TP Loses To Levy - But Wins On His Pauper Motion!

[The Observer]

In a lengthy opinion, the Court Of Claims denines what our stalwart TP set out to retrieve what he construes has been wrongfully taken from him. I am providing excerpts due to the prohibitive size and density of the opinion

RICHARD ROY BUSER,
Plaintiff,
v.
THE UNITED STATES,
Defendant.

Release Date: JANUARY 12, 2009

Published by Tax Analysts(R)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

(Filed: January 12, 2009)

Pro Se; Subject Matter Jurisdiction; 28 U.S.C section 1491;
In Forma Pauperis; Motion to Dismiss; RCFC 12(b)(1);
Failure to State a Claim, RCFC 12(b)(6); Tax Refund Claim;
Full Payment Rule; Flora; Res Judicata; Injunctive Relief;
Wrongful Levy Claim, 26 U.S.C. section 7426; Frivolous Claims;
Request to Stay Garnishment

Richard Roy Buser, Arizona City, AZ, pro se.

G. Robson Stewart, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

SWEENEY, Judge

Before the court are Defendant's Motion of the United States to Dismiss the Complaint and Brief in Support Thereof, filed pursuant to Rule 12(b)(1) or, alternatively, Rule 12(b)(6) of the Rules of the United States Court of Federal Claims ("RCFC"), Plaintiff's Application to Proceed In Forma Pauperis, and plaintiff's request for a stay of garnishment. In this action, plaintiff seeks a judgment of $ 32,133.18, which he alleges is the amount wrongfully garnished from his wages by the Internal Revenue Service ("IRS"). Although the court afforded plaintiff ample time -- over fifty days -- to respond to defendant's motion, he has failed to do so. The court determines that there is no reason to further delay its ruling. For the reasons stated below, the court grants plaintiff's application to proceed in forma pauperis, denies plaintiff's request for a stay of garnishment, and grants defendant's motion to dismiss.

I. BACKGROUND/1/

On January 27, 1999, plaintiff, Richard Roy Buser, and his wife filed a joint tax return for the 1997 tax year. Mot. United States Dismiss Compl. & Br. Supp. Thereof ("Def.'s Mot.") 4; Def.'s Ex. 1 at 2. Plaintiff and his wife filed a joint tax return for the 1998 tax year on January 3, 2000./2/ Def.'s Mot. 4; Def.'s Ex. 2 at 9. The IRS, on November 21, 2001, issued a Notice of Deficiency ("notice") to plaintiff and his wife for the 1997 and 1998 tax years. Def.'s Ex. 3. The November 21, 2001 notice indicated a deficiency of $ 24,198.00 and penalties of $ 5,847.00 for the 1997 tax year, as well as a deficiency of $ 13,843.00 and penalties of $ 2,768.50 for the 1998 tax year. Id. at 14. On March 4, 2002, plaintiff and his wife petitioned the United States Tax Court ("Tax Court"), challenging the November 21, 2001 notice and alleging that the IRS (1) erroneously denied their Schedule C Expenses for 1997 and 1998, (2) erroneously denied their Schedule C Cost of Goods Sold for 1997, (3) incorrectly calculated their interest income, and (4) erroneously imposed upon them penalties for their failure to file tax returns. Def.'s Ex. 4. The parties ultimately reached an agreement regarding the 1997 and 1998 tax years on May 6, 2003, the date on which the Tax Court entered a stipulated final decision./3/ Def.'s Ex. 5.

According to each IRS Certificate of Assessments, Payments and Other Specified Matters ("Certificate of Assessments and Payments") for plaintiff's tax years 1999, 2000, and 2001, plaintiff did not file a tax return for those years. Def.'s Exs. 6-8. On April 21, 2003, the IRS generated a substitute return for plaintiff's 1999 and 2000 tax years. See Def.'s Ex. 6 at 28 (1999 tax year); Def.'s Ex. 7 at 34 (2000 tax year). On March 1, 2004, the IRS assessed a tax of $ 16,207.00 for tax year 1999, Def.'s Ex. 6 at 28, and assessed a tax of $ 41,165.00 for tax year 2000, Def.'s Ex. 7 at 34. The IRS also generated a substitute return for plaintiff's 2001 tax year on November 3, 2003, and assessed a tax of $ 35,293.00 on August 2, 2004. Def.'s Ex. 8 at 38.

