, 2001. Johnson does not allege that he sought any such agreement.

Apparently, the ODA tax matters partner filed a petition for judicial review. Johnson provides a copy of the United States Tax Court decision in Oasis Date Associates, Frederick H. Behrens, Tax Matters Partner, v. Commission of Internal Revenue, Tax Court Docket No. 15037-91 filed on July 19, 2001. [1-1, Exhibit C to the Complaint.] After ten years of litigation and/or negotiation, the order finds that the ODA partnership return for 1984 contained claims for liabilities in the amount of Two Million Nine Hundred Sixty-Five Thousand Seven Hundred Fourteen Dollars ($2,965,714) which "lack economic substance." Once final, this order of the Tax Court allowed the Commissioner to assess tax deficiencies.

JOHNSON'S TAX DEFICIENCIES

The foregoing history of the ODA tax proceedings is made necessary by Johnson's frequent references to it in his Complaint. In fact, however, this history has only limited relevance to the present case. Johnson could have remained a party to the ODA tax litigation. A comparison of the FPAA with the final Tax Court decision suggests that he might have benefitted from doing so. The original FPAA had disallowed over Four Million Dollars ($4,000,000.00) claimed in the ODA partnership return and had found "false or fraudulent items." Ten years later, the ODA tax matters partner obtained a decision which simply held that claimed liabilities in the amount of Two Million Nine Hundred Sixty Five Thousand Seven Hundred Fourteen Dollars ($2,965,714) "lack economic substance" with no further mention of falsehood or fraud.

Johnson chose a different course of action, however. On October 14, 1992, he filed a voluntary petition in the United States Bankruptcy Court for the District of South Carolina. In re Johnson, 92-BK-75816 (Bankr. D.S.C.). This act, as a matter of law, disassociated Johnson from the ODA tax proceeding, with its benefits and risks.

The filing of a bankruptcy petition converts partnership items into nonpartnership items for tax purposes. The Secretary of Treasury is authorized to promulgate rules concerning the status of partnership items in the interest of enforcing the Internal Revenue Code. See 26 U.S.C. § 6231(c)(2). A regulation was adopted in 1987 which states:

— 26 U.S.C. § 6231(c)(2) (Items may be treated as nonpartnership items) provides:
To the extent that the Secretary determines and provides by regulations that to treat items as partnership items will interfere with the effective and efficient enforcement of this title in any case described in paragraph (1), such items shall be treated as nonpartnership items for purposes of this subchapter.

Bankruptcy. The treatment of items as partnership items with respect to a partner named as a debtor in a bankruptcy proceeding will interfere with the effective and efficient enforcement of the internal revenue laws. Accordingly, partnership items of such a partner arising in any partnership taxable year ending on or before the last day of the latest taxable year of the partner with respect to which the United States could file a claim for income tax due in the bankruptcy proceeding shall be treated as nonpartnership items as of the date the petition naming the partner as debtor is filed in bankruptcy.

See "Bankruptcy and receivership" § 301.6231(c)-7T, 52 Fed. Reg. 6779 at 6793 (March 5, 1987).

As a nonpartnership interest, Johnson's stake in ODA became subject to a new limitations period — namely, one year after the date of conversion from partnership to nonpartnership status. See 26 U.S.C. § 6229(f). Johnson received a Chapter Seven discharge on February 24, 1993. See Johnson v. Commissioner, C/A No. 5:02-3935-23BC (Johnson Three). , On May 26, 1993, the IRS issued to Johnson a "Notice of Deficiency" in the amount of Twenty One Thousand Sixty Three Dollars ($21,063.00) for tax year 1984. [12-1, pp. 61-62.] This Notice was timely under 26 U.S.C. § 6229(f), by a margin of almost five months.

