Spagnolo v. Internal Revenue Service

Filing 54

ORDER GRANTING DEFENDANTS MOTION TO DISMISS AND DENYING AS MOOTPLAINTIFF'S MOTION FOR SUMMARY JUDGMENT re 18 Motion to Dismiss for Lack of Jurisdiction and 39 Motion for Summary Judgment. Signed by JUDGE ALAN C KAY on 12/18/2012. (eps ) -- Mr. Spagnolo's dispute is with the Social Security Administration, not the IRS. Mr. Spagnolo's Complaint lacks standing because even if the Court were to do what Mr. Spagnolo asks, that remedy still would not get him the be nefits he claims he has been unfairly denied CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications will be served by first class mail on 12/19/2012

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

NICK SPAGNOLO,
Plaintiff,
v.
U.S. INTERNAL REVENUE SERVICE,
Defendant.

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Civ. No. 12-00255 ACK-BMK

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS AND DENYING AS MOOT
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
The Court hereby DISMISSES WITHOUT PREJUDICE
Mr. Spagnolo’s Complaint because he lacks standing to pursue his
claims against the IRS, under Article III of the United States
Constitution.
PROCEDURAL HISTORY
Plaintiff Nick Spagnolo filed his Complaint on May 11,
2012. (Doc. No. 1.) The United States1/ filed a motion to dismiss
the Complaint for lack of subject matter jurisdiction on August
24, 2012. (Doc. No. 18 (“MTD”).) The motion was supported by a
declaration from counsel and various exhibits. (Doc. No. 19

1/

As the United States correctly notes, the Internal
Revenue Service (“IRS”) is not a suable entity; the Court
therefore substitutes the United States as the proper party
defendant. See, e.g., Devries v. I.R.S., 359 F. Supp. 2d 988,
991-92 (E.D. Cal. 2005); Erickson v. Luke, 787 F. Supp. 1364,
1369-70 (D. Idaho 1995).

(“Watson Decl.”).) Mr. Spagnolo filed an Opposition to the
Motion, along with supporting exhibits, on September 17, 2012.
(Doc. No. 26 (“Opp.”).) The United States did not file a reply.
Mr. Spagnolo filed a Motion for Summary Judgment on
October 10, 2012. (Doc. No. 39.) The United States filed an
opposition to the motion on November 26, 2012. (Doc. Nos. 47 &
48.) Mr. Spagnolo mailed a Reply in support of his Motion for
Summary Judgment on December 12, 2012, well after the deadline
prescribed by Local Rule 7.4. (Doc. No. 53.) In consideration of
Mr. Spagnolo’s pro se status, however, the Court considered the
Reply.
The Court held a hearing regarding both motions on
December 17, 2012.
STATUTORY BACKGROUND
The Social Security Act, 42 U.S.C. §§ 401 et seq.,
creates a federal insurance scheme which provides old-age,
disability, survivors, and Medicare insurance. FICA, the Federal
Insurance Contributions Act, is one of the taxing statutes that
fund the Social Security Act’s programs. See Whitaker v. United
States, 194 F. Supp. 505, 507 (D.Mass.), aff’d, 295 F.2d 817 (1st
Cir. 1961).
Under FICA, every employer must withhold the FICA tax
on wages from its employees’ paychecks, 26 C.F.R. § 31.3102-1(a),
and must also pay its own tax, generally equal to the employee’s