The IRS issued an Intent to Levy Collection Due Process Notice to plaintiff for the 1997-2001 tax years on November 27, 2006. See Def.'s Ex. 1 at 3; Def.'s Ex. 6 at 29; Def.'s Ex. 7 at 35; Def.'s Ex. 8 at 39. On April 9, 2007, the IRS issued a Notice of Levy on Wages, Salary, and Other Income ("Notice of Levy") against plaintiff's wages to his employer, Microchip Technology. Compl. paragraph 2; Def.'s Mot. 5; Compl. Ex. A. The Notice of Levy was signed by IRS Revenue Officer J. Jones and indicated that the levy, which applied to unpaid assessments for and statutory additions to tax years 1997 through 2001, totaled $ 211,842.68. Compl. Ex. A. On or about May 15, 2007, Microchip Technology began making payments to the IRS by garnishing plaintiff's wages. Def.'s Mot. 5; Def.'s Ex. 1 at 3.

Plaintiff alleges that by June 29, 2008, the IRS had collected $ 32,133.18 from his 2007 and 2008 Microchip Technology paychecks. Compl. Prayer for Relief; Compl. Ex. F. The IRS applied these payments to satisfy the assessments for plaintiff's 1997 and 1998 tax years. See Def.'s Ex. 1 at 7 (indicating no outstanding balance for the 1997 tax year); Def.'s Ex. 2 at 13 (indicating no outstanding balance for the 1998 tax year). As of September 5, 2008, plaintiff had partially satisfied his assessment for 1999 and had an outstanding balance of $ 15,831.21. Def.'s Ex. 6 at 32. According to defendant, no payments have been applied toward plaintiff's 2000 and 2001 tax years, Def.'s Mot. 6, which had, as of September 5, 2008, outstanding balances due of $ 72,042.81 and $ 58,780.86, respectively, see Def.'s Ex. 7 at 36 (indicating the balance for the 2000 tax year); Def.'s Ex. 8 at 40 (indicating the balance for the 2001 tax year). Plaintiff has not filed a claim for refund for tax years 1999, 2000, or 2001. Def.'s Mot. 6; Stewart Decl. paragraph 4.

On May 2, 2007, plaintiff sent a letter to Microchip Technology in which he alleged that IRS Revenue Officer J. Jones lacked the delegated authority to send the Notice of Levy. Compl. Ex. B at 1; see also id. at 2 (containing plaintiff's affidavit stating that IRS Revenue Officer J. Jones (1) "was never authorized by the Secretary of the Treasury . . . to send out such a notice," (2) "will not be able to produce a Delegation Order from the Secretary of the Treasury . . . authorizing him to seize property in payment of income taxes," (3) "does not have an 'enforcement pocket commission,'" and (4) "has no authority to seek to collect the income taxes I allegedly owe BY FORCE"). According to plaintiff, IRS Revenue Officer J. Jones is a "rogue agent" who has "commit[ted] the felonies [sic] act of fraudulent conversion." Compl. Ex. D at 4. Plaintiff cautioned his employer:

Remember, a notice of levy is not a court order and Microchip
Technology, Incorporated will respond to it at its own legal
peril. You will be liable to me for breach of contract if you
turn over my funds to someone who never had any legal authority
to compel payment in this manner.

Compl. Ex. B at 1. Plaintiff alleges that his employer "responded by stating that they do not get involved in these matters even though they did[,] in fact[,] garnish my wages. . . ." Compl. paragraph 1.