— 26 U.S.C. § 6229(f) provides.
(1) Items becoming nonpartnership items. — If before the expiration of the period otherwise provided in this section for assessing any tax imposed by subtitle A with respect to the partnership items of a partner for the partnership taxable year, such items become nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231, the period for assessing any tax imposed by subtitle A which is attributable to such items (or any item affected by such items) shall not expire before the date which is 1 year after the date on which the items become nonpartnership items. The period described in the preceding sentence (including any extension period under this sentence) may be extended with respect to any partner by agreement entered into by the Secretary and such partner.

Johnson challenged this tax deficiency (and deficiencies in tax years 1981, 1982, 1985 and 1986) in the United States Tax Court in Johnson v. Commissioner, T.C. Docket No. 93-18457. The Tax Court found no deficiencies for 1982, 1985 or 1986, but ruled that Johnson owed deficiencies in the amounts of $491.00 for 1981 and $21,063.00 for 1984 in an Order signed on October 18, 2002. [12-1, pp. 25-26, Dismissal Order, T.C. Docket No. 93-18457.] He appealed this adverse decision to the United States Court of Appeals for the Fourth Circuit which affirmed the decision of the Tax Court on February 4, 2003. See Johnson v. Commissioner, 55 Fed. Appx. 204 (4th Cir. 2003). Johnson sought no further review. He is bound by that decision.

Johnson also mounted a collateral attack upon the tax deficiencies. He moved the United States Bankruptcy Court to reopen his case, so that he could file an adversary proceeding. Leave was granted. Johnson v. Commissioner, Adv. Proc. No. 02-80185-W (In re Johnson, 92-BK-75816). On August 26, 2002, however, the Honorable John E. Waites, Judge of the United States Bankruptcy Court, granted summary judgment to the Defendant concluding that the post-discharge Notice of Assessment was not in violation of any statutory stay or discharge injunction. Also Judge Waites concluded that Johnson was not entitled to a recovery under 26 U.S.C. § 7433 which is part of the Omnibus Taxpayer's Bill of Rights, Pub.L. 100-647, November 10, 1988.

In November, 2002, Johnson appealed from Judge Waites' decision by filing Johnson Three. On August 5, 2003, the undersigned filed a Report and Recommendation to affirm the decision of the Bankruptcy Court, and on August 19, 2003, the Report and Recommendation was adopted by the Honorable Patrick M. Duffy, United States District Judge. The matter is currently pending in the United States Court of Appeals for the Fourth Circuit. See Johnson v. Commissioner, 03-2088.

PRO SE COMPLAINT

Johnson is a pro se litigant, and thus his pleadings are accorded liberal construction. Hughes v. Rowe, 449 U.S. 5 (1980); Estelle v. Gamble, 429 U.S. 97 (1976); Haines v. Kerner, 404 U.S. 519 (1972); Loe v. Armistead, 582 F.2d 1291 (4th Cir. 1978); Gordon v. Leeke, 574 F.2d 1147 (4th 1978). Pro se pleadings are held to a less stringent standard than those drafted by attorneys. Hughes v. Rowe, 449 U.S. 5 (1980) (per curiam). Even under this less stringent standard, however, a pro se complaint is still subject to summary dismissal. The mandated liberal construction means only that if the court can reasonably read the pleadings to state a valid claim on which the plaintiff could prevail, it should do so. Barnett v. Hargett, 174 F.3d 1128 (10th Cir. 1999). A court may not construct the plaintiff's legal arguments for him. Small v. Endicott, 998 F.2d 411 (7th Cir. 1993). Nor should a court "conjure up questions never squarely presented." Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985).

In his First Cause of Action, Johnson contends that the 1981 and 1984 tax deficiencies "have not become final." Therefore, any assessment is "unlawful" and "attempts to assess and collect" have entitled him to One Million Dollars ($1,000,000.00) in compensatory damages and One Million Dollars ($1,000,000.00) in punitive damages.

