Plaintiffs
v.
UNITED STATES OF AMERICA COMMISSIONER OF INTERNAL REVENUE SERVICE
and
PETER M. O'KEEFE, Revenue Agent,
Defendants
No. 90 Civ. 0501 (MGC)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
1990 U.S. Dist.
July 26, 1990, Decided
July 27, 1990, Filed
COUNSEL:
[*1]
GEORGE and DEBORAH TUCCIO, Pro se, New York, New York.
OTTO G. OBERMAIER, United States Attorney for the Southern District
of New York, Attorney for Defendants, New York, New York, BY: Beverly Kolenberg
Special United States Attorney.
JUDGES:
Miriam Goldman Cedarbaum, United States District Judge.
OPINIONBY:
CEDARBAUM
OPINION:
OPINION AND ORDER
This action was brought pro se by George and Deborah Tuccio, a married couple, against the United States of America, the Commissioner of the Internal Revenue Service, and Revenue Agent Peter M. O'Keefe. The Tuccios seek (1) an injunction preventing the defendants from proceeding with an audit of their 1987 personal income taxes, and (2) damages in the amount of $ 15,000 to cover legal, accounting, administrative and court costs, as well as business losses. The defendants have moved to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). For the reasons discussed below, defendants' motion to dismiss is granted.
The Complaint
Plaintiffs filed this action pursuant to 26 U.S.C. § 7430 and the Omnibus Taxpayer Bill of Rights. Omnibus Taxpayer Bill of Rights, Pub.L. No. 100-647, § 6226 et seq., 102 Stat. 3342, 3730-52 (1988). For the purpose [*2] of ruling on defendants' motion to dismiss, the allegations of the complaint must be accepted as true. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The Complaint pertains to an audit of plaintiffs' 1987 personal income tax return which was commenced on November 30, 1988 by Revenue Agent Peter M. O'Keefe. On January 22, 1990, when the Complaint was filed, the audit had not yet been completed.
According to plaintiffs, at their first meeting with Agent O'Keefe, O'Keefe failed to "convey information concerning the rights of the taxpayer, administrative and judicial appellate procedures, refund and complaint procedures, including IRS audit and related matters," as required by the Omnibus Taxpayer Bill of Rights. n1 Complaint, para. 4.
n1 26 U.S.C. § 7521(b), part of the Omnibus Taxpayer Bill of Rights, provides in relevant part:
(1) Explanations of Processes.-- An officer or employee of the Internal Revenue Service shall before or at an initial interview provide to the taxpayer --
(A) in the case of an in-person interview with the taxpayer relating to the determination of any tax, an explanation of the audit process and the taxpayer's rights under such process. ...
[*3]
The Tuccios allege that Agent O'Keefe issued Form 4564, an information
document request form, four times between November 30, 1988 and May 22,
1989. Plaintiffs contend that they met personally with Agent O'Keefe on
all four occasions and "complied ... to the letter" each time. Complaint,
para. 2. Plaintiffs also claim that much of the information requested in
the later meetings had already been supplied to Agent O'Keefe during previous
meetings. Plaintiffs contend that these repeated demands to produce the
same information caused them economic hardship.
Plaintiffs commenced this action to enjoin the defendants from continuing
the audit. Plaintiffs also seek damages to cover their expenses in connection
with the audit, and for the loss of business they have allegedly experienced
as a result of defendants' activities.
Discussion
I. Plaintiffs' Claim for an Injunction
Plaintiffs' claim for an injunction is barred by the Anti-Injunction
Act, 26 U.S.C. section 7421(a). As the Supreme Court has noted, the Anti-Injunction
Act has no recorded legislative history. Bob Jones University v. Simon,
416 U.S. 725, 736 (1974). Nonetheless, the language of the Act "could scarcely
be [*4] more explicit." Id. Section 7421(a) provides:
[N]o 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.
26 U.S.C. § 7421(a).
The Act was drafted to "withdraw jurisdiction from the state and federal
courts to entertain suits seeking injunctions prohibiting the collection
of federal taxes." Enochs v. Williams Packing & Navigation Co., 370
U.S. 1, 5 (1962). Its purpose is to permit the United States to assess
and collect taxes with minimal pre-enforcement judicial intervention. Id.
at 7. n2 If taxpayers wish to litigate the legality of the Internal Revenue
Service's actions, they may (1) petition the Tax Court for a redetermination
of a tax deficiency, n3 or (2) pay under protest, and then sue for a refund
either in this court n4 or in Court of Claims. n5 Bob Jones University,
416 U.S. at 730-31.
n2 The statutory exceptions to the Anti-Injunction Act are 26 U.S.C. § § 6212(a) and (c), 6213(a), 6672(b), 6694(c), 7426(a) and (b)(1), and 7429(b), and do not apply in this case.
n3 26 U.S.C. § § 6212, 6213. While this option still requires an assessment of taxes to be made first, it does allow the taxpayer too "litigate first and pay, if necessary, later." See Laino v. United States, 633 F.2d 626, 629 (2d Cir. 1980).
n4 26 U.S.C. § 7422; 28 U.S.C. § 1346(a)(1).
n5 28 U.S.C. § 1491.
[*5]
Moreover even if the Anti-Injunction Act did not bar this injunction
claim, the Tuccios have pleaded no facts which would establish that they
face irreparable injury, the threshold requirement for injunctive relief.
The hardship described in the Complaint is financial and can be fully compensated
by money damages.
II. Plaintiffs' Claim for Damages
In addition to an injunction, the Tuccios seek damages in the amount
of $ 15,000. They appear to believe that 26 U.S.C. section 7430 empowers
this Court to award reasonable litigation costs in any civil proceeding
brought against the United States under the Internal Revenue Code.
Section 7430 does not authorize an independent cause of action for
the recovery of damages. The statute provides that litigants who have prevailed
in administrative [*6] or judicial proceedings are entitled to recover
certain costs and fees. Before the Tuccios can collect litigation costs,
they must bring a suit in an administrative or judicial court that has
jurisdiction over their complaint and, then, must prevail in that proceeding.
The Tuccios also appear to claim that, in a case in which the IRS has caused a taxpayer hardship, the Omnibus Taxpayer Bill of Rights creates a cause of action in federal court for the recovery of money. The portion of the Omnibus Taxpayer Bill of Rights that refers to taxpayer hardship is codified at 26 U.S.C. section 7811. That provision states that taxpayers who are "suffering or [are] about to suffer a significant hardship as a result of the manner in which the internal revenue laws are being administered," may apply for a Taxpayer Assistance Order through the Office of Ombudsman.
While section 7811(a) does allow taxpayers facing "significant hardship" as a result of IRS activities to apply for relief, that provision does not authorize a suit for damages. Accordingly, plaintiffs' claim for damages also fails.
Conclusion
For all the foregoing reasons, defendants' motion to dismiss pursuant [*7] to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) is granted.
SO ORDERED.