On or about January 9, 2008, plaintiff sent a letter to IRS Revenue Officer J. Jones, Compl. Ex. C, "informing him of the problems with the Notice of Levy," Compl. paragraph 3. Plaintiff, invoking the Freedom of Information Act ("FOIA"), requested the proof of authority relied upon by IRS Revenue Officer J. Jones to send the Notice of Levy, including "a photo copy of your badge and Employee ID; the date you took your Oath of Office, the name of the person administering the Oath, and a copy of that Oath," as well as "the law Mr. J[.] Jones used to make his determination of the tax liability." Compl. Ex. C at 2. Plaintiff also asserted that the "administrative determination of status for me is incorrect in several ways," id., and included an "affidavit of status" with his letter,/4/ Compl. Ex. D. Plaintiff received no response from the IRS to his January 9, 2008 letter. Compl. paragraph 3.

On August 18, 2008, plaintiff filed a pro se complaint in the United States Court of Federal Claims ("Court of Federal Claims") alleging that the Notice of Levy issued by the IRS to Microchip Technology was both deficient, id. paragraph 2 (alleging that the Notice of Levy "did not have a valid [Office of Management and Budget ("OMB")] number on the form), and unlawful,/5/ id. paragraphs 2-3. Additionally, plaintiff alleges, IRS Form 1040 "violates the federal Paperwork Reduction Act . . . and is therefore a legally invalid form." Id. paragraph 5. According to plaintiff, IRS Form 1040 "falls into the 'bootleg' class if it does not display a valid OMB control number." Id. Furthermore, plaintiff asserts, "t would be unlawful for THE INTERNAL REVENUE and/or THE INTERNAL REVENUE SERVICE to penalize me for any actions performed or not by myself pertaining to the 1040 form." Id.

Plaintiff seeks a refund of $ 32,133.18, which reflects the total amount of his wages that the IRS garnished in 2007 and 2008. Compl. Prayer for Relief; see also Compl. Ex. F (containing plaintiff's December 28, 2007 and June 27, 2008 payroll statements, which reflect the amounts garnished). In addition, plaintiff requests a stay of garnishment during the course of his litigation. Compl. Prayer for Relief.
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[The Observer]

II. APPLICATION TO PROCEED IN FORMA PAUPERIS

Plaintiff submitted an application to proceed in forma pauperis with his complaint. Pursuant to 28 U.S.C. section 1915 (2006), courts of the United States are authorized to waive filing fees or security under certain circumstances./6/ The statute provides, in relevant part:

Subject to subsection (b), any court of the United States may
authorize the commencement, prosecution or defense of any suit,
action or proceeding, civil or criminal, or appeal therein,
without prepayment of fees or security therefor, by a person who
submits an affidavit that includes a statement of all assets such
prisoner possesses that the person is unable to pay such fees or
give security therefor. Such affidavit shall state the nature of
the action, defense or appeal and affiant's belief that the
person is entitled to redress.

28 U.S.C. section 1915(a)(1). Subsection (b), which addresses requirements for prisoners bringing a civil action or filing an appeal, is not applicable here./7/ See Application Proceed In Forma Pauperis 2 (indicating that plaintiff is not a prisoner). Plaintiff states that "because of [his] poverty, [he is] unable to pay" filing fees. Id. at 1. In support of his application, plaintiff indicates that his last date of employment was July 4, 2008, that he is not presently employed, id., and that his only valuable property constitutes an automobile that he estimates is worth $ 1,500.00, id. at 2. Based upon plaintiff's representations, the court grants his application to proceed in forma pauperis and proceeds to the merit of the complaint.
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[The Observer]