In his Second Cause of Action, Johnson claims that the deficiencies arose in connection with "a partnership item." On that basis, and invoking language of tax jurisprudence, Johnson contends that the IRS claims of a tax deficiency "have no economic basis" and are "unlawful," thereby entitling him to Five Million Dollars ($5,000,000.00) in compensatory damages and Five Million Dollars ($5,000,000.00) in punitive damages.

In his Third Cause of Action, Johnson repeats the reasoning above and contends that these same IRS claims "have no legal basis" thereby entitling him to Five Million Dollars ($5,000,000.00) in compensatory damages and Five Million Dollars ($5,000,000.00) in punitive damages.

Finally, in his Fourth Cause of Action, Johnson argues that current IRS claims "are inconsistent with the items as set forth in the ODA [Oasis Date Associates] partnership Decision " [emphasis in original]. Therefore, the tax deficiencies are "unlawful," entitling him to Ten Million Dollars ($10,000,000.00) in compensatory damages and Ten Million Dollars ($10,000,000.00) in punitive damages.

PROCEDURAL HISTORY

Motions to Consolidate

On January 31, 2003, Johnson filed a Motion to Consolidate the present case with his appeal from the Bankruptcy Court decision, Johnson Three , and with Johnson v. Commissioner, 5:02-4291-23BC (Johnson Four) , [4-1]

By letter on March 10, 2003, and later by formal Motion (with a "Consolidated Complaint") on March 31, 2003, Johnson moved for consolidation of the present case with Johnson Four , deleting his prior request to consolidate with Johnson Three [9-1, 12-1]

— In his proposed "Consolidated Complaint," and in addition to the causes of action review in this Report, Johnson repeats the claims he made in Johnson Four , a "ten-year (10) Statute of Limitations" bars issuance of the 1981, 1984 and 1991 notices of tax deficiencies; a Tax Court vindication of Johnson for tax years 1982, 1985 and 1986 entitled him to recover damages; errors, irregularities and delays in the ODA Tax proceeding entitled Johnson to recover damages. These claims are discussed in a Report filed in Johnson Four and need not be replicated here.

On July 10, 2003, Johnson commenced yet another suit, this time attacking the ODA administrative adjustment and tax proceeding. See Johnson v. Commissioner, et al, C/A No. 5:03-2284-23BC, (Johnson Seven). On September 23, 2003, Johnson moved to consolidate the present action with both Johnson Four and Johnson Seven. [26-1.] In an Order filed on September 23, 2003, the undersigned denied all motions to consolidate. [28-1]

Motions to Stay Collections

On April 2, 2003, Johnson filed a Motion to Stay collection of tax balances for 1981 ($2,373.61) and for 1984 ($104,351.54). [13-1.] By letter filed on May 7, 2003, and then by formal Motion filed on May 9, 2003, Johnson renewed his Motion to Stay with regard to collection of his 1981 tax balance. [15-1, 19-1.] The Defendants responded to the Motions on May 20, 2003. [20-1.] On September 23, 2003, the undersigned filed an order denying these Motions. [28-1]

Additional Motions by Johnson

On May 8, 2002, Johnson filed a Motion for Judgment on the Pleadings. [18-1] The Defendants responded to the Motion on May 20, 2003. [20-1.]

On July 23, 2003, Johnson filed a Motion for Preliminary Hearing. [22-1.] On September 23, 2003, the undersigned filed an order denying this Motion. [28-1]

On September 30, 2003, Johnson filed a lengthy Motion to Order Responsive Pleadings. [29-1] The Motion is not only directed to the present action, but also to Johnson Four and Johnson Seven, Insofar as the Motion concerns the present case, Johnson protested the Defendant's Motion to Dismiss which is discussed below The Motion is therefore deemed moot in the context of the entire disposition of this case recommended later in this Report.

