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Myers v. United States

United States District Court, Tenth Circuit

October 11, 2013

CHERYL MYERS, Plaintiff,


KATHRYN H. VRATIL, District Judge.

Cheryl Myers brings suit pro se against the United States of America for violations of the Internal Revenue Code, specifically 26 U.S.C. §§ 7433, 6304 and 7432. Plaintiff alleges that the Internal Revenue Service ("IRS") engaged in unauthorized collection actions against her in connection with certain income tax returns, including wrongful failure to release a lien on her property. This matter is before the Court on United States' Motion To Dismiss Plaintiff's Complaint (Doc. #12) filed August 8, 2012.[1] Defendant moves to dismiss plaintiff's complaint because (1) plaintiff has not established that this Court has subject matter jurisdiction over her claims, (2) defendant has not waived its sovereign immunity for any claims that accrued before January 9, 2010, (3) plaintiff's allegations concern the assessment of her taxes, rather than collection thereof, and thus plaintiff has not stated a claim upon which relief may be granted under 26 U.S.C. § 7433 and (4) plaintiff failed to exhaust administrative remedies. For the following reasons, the Court sustains defendant's motion to dismiss.

Legal Standards

Defendant seeks to dismiss plaintiff's claims under Rules 12(b)(1) and (b)(6), Fed. R. Civ. P., for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. Rule 12(b)(1) motions generally take the form of facial attacks on the complaint or factual attacks on the accuracy of its allegations. Holt v. United States , 46 F.3d 1000, 1002-03 (10th Cir. 1995) (citing Ohio Nat'l Life Ins. Co. v. United States , 922 F.2d 320, 325 (6th Cir. 1990)). Defendant challenges the face of the complaint, so the Court presumes the accuracy of plaintiff's factual allegations and does not consider evidence outside the complaint. Id . Courts may exercise jurisdiction only when specifically authorized to do so, see Castaneda v. INS , 23 F.3d 1576, 1580 (10th Cir. 1994), and must "dismiss the cause at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking." Scheideman v. Shawnee County Bd. of County Comm'rs , 895 F.Supp. 279, 280 (D. Kan. 1995) (citing Basso v. Utah Power & Light Co. , 495 F.2d 906, 909 (10th Cir. 1974)); Fed.R.Civ.P. 12(h)(3). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against jurisdiction. Marcus v. Kan. Dep't of Revenue , 170 F.3d 1305, 1309 (10th Cir. 1999). Plaintiff bears the burden of showing that jurisdiction is proper, see id., and must demonstrate that the case should not be dismissed, see Jensen v. Johnson County Youth Baseball League , 838 F.Supp. 1437, 1439-40 (D. Kan. 1993). Conclusory allegations of jurisdiction are not enough. Id.

In ruling on a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., the Court assumes as true all well-pleaded factual allegations and determines whether they plausibly give rise to an entitlement of relief. Ashcroft v. Iqbal , 556 U.S. 662, 679 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim which is plausible - and not merely conceivable - on its face. Id. at 679-80; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007). In determining whether a complaint states a plausible claim for relief, the Court draws on its judicial experience and common sense. Iqbal , 556 U.S. at 679.

The Court need not accept as true those allegations which state only legal conclusions. See id.; Hall v. Bellmon , 935 F.3d 1106, 1110 (10th Cir. 1991). Plaintiff bears the burden of framing her complaint with enough factual matter to suggest that she is entitled to relief; it is not enough to make threadbare recitals of a cause of action accompanied by conclusory statements. Twombly , 550 U.S. at 556. Plaintiff makes a facially plausible claim when she pleads factual content from which the Court can reasonably infer that defendant is liable for the misconduct alleged. Iqbal , 556 U.S. at 678. Plaintiff must show more than a sheer possibility that defendant has acted unlawfully - it is not enough to plead facts that are "merely consistent with" defendant's liability. Id . (quoting Twombly , 550 U.S. at 557). A pleading which offers labels and conclusions, a formulaic recitation of the elements of a cause of action, or naked assertions devoid of further factual enhancement will not stand. Iqbal , 556 U.S. at 678. Similarly, where the well-pleaded facts do not permit the Court to infer more than the mere possibility of misconduct, the complaint has alleged - but has not "shown" - that the pleader is entitled to relief. Id. at 1950. The degree of specificity necessary to establish plausibility and fair notice depends on context, because what constitutes fair notice under Rule 8(a)(2), Fed. R. Civ. P., depends on the type of case. Robbins v. Oklahoma , 519 F.3d 1242, 1248 (10th Cir. 2008) (quoting Phillips v. County of Allegheny , 515 F.3d 224, 232-33 (3d Cir. 2008)).

Factual Background

The 14-page complaint incorporates the 51-page administrative claim which plaintiff mailed two days before she filed her complaint. In each document, plaintiff recounts in largely chronological order her inability to obtain credit from the IRS for estimated tax payments she allegedly made for tax years 1997 and 1998. Plaintiff summarizes her facts and claims as follows:

Plaintiff claims violations as a result of... IRS reckless and intentional collection tactics perpetrated in illegal disregard of the Internal Revenue Code, ("IRC"), and regulations promulgated by the IRC.
Plaintiff also claims violations as a result of the United States' use of IRS as an instrumentality to perpetuate the on-going, invidious collusion between the United States, ("US"), and Michael Barton Myers, ("Myers"), and the use of IRS as an instrumentality to perpetuate the plans, secret pacts, and secret settlements the U.S. and Myers' [sic] collusively devised to implement overt acts employing the threat and/or use of violence and/or use of other criminal means intended to harm and which continue to harm Plaintiff's physical person, reputation and property.
All of the claims, events, and damages set forth herein, taken individually and together, evidence a decade of illegal pattern and practice of reckless and intentional violation of § 7433 and illegal pattern and practice of harassment and abuse as defined in § 6304(b).