2

tax, for each person who qualifies as an “employee,” 26 U.S.C.
§§ 3111(a), 3121(d). Employers must also pay Federal Unemployment
Tax Act (“FUTA”) taxes for each employee. 26 U.S.C. § 3301.
Employers do not have to withhold and pay these employment taxes,
however, in regard to payments to “independent contractors.” If a
business uses independent contractors, it need only send annual
information returns, on Form 1099 to the contractors and on Forms
1096 & 1099 to the IRS, indicating the income paid during the
year. 26 C.F.R. § 1.6041-1(a). The contractors, in turn, must pay
their own self-employment contribution taxes.
For FICA and FUTA tax purposes, section 3121(d) of the
Internal Revenue Code defines an employee as: (1) any officer of
a corporation; or (2) any individual who, under the usual common
law rules applicable in determining the employer-employee
relationship, has the status of an employee. 26 U.S.C. § 3121(d).
FICA and FUTA’s tax obligations are enforced by the
IRS. 26 U.S.C. §§ 6201, 6205, 6211. There are many federal cases
in which the IRS has pursued employers because they have
underpaid FICA taxes by improperly treating employees as if they
were independent contractors. See, e.g., Springfield v. United
States, 88 F.3d 750, 753 (9th Cir. 1996).

3

FACTUAL BACKGROUND2/
Plaintiff Nick Spagnolo delivered telephone directories
for three Pennsylvania directory delivery companies seasonally
for at least ten years, until 2007.3/ (Compl. ¶¶ 1, 7; Compl.
Ex. 1 at 10; Watson Decl., Ex. 1.) The delivery companies
evidently treated Mr. Spagnolo for tax purposes as an independent
contractor rather than an employee, as they did not pay FICA or
FUTA taxes relating to him and did not withhold those taxes from
his paychecks. (MTD at 2.) The companies reported his income on
Forms 1099 rather than W-2s. (See Compl. Ex. 9.)
In 2010, Mr. Spagnolo began receiving disability
benefits. (Compl. Ex. 1, at 8.) In August 2010, Mr. Spagnolo
requested, using IRS Form SS-8, that the IRS examine whether he
was an employee or an independent contractor, which he believed
would allow him to claim Social Security, Medicare, and Medicaid
benefits. (See Watson Decl., Ex. 1.) He also sent the IRS a
follow-up letter in September 2010, in which he requested that
his income reported on Forms 1099 be transferred to W-2s and that

2/

The facts as recited in this Order are for the purpose of
disposing of the current motion and are not to be construed as
findings of fact that the parties may rely on in future
proceedings.
3/

At the hearing on the instant motions, Mr. Spagnolo
stated that he is seeking relief regarding the years 2000 until
2007 or 2008. He stated that he does not dispute his
classification as an independent contractor for years prior to
2000.
4

his former employers be required to pay FICA and FUTA taxes
relating to his employment. (Compl. Ex. 2, at 1.)4/
The IRS collected information from Mr. Spagnolo’s
former employers and determined that Mr. Spagnolo was an
independent contractor. (See Watson Decl., Ex. 2.) It sent him
and his former employers a letter detailing its conclusions on
October 7, 2011. (Id.)5/
In December 2011, Mr. Spagnolo sent documents to the
IRS which he believed showed that he was an employee rather than
an independent contractor during the relevant period. (See Compl.
¶ 4; Compl. Ex. 1, at 8-13.) The IRS has not responded. (Compl.
¶ 4.) Mr. Spagnolo has complained to the Pennsylvania Department
of Labor & Industry and unemployment office and the Hawai’i
Unemployment Division about his former employers’ failure to
provide him with W-2s. (Opp. at 6.) He has also complained to the
Pennsylvania Human Relations Commission. (Opp., Ex. 10.)
On January 18, 2012, Mr. Spagnolo filed in this
district a motion for a writ of mandamus naming the IRS as

4/

The United States asserts, without supporting evidence,
that Mr. Spagnolo has not filed any federal income tax returns or
paid any federal income or self-employment taxes since 1996, and
that the last time he paid taxes, in 1996, he paid selfemployment taxes. (MTD at 3 n.1.)
5/