On September 30, 2003, Johnson also filed a Motion for a Restraining Order with regard to a "Notice of Intent to Levy" issued by the Internal Revenue Service on September 22, 2003, to collect a balance owed for the tax year 1981. [30-1] The Notice on its face advises Johnson that he may appeal the intended levy by requesting a "Collection Due Process" hearing. Such hearings are governed by 26 U.S.C. § 6330. Johnson's Motion, filed less than ten days after the Notice was mailed, is clearly premature and therefore should be denied. Defendant's Motion to Dismiss

On May 5, 2003, the Defendants filed a Motion to Dismiss with a Supporting Memorandum. [14-1] The undersigned issued an Order on May 7, 2003, under Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), notifying Johnson of the summary judgment dismissal procedure and the possible consequences if he failed to respond adequately to the Motion to Dismiss. [16-1.] On May 8, 2003, and again on May 23, 2003, Johnson filed responses to the Motion to Dismiss, [17-1] [21-1]

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of a complaint. See Randall v. United States, 30 F.3d 518, 522 (4th Cir. 1994). These motions should only be granted "in very limited circumstances." De Sole v. United States, 947 F.2d 1169, 1171 (4th Cir. 1991). The Court must construe all inferences in the light most favorable to Johnson and dismiss his action only 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." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L.Ed.2d 80, 78 S.Ct. 99 (1957); Migdal v. Rowe Price-Fleming Intern. Inc., 248 F.3d 321. 325. (4th Cir. 2001);Comet Enterprise Ltd, v. Air-A-Plane Corp., 128 F.3d 855 (4th Cir. 1997).

As explained below, Johnson's Complaint fails to state a claim upon which this Court may grant relief. Accordingly, it is recommended that Johnson's Motion for Judgment on the pleadings be denied, and that the Defendants' Motion to Dismiss be granted.

NO CAUSE OF ACTION

In this and other cases, Johnson has filed lengthy pleadings and memoranda, heavy laden with statutory citations. At the end of the day, however, his theory of recovery amounts to a claim that any perceived misstep or irregularity, any omission or delay, attributable to the Defendant is actionable and entitles him to recover monetary damages. Indeed, the Internal Revenue Code contemplates that in certain circumstances taxpayers may challenge actions of the IRS and even recover damages for specific violations of law in the tax assessment and collection process. The law does not, however, grant to any taxpayer a forum in which generally to impede, or recover damages for, the collection of revenues by the United States government.

The general rule is that collection of taxes may not be enjoined. The Internal Revenue Code of 1954 contained the following provision, now codified as 26 U.S.C. § 7421 ("Prohibition of suits to restrain assessment or collection"):

(a) Tax. — Except as provided in sections 6015(e), 6212(a) and (c), 6213(a), 6225(b), 6246 (b), 6330(e)(1), 6331(1), 6672(c), 6694(c), 7426(a) and (b)(1), 7429(b), and 7436, 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.

From the foregoing list of exceptions, certain stages of the tax assessment process can be subject to judicial review, in this Court or the Tax Court, and in a certain sense enjoined or at least challenged. Examples include: judicial review of a Notice of Deficiency under 26 U.S.C. § 6212(a) and (c) and § 6213(a); judicial review of a Final Partnership Administrative Adjustment (FPAA) under 26 U.S.C. § 6225(b) (discussed above) or adjustments of partnership items under 26 U.S.C. § 6246(b); judicial review of a tax levy under 26 U.S.C. § 6330(e)(1), § 6331(1), § 7426 and § 7429(b). Courts may entertain action by persons seeking relief from a joint income tax return under 26 U.S.C. § 6015. Persons responsible for collection or withholding of taxes and tax preparers may contents liability in court under 26 U.S.C. § 6672 and § 6694 respectively. Employers may contest the employment status of persons for whom they are alleged to be responsible 26 U.S.C. § 7436.

The "Anti-Injunction Act," as 26 U.S.C. § 7421 is also known, is part of Sub-Chapter B to Chapter 76 of the Internal Revenue Code entitled "Proceedings by Taxpayers and Third Parties." In this Sub-Chapter are gathered the four statutory provisions whereby taxpayers may recover damages from the United States for wrongdoing in the course of revenue collections. With technical language deleted, these statutes permit the following actions and recoveries (underlining added for ease in reading):

§ 7431. Civil damages for unauthorized inspection or disclosure of returns and return information

(a) In general. —

(1) Inspection or disclosure by employee of United States. — If any officer or employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.

