Blanchette v. Jacobosky

Filing 16

Judge Richard G. Stearns: ORDER entered granting 5 Motion to Dismiss for Lack of Jurisdiction and for Failure to State a Claim. (RGS, law1)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 13-12655-RGS
DENNIS A. BLANCHETTE
v.
SOCIAL SECURITY ADMINISTRATION
MEMORANDUM AND ORDER
ON DEFENDANT’S MOTION TO DISMISS
February 21, 2014
STEARNS, J.
Plaintiff Dennis Blanchette complains that the Social Security
Administration (SSA) “fraudulently took all of his $1,157.00 monthly SSA
payments, and gave it to the Internal Revenue Service (IRS)” between the
years 2009 to 2012. Blanchette requests that the court find the SSA liable
to him in the amount of $3,000,000.00.
The SSA admits that from May of 2009, until January of 2012, the
SSA garnished $1,157.00 from Blanchette’s SSA retirement benefits on a
monthly basis, stating that it did so in compliance with an IRS levy on
Blanchette’s Social Security retirement benefits pursuant to 26 U.S.C. §
6331. (Blanchette has not disputed the fact that the IRS released the levy in
January of 2012 and that the SSA ceased garnishing Blanchette’s

retirement benefits at that time).

The SSA now moves to dismiss

Blanchette’s Complaint for lack of subject matter jurisdiction and for failure
to state a claim.
DISCUSSION
1. Blanchette fails to state a claim upon which relief can be
granted.
Internal Revenue Code, 26 U.S.C. § 6332(a) states: “[A]ny person in
possession of . . . property or rights to property subject to a levy . . . shall,
upon demand of the Secretary, surrender such property . . . to the
Secretary.” The definition of the term “person” for purposes of § 6332(a) is
expansive and includes individuals, business entities, agencies, and even
States. See Commonwealth of Massachusetts v. United States, 296 F.2d
336, 337 (1st Cir. 1961) (holding Massachusetts liable for failing to honor an
IRS levy to collect federal income tax owed by state employees); cf. McKean
v. United States, 563 F. Supp. 2d 182, 185 (D.D.C. 2008) (upholding the
procedural validity of an IRS levy on social security payments); Overton v.
United States, 74 F. Supp.2d 1034, 1045 (D.N.M. 1999) (“General
retirement benefits such as IRAs, self-employed Keough plans, thrift
savings plans and Social Security benefits are not [exempt from levy].”).
The SSA was therefore obligated to comply with the levy and to surrender
that portion of Blanchette’s retirement benefits that was subject to the levy.
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Further, anyone who surrenders such property pursuant to an IRS
levy “shall be discharged from any obligation or liability to the delinquent
taxpayer and any other person . . . arising from such surrender or
payment.” 26 U.S.C. § 6332(e). Thus, Blanchette cannot by operation of
law state a claim upon which relief can be granted against the SSA for
having “given” his property to the IRS during the duration of the levy.
Blanchette argues that the Social Security Act (Pub. L. No. 74-271,
now codified as 42 U.S.C. ch. 7) forbids the SSA from complying with an
IRS levy. See Pl.’s Mot. to Strike (Dkt. #10), ¶ 14. In support, Blanchette
cites 42 U.S.C. § 407 (Social Security Act, § 207), which provides that social
security payments shall not be “subject to execution, levy, attachment,
garnishment, or other legal process” and that “[n]o other provision of law . .
. may be construed to limit, supersede, or otherwise modify the provisions
of this section except to the extent that it does so by express reference to
this section.” Id. §§ 407(a) & (b).
Blanchette’s citation to the Social Security Act is not inaccurate,
insofar as it goes, but it is irrelevant to this dispute because the statutory
authorization of the IRS levy power to collect unpaid taxes does contain an
express exclusionary reference to § 207 of the Social Security Act. See 26

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U.S.C. § 6334, titled “Property Exempt from Levy,” which states in
pertinent part:
“[n]otwithstanding any other law of the United States
(including section 207 of the Social Security Act), no property
or rights to property shall be exempt from levy other than the
property specifically made exempt by subsection (a).”
26 U.S.C. § 6334(c) (emphasis added). Because 26 U.S.C. § 6334(c)
supersedes 42 U.S.C. § 407(a), Blanchette’s exemption argument fails as a
matter of law.
2. The court lacks subject matter jurisdiction over
Blanchette’s Complaint because it was not brought in
accordance with 26 U.S.C. § 7433.
A taxpayer’s claim for damages resulting from tax collection is limited
by 26 U.S.C. § 7433.

Section 7433 operates as a waiver of sovereign

immunity and allows a taxpayer to bring a lawsuit for damages against the
United States to recover for “certain unauthorized collection actions” by the
IRS. Id. § 7433(a). It is “the exclusive remedy for recovering damages
resulting from such actions.” Id. § 7433(b). Blanchette’s Complaint, on its
face, seeks damages in connection with the collection of a tax (requesting
$3,000,000 as redress from the SSA for having turned over his retirement
benefits to the IRS). Because he has failed to comply with 26 U.S.C. § 7433,
the court lacks subject matter jurisdiction.

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As an initial matter, Blanchette fails to name the proper party to a §
7433 action (the United States) and fails to allege that he has satisfied any
of the other jurisdictional requirements for bringing a § 7433 action (such
as exhaustion of his administrative remedies with the IRS).

Further,

Blanchette himself disavows any connection between his Complaint and §
7433 via a contorted reading of the terms “taxpayer,” “person,” and
“individual” in 26 U.S.C. §§ 7433 and 7701, and 1 U.S.C. § 1, concluding
“[n]eedless to say, I am not the statutory taxpayer or personage what-sowhoever of interest at law.” See Pl.’s Mot. to Dismiss (Dkt. # 12), ¶¶ 9-13.
Blanchette’s argument regarding the inapplicability of § 7433 is one
of the many “well-worn tax-protester arguments,” In re Haggert, 1992 WL
379414, *4 (1st Cir. Dec. 22, 1992), that courts have repeatedly rejected as
“meritless” and “frivolous.” 1 Blanchette’s assertion, by reference to 1 U.S.C.

See, e.g., United States v. Studley, 783 F.2d 934, 937, n. 3 (9th Cir. 1986)
(noting that “[a]n individual is a ‘person’ under the Internal Revenue Code”
and that arguments to the contrary “ha[ve] been consistently and
thoroughly rejected by every branch of the government for decades” and
“advancement of such utterly meritless arguments is now the basis for
serious sanctions imposed by civil litigants who raise them.”); United
States. v. Rice, 659 F. 2d 524, 528 (5th Cir. 1981) (noting the frivolity of the
“not a ‘person’” argument); Lovell v. United States, 755 F.2d 517, 519-520
(7th Cir. 1984) (imposing sanctions against pro-se plaintiffs for arguing that
as “natural persons” they were “exempt from federal taxation”); United
States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990) (“contention that
defendant was not an ‘individual’ under the Internal Revenue Code also is
frivolous”); Jones vs. I.R.S., 2012 WL 5334631, *2 (D. Mont. Oct. 26, 2012)

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§ 1 (which defines the meaning of the term “person” for any Act of
Congress), that he is not a “person” subject to an internal revenue tax, is
particularly ironic (as well as mistaken as a matter of law) in light of the fact
that the stated purpose of his Complaint is to recover damages for the
deprivation of his alleged “right” as a “person,” under another Act of
Congress, to social security payments.
ORDER
For the foregoing reasons, defendant’s Motion to Dismiss is
GRANTED.
SO ORDERED.
/s/Richard G. Stearns
UNITED STATES DISTRICT JUDGE

(“An individual, including Jones, is a ‘person’ under the Internal Revenue
Code and is subject to Title 26.”).

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