Carroll v. Cummings

Filing 5

ORDER granting 3 Motion to Dismiss for Lack of Jurisdiction. The Clerk shall enter judgment accordingly. Signed by Judge William C Griesbach on 08/24/2011. (cc: all counsel, via US mail to John Raymond Carroll) (Griesbach, William)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

JOHN RAYMOND CARROLL,
Plaintiff,
v.

Case No. 11-C-536

UNITED STATES OF AMERICA,1
Defendant.

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

Pro se plaintiff John Carroll filed a complaint in this Court on June 3, 2011, alleging that
the Internal Revenue Service improperly levied upon several of his bank accounts and employment
wages without first mailing to him an Internal Revenue Code (“IRC”) § 6212 Notice of Deficiency
within thirty days of the assessment of the underlying unpaid taxes. (Compl. ¶¶ VII–IX.) Carroll
seeks relief in the form of an injunction “ordering defendant and any agency or employee thereof
to return all property heretofore seized pursuant to the levies and assessment.” (Id. ¶ XIV.) This
matter is before me on defendant’s motion to dismiss under Rules 12(b)(1) and (5) of the Federal
Rules of Civil Procedure. For the reasons stated below, the motion will be granted.

1

Though Carroll named the IRS Revenue Officer Eugene Cummings as defendant, the proper
defendant is the United States, so the pleadings will be amended with the United States replacing
the IRS officer as defendant. See 26 U.S.C. § 7422(c), (f).

BACKGROUND FACTS
Carroll resides in Marinette, Wisconsin, which he claims means he is “not a citizen born in
a Territory over which the United States is sovereign.” (Compl. ¶ IV.) Carroll admits he failed to
file tax returns from 2000–2002, but questions how income taxes could be assessed against him.
He claims, as a member of the Wisconsin Republic, he is outside the scope of the I.R.C. and beyond
the Government’s taxing authority. (Id. ¶ VI.) In response to Carroll’s unfiled returns, the IRS
assessed $127,527.86 in unpaid income taxes (exclusive of interest) against him. (Mot. to Dismiss,
Ex. A.)
On March 22, 2001, Revenue Officer Eugene Cummings sent Carroll a “Final Notice” in
which Carroll was notified of the Government’s intent to levy in thirty days if he did not request a
Collection Due Process hearing. (Id., Ex. B.) Carroll’s only response to this notice was to send a
letter to Revenue Officer Cummings requesting, among other things, a copy of a Summary Record
of Assessment identifying him as a “taxpayer” as well as all supporting records used to determine
Carroll’s tax liability. (Id., Ex. C.) On May 9, 2011, Revenue Officer Cummings initiated
collections actions and served notices of levy upon two of Carroll’s bank accounts and his employer.
(Compl., Ex. A. at 3–4.)
Carroll then filed a complaint in this Court on June 3, 2011, alleging that the IRS improperly
levied upon several of his bank accounts and employment wages without first mailing to him an
I.R.C. § 6212 Notice of Deficiency within thirty days of the assessment of the underlying unpaid
taxes. (Compl. ¶¶ VII–IX.) However, the March 2011 correspondence sent to Carroll was a Final
Notice of Intent to Levy and Notice of Right to a Hearing. Furthermore, Carroll’s complaint falsely
suggests he had no notice prior to March 2011 of his tax deficiency, despite the fact that he had
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received notice of his tax deficiencies several years earlier. (See, e.g., Ex. A, Entry 494 for 2000
Tax Year Account (Statutory Notice of Deficiency sent to Carroll on September 18, 2007.)) Despite
these facts, Carroll seeks an injunction “ordering defendant and any agency or employee thereof to
return all property heretofore seized pursuant to the levies and assessment.” (Id. ¶ XIV.) The
government subsequently filed a motion to dismiss.