Complaint (Doc. #1) filed Jan. 9, 2012 at ¶¶ 11-13. The complaint thereafter alleges the following facts:

Plaintiff was married to Michael Myers ("Myers"). Both are lawyers. Myers' law firm terminated his employment in September of 1992 and forced plaintiff, who was under duress as a result of Myers' verbal and physical abuse, to take him on as a partner in her solo practice.[2] When Myers went to plaintiff's practice, he took a client named Douglas Ruedlinger, whom Myers represented in individual and business bankruptcy matters. About four months after Myers went to plaintiff's law firm, Ruedlinger petitioned the bankruptcy court to let him hire Myers, the law firm and another lawyer to represent Doug Ruedlinger, Inc. and First Benefits, Inc. In connection with the petition, Myers completed an affidavit that lacked candor and/or was perjured, which drew plaintiff and the firm into matters over which plaintiff had no control or knowledge. The IRS ultimately conducted audits of all attorneys who had represented Ruedlinger, including plaintiff and her partnership, and the joint tax returns for plaintiff and Myers for tax years 1992, 1993 and 1994. In response to the audit, in May of 1997, plaintiff and Myers filed a petition for determination of deficiency. At the time, plaintiff had access to all law firm and personal tax records to prove the elements of the petition.

In September of 2000, plaintiff filed for divorce. The following month she filed for dissolution of the law partnership. She then discovered that, in the pages of thousands of books and magazines in their home, Myers had hidden tax documents and receipts relevant to tax years 1992 through 1994 and 1997 through 2000. After plaintiff found, collected and categorized the tax records, Myers was under court order to leave the records at his attorney's office.[3] Instead, in March of 2001, Myers stole the records and took them to California. Plaintiff has had no access to the records since then.

On May 15, 2001, Myers filed a Chapter 11 personal bankruptcy proceeding. Plaintiff alleges that (1) the United States and the IRS knew that Myers had acted in bad faith in connection with a bankruptcy case in which he was attorney of record; (2) the IRS knew but ignored the fact that Myers had omitted from his bankruptcy schedules property of his deceased mother which may have been valued at more than $2.0 million; (3) the United States and the IRS endorsed fraudulent draft tax returns that Myers had prepared in connection with his bankruptcy and ignored plaintiff's evidence of the fraud; (4) knowing that plaintiff and Myers had made joint estimated tax payments for 1997 and 1998, the IRS allowed Myers to file a tax return for 1997 that sought a refund of 1997 estimated tax payments even though it was outside the permissible three-year window; (5) despite plaintiff's claim for $34, 250 (the amount of the joint estimated tax payments for 1997 and 1998) the IRS did not post such payment on plaintiff's account and ignored her claims; and (6) in 2001, when plaintiff discovered the indicia of Myers's tax fraud, she refused to file joint returns with him for the tax years 1997 through 2000. Instead, in 2002 plaintiff filed her tax returns for those four years as a married person filing individually, hindered in her ability to document her returns because Myers had stolen the records.

The estimated tax payments are central to plaintiff's claims. Plaintiff and Myers made these payments from their joint personal checking account for tax years 1997 and 1998. In her 2002 filings, plaintiff noted the estimated tax payments on her returns for 1997, 1998, 1999 and 2000.[4] As a result, plaintiff's returns for each of those years show a tax-due balance of zero. On March 25, 2002, the IRS sent plaintiff a notice of underpayment of 2000 taxes - her first notice that the IRS had not credited the 1997 and 1998 joint estimated tax payments to plaintiff's returns. In April and June of 2002, the IRS sent plaintiff deficiency notices for all four tax years - 1997 through 2000 - even though plaintiff's returns indicated a zero tax balance due. Following up, in June and July of 2002, the IRS sent plaintiff notices of intent to levy on her state tax refunds for those four years. In April of 2003, the IRS sent plaintiff notice of its final intent to levy. It then filed a tax lien in Shawnee County, Kansas, in the amount of $5, 891.10. When plaintiff called the IRS to protest the lien and intent to levy, she asked for and received copies of her accounts for tax years 1997 through 2000. Those accounts showed no evidence that the IRS had received estimated tax payments for 1997 or 1998.

On May 15, 2003, plaintiff filed with the IRS a "Consolidated Request for Withdrawal of Notice of Federal Tax Lien and Request for a Collection Due Process Hearing." In the request, she wrote of physical and mental abuse by Myers, her lack of access to joint funds during their marriage, his secreting money and spending extravagantly on other women and himself, Myers' fraud and tax crimes and her consequential physical and mental impairments and fear for her life - all of which formed the basis of her request for equitable relief and status as an innocent spouse. Plaintiff also stated that her consolidated request served as proof of the reasons that the notice of lien and levy were illegal. Four days later, when plaintiff telephoned the IRS, an IRS agent verbally threatened her and demanded that plaintiff make no more reports about Myers.

On May 24, 2004, plaintiff filed her own Chapter 11 bankruptcy. The IRS entered an adverse appeals decision regarding her tax returns for 1997 through 2000, ignored plaintiff's request for a due process hearing and filed a proof of claim.[5] According to plaintiff, the United States, IRS and Myers were then engaged in ...

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