E. Plaintiff's Remaining Claims Are Frivolous

The court, having determined that it lacks jurisdiction over the complaint, need not reach plaintiff's remaining claims-that (1) IRS Form 1040 violates the Paperwork Reduction Act; (2) the Notice of Levy was procedurally deficient; and (3) he is not subject to federal income taxation-since they merely offer additional support for plaintiff's failure to satisfy the necessary prerequisites for asserting jurisdiction over his tax refund claims in the Court of Federal Claims. Typically, frivolous claims are dismissed for failure to state a claim upon which relief can be granted pursuant to RCFC 12(b)(6). See Lewis v. United States, 70 F.3d 597, 602-03 (Fed. Cir. 1995) (discussing dismissals for want of jurisdiction and for failure to state a claim and noting that the usual course is to dismiss frivolous claims for failure to state a claim, which is a final adjudication on the merits). However, "the Supreme Court has not overturned the line of cases countenancing the dismissal of frivolous claims on jurisdictional grounds" so long as "jurisdictional dismissals for frivolousness [are] 'confin[ed]' to cases 'that are very plain.'" Id. at 603-04 (quoting Hart v. B.F. Keith Vaudeville Exch., 262 U.S. 271, 274 (1923) (second alteration in original)); see also Bell v. Hood, 327 U.S. 678, 682-83 (1946) (noting that "a suit may sometimes be dismissed for want of jurisdiction where the alleged claim . . . is wholly insubstantial and frivolous"). As explained below, plaintiff's arguments are wholly frivolous and without merit.

First, Congress enacted the Paperwork Reduction Act of 1980 ("PRA"), 44 U.S.C. sections 3501-3520 (2006), in order to limit, as much as practical, information requests by federal agencies that burden the public. See Dole v. United Steelworkers of Am., 494 U.S. 26, 32 (1990) (stating that the PRA "was enacted in response to one of the less auspicious aspects of the enormous growth of our federal bureaucracy: its seemingly insatiable appetite for data"). The PRA does not apply to "'information collection request' forms issued during an investigation against an individual to determine his . . . tax liability." Lonsdale v. United States, 919 F.2d 1440, 1445 (10th Cir. 1990). Indeed, as the United States Court of Appeals for the Tenth Circuit determined in Lonsdale, the PRA "provides no basis for avoiding . . . levies imposed on [a taxpayer's] wages. . . ." Id.; see also United States v. Neff, 954 F.2d 698, 699 (11th Cir. 1992) ("Congress did not enact the PRA's public protection provision to allow [the] OMB to abrogate any duty imposed by Congress. So the PRA provides [appellant] no refuge from his statutorily-imposed duty to file income tax returns."). Furthermore, courts have previously rejected arguments similar to plaintiff's concerning IRS Form 1040 and valid OMB control numbers. See, e.g., Lewis v. Comm'r, 523 F.3d 1272, 1274-77 (10th Cir. 2008) (rejecting arguments that IRS Form 1040 (1) did not comply with the PRA, (2) did not display a valid control number, (3) must contain an expiration date, and (4) must include a disclaimer indicating that PRA requirements are satisfied); United States v. Lawrence, 217 Fed. App'x 553, 554 (7th Cir. 2007) (rejecting arguments that IRS Form 1040 did not contain a valid OMB number and therefore ran afoul of the PRA); Salberg v. United States, 969 F.2d 379, 384 (7th Cir. 1992) (affirming the district court's determination that an IRS Form 1040 without an OMB control number expiration date does not violate the PRA).

Second, the IRS is authorized by statute to issue a notice of levy. Section 6331 provides, in part:

If any person liable to pay any tax neglects or refuses to pay
the same within 10 days after notice and demand, it shall be
lawful for the Secretary to collect such tax (and such further
sum as shall be sufficient to cover the expenses of the levy) by
levy upon all property and rights to property . . . belonging to
such person or on which there is a lien provided in this chapter
for the payment of such tax.

26 U.S.C. section 6331(a); see also id. section 6331(d)(4) (enumerating information that must be included with a notice of levy). Although plaintiff argues that the Notice of Levy was deficient because it "did not have a valid OMB number on the form[,] . . . did not have a court stamp or . . . complete signature," Compl. paragraph 1, neither section 6331 nor its implementing regulations require this information, see 26 U.S.C. section 6331; 26 C.F.R. sections 301.6331-1, -2 (2006). Moreover, courts have rejected such arguments. See, e.g., Tavano v. Comm'r, 986 F.2d 1389, 1389 (11th Cir. 1993) (holding that a notice of tax deficiency sent to a taxpayer by the IRS need not be signed in order to be valid)./15/ Furthermore, section 6331(a) explicitly applies to "any person liable to pay any tax," 26 U.S.C. section 6331(a), despite plaintiff's claims to the contrary, see Compl. Ex. D at 2 (declaring that plaintiff is "NOT . . . 'one of the entities listed in Title 26 section 6331(a)'").

Third, despite plaintiff's creative arguments to the contrary, he cannot disclaim his responsibility to pay federal income tax. The Fourteenth Amendment to the United States Constitution provides: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside." U.S. Const. amend. XIV section 1. Plaintiff himself concedes that he is a citizen of Arizona, "which is a State of the Union," Compl. Ex. E at 1, though he claims that he is not a "citizen or resident of the geographical United States," id. at 3; see also Compl. Ex. D at 1 (stating that plaintiff is not a United States citizen). The court, pursuant to Rule 201 of the Federal Rules of Evidence, takes judicial notice of the fact that the state of Arizona, which was admitted to the union as the forty-eighth state in 1912, is one of the fifty states that comprise the United States of America. See America's Story from America's Library, "Arizona," at http://www.americaslibrary.gov (last visited January 9, 2009); Am. Heritage College Dictionary 77 (4th ed. 2004) (defining "Arizona" as a "state in the SW US on the Mexican border; admitted as the 48th state in 1912"). Plaintiff's position is nonsensical and therefore untenable.

Furthermore, although plaintiff maintains that "I am not a person," Compl. Ex. D at 4, the IRC defines a "person" to include "an individual, a trust, estate, partnership, association, company or corporation," 26 U.S.C. section 7701(a)(1) (emphasis added). Along these same lines, plaintiff asserts that he is not a "taxpayer." Compl. Ex. D at 1. The IRC defines a "taxpayer" as "any person subject to any internal revenue tax." 26 U.S.C. section 7701(a)(14). Courts have previously deemed similar arguments to those raised by plaintiff here as frivolous. See, e.g., United States v. Sloan, 939 F.2d 499, 500-01 (7th Cir. 1991) (rejecting similar arguments, which the court characterized as "strange"); Stoecklin v. Comm'r, 865 F.2d 1221, 1224 (11th Cir. 1989) (characterizing arguments that appellant "is not subject to the income tax laws" as "frivolous"); Stubbs v. Comm'r, 797 F.2d 936, 938 (11th Cir. 1986) (per curiam) (characterizing arguments that appellant was not a person required to file a tax return as "patently frivolous"); United States v. Studley, 783 F.2d 934, 937 & n.3 (9th Cir. 1986) ("[Appellant] contends that she is not a 'taxpayer' because she is an absolute, freeborn and natural individual. This argument is frivolous. And individual is a 'person' under the [IRC]. . . ."); Guthrie v. Comm'r, No. 1400904, 2006 WL 1027727, at *1 (Tax Ct. Apr. 19, 2006) (characterizing petitioner's arguments that he "is not subject to Federal income tax," that "requiring him to pay income tax violates the U.S. Constitution," and that "he is not liable for income tax because he is Catholic" as frivolous)./16/

In short, "[t]axes are what we pay for civilized society," Compania General de Tabacos de Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 100 (1927) (Holmes, J., dissenting), and "[a]ll individuals, natural or unnatural, must pay federal income tax on their wages," Lovell v. United States, 755 F.2d 517, 519 (7th Cir. 1984). Plaintiff's arguments are frivolous and, in fact, confirm that the court lacks jurisdiction over the complaint.

V. CONCLUSION

For the reasons stated above, the court lacks jurisdiction over plaintiff's complaint. Accordingly, it is hereby ordered:

1. Plaintiff's application to proceed in forma pauperis is
GRANTED.

2. Defendant's motion to dismiss the complaint is GRANTED.
The Clerk of Court is directed to dismiss plaintiff's complaint
WITHOUT PREJUDICE and to enter judgment accordingly.

3. Plaintiff's request for a stay of garnishment is
DENIED.

NO COSTS.

Margaret M. Sweeney
Judge