ANALYSIS
I. Standards
In reviewing the plaintiff’s complaint with regard to any motion to dismiss, all well-pleaded
facts are assumed to be true, and all such facts, as well as the reasonable inferences therefrom, are
viewed in the light most favorable to the plaintiff. Gutierrez v. Peters, 111 F.3d 1364, 1368–69
(7th Cir. 1997). A motion to dismiss under Rule 12(b)(1) challenges the jurisdiction of this Court
over the subject matter related in the complaint. A motion to dismiss under Rule 12(b)(5) asserts
insufficient process.
II. The Anti-Injunction Act
Defendant contends the Court lacks jurisdiction over Carroll’s claim to enjoin future
garnishments based upon the Internal Revenue Code’s Anti-Injunction Act, 26 U.S.C. § 7421(a),
which generally prohibits suits for the purpose of restraining the assessment or collection of any tax.
The statute provides:
(a) Tax.--Except as provided in sections 6015(e), 6212(a) and (c), 6213(a), 6225(b),
6246(b), 6330(e)(1), 6331(I), 6672(c), 6694(c), 7426(a) and (b)(1), 7429(b), and
7436, no suit for the purpose of restraining the assessment or collection of any tax
shall be maintained in any court by any person, whether or not such person is the
person against whom such tax was assessed.
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26 U.S.C. § 7421(a). “The primary purpose of the statute is ‘protection of the Government's need
to assess and collect taxes with a minimum of pre-enforcement judicial interference . . . .’”
Rappaport v. United States, 583 F.2d 298, 301 (7th Cir. 1978) (quoting Bob Jones Univ. v. Simon,
416 U.S. 725, 736 (1973)).
Carroll invokes two exceptions: Sections 6861 and 6213. Section 6861 pertains to jeopardy
assessments and is not one of the specifically enumerated exceptions set forth in the Anti-Injunction
Act. Furthermore, the assessments and levies at issue in this case do not arise under Section 6861.
Consequently, Section 6861 does not provide Carroll with a basis for allowing the Court to enjoin
the Government.
Carroll also alleges the Government failed to timely abide by the notification requirements
in Section 6213 prior to levying on his bank accounts and garnishing his wages. However, Section
6213(a) “merely allows a taxpayer who has received a notice of deficiency from the [IRS] to petition
the Tax Court within ninety days for a redetermination of the deficiency.” Cooper v. Starkey, 585
F. Supp. 598, 599 (N.D. Ill. 1984). In other words, this exception is limited to taxpayers seeking
to enjoin collection actions that have been initiated without proper notice or before the ninety-day
period to petition the Tax Court has run. As discussed above, Carroll first received notice of his tax
deficiencies in 2007, at the very latest — well before the IRS initiated its 2011 enforcement efforts.
The Section 6213(a) exception to the Anti-Injunction Act thus does not apply.
Carroll does not allege Section 6330(e)(1) as a basis for exception but the defendant
discusses it anyway, contending that even if he had so alleged, the exception would still be
inapplicable. Section 6330(e)(1) allows a taxpayer to enjoin collection efforts where the taxpayer
has made a timely request for a Section 6330(a) Due Process Hearing. Carroll received a Section
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6331 Notice of Intent to Levy on March 22, 2011, in which he was advised of his right to seek a
Collection Due Process hearing within thirty days. (See Ex. B.) Carroll did not attempt to seek this
hearing and thus is also precluded from alleging application of the Section 6330(e)(1) exception.
Consequently, Carroll’s complaint does not fall under any of the statutory exceptions of § 7421(a).
If none of the statutory exceptions of § 7421(a) apply, as they do not here, the only way an
injunction is permitted in a tax case is where Congress has provided no other remedy to the
aggrieved party, as outlined in South Carolina v. Regan, 465 U.S. 367, 378 (1984), or where “(1)
under the most liberal view of the law and facts, the government could not ultimately prevail; and
(2) plaintiff will sustain irreparable injury for which there is no adequate remedy at law.”
Rappaport, 583 F.2d at 301–02 (citations omitted).
As none of the statutory exceptions to § 7421(a) are applicable, only a finding that Carroll
has been provided no other remedy by Congress or that the two conditions discussed in Rappaport
are met will prevent dismissal of this matter for lack of subject matter jurisdiction. Carroll cannot
claim Congress has not provided another remedy, as he still has available to him several statutory
bases for challenging the tax or the IRS’s efforts to collect it, again after making a claim with the
IRS. In particular, after satisfying his tax liabilities, and exhausting administrative procedures with
the IRS, Carroll could sue for a refund. See 26 U.S.C. § 7422.
The Rappaport exception also fails to save Carroll’s claim. First, it is not apparent the
Government could not ultimately prevail in an action against Carroll. In fact, it appears as if it will
prevail, as the tax assessments underlying the levies Carroll challenges are presumed valid and arise
from Carroll’s admitted failure to file tax returns. (Compl. ¶ VI.) Furthermore, Carroll’s complaint

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is based on frivolous assertions, such as that he is a citizen of the “Wisconsin Republic” and thus
cannot be taxed by the United States, or that taxes cannot be assessed against him because he has
not filed tax returns. (Id. ¶¶ IV, VI.) These arguments have been soundly rejected by the federal
courts and thus it is far from clear that the Government will not ultimately prevail. See, e.g., United
States v. Studley, 783 F.2d 934, 937 & n.3 (9th Cir. 1986) (rejecting the assertion an “absolute,
freeborn, and natural individual” need not pay federal taxes and noting this argument has been
“consistently and thoroughly rejected by every branch of the government for decades” such that it
is “now the basis for serious sanctions”); see also United States v. Krenzelok, No. 91-2023, 1992
WL 154032, at *2 (E.D. Wis. July 6, 1992) (“[t]he notion that a tax return is a prerequisite to a valid
assessment is not supported by legal authority or common sense”). Additionally, nothing in the
facts suggests irreparable injury will occur without the requested relief. Economic harm alone is
not irreparable as a matter of law, even by Enochs’ own terms (economic injury even to the point
of “ruination of the taxpayer’s enterprise” does not establish irreparable harm, 370 U.S. at 6); see
also Sierra v. United States, No. 97 CIV. 9320 (RWS), 1998 WL 599715, at * 5 (S.D.N.Y. Sept. 10,
1998) (stating that the IRS’s garnishment of taxpayer wages did not constitute irreparable harm
sufficient to override prohibitions of the Anti-Injunction Act). As the Government will likely
prevail and Carroll cannot demonstrate irreparable injury, the Rappaport exception does not apply.
Because the Court has no jurisdiction to grant the injunctive relief Carroll seeks, his claim
to enjoin the Government from its assessments and levies of his federal income taxes will be
dismissed under Rule 12(b)(1) of the Federal Rules of Civil Procedure. See Dye v. United States,
516 F. Supp. 2d 61, 73–74 (D.D.C. 2007). As such, I need not address the Government’s second
argument regarding insufficient service of process.

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CONCLUSION
The Anti-Injunction Act provision of the Internal Revenue Code prevents the Court from
finding subject matter jurisdiction to entertain Carroll’s claim for injunctive relief. For these
reasons defendant’s motion to dismiss is GRANTED. The Clerk shall enter judgment accordingly.
SO ORDERED this

24th

day of August, 2011.

s/ William C. Griesbach
William C. Griesbach
United States District Judge

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