At the same time, Mr. Spagnolo received another
determination letter from the IRS regarding a different former
employer, a construction company, for which he worked in 2005.
(See MSJ at 25-32.) The IRS determined that as to that work, he
was an “employee” for tax purposes. (See id.)
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defendant, accompanied by an application to proceed in forma
pauperis. (Case No. 12-cv-00039, Doc. No. 1.) The magistrate
judge reviewed Mr. Spagnolo’s application and the merits of his
motion as required under 28 U.S.C. § 1915(e)(2) and recommended
that the court dismiss Mr. Spagnolo’s action because it failed to
state a claim on which relief could be granted. (Id. Doc. No. 4.)
Neither party filed any objections to the magistrate judge’s
recommendation, and the district court judge dismissed the action
on February 9, 2012. (Id. Doc. No. 5.) Mr. Spagnolo later filed
this action.
Mr. Spagnolo alleges that the IRS’s classification of
him as an “independent contractor” rather than an “employee” is
incorrect and prevents him from receiving social security
disability insurance and Medicare coverage. (Compl. ¶ 1.) He
seeks to have: (1) his tax status for the relevant years
corrected to “employee”; (2) his former employers forced to pay
FICA and other federal taxes relating to his employment; and
(3) his Social Security records corrected so that he may receive
social security disability insurance. (Compl. ¶ 2.)
STANDARD
I.

Motion To Dismiss for Lack of Subject Matter Jurisdiction
A court’s subject matter jurisdiction may be challenged

under Federal Rule of Civil Procedure 12(b)(1) (“Rule 12(b)(1)”).
“A party invoking the federal court’s jurisdiction has the burden
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of proving the actual existence of subject matter jurisdiction.”
See Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996).
On a Rule 12(b)(1) motion to dismiss for lack of
subject matter jurisdiction, the court is not “restricted to the
face of the pleadings, but may review any evidence, such as
affidavits and testimony, to resolve factual disputes concerning
the existence of jurisdiction.” McCarthy v. United States, 850
F.2d 558, 560 (9th Cir. 1988). “Once the moving party [converts]
the motion to dismiss into a factual motion by presenting
affidavits or other evidence properly brought before the court,
the party opposing the motion must furnish affidavits or other
evidence necessary to satisfy its burden of establishing subject
matter jurisdiction.” Savage v. Glendale Union High Sch., 343
F.3d 1036, 1040 n.2 (9th Cir. 2003).
“The requirement that the nonmoving party present
evidence outside his pleadings in opposition to a motion to
dismiss for lack of subject matter jurisdiction is the same as
that required under Rule 56(e) that the nonmoving party to a
motion for summary judgment must set forth specific facts, beyond
his pleadings, to show that a genuine issue of material fact
exists.” Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813
F.2d 1553, 1559 (9th Cir. 1987). When ruling on a jurisdictional
motion involving factual issues which also go to the merits, the
moving party “should prevail only if the material jurisdictional

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facts are not in dispute and the moving party is entitled to
prevail as a matter of law.” Casumpang v. Int’l Longshoremen’s &
Warehousemen’s Union, 269 F.3d 1042, 1060-61 (9th Cir. 2001).
II.

Special Considerations for a Pro Se Litigant
A pro se litigant’s pleadings must be read more

liberally than pleadings drafted by counsel. Haines v. Kerner,
404 U.S. 519, 520–21 (1972); Wolfe v. Strankman, 392 F.3d 358,
362 (9th Cir. 2004); Eldridge v. Block, 832 F.2d 1132, 1137 (9th
Cir. 1987). When a plaintiff proceeds pro se and technically
violates a rule, the court should act with leniency toward the
pro se litigant. Draper v. Coombs, 792 F.2d 915, 924 (9th Cir.
1986); Pembrook v. Wilson, 370 F.2d 37, 39–40 (9th Cir. 1966).
However, “a pro se litigant is not excused from knowing the most
basic pleading requirements.” Am. Ass’n of Naturopathic
Physicians v. Hayhurst, 227 F.3d 1104, 1107–08 (9th Cir. 2000).
Before a district court may dismiss a pro se complaint
for failure to state a claim upon which relief can be granted,
the court must provide the pro se litigant with notice of the
deficiencies of the complaint and an opportunity to amend it if
the deficiencies can be cured, prior to dismissal. Ferdik v.
Bonzelet, 963 F.2d 1258, 1261 (9th Cir. 1992); Eldridge, 832 F.2d
at 1136. However, the court may deny leave to amend where
amendment would be futile. Flowers v. First Hawaiian Bank, 295
F.3d 966, 976 (9th Cir. 2002) (citing Cook, Perkiss & Liehe, Inc.

