Tait et al v. Internal Revenue Service et al

Filing 16

ORDER by Magistrate Judge Jacqueline Scott Corley granting 8 Motion to Dismiss. (ahm, COURT STAFF) (Filed on 7/12/2016)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
THOMAS BATES TAIT, et al.,

7

Case No. 16-cv-01270-JSC

Plaintiffs,
8
v.

ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS

9
INTERNAL REVENUE SERVICE, et al.,

10

Re: Dkt. Nos. 8, 10, 12, 14

Defendants.

United States District Court
Northern District of California

11
Thomas Tait, proceeding pro se, filed this action on behalf of himself and his minor son,

12
13

Nicholas Tait, against the Internal Revenue Service (“IRS”), the Department of the Treasury, and

14

Ursula S. Dean, an IRS employee (collectively “Defendants”) seeking a declaration that they are

15

exempt from federal taxes. Now pending before the Court is Defendants’ motion to dismiss the

16
17
18
19

complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 8.) After
carefully considering the record in this case, and having had the benefit of oral argument on July
7, 2016, the Court GRANTS Plaintiff’s Motion to Dismiss without leave to amend.1 Among other
things, the Court lacks subject matter jurisdiction to hear this suit due to Plaintiff’s failure to
exhaust his administrative remedies pursuant to 28 U.S.C. § 1346, rendering any amendment to

20

the pleadings futile.

21

BACKGROUND

22
23

Plaintiff Thomas Tait alleges that nearly a year ago he sent the IRS a demand for an
explanation of the legal authority that required him to pay income taxes. He did not demand the

24

return of taxes paid; instead, he asked for a letter stating that he is exempt from paying federal

25

taxes. (Dkt. No. 1 at ¶ 4, and at pp. 9-10.) In response, the IRS sent Plaintiff several letters

26

indicating that it was researching the issue, but never substantively responded to Plaintiff’s letter.

27
1

28

Both parties have consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. §
636(c). (Dkt. Nos. 2 & 4.)

1

(Id. at ¶ 9 and at pp.11-12, 15-16.)
Mr. Tait, proceeding pro se, thereafter filed this civil action against the IRS, the

2
3

Department of the Treasury, and Ursula S. Dean, naming himself and his minor son Nicholas Tait

4

as Plaintiffs. (Dkt. No. 1.) The complaint alleges a single cause of action for “Trespass on the

5
6
7
8

Case” and seeks a declaratory judgment that: (1) Defendants have no jurisdiction to tax Plaintiffs,
(2) Plaintiffs are not required to file any income tax returns, (3) Plaintiffs are exempt from paying
income taxes, past, present and future, (4) Plaintiffs have a right to a refund of all federal income
taxes, past, present and future, (5) Plaintiffs’ use of a Social Security Number does not have any
bearing on tax liability, (6) Defendants are precluded from suing Plaintiffs regarding any tax issue,

9
10

United States District Court
Northern District of California

11
12

(7) Any accounts or trusts in Plaintiffs’ names are exempt from income taxes, (8) Mr. Tait’s
corporation, Global Innovation Solutions, Inc., is exempt from taxes, (9) Plaintiffs are not required
to have health insurance, (10) Defendants cannot audit Plaintiffs, and (11) Defendants or Plaintiffs
may order that all records in this case may be sealed. (Id. at ¶¶ A-M.2)

13

In response, Defendants filed the underlying motion to dismiss for lack of subject matter

14

jurisdiction and failure to state a claim. (Dkt. No. 8.) Mr. Tait filed an Opposition, wherein he

15

agreed to dismiss Dean as a defendant, and argued that “this case involves matters of federal law, .

16

. . which confers subject matter jurisdiction to the court,” and that his injury is “clearly spelled out

17

in the correspondence and, that, coupled with the characteristics of Superior courts, is also

18

sufficient to establish jurisdiction.” (Dkt. No. 10 at 2, 4.) Following submission of Defendants’

19

reply, Plaintiffs filed a further response which reiterates the arguments he previously raised. (Dkt.

20

No. 14.) At oral argument, Mr. Tait clarified that he does not seek a refund for taxes paid.
DISCUSSION

21

Defendants move to dismiss for lack of subject matter jurisdiction on several grounds.

22
23
24

First, on the grounds that suits against the United States, and its agents in their official capacity,
are barred by sovereign immunity. Second, that the Declaratory Judgment Act bars claims for
declaratory relief with respect to federal taxes and the anti-injunction act prohibits restraints on the

25

government’s ability to collect taxes. Finally, that Plaintiff has failed to exhaust his administrative

26
27
2

28

Plaintiffs’ prayer for relief uses lettered, rather than numbered paragraphs. These lettered
paragraphs can be found at pages 4-6 of the Complaint.
2

1

remedies with respect to any claim for a tax refund.

2

I.