(c) Damages. — In any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of —

(1) the greater of —

(A) $1,000 for each act of unauthorized inspection or disclosure of a return or return information with respect to which such defendant is found liable, or

(B) the sum of —

(1) the actual damages sustained by the plaintiff as a result of such unauthorized inspection or disclosure, plus

(ii) in the case of a willful inspection or disclosure or an inspection or disclosure which is the result of gross negligence, punitive damages, plus

(2) the costs of the action, plus

(3) in the case of a plaintiff which is described in section 7430(c)(4)(A)(ii), reasonable attorneys fees, except that if the defendant is the United States, reasonable attorneys fees may be awarded only if the plaintiff is the prevailing party (as determined under section 7430(c)(4)).

§ 7432. Civil damages for failure to release lien

(a) In general. — If any officer or employee of the Internal Revenue Service knowingly, or by reason of negligence, fails to release a lien under section 6325 on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.

(b) Damages. — In any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of —

(1) actual, direct economic damages sustained by the plaintiff which, but for the actions of the defendant, would not have been sustained, plus

(2) the costs of the action.

§ 7433. Civil damages for certain unauthorized collection actions

(a) In general. — If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Except as provided in section 7432, such civil action shall be the exclusive remedy for recovering damages resulting from such actions.

(b) Damages. — In any action brought under subsection (a) or petition filed under subsection (e), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000, in the case of negligence) or the sum of —

(1) actual, direct economic damages sustained by the plaintiff as a proximate result of the reckless or intentional or negligent actions of the officer or employee, and

(2) the costs of the action.

§ 7435. Civil damages for unauthorized enticement of information disclosure

(a) In general. — If any officer or employee of the United States intentionally compromises the determination or collection of any tax due from an attorney, certified public accountant, or enrolled agent representing a taxpayer in exchange for information conveyed by the taxpayer to the attorney, certified public accountant, or enrolled agent for purposes of obtaining advice concerning the taxpayer's tax liability, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Such civil action shall be the exclusive remedy for recovering damages resulting from such actions.

(b) Damages. — In any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the lesser of $500,000 or the sum of —

(1) actual, direct economic damages sustained by the plaintiff as a proximate result of the information disclosure, and

(2) the costs of the action.

The facts alleged by Johnson cannot support a cause of action under any of these statutes. Johnson does not claim that the Defendant or its agents wrongfully disclosed the contents or information in his returns under § 7431. He does not complain of failure to release a lien under § 7432. Johnson alleges irregularities in the assessment process for 1981 and 1984 tax deficiencies, but he does not allege any collection activity which is the focus of § 7433. See Shaw v. U.S., 20 F.3d 182 (5th Cir. 1994);Wise v. C.I.R., 168 F. Supp.2d 649 (S.C. Tex. 2001); Addington v. U.S., 75 F. Supp.2d 520 (S.D.W.Va. 1999); Miller v. U.S., 763 F. Supp. 1534 (N.D. Cal. 1991). Finally, Johnson does not complain that information was improperly enticed from him or another person acting on his behalf under § 7435. Notwithstanding this utter failure to bring his action under the applicable statutes, Johnson's four causes of action have been carefully reviewed and liberally construed.

— In fact, at no point in the present action is there any indication that the Defendant has commenced collection upon the 1981 or 1984 tax deficiencies. The first such activity is revealed by Johnson's Motion on September 23, 2003, to restrain a possible levy upon the 1981 tax deficiency. The Motion is discussed above in the "Procedural History" of this action.

— In Johnson Three a similar conclusion was reached with specific regard to the tax deficiency notice for 1984.