8

v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir.
1990) (per curiam)); Eldridge, 832 F.2d at 1135-36.
DISCUSSION
The Court finds that it must dismiss Mr. Spagnolo’s
Complaint for lack of subject matter jurisdiction, although not
for the reasons argued in the United States’ Motion. Mr. Spagnolo
filed his Complaint because he believes that the IRS’s
classification of him as an independent contractor prevents him
from receiving federal benefits. That belief is incorrect.
Because the IRS’s worker classification does not determine
whether Mr. Spagnolo receives federal benefits, Mr. Spagnolo does
not have standing to bring this case. Mr. Spagnolo’s claims
should be directed to the Social Security Administration, not the
IRS.
I.

Sovereign Immunity
First, the United States argues that the Court has no

jurisdiction here due to sovereign immunity. The Court disagrees.
The United States, as a sovereign, cannot be sued
unless it has expressly consented to suit. Gilbert v. DaGrossa,
756 F.2d 1455, 1458 (9th Cir. 1985). Where the United States has
not consented to suit, the case must be dismissed. Id. This
immunity extends to the IRS. See, e.g., Minor v. United States,
294 Fed. App’x 295, 296 (9th Cir. 2008) (citing Gilbert, 756 F.2d
at 1458). As the United States correctly points out, the federal
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Anti-Injunction Act prohibits lawsuits brought “for the purpose
of restraining the assessment or collection of any tax . . .
whether or not [the plaintiff] is the person against whom such
tax was assessed.” 26 U.S.C. § 7421(a). This statute bars most
federal lawsuits regarding tax collection.
In this case, however, Mr. Spagnolo is not seeking to
“restrain” the collection of taxes; in fact, he is seeking to
have the IRS collect more taxes - from his former employers. Such
lawsuits are rare, for obvious reasons, but when they do arise,
they are not barred by the Anti-Injunction Act. See Tax Analysts
& Assocs. v. Shultz, 376 F. Supp. 889, 892 (D.D.C. 1974). In Tax
Analysts, the plaintiff was a non-profit organization that
promoted tax reform. Its lawsuit sought “to force the IRS to
collect a tax which is due, but which has been allegedly avoided
by an illegal Revenue Ruling.” Id. at 893. The court found that
“an action to force the collection of [a] tax is clearly outside
of both the language and the intent of section 7421(a)” and that
the suit therefore was not barred by the Anti-Injunction Act. Id.
at 894. The court found that the lawsuit also was not barred by
the Declaratory Judgment Act, for the same reason. Id. Thirty
years later, the Supreme Court cited the court’s decision
approvingly as part of federal Anti-Injunction Act jurisprudence.
See Hibbs v. Winn, 542 U.S. 88, 103 (2004); see also Cohen v.
United States, 650 F.3d 717, 726-27 (D.C. Cir. 2011).

10

Here, as in Tax Analysts, Mr. Spagnolo is seeking to
“force the collection of [a] tax.” 376 F. Supp. at 894. (See Opp.
at 9 (“[U]nder tax LAW ALL TAX DUE TO THE IRS - MUST NOW be paid
by the company VIOLATOR.”).) Thus, Mr. Spagnolo’s lawsuit is not
barred by the United States’ sovereign immunity.
II.

Standing
Although Mr. Spagnolo’s claim is not barred by

sovereign immunity, he nonetheless does not have standing to
pursue his claim against the IRS.
Standing is “an essential and unchanging part” of the
“case or controversy” requirement of Article III of the United
States Constitution. Lujan v. Defenders of Wildlife, 504 U.S.
555, 560 (1992). Standing must be considered by federal courts
even if the parties fail to raise it. United States v. Hays, 515
U.S. 737, 742 (1995); see Carrico v. City & County of S.F., 656
F.3d 1002, 1005 (9th Cir. 2011) (court may raise standing issue
itself at any time). Standing is gauged by the specific claims
that the party presents; i.e. “whether the particular plaintiff
is entitled to an adjudication of the particular claims
asserted.” Allen v. Wright, 468 U.S. 737, 752 (1984).
To establish a “case or controversy” under Article III,
the plaintiff must show the following three elements: (1) injury
- an “injury in fact” which is concrete and not conjectural;
(2) causation - a causal connection between the injury and the

11

defendant’s conduct; and (3) redressability - a likelihood that
the injury will be remedied by a decision in plaintiff’s favor.
Sprint Commc’ns Co., LP v. APCC Servs., Inc., 554 U.S. 269, 274
(2008) (describing these three elements as an “irreducible
constitutional minimum”). In this case, Mr. Spagnolo cannot show
either causation or redressability.
A.

Causation
As to causation, the Supreme Court’s decision in Simon

v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26
(1976), is instructive. In Simon, a group of non-profits and
plaintiffs sued the IRS under the Administrative Procedure Act
claiming that the IRS had violated the Internal Revenue Code by
extending tax-exempt charitable status to hospitals which refused
medical care beyond emergency-room care to indigent patients. The
individual plaintiffs were indigent people who had been refused
non-emergency care by such hospitals. The lawsuit sought to limit
the number of hospitals which were exempt from taxes and thus,
like Mr. Spagnolo’s suit, sought to have the IRS collect more
taxes. The Supreme Court declined to reach “the question of
whether there is a statutory or an immunity bar to this suit.”
Id. at 37. (That question was addressed by the Tax Analysts case
discussed above.)
Instead, the Supreme Court concluded that plaintiffs
did not have standing to sue because they were not “adversely

12

affected or aggrieved by agency action within the meaning of a
relevant statute.” Simon, 426 U.S. at 38 (quoting 5 U.S.C.
§ 702). The Court explained that to meet the “minimum” standing
requirement of Article III of the Constitution, a plaintiff must
“establish that, in fact, the asserted injury was the consequence
of the defendants’ actions, or that prospective relief will
remove the harm.” Simon, 426 U.S. at 45 (quoting Warth v. Seldin,
422 U.S. at 505). The Supreme Court concluded that the plaintiffs
could not establish either that the hospitals refused them
medical care because the IRS had granted them charitable status
or that removing the hospitals’ charitable status would get
medical care for the plaintiffs. Simon, 426 U.S. at 40-43.
In this case, as in Simon, the plaintiff’s injury is
not a consequence of the defendant’s actions. Mr. Spagnolo
believes that he is being denied benefits because his former
employers did not pay the correct employment taxes; he believes
that if his IRS worker classification is changed and his former
employers are forced to pay FICA taxes, he will receive
additional federal benefits. (See Compl. ¶ 2; MSJ at 16
(“Plaintiff has the right to correction of 1099 wage statements
to W-2 forms including FICA and FUTA requirements . . . . These
wages under law are then to be included in the SOCIAL SECURITY
FILES . . . . [M]y credits will EXCEED 20 and I will receive SSDI
and Medicare.”).) Mr. Spagnolo is mistaken. A person’s right to

13

social security benefits does not depend on his employers’
payment of FICA taxes.
Mr. Spagnolo’s mistake is common and has been shared by
other litigants in federal courts. As mandated by statute, the
money raised through FICA taxes must be used exclusively to fund
Social Security. See 42 U.S.C. § 911(a). But “[a]lthough FICA and
the SSA are inextricably linked, their purposes are vastly
different.” McDonald v. S. Farm Bureau Life Ins. Co., 291 F.3d
718, 724 (11th Cir. 2002). One court explained the system thus:
[N]either the employee's share nor the
employer's share of the FICA tax is deposited
and invested on behalf of the employee.
Current FICA taxes fund the benefits of
current social security recipients; the FICA
taxpayers of today are funding social
security payments to the wage earners of
yesterday. Accordingly, employees do not earn
social security credits . . . in exchange for
paying their share of the FICA taxes or for
their employer's paying of its share:
“eligibility for benefits, and the amount of
such benefits, do not in any true sense
depend on contribution to the program through
the payment of taxes, but rather on the
earnings record of the primary beneficiary.”
Employees earn credit solely by earning
wages.
330 W. Hubbard Rest. Corp. v. United States, 37 F. Supp. 2d 1050,
1055 (N.D. Ill. 1998) (quoting Flemming v. Nestor, 363 U.S. 603,
609 (1960)); see 330 W. Hubbard, 37 F. Supp. 2d at 1055-56
(“Perhaps [plaintiff] is confused because an employee's wage
earning also creates a FICA tax liability for the employee and

14

employer, but the [social security] credit and the tax have
nothing else to do with each other.”)
Therefore, “an employee who qualifies for Social
Security benefits receives those benefits regardless of whether
his employer has complied with the requirements of FICA. . . .
Simply put, an employee’s ability to collect Social Security is
in no way dependent on his employer’s compliance with FICA.”
McDonald, 291 F.3d at 724; see Glanville v. Dupar, Inc., 727 F.
Supp. 2d 596, 600 (S.D. Tex. 2010) (“Although FICA taxes are used
to fund the Social Security program, a worker's eligibility for
social security benefits does not depend on his employer's actual
payment of FICA taxes.”); Gifford v. Meda, No. 09-cv-13486, 2010
WL 1875096, at *12 (E.D. Mich. May 10, 2010) (“It is completely
irrelevant whether or not his employer has paid his FICA share or
not, if the employee can be properly classified and has reported
his income, he will qualify to receive social security
benefits.”); Salazar v. Brown, 940 F. Supp. 160, 163 (W.D. Mich.
1996) (“[A] worker’s entitlement to social security benefits does
not depend on the actual payment of FICA taxes by the
employer.”). The fact that the IRS did not collect FICA taxes
from Mr. Spagnolo’s former employers does not reduce
Mr. Spagnolo’s social security benefits.6/ Thus, Mr. Spagnolo

6/

At the hearing on this motion, Mr. Spagnolo indicated
that he had been told by the Social Security Administration that
documents from the IRS were required to supplement the record of
15

cannot demonstrate the causation required for Article III
standing.
B.

Redressability
Mr. Spagnolo also cannot demonstrate that the action he

requests from the Court would remove the harm that he has
suffered. The relief that a plaintiff seeks must redress the
“injury in fact” that he has suffered. It is not enough that a
favorable judgment will benefit the public at large or punish a
wrongdoer or simply make plaintiff happy. Steel Co. v. Citizens
for a Better Env’t, 523 U.S. 83, 107 (1998). “Psychic
satisfaction” alone will not create Article III standing. Id.
The Social Security Administration’s determination of
whether wages are “covered” so as to create social security
benefits is entirely separate from the IRS’s determination of
whether those wages should be taxed under FICA. For example, an
employee who had FICA taxes withheld from his paychecks may still
be denied federal disability benefits if the Social Security
Administration determines that he was not, in fact a covered
employee. See McCall v. Astrue, No. 05-Civ-2042, 2008 WL 5378121,
at *11 (S.D.N.Y. Dec. 23, 2008) (although there is “considerable
equitable appeal” to the argument that past FICA payments should

his covered wages. The Court notes that if anyone at the Social
Security Administration misled Mr. Spagnolo about how the FICA
statutory scheme works, his claim would, again, properly be
against the Social Security Administration, not the IRS.
16

entitle the employee to disability coverage, “[c]overage is
achieved by receiving covered ‘wages’ . . . not from having FICA
taxes erroneously withheld from payments that are not in fact
covered . . . .”). Thus, even if the Court were to declare that
Mr. Spagnolo was an employee under IRS standards and order his
former employers to pay the FICA taxes to the IRS, the Court’s
order would not affect Mr. Spagnolo’s social security benefits.
In sum, because no action by the IRS can create
benefits for Mr. Spagnolo, Mr. Spagnolo does not have standing to
pursue his lawsuit against the IRS.
III. Proper Remedy
The remedy for Mr. Spagnolo’s claim lies with the
Social Security Administration, not the IRS. See Gifford, 2010 WL
1875096, at *11. The Social Security Act creates a specific
administrative procedure for employees who believe that their
earnings have not been credited properly to their social security
record. Salazar, 950 F. Supp. at 163. “An employee seeking to
establish that he has earned wages that should be credited to his
account for social security purposes must proceed
administratively before the [Commissioner of Social Security] to
correct the employee’s earnings record . . . .” Id. (citing 42
U.S.C. § 405(c)(4), (5)); see McDonald, 291 F.3d at 726. The
Social Security Administration will investigate the requested
correction and make any necessary changes. 20 C.F.R.

17

§§ 404.8020.823. At the end of that process, if Mr. Spagnolo is
not satisfied with the Administration’s resolution of his
complaint, he may file a complaint in federal district court. 42
U.S.C. § 405(c)(8); see, e.g., Jabbar v. Sec’y of Health & Human
Servs., 855 F.2d 295 (6th Cir. 1988) (reversing the Secretary’s
determination and ordering correction of earnings record).7/
CONCLUSION
Mr. Spagnolo’s Complaint is based on a
misunderstanding. He believes that he is being denied federal
benefits because his former employers failed to pay FICA taxes.
He is mistaken. Whether a person is entitled to federal benefits
does not, as a matter of law, depend on whether his employers
properly paid their taxes. Mr. Spagnolo’s dispute is with the
Social Security Administration, not the IRS. Mr. Spagnolo’s
Complaint lacks standing because even if the Court were to do
what Mr. Spagnolo asks, that remedy still would not get him the
benefits he claims he has been unfairly denied.

7/

The Court notes that Mr. Spagnolo already has an action
proceeding against the Commissioner of Social Security, Civ.
No. 12-00563 LEK-BMK, filed on October 19, 2012. Mr. Spagnolo
explained at the hearing on the instant motions that his case
against the Social Security Administration concerns benefits that
Mr. Spagnolo asserts he is owed based on the Administration’s
current record of his covered earnings. It does not raise the
issues of his worker classification or of supplementing the
record of his earnings. The Court cannot discern from
Mr. Spagnolo’s complaint in that action whether he has gone
through the administrative procedure required before he can
contest his worker classification in federal court.
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For the foregoing reasons, the Court GRANTS Defendant’s
Motion To Dismiss and DISMISSES WITHOUT PREJUDICE Plaintiff’s
Complaint. Plaintiff has also filed a Motion for Summary
Judgment. (Doc No. 39.) In view of the Court’s granting the
United States’s Motion To Dismiss, Mr. Spagnolo’s Motion for
Summary Judgment is DENIED as moot.

IT IS SO ORDERED.
DATED: Honolulu, Hawai’i, December 18, 2012

________________________________
Alan C. Kay
Sr. United States District Judge

Spagnolo v. IRS, Civ. No. 12-00255 ACK BMK, Order Granding Defendant’s Motion
To Dismiss and Denying as Moot Plaintiff’s Motion for Summary Judgment

19