As a preliminary matter, the Court notes that the suit names both Thomas Tait and his

3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12

Mr. Tait Cannot Represent his Minor Son or Corporation

minor son, Nicholas Tait, as plaintiffs but minors do not have the capacity to bring suit on their
own behalf. See Fed. R. Civ. Pro. 17(c). Nor could Mr. Tait bring this suit on behalf of his minor
son as his guardian; he cannot sue on behalf of his minor son without retaining an attorney. See
Johns v. Cty. of San Diego, 114 F.3d 874, 877 (9th Cir. 1997) (holding that a parent or guardian
cannot bring an action on behalf of a minor child without retaining a lawyer); see also C.E. Pope
Equity Trust v. United States, 818 F.2d 696, 697 (9th Cir. 1987) (noting that a non-lawyer “has no
authority to appear as an attorney for others than himself”). Further, it unclear why Nicolas Tait is
named as a plaintiff since there is no allegation that he paid taxes and he is a minor. Likewise, to
the extent that Plaintiff seeks a determination regarding the tax liability of his corporation Global
Innovation Solutions, Inc., he cannot sue as an individual on behalf of his corporation. See

13

Sherman v. British Leyland Motors, Ltd., 601 F.2d 429, 439 (9th Cir. 1979) (holding that

14

shareholder lacked standing to bring suit on company’s behalf in his individual capacity). Further,

15

a corporation must be represented by an attorney. In re Highley, 459 F.2d 554, 555 (9th Cir.

16

1972) (citations omitted). The Court thus construes this lawsuit as being brought by Mr. Tait

17

regarding the federal taxes he himself had paid and will pay.

18

II.

19

Plaintiff has not Established Subject Matter Jurisdiction
“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of

20

Am., 511 U.S. 375, 377 (1994). The party asserting jurisdiction, that is the party that brought the

21

case to federal court (here Plaintiff), bears the burden of establishing that the court has subject

22
23
24

matter jurisdiction. Id. “Subject matter jurisdiction is fundamental” and cannot be waived.
Billingsley v. C.I.R., 868 F.2d 1081, 1085 (9th Cir. 1989). “The requirement that jurisdiction be
established as a threshold matter spring[s] from the nature and limits of the judicial power of the
United States and is inflexible and without exception.” Steel Co. v. Citizens for a Better Env’t,

25
523 U.S. 83, 94-95 (1998) (internal citations and quotation marks omitted).
26
27

A. The Court does not Have Jurisdiction of the Declaratory or Injunctive Relief Claims
The Declaratory Judgment Act excludes claims for declaratory relief “with respect to

28
3

1

Federal taxes.” 28 U.S.C. § 2201(a); see also Bob Jones University v. Simon, 416 U.S. 725, 742

2

n.7, n.15 (1974) (outlining the legislative history of the federal tax exception to the Declaratory

3

Judgment Act). “[U]nder the specific terms of § 2201 the courts have no jurisdiction to enter

4

declaratory judgments with respect to Federal taxes.” Mitchell v. Riddell, 402 F.2d 842, 846 (9th

5
6
7
8
9
10

Cir.1968). Plaintiff’s request for a declaration that he is not liable for paying income taxes past,
present and future falls squarely within this prohibition and thus the Court lacks subject matter
jurisdiction. See Hughes v. United States, 953 F.2d 531, 537 (9th Cir. 1992) (holding that a
district court lacks subject matter jurisdiction of a claim barred by section 2201(a)).
Plaintiff’s request for an injunction against any future assessment of taxes is barred by the
Anti-Injunction Act. 26 U.S.C. § 7421(a). “The object of [Section] 7421(a) is to withdraw
jurisdiction from the state and federal courts to entertain suits seeking injunctions prohibiting the

United States District Court
Northern District of California

11

collection of federal taxes.” Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 5 (1962). The

12

Act states that, barring certain exceptions, “no suit for the purpose of restraining the assessment or

13

collection of any tax shall be maintained in any court by any person, whether or not such person is

14

the person against whom such tax was assessed.” 26 U.S.C. § 7421(a). Plaintiff’s allegations do

15

not even remotely suggest that any of the exceptions apply. Therefore, the Court also lacks

16

jurisdiction of Plaintiff’s request for an injunction against the federal government collecting taxes

17

from him. See Jensen v. I.R.S., 835 F.2d 196, 198 (9th Cir. 1987) (holding that district court

18

lacked subject matter jurisdiction of injunctive relief claim barred by section 7421(a)).

19

B. Any Claim for Monetary Damages is Barred by Sovereign Immunity

20

Although at oral argument Plaintiff disavowed any intent to seek monetary damages, to the

21
22
23
24

extent he does (as his complaint suggests, see Dkt. No. 1 at 4 (“Plaintiffs are exempt from
withholding and have a right to a refund of all federal income taxes”)), such claim is barred by
sovereign immunity. Plaintiff’s claims against the IRS, the Department of Treasury, and Ursula S.
Dean3 are considered claims against the United States. See Krouse v. U.S. Gov't Treasury Dep't
I.R.S., 380 F. Supp. 219, 221 (C.D. Cal. 1974) (citations omitted); see also 26 U.S.C. § 7422(f)(1).