FOUR CAUSES OF ACTION

First Cause of Action — Requests for Payment (Tax Years 1981 and 1984)

Johnson attaches to his Complaint two (2) IRS Forms — 3552 "Notice of Tax Due" both issued on January 20, 2003. One Notice requests payment of Two Thousand Three Hundred Seventy Three and 61/00 Dollars ($2,373.61) for tax year 1981 and the other Notice requests payment of One Hundred Three Thousand Three Twenty Nine and 68/00 Dollars ($103,029.68) for tax year 1984. [1-1, Exhibits D and E to the Complaint.]

In his Complaint, Johnson deems these Notices "unlawful attempts to assess and collect alledged [sic] deficiencies." [1-1, p. 4.] As a matter of law, the Notices did not constitute assessments. The tax assessments for 1981 and 1984 had already been made and thoroughly litigated in the United States Tax Court. On January 29, 2003, when Johnson filed this action, his appeal from the Tax Court was pending in the Circuit Court of Appeals for the Fourth Circuit, days away from a decision on February 4, 2003. See Johnson v. Commissioner, 55 Fed. Appx. 204 (4th Cir. 2003). Johnson sought no further review of this decision and cannot now contest tax liability for either 1981 or 1984. As a challenge to tax assessment, Johnson's First Cause of Action should be dismissed with prejudice under the doctrine of res judicata.

Johnson's challenge to collection actions, by contrast, is clearly premature. Nowhere in his Complaint does Johnson allege any collection action under Chapter 64 of the Internal Revenue Code, codified as 26 U.S.C. § 6301 through § 6344. As a quest for judicial review of a collection activity, Johnson's First Cause of Action should be dismissed without prejudice as premature.

Second and Third Causes of Action

Johnson claims that tax deficiencies for 1981 and 1984 "are for a partnership item on the Plaintiff's tax returns for said tax periods." [1-1, p. 4.] As discussed above at some length, Johnson no longer was a party to the ODA tax proceeding after October 14, 1992, when he filed a voluntary petition in the United States Bankruptcy Court. Johnson's Second and Third Causes of Action should be dismissed with prejudice.

Fourth Cause of Action — "Inconsistent" with ODA Tax Proceedings

Johnson alleges that the tax deficiencies for tax years 1981 and 1984 are "inconsistent" with findings in the ODA partnership decision. Again, as discussed above at some length, Johnson no longer was a party to the ODA tax proceeding after October 14, 1992, when he filed a voluntary petition in the United States Bankruptcy Court. As noted above, the ODA tax matters partner seems to have negotiated a substantial reduction in tax exposure for the participating partners. This fact is irrelevant for purposes of Johnson's Complaint.

Vicariously, perhaps, Johnson was troubled by the ultimate settlement. He alleges substantial personal loss:

The Plaintiff submits as a result of the Defendant's attempts to assess and collect alledged [sic] deficiencies in income taxes from the Plaintiff, both as an individual and as limited partner of ODA, he has incurred substantial severe personal injury and damages as a result thereof. The actions by the Defendant were the primary cause of the Plaintiff being forced to file a voluntary no-asset Chapter 7 Petition [sic]. They were the primary cause of his being diagnosed with a state of severe mental depression in 1996 as a matter of record, and resulting in damages to his personal and professional reputation and his inability to work and practice his profession of architecture since 1989. Professionals do not recover from allegations of infractions upon the law of any kind nor from the stigmas of bankruptcy. He submits he is therefore entitled to money damages and punitive damages for any and all unlawful attempts of the Defendant to assess and or collect taxes or alleged deficiencies in tax from the Plaintiff as determined by the Court. . . .

Whether true or not, Johnson's claims of injury cannot sustain a recovery in this Court simply because they are not contemplated by the statutory scheme to protect and vindicate taxpayer rights. Johnson's Fourth Cause of Action is wholly without merit and should be dismissed with prejudice.

RECOMMENDATION

It is recommended that the Defendant's Motion to Dismiss be granted and that Plaintiffs Motion for Judgment on the Pleadings be denied. The Plaintiffs attention is directed to the important notice on the next page.

