McCoy v. United States Of America
MEMORANDUM Opinion and Order Signed by the Honorable Ronald A. Guzman on 11/21/2017: Defendant's motion to dismiss the complaint 6 is granted for lack of subject-matter jurisdiction. Civil case terminated. [For further details see Memorandum Opinion and Order.] Mailed notice(is, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
OTHA U. MCCOY II,
UNITED STATES OF AMERICA,
No. 17 C 3232
Judge Ronald A. Guzmán
MEMORANDUM OPINION AND ORDER
Defendant’s motion to dismiss the complaint is granted for the reasons set forth below.
This is an action by Otha U. McCoy II to obtain a refund of income tax, penalties, and
interest he paid the Internal Revenue Service (“IRS”) through wage and refund levies following
an audit of his 1994 personal income tax return. Plaintiff alleges that at the time of the audit, he
was employed as an undercover Chicago police officer in a tactical unit that was under
investigation by the Internal Affairs Division of the Chicago Police Department and the Federal
Bureau of Investigation for “alleged shakedowns” of drug dealers. (ECF No. 1, Compl. ¶¶ 919.) Plaintiff’s theory is that his tax audit was initiated in connection with the investigations, as
“illegal leverage and punishment” to implicate him in wrongdoing. (Id. at 5.) The complaint
contains three counts, labeled “Violation of Taxpayer Bill of Rights” (Count I); “Harassment”
(Count II); and “Fruits of the Poisonous Tree” (Count III). (Id. at 5-7.) The judgment sought is
$64,710.16, “plus penalties and interest paid by Plaintiff, interest on such amounts and such
amounts this court may deem be [sic] legally just, including costs and attorney fees.” (Id. at 7.)
The government moves to dismiss the complaint under Federal Rules of Civil Procedure
12(b)(1) for lack of subject-matter jurisdiction and 12(b)(6) for failure to state a claim.
When considering a Rule 12(b)(1) motion to dismiss for lack of subject-matter
jurisdiction, a district court accepts as true all well-pleaded factual allegations and draws all
reasonable inferences from the allegations in favor of the plaintiff. Kelley v. Med-1 Sols., LLC,
548 F.3d 600, 604 (7th Cir. 2008) (citing Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th
If the defendant factually attacks the plaintiff’s assertion of subject-matter
jurisdiction, the court may look beyond the jurisdictional allegations in the complaint and “view
whatever evidence has been submitted on the issue to determine whether in fact subject matter
jurisdiction exists.” Capitol Leasing, 999 F.2d at 191. Plaintiff, as the party asserting subjectmatter jurisdiction, bears the burden of proving the existence of that jurisdiction. See Glaser v.
Wound Care Consultants, Inc., 570 F.3d 907, 913 (7th Cir. 2009).
“A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief
may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). The complaint must
“give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted). A plaintiff’s “[f]actual
allegations must be enough to raise a right to relief above the speculative level.” Id. Stated
differently, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).
Plaintiff asserts jurisdiction based on 28 U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422.
(Compl. ¶ 2.) The former confers upon district courts jurisdiction over civil actions 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.” 28 U.S.C. § 1346(a)(1). The Supreme Court has held that “[d]espite its
spacious terms, § 1346(a)(1) must be read in conformity with other statutory provisions which
qualify a taxpayer’s right to bring a refund suit upon compliance with certain conditions.”
United States v. Dalm, 494 U.S. 596, 601 (1990). The first is § 7422(a), which limits a
taxpayer’s right to bring a refund suit by providing:
No suit or proceeding shall be maintained in any court for the recovery of any
internal revenue tax alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected without authority, or
of any sum alleged to have been excessive or in any manner wrongfully collected,
until a claim for refund or credit has been duly filed with the Secretary [of
Treasury], according to the provisions of law in that regard, and the regulations of
the Secretary established in pursuance thereof.
26 U.S.C. § 7422(a); Dalm, 494 U.S. at 601-02; Nick’s Cigarette City, Inc. v. United States, 531
F.3d 516, 520 (7th Cir. 2008) (stating that § 7422(a) “has long been considered a jurisdictional
prerequisite”); see also Jackson v. United States, 100 Fed. Cl. 34, 42 (2011) (“Essentially,
section 7422(a) functions as a waiver of the government’s sovereign immunity in tax refund
suits.”). A second condition for refund suits is found in 26 U.S.C. § 6511(a), which provides
that if a taxpayer is required to file a return with respect to a tax, he must file any claim for
refund within three years from the time the return was filed or two years from the time the tax
was paid, whichever period expires later.1 Dalm, 494 U.S. at 602. “Read together, the import of
these sections is clear: unless a claim for refund of a tax has been filed within the time limits
imposed by § 6511(a), a suit for refund, regardless of whether the tax is alleged to have been
‘erroneously,’ ‘illegally,’ or ‘wrongfully collected,’ §§ 1346(a)(1), 7422(a), may not be
maintained in any court.” Id. Additional prerequisites for seeking a refund are found in 26
U.S.C. § 6532(a), which states that a suit or proceeding under § 7422(a) may not be commenced
sooner than six months from the date the refund claim was filed (unless the IRS renders a
decision within that time), nor later than two years from the date of the mailing by certified mail
of the IRS’s notice of disallowance of the claim. See Bartley v. United States, 123 F.3d 466, 468
(7th Cir. 1997) (“In view of the plain language of [§§ 7422(a) and 6532(a)], it is settled that
unless the taxpayer has first filed a proper claim with the Internal Revenue Service, a court lacks
subject matter jurisdiction over a suit for refund.”).
The government argues that because plaintiff did not meet these statutory requirements,
the Court lacks jurisdiction to hear plaintiff’s refund claim. The record shows that on February
15, 2011, plaintiff filed an administrative claim with the IRS in which he sought a $150,000.00
refund in connection with the 1994 “erroneous audit,” which plaintiff claimed “erroneously
resulted in assessment of tax and penalty and funds seized in 2009 and prior years.” (ECF No. 63.) Under § 6511, the limitations period relevant to that claim would be two years from the time
the tax was paid. IRS records show that by the beginning of the two-year period prior to the
The statute further provides that if the refund claim was not filed within three years from
the filing of the return, “the amount of the credit or refund shall not exceed the portion of the tax
paid during the 2 years immediately preceding the filing of the claim.” 26 U.S.C. § 6511(b)(2)(B).
In other words, the taxpayer can recover only those taxes that were paid within the two years
preceding the filing of the claim.
filing of plaintiff’s administrative claim, plaintiff had already paid $68,595.80 toward his 1994
tax debt, penalties, and interest, and he had paid off the entire tax deficiency itself (as
distinguished from penalties and interest) well in advance of that date. (ECF No. 6-1, Decl. of
Mayer Y. Silber ¶¶ 6-7.) Because plaintiff cannot recover amounts paid before the two years
preceding the filing of the claim, plaintiff’s claim for a refund of those amounts therefore was
not “duly filed” under § 7422(a). See Castaners v. United States, No. 11 C 5130, 2012 WL
1802151, at *3 (N.D. Ill. May 16, 2012).
As for the remaining amounts plaintiff paid during the two-year period before he filed his
administrative claim, plaintiff’s claim as to those funds is barred by § 6532, the limitations
period applicable to this lawsuit.
The record indicates that the IRS denied plaintiff’s
administrative claim in a notice of claim disallowance sent by certified mail on June 22, 2012.
(ECF No. 6-4.) Under § 6532, plaintiff had two years from the denial of his claim to bring suit,
but he filed the instant action on April 28, 2017, well after the expiration of that period.
Plaintiff does not dispute the evidence submitted by the government, nor does he present
any argument regarding the timeliness of his administrative claim or this lawsuit. But he does
contend that the requirements set forth in § 7422(a) do not apply here “because of the ongoing
concealment of information vital to his claim.” (ECF No. 10, Pl.’s Resp. Def.’s Mot. Dismiss at
2.) Plaintiff cites no authority for this argument, which is rejected. It is well established that the
United States cannot be sued without its consent and that the terms of its consent define the
Court’s jurisdiction, Dalm, 494 U.S. at 608, and that any waiver of the government’s immunity
from suit must be unequivocally expressed, Lehman v. Nakshian, 453 U.S. 156, 160-61 (1981).
Plaintiff’s additional contentions that the limitations periods do not apply because the IRS
considered his (partially) untimely administrative claim and because plaintiff alleges violations
of his “fundamental rights” under the Fourth, Fifth, and Fourteenth Amendments (through his
claims for “harassment” and “fruits of the poisonous tree”) are unsupported by authority and
Furthermore, plaintiff’s invocation of the “Taxpayer Bill of Rights” does not preclude
dismissal. Plaintiff alleges that under the “IRS Taxpayer Bill of Rights (Title 26 USC),” he has
the right to a fair and just tax system, to be informed, and to pay the correct tax and no more than
is due. (Compl. ¶ 20.) According to plaintiff, the IRS violated these rights by failing to allow
him “to see IRS paperwork initiating or justifying” the 1994 audit; assessing more tax than he
was required to pay; and treating plaintiff “unfairly.” (Compl. ¶¶ 20-25.) Plaintiff does not refer
to any particular statute or regulation, and the government points out that the provision
commonly referred to as the “Taxpayer Bill of Rights” is 26 U.S.C. § 7433, which does not list
any rights but simply allows taxpayers to bring civil actions for damages against IRS employees
who recklessly, intentionally, or negligently disregard the tax code when collecting taxes. 26
U.S.C. § 7433(a). Section 7433 provides a remedy only for improper collection activities, not
for an improper assessment of taxes. See Shaw v. United States, 20 F.3d 182, 184 (5th Cir.
1994) (explaining how the conduct is different and that “to prove a claim for improper
assessment, a taxpayer must demonstrate why no taxes are owed, but to prove a claim for
improper collection practices, the taxpayer must demonstrate that the IRS did not follow the
prescribed methods of acquiring assets”); Bolden v. United States, No. 12 C 1440, 2013 WL
389028, at *4 (N.D. Ill. Jan. 31, 2013) (“Any harm suffered must relate to the manner of federal
tax collection, not the assessment.”); Henry v. United States, No. 07 C 4813, 2007 WL 4941854,
at *1 (N.D. Ill. Dec. 21, 2007). Plaintiff challenges the audit and assessment of taxes, not their
intentional, reckless, or negligent collection, so he does not state a claim for relief under § 7433.
Nor could he, because (1) § 7433 contains an exhaustion-of-remedies requirement, and plaintiff
does not contend in response to the government’s motion that he exhausted his administrative
remedies with respect to any claim for unauthorized collection activities; and (2) any § 7433
claim would be barred by the applicable two-year statute of limitations, 26 U.S.C. § 7433(d)(3).
Because plaintiff did not comply with the conditions required to waive the sovereign
immunity of the United States, this Court does not have jurisdiction to consider plaintiff’s refund
claim. That determination disposes of this case in light of the fact that a refund is the only relief
plaintiff seeks. The poorly-drafted nature of the complaint filed by counsel, however, compels
the Court to further state that to the extent that plaintiff is attempting to seek any other relief, he
fails to state a claim upon which relief can be granted. Plaintiff pleads no factual content that
allows the Court to draw the reasonable inference that the United States is liable for the
Defendant’s motion to dismiss the complaint  is granted for lack of subject-matter
jurisdiction. Civil case terminated.
DATE: November 21, 2017
Ronald A. Guzmán
United States District Judge
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