Clift v. United States Internal Revenue Service

Filing 39

ORDER by Judge Benjamin H. Settle granting 34 Motion to Dismiss.(TG)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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5 STEVEN C. CLIFT,
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Plaintiff,

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v.

8 UNITED STATES INTERNAL
REVENUE SERVICE,
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Defendant.
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CASE NO. C16-5116 BHS
ORDER GRANTING
DEFENDANT’S MOTION TO
DISMISS

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This matter comes before the Court on the United States of America’s (“United
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States”) motion to dismiss (Dkt. 34). The Court has considered the pleadings filed in
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support of and in opposition to the motion and the remainder of the file and hereby grants
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the motion for the reasons stated herein.
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I. PROCEDURAL HISTORY
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On February 16, 2016, Plaintiff Steven Clift (“Clift”) filed a pro se complaint
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against the Internal Revenue Service (“IRS”), alleging the IRS improperly assessed civil
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penalties for frivolous tax submissions and issued false levies. Dkt. 1. Clift asserted six
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claims: (1) abuse of process; (2) breach of fiduciary duty; (3) conspiracy; (4) fraud; (5)
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infliction of emotional distress; and (6) negligence. Id. at 3–4. Liberally construed, Clift’s
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complaint appears to assert a damages claim under 26 U.S.C. § 7433 and a refund claim
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ORDER - 1

1 under 28 U.S.C. § 1346. See Dkt. 1 at 2–5. Clift seeks damages and an order directing the
2 IRS to process his tax returns, remove all liens and levies, and return all levied funds. Id.
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On April 18, 2016, the United States 1 moved to dismiss for lack of jurisdiction and

5 failure to state a claim. Dkt. 8. The next day, the United States filed a preacipe to its
6 motion. Dkt. 11. On May 10, 2016, Clift responded. Dkt. 14. On May 13, 2016, the
7 United States replied. Dkt. 15. The Court granted the United States’ motion and granted
8 Clift leave to amend his complaint to cure the deficiencies in his claims for damages
9 under 26 U.S.C. § 7433 and his claim for refund under 28 U.S.C. § 1346. Dkt. 18.
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On July 22, 2016, Clift filed an amended complaint, properly naming the United

11 States as defendant. Dkt. 19. On August 5, 2016, the United States moved to dismiss the
12 amended complaint. Dkt. 21. On August 10, 2016, Clift responded. Dkt. 23. On
13 September 2, 2016, the United States replied. Dkt. 26. On October 14, 2016, the Court
14 granted the United States’ motion, dismissed Clift’s amended complaint, and once again
15 granted Clift leave to amend his claim. Dkt. 28.
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On November 4, 2016, Clift filed a second amended complaint. Dkt. 29. On

17 December 19, 2016, the United States again moved to dismiss Clift’s claims. Dkt. 34. On
18 January 3, 2017, Clift responded. Dkt. 35. On January 13, 2017, the United States replied.
19 Dkt. 38.
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The IRS is not an entity subject to suit, and therefore the United States is the proper
defendant. See Krouse v. U.S. Gov’t Treasury Dep’t I.R.S., 380 F. Supp. 219, 221 (C.D. Cal.
22 1974) (citing Blackmar v. Guerre, 342 U.S. 512 (1952)).

ORDER - 2

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II. DISCUSSION

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As in its previous motions, the United States again moves to dismiss Clift’s claims

3 for lack of subject matter jurisdiction and for failure to state a claim. Dkt. 34.
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Legal Standards

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Rule 12(b)(1) provides for dismissal of claims if the Court lacks subject matter

6 jurisdiction. Federal courts are courts of limited jurisdiction, “possess[ing] only that
7 power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of
8 Am., 511 U.S. 375, 377 (1994). When jurisdiction is challenged in a Rule 12(b)(1)
9 motion, “[i]t is to be presumed that a cause lies outside this limited jurisdiction, and the
10 burden of establishing the contrary rests upon the party asserting jurisdiction.” Id.
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Motions to dismiss brought under Rule 12(b)(6) may be based on either the lack of

13 a cognizable legal theory or the absence of sufficient facts alleged under such a theory.
14 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). Material
15 allegations are taken as admitted and the complaint is construed in the plaintiff’s favor.
16 Keniston v. Roberts, 717 F.2d 1295, 1301 (9th Cir. 1983). To survive a motion to dismiss,
17 the complaint does not require detailed factual allegations but must provide the grounds
18 for entitlement to relief and not merely a “formulaic recitation” of the elements of a cause
19 of action. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A plaintiff must allege
20 “enough facts to state a claim to relief that is plausible on its face.” Id. at 546.
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ORDER - 3

1 B.

Damages Claim

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As stated in the Court’s previous orders dismissing Clift’s claims, “[a] taxpayer

3 cannot seek damages under § 7433 for improper assessment of taxes.” Miller v. United
4 States, 66 F.3d 220, 223 (9th Cir. 1995) (quoting Shaw v. United States, 20 F.3d 182, 184
5 (5th Cir. 1994)). Because the assessment of civil penalties against Clift under 26 U.S.C. §
6 6702 for frivolous tax returns is not a “collection activity,” the Court lacks jurisdiction
7 under 26 U.S.C. § 7433. See id.
Clift also claims that the IRS engaged in an unlawful “collection activity” that

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9 violated 26 U.S.C. § 6331(h) when it levied over 15 percent of his Social Security
10 retirement benefits. Dkt. 29 at 2, 5. However, 26 U.S.C. § 6331(h) does not create a 15
11 percent limit on the levy of Social Security retirement benefits. 26 U.S.C. §
12 6331(h)(2)(A). See also Hines v. United States, 658 F. Supp. 2d 139, 146–47 (D.D.C.
13 2009); Beam v. U.S. Gov’t, 07-6035-TC, 2007 WL 1674083, at *1 (D. Or. June 6, 2007)
14 (citing Overton v. United States, 74 F. Supp. 2d 1034, 1045 (D.N.M. 1999)) (“Social
15 Security retirement benefits are not exempt from levy or subject to the limitations on
16 continuous levy for specified payments.”). Therefore, Clift’s claim that the IRS violated
17 26 U.S.C. § 6331(h) by levying his retirement benefits in an amount greater than 15
18 percent fails as a matter of law. Because this claim is legally deficient and cannot be
19 cured by amendment, the Court dismisses Clift’s damages claim without leave to amend.
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Refund Claim

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Despite multiple opportunities to appropriately amend his complaint, Clift has

22 again failed to plead that he exhausted the administrative procedures that are prerequisite

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1 to pursuing a refund claim. See 26 U.S.C. § 7422(a). There is no indication that Clift has
2 ever filed a claim that conforms to the requirements of 26 C.F.R. § 301.6402–2, and the
3 documents he has filed with his multiple complaints strongly suggest that no such claims
4 were ever filed. Accordingly, his refund claim is dismissed.
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III.

ORDER

Therefore, it is hereby ORDERED that the United States’ motion to dismiss (Dkt.

7 34) is GRANTED and Clift’s second amended complaint is DISMISSED. The Clerk
8 shall close this case.
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Dated this 8th day of February, 2017.

A

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BENJAMIN H. SETTLE
United States District Judge

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ORDER - 5