Notice of Right to File Objections to Magistrate Judge's "Report and Recommendation" The Serious Consequences of a Failure to Do So

The petitioner is hereby notified that any objections to the attached Report and Recommendation must be filed within ten (10) days of the date of its filing. 28 U.S.C. § 636 and Fed.R.Civ.P. 72(b). The time calculation of this ten-day period excludes weekends and holidays and provides for an additional three days for filing by mail. Fed.R.Civ.P. 6. Based thereon, this Report and Recommendation, any objections thereto, and the case file will be delivered to a United States District Judge fourteen (14) days after this Report and Recommendation is filed. A magistrate judge makes only a recommendation, and the authority to make a final determination in this case rests with the United States District Judge. See Mathews v. Weber, 423 U.S. 261, 270-271 (1976).

During the ten-day period, but not thereafter, a party must file with the Clerk of Court specific, written objections to the Report and Recommendation, if he or she wishes the United States District Judge to consider any objections. Any written objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections, See Keeler v. Pea, 782 F. Supp. 42, 43-44 (D.S.C. 1992). Failure to file specific, written objections shall constitute a waiver of a party's right to further judicial review, including appellate review, if the recommendation is accepted by the United States District Judge. See United States v. Schronce, 727 F.2d 91, 94 n. 4 (4th Cir.), cert. denied, Schronce v. United States, 467 U.S. 1208 (1984); and Wright v. Collins, 766 F.2d 841. 845-847 nn. 1-3 (4th Cir. 1985). Moreover, if a party files specific objections to a portion of a magistrate judge's Report and Recommendation, but does not file specific objections to other portions of the Report and Recommendation, that party waives appellate review of the portions of the magistrate judge's Report and Recommendation to which he or she did not object. In other words, a party's failure to object to one issue in a magistrate judge's Report and Recommendation precludes that party from subsequently raising that issue on appeal, even if objections are filed on other issues. Howard v. Secretary of HHS, 932 F.2d 505. 508-509 (6th Cir. 1991). See also Praylow v. Martin, 761 F.2d 179, 180 n. 1 (4th Cir.) (party precluded from raising on appeal factual issue to which it did not object in the district court), cert. denied, 474 U.S. 1009 (1985). In Howard, supra, the Court stated that general, non-specific objections are not sufficient:

A general objection to the entirety of the [magistrate judge's] report has the same effects as would a failure to object. The district court's attention is not focused on any specific issues for review, thereby making the initial reference to the [magistrate judge] useless. * * * This duplication of time and effort wastes judicial resources rather than saving them, and runs contrary to the purposes of the Magistrates Act. * * * We would hardly countenance an appellant's brief simply objecting to the district court's determination without explaining the source of the error.

Accord Lockert v. Faulkner, 843 F.2d 1015, 1017-1019 (7th Cir. 1988), where the Court held that the appellant, who proceeded pro se in the district court, was barred from raising issues on appeal that he did not specifically raise in his objections to the district court:

Just as a complaint stating only `I complain' states no claim, an objection stating only `I object' preserves no issue for review. * * * A district judge should not have to guess what arguments an objecting party depends on when reviewing a [magistrate judge's] report.

See also Branch v. Martin, 886 F.2d 1043, 1046 (8th Cir. 1989)("no de novo review if objections are untimely or general"), which involved a pro se litigant; and Goney v. Clark, 749 F.2d 5, 7 n. 1 (3rd Cir. 1984)("plaintiffs objections lacked the specificity to trigger de novo review").

This notice apprises the petitioner of the consequences of a failure to file specific, written Objections. See Wright v. Collins, supra; andSmall v. Secretary of HHS, 892 F.2d 15, 16 (2nd Cir. 1989). Filing by mail pursuant to Fed.R.Civ.P. 5 may be accomplished by mailing objections addressed as follows: