United States of America v. Bigley et al

Filing 54

ORDER denying 37 Bigley defendants' Motion to Dismiss. Signed by Judge H Russel Holland on 2/27/2015. (ACL)

WO

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

UNITED STATES OF AMERICA,

)
)
Plaintiff, )
)
vs.
)
)
MICHAEL A. BIGLEY; CAROLYN E.
)
BIGLEY; ROBERT B. KELSO; RAEOLA D.
)
KELSO; and ISA MINISTRIES,
)
)
Defendants. )
__________________________________________)

No. 2:14-cv-0729-HRH

ORDER
Bigley Motion to Dismiss1
The Bigley defendants move pro se to dismiss plaintiff’s complaint for lack of
jurisdiction pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure. The motion is
opposed. Oral argument has not been requested and is not deemed necessary.
The focus of the Bigley defendants’ motion is 26 U.S.C. § 7403(a), which provides in
pertinent part:
In any case where there has been a refusal or neglect to pay
any tax, or to discharge any liability in respect thereof, whether
or not levy has been made, the Attorney General or his delegate, at the request of the Secretary, may direct a civil action to
be filed in a district court of the United States to enforce the
lien of the United States under this title with respect to such tax
or liability....
The Bigley defendants argue that they have not refused or neglected to pay an alleged tax
or discharge any liability.

The Bigley defendants argue that showing of a refusal or neglect

to pay taxes are prerequisite elements of § 7403. They are mistaken. Whether or not

1

Docket No. 37.

Order – Bigley Motion to Dismiss

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plaintiff can establish a tax liability and the Bigley defendants’ refusal or neglect to pay it
goes to the merits of plaintiff’s complaint, not this court’s jurisdiction. As this court has
already held in connection with the Bigley defendants’ earlier motion to dismiss, this court
has jurisdiction of plaintiff’s complaint pursuant to 28 U.S.C. §§ 1340 and 1345 and
26 U.S.C. §§ 7402 and 7403. The court can and will take up the merits of plaintiff’s
complaint and address the question of whether or not there has been a refusal or neglect
to pay a tax liability once the Bigley defendants have answered.
Directly related to the Bigley defendants’ foregoing contention is their allegation that
they paid any taxes owed to plaintiff by delivering to plaintiff a “Certified Promissory
Money Note” in the amount of $700,000.00.2 The parties disagree as to whether or not this
tender had any legal effect. What is clear, however, is that there really is a dispute between
plaintiff and the Bigley defendants as to whether or not they have refused or neglected to
pay taxes owed to the Department of the Treasury. The parties’ arguments about the
efficacy of a promissory note which the Bigley defendants claim to have tendered in
payment of taxes are not germane to the question of whether or not the court has
jurisdiction to entertain plaintiff’s complaint. None of these contentions demonstrate a
lack of jurisdiction with respect to plaintiff’s complaint in this case.
The Bigley defendants argue that:
...the only regulations that the Secretary promulgated for the
enforcement of §§ 6321, 7401, and 7403 exist under 27 C.F.R.,
Part 70. The Plaintiff has not alleged any facts that the nature
of the tax upon which the statutory lien arose under § 6321 was
within the subject matter of 27 C.F.R., Part 70.[3]
Section 6321 makes provision for tax liens in favor of the United States. The tax lien
statute has application to “any tax” which a taxpayer “neglects or refuses to pay.”

2

No. 37.
3

Affidavit of Facts in Support of Motion to Dismiss, ¶ 16 (page 10 of 12), Docket
Motion to Dismiss (page 4 of 12), Docket No. 37.

Order – Bigley Motion to Dismiss

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Section 7401 is not tax-specific, and § 7403 has application “in any case where there has
been a refusal or neglect to pay any tax....” Plainly these statutes make provision for a
federal tax lien and civil actions by the United States to recover taxes (in this case income
taxes) owed and foreclose tax liens based upon its jurisdiction under 28 U.S.C. §§ 1340 and
1345.
The Bigley defendants argue that the taxes which plaintiff seeks in this case are not
“within the subject matter of 27 C.F.R., Part 70.”4 In deed, the taxes which plaintiff seeks
to collect are entirely unrelated to regulations found at 27 C.F.R., Part 70. Those regulations
have absolutely nothing to do with this case. Likewise, plaintiff’s efforts to enforce a tax
lien have nothing to do with Title 27, Code of Federal Regulations. The Secretary of the
Treasury does, of course, have the authority to promulgate regulations. 26 U.S.C. § 7805(a).
But 26 U.S.C. §§ 6321, 7401, and 7403 are clear and unambiguous. There is no need for any
regulations as a predicate to the application of those regulations.
Finally, in their reply the Bigley defendants raise a new argument. They contend
that there is no competent evidence that plaintiff’s complaint was authorized by the
Secretary of the Treasury, or his delegate, and directed by the Attorney General, or his
delegate. See 26 U.S.C. §§ 7401 and 7403. This new argument is procedurally defective
because it was raised in defendants’ reply, thereby depriving plaintiff an opportunity to
respond to the argument. Moreover, this argument fails on the merits for purposes of the
Bigley defendants’ motion to dismiss because, in responding to the motion to dismiss,
plaintiff volunteered Exhibits 1 and 25 which constitute prima facie evidence that the
Secretary of the Treasury has authorized and the Attorney General has directed the
commencement of this action. These exhibits appear regular on their face and have been

4

Id.

5

Response in Opposition to Bigleys’ Rule 12(b)(1) Motion to Dismiss (pages 5 and
10 of 47), Docket No. 43-1.
Order – Bigley Motion to Dismiss

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authenticated by the declaration of plaintiff’s attorney.6 The redactions of which the Bigley
defendants complain do not detract from the fact that these exhibits contain clear
authorization and direction for the filing of this case. If, after defendants have answered
and the court has entered a scheduling order, the Bigley defendants wish to inquire further
into the authorization of this suit, they may do so in the course of discovery. For now, the
court is satisfied that the Secretary has authorized and the Attorney General has directed
the filing of this case.
The Bigley defendants’ motion to dismiss is denied.
DATED at Anchorage, Alaska, this 27th day of February, 2015.

/s/ H. Russel Holland
United States District Judge

6

Docket No. 43-1 at 2.

Order – Bigley Motion to Dismiss

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