25

(A suit regarding the collection of federal income tax “may be maintained only against the United

26
27
3

28

The IRS is bureau of Department of the Treasury pursuant to 26 U.S.C. § 7802 and not, as
Plaintiff suggests, a foreign corporation (Dkt. No. 10 at 3.)
4

1

States and not against any officer or employee of the United States.”); Gilbert v. DaGrossa, 756

2

F.2d 1455, 1458 (9th Cir. 1985) (citations omitted) (“a suit against IRS employees in their official

3

capacity is essentially a suit against the United States”).
The United States is immune from suit absent a congressional waiver of sovereign

4
5
6
7
8
9
10

immunity. See Block v. North Dakota, 461 U.S. 273, 287 (1983) (“The basic rule of federal
sovereign immunity is that the United States cannot be sued at all without the consent of
Congress.”). Thus, “[a]bsent a waiver, sovereign immunity shields the Federal Government and
its agencies from suit.” F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994). Any waiver of immunity
cannot be implied and must be “unequivocally expressed.” United States v. Testan, 424 U.S. 392,
399 (1976) (internal citation and quotation marks omitted). These unequivocally expressed
waivers often take the form of statutory consent to a cause of action against the United States. Id.

United States District Court
Northern District of California

11

“Moreover, a waiver of the Government’s sovereign immunity will be strictly construed, in terms

12

of its scope, in favor of the sovereign.” Lane v. Pena, 518 U.S. 187, 192 (1996).

13

Plaintiff’s suggestion that the Court has original jurisdiction over his claims under 28

14

U.S.C. § 1346 is unpersuasive. Section 1346(a)(1) confers original jurisdiction to district courts

15

for:

16
17
18

[a]ny civil action against the United States for the recovery of any
internal-revenue tax alleged to have been erroneously or illegally
assessed or collected, or any penalty claimed to have been collected
without authority or any sum alleged to have been excessive or in
any manner wrongfully collected under the internal-revenue laws.

19

While Plaintiff is correct that the government has waived sovereign immunity for claims under

20

Section 1346, Plaintiff does not satisfy the jurisdictional prerequisites to suit under this section.

21

See Hutchinson v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982). In particular, “no suit or

22

proceedings shall be maintained . . . until a claim for refund or credit has been duly filed with the

23

Secretary, according to the provisions of law in that regard, and the regulations of the Secretary

24

established in pursuance thereof.” 26 U.S.C. § 7422(a). Absent an allegation that the taxpayer

25
26
27

“has filed a claim for refund which the IRS has either rejected or not acted upon in six months,”
the Court lacks jurisdiction to hear a tax refund suit. See Thomas v. United States, 755 F.2d 728,
729 (9th Cir. 1985) (citing 26 U.S.C. §§ 7422(a) & 6532(a)); see also Provenzano v. United
States, 123 F. Supp. 2d 554, 557 (S.D. Cal. 2000) (concluding that the court lacked subject matter

28
5

1

where the plaintiff failed to comply with the procedural requirements for filing a refund claim and

2

instead submitted a letter to the IRS demanding a refund). Neither Plaintiff’s complaint nor his

3

opposition brief indicates that he filed any such refund request. Moreover, at oral argument, Mr.

4

Tait insisted that he is not seeking a refund of taxes paid. Since Plaintiff has not exhausted his

5
6
7
8

administrative remedies before filing suit, Section 1346 does not waive sovereign immunity and
the Court therefore lacks subject matter jurisdiction over Plaintiff’s claim.
Plaintiff’s contention that the Court has federal question and diversity jurisdiction over this
action is unavailing. Merely identifying that there may be diversity jurisdiction, more than
$75,000 in dispute, or that the suit arises under federal law does not suffice to cure the lack of

9
10

United States District Court
Northern District of California

11
12
13

waiver of sovereign immunity. Meyer, 510 U.S. at 475.
***
For the reasons explained above, the Court lacks subject matter jurisdiction over this
action. The Court therefore GRANTS the motion to dismiss without leave to amend.
IT IS SO ORDERED.

14
15
16
17

Dated: July 12, 2016
______________________________________
JACQUELINE SCOTT CORLEY
United States Magistrate Judge

18
19
20
21
22
23
24
25
26
27
28
6

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

THOMAS BATES TAIT, et al.,

Case No. 16-cv-01270-JSC

Plaintiffs,
8
v.

CERTIFICATE OF SERVICE

9
10

INTERNAL REVENUE SERVICE, et al.,
Defendants.

United States District Court
Northern District of California

11
12
13
14
15
16
17

I, the undersigned, hereby certify that I am an employee in the Office of the Clerk, U.S.
District Court, Northern District of California.
That on July 12, 2016, I SERVED a true and correct copy(ies) of the attached, by placing
said copy(ies) in a postage paid envelope addressed to the person(s) hereinafter listed, by
depositing said envelope in the U.S. Mail, or by placing said copy(ies) into an inter-office delivery
receptacle located in the Clerk's office.

18
19
20

Thomas Bates Tait
Nicholas Thiele Tait
1283 Windermere Way
Concord, CA 94521-3342

21
22

Dated: July 12, 2016

23
24

Susan Y. Soong
Clerk, United States District Court

25
26
27
28

By:________________________
Ada Means, Deputy Clerk to the
Honorable JACQUELINE SCOTT CORLEY
7