Pinnix v. United States of America
Filing
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ORDER granting 6 Motion to Dismiss for the reasons set out in the order. Signed by District Judge Daniel P. Jordan III on September 5, 2014. (SP)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
BARRY NEIL PINNIX
PLAINTIFF
V.
CIVIL ACTION NO. 3:14CV80 DPJ-FKB
UNITED STATES OF AMERICA
DEFENDANT
ORDER
This taxpayer action is before the Court on motion of the United States to dismiss [6]
Plaintiff Barry Neil Pinnix’s claims for failure to exhaust his administrative remedies, or
alternatively, for failure to plead a plausible claim. Pinnix has responded in opposition. The
Court, having considered the parties’ submissions along with the pertinent authorities, finds the
motion should be granted. Pinnix’s claims are dismissed without prejudice for failure to properly
exhaust his administrative remedies.
I.
Factual Background
Pinnix filed this action on January 30, 2014, seeking damages for unauthorized collection
actions pursuant to 26 U.S.C. § 7433 and a refund of balances wrongfully seized by the IRS
pursuant to § 7405. Compl. [1] at 1. In his Complaint, Pinnix contends that he has complied
with the exhaustion requirements of § 7433(d)(1) by filing a complaint with the Treasury
Inspector General for Tax Administration (TIGTA) on January 22, [2014].1 Id. In very general
terms, Pinnix disagrees with the Internal Revenue Service’s unwillingness to reach a compromise
to resolve his tax liability following an audit.
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Pinnix states in the Complaint that the letter was sent January 22, 2013, but the letter
attached to the Complaint reflects a date of January 22, 2014. And future filings by Pinnix
reference January 22, 2014.
II.
Exhaustion of Administrative Remedies
The United States contends that Pinnix’s January 22, 2014 letter to TIGTA does not
comply with the applicable regulations and, therefore, he has not administratively exhausted his
claim. Treasury Regulation § 301.7433-1(e) provides as follows:
(e) Procedures for an administrative claim–
(1) Manner. An administrative claim for the lesser of $1,000,000 ($100,000 in the
case of negligence) or actual, direct economic damages as defined in paragraph (b)
of this section shall be sent in writing to the Area Director, Attn: Compliance
Technical Support Manager of the area in which the taxpayer currently resides.
(2) Form. The administrative claim shall include:
(i) The name, current address, current home and work telephone numbers and any
convenient times to be contacted, and taxpayer identification number of the
taxpayer making the claim;
(ii) The grounds, in reasonable detail, for the claim (include copies of any
available substantiating documentation or correspondence with the Internal
Revenue Service);
(iii) A description of the injuries incurred by the taxpayer filing the claim (include
copies of any available substantiating documentation or evidence);
(iv) The dollar amount of the claim, including any damages that have not yet been
incurred but which are reasonably foreseeable (include copies of any available
substantiating documentation or evidence); and
(v) The signature of the taxpayer or duly authorized representative. For purposes
of this paragraph, a duly authorized representative is any attorney, certified public
accountant, enrolled actuary, or any other person permitted to represent the
taxpayer before the Internal Revenue Service who is not disbarred or suspended
from practice before the Internal Revenue Service and who has a written power of
attorney executed by the taxpayer.2
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In addition, the regulations provide that a claimant must wait until (1) he or she receives
a decision on the administrative claim or (2) six months have elapsed since the filing of an
administrative claim before filing a civil action. An exception exists for claims filed during the
last six months of the two-year period of limitations. Treas. Reg. § 301.7433-1(d) (citing
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(Emphasis added). So, an administrative claim must be sent to the Area Director and contain
specific facts — including the grounds for the claim, a description of the injuries, and the dollar
amount of the claim. Treas. Reg. § 301.7433-1(e); see Memo. [7] at 6. According to the United
States, Pinnix’s letter did not meet either condition.
A.
Recipient
If the Court limits its review of this motion to dismiss to the allegations of the Complaint
and the referenced documents, then those allegations demonstrate that Pinnix failed to comply
with the IRS exhaustion requirements. As noted above, the Complaint merely states that an
administrative claim was filed with TIGTA on January 22, 2014. Compl. [1] ¶ 5. TIGTA is not
authorized to accept such claims. Instead, Treasury Regulation § 301.7433-1(e)(1) expressly
states that the claim must be “sent in writing to the Area Director, Attn: Compliance Technical
Support Manager of the area in which the taxpayer currently resides.”
In his response, Pinnix goes beyond his Complaint and argues that he sent a copy of his
January 22 letter to the Area Director. Resp. [8] at 5. Even assuming the Court would consider
the argument, there is no evidence that this ever occurred. First, there is no indication from the
face of the initial letter that Pinnix copied anyone. Second, there is no return receipt from the
Area Director for the January 22 letter. Finally, there is no indication that Pinnix sent the letter
to the “Area Director, Attn: Compliance Technical Support Manager of the area in which the
taxpayer currently resides.” Treas. Reg. § 301.7433-1(e)(1).
§ 301.7433-1(g), which provides that civil actions must be filed within two years after the date
the cause of action accrues).
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Pinnix does, however, attach a copy of a second letter, addressed to the Area Director,
that his counsel mailed on April 30, 2014—after suit was filed and after the United States moved
to dismiss. Resp. [8], Exh. C. This time, he did attach a certified mail receipt (though not a
return receipt evidencing delivery). But even assuming Pinnix mailed the second letter to the
Area Director, he did so after filing suit, which is too late. See Treas. Reg. § 301.7433–1(d).
The Seventh Circuit reached this same conclusion in Gray v. United States, 723 F.3d 795,
799 (7th Cir. 2013). And while the Fifth Circuit has never examined the issue in depth, it has
stated—perhaps in dicta—that exhaustion must come first. See Don Johnson Motors, Inc. v.
United States, 453 F. App’x 526, 528 (5th Cir. 2011) (affirming dismissal because taxpayer “did
not exhaust administrative remedies prior to filing suit” (citing § 7433(d)(1); Treas. Reg.
§ 301.7433–1(e))); see also Lapaglia v. Richardson, 68 F.3d 466, 1995 WL 581559, at *1 (5th
Cir. 1995) (per curiam) (holding that § 301.7433–1(e) “provides specific and straightforward
instructions as to the appropriate steps to take before filing suit in district court”). While it is not
clear whether the taxpayers in these Fifth Circuit cases attempted exhaustion after filing suit, this
Court remains persuaded by the Seventh Circuit’s well-reasoned opinion in Gray. See also Rotte
v. United States, 615 F. Supp. 2d 1347, 1354 (S.D. Fla. 2009) (reaching same holding), aff’d, 368
F. App’x 73, 2010 WL 691177 (11th Cir.), reh’g and reh’g en banc denied, 402 F. App’x 514,
2010 WL 2835014 (11th Cir.), cert. denied 131 S. Ct. 835 (2010), reh’g denied, 131 S. Ct. 1559
(2011).
Finally, it should be noted that Judge Ozerden’s prior dismissal of Pinnix’s claim for
failure to exhaust should have alerted him to the need for exhaustion before filing suit. See
Pinnix v. United States, No. 3:13cv341–HSO–RHW, 2014 WL 764496, at *3 (S.D. Miss. Jan.
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10, 2014) (noting pre-suit requirement and citing Gray). Nevertheless, Pinnix again failed to
exhaust his administrative remedies.
B.
Substance of the Claim
The United States alternatively argues that, even assuming Pinnix properly addressed and
delivered the January 22 letter to the Area Director before filing suit, his administrative claim
still falls short because it lacks any statement of actual, direct economic damages or the dollar
amount of the claim. The Court agrees.
A taxpayer cannot satisfy the exhaustion requirements through communications that do
not comply with the regulations. See Lapaglia, 1995 WL 581559, at *1 (finding neither
correspondence between attorney and IRS nor a “Claim for Refund and Request for Abatement”
form satisfied the administrative claim procedure of § 301.7433-1). A review of Pinnix’s letter,
written by his attorney, reveals that he has not complied with the substantive requirements for
exhaustion. Compl. [1], Exh. A, Letter [1-2]. His letter describes his past history with the IRS,
including amounts of assessments, payments, penalties, and overpayments—but it is wholly
unclear what relief he is seeking, and he has not specified a “dollar amount of the claim,” as
required by Treasury Regulation § 301.7433-1(e). See Venen v. United States, 38 F.3d 100, 103
(3d Cir. 1994) (finding taxpayer did not comply with exhaustion requirement by sending a letter
to a revenue agent, not the district director, and failing to specify the grounds for relief); Don
Johnson Motors, Inc., 532 F. Supp. 2d at 877 (finding claim sent to revenue officer that did not
include evidence substantiating the dollar amount of the claim did not satisfy the administrative
claim requirements), aff’d, 453 F. App’x 526 (5th Cir. 2011) (per curiam). In sum, the
allegations in Pinnix’s pleadings do not show that he has exhausted his administrative remedies.
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III.
Conclusion
Because Plaintiff has failed to exhaust his administrative remedies, the Court finds
Defendant’s motion to dismiss [6] should be granted. This action is dismissed without prejudice.
SO ORDERED AND ADJUDGED this the 5th day of September, 2014.
s/ Daniel P. Jordan III
UNITED STATES DISTRICT JUDGE
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