Taylor v. IRS

1

TONY TAYLOR, Plaintiff, v. IRS, Defendant.

No. 1:22-cv-01246-SAB

United States District Court, E.D. California

February 27, 2023

DEADLINE APRIL 3, 2023

ORDER SCREENING COMPLAINT (ECF NO. 1)

Plaintiff Tony Taylor (“Plaintiff”), a state prisoner proceeding pro se and in forma pauperis filed this action against the Department of Treasury Internal Revenue Service (“IRS”) on September 29, 2022. (ECF No. 1.) The complaint is now before this Court for screening.

I. SCREENING REQUIREMENT

The Court is required to screen complaints brought by prisoners seeking relief against a governmental entity or officer or employee of a governmental entity. 28 U.S.C. § 1915A(a). The Court must dismiss a complaint or portion thereof if the prisoner has raised claims that are legally “frivolous or malicious,” that “fail[] to state a claim on which relief may be granted,” or that “seek[] monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B).

A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief ....” Fed.R.Civ.P. 8(a)(2). Detailed factual allegations are not required, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal (Iqbal), 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly (Twombly), 550 U.S. 544, 555 (2007)); see also Ivey v. Bd. of Regents of the Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982) (“Vague and conclusory allegations of official participation in civil rights violations are not sufficient ....”).

Prisoners proceeding pro se in civil rights actions are entitled to have their pleadings liberally construed and to have any doubt resolved in their favor. Wilhelm v. Rotman, 680 F.3d 1113, 1121 (9th Cir. 2012) (citations omitted). To survive screening, Plaintiff's claims must be facially plausible, which requires sufficient factual detail to allow the Court to reasonably infer that each named defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678-79; Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). The “sheer possibility that a defendant has acted unlawfully” is not sufficient, and “facts that are ‘merely consistent with' a defendant's liability” falls short of satisfying the plausibility standard. Iqbal, 556 U.S. at 678; Moss, 572 F.3d at 969.

As a general rule, the Court must limit its review to the operative complaint and may not consider facts presented in extrinsic evidence. See Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Materials submitted as part of the complaint, however, are not “outside” the complaint and may be considered. Id.; Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). Moreover, the Court is not required to accept as true conclusory allegations which are contradicted by exhibits to the complaint. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001), amended on denial of reh'g, 275 F.3d 1187 (9th Cir. 2001); Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295-96 (9th Cir. 1998). Leave to amend may be granted to the extent that the deficiencies of the complaint can be cured by amendment. Cato v. U.S., 70 F.3d 1103, 1106 (9th Cir. 1995).

II. ALLEGATIONS

The Court accepts Plaintiff's allegations in the complaint as true only for the purpose of the sua sponte screening requirement under 28 U.S.C. § 1915.

Plaintiff seeks receipt of economic impact payments (“EIPs”) purportedly due under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). (Compl., ECF No. 1 at 1.) Plaintiff received a letter from the IRS, dated November 18, 2021 and signed by Department Manager Charles Matthews. (Id.; Ex. 1, ECF No. 1 at 4-5.) The letter is addressed to “Tony D. Taylor,” with Plaintiff's prison identification number and Plaintiff's prison address. (ECF No. 1 at 4; see also id. at 1; Ex. 2, ECF No. 1 at 6; Ex. 4, ECF No. 1 at 8-9.) The letter is responsive to an inquiry purportedly made by Plaintiff on or around January 21, 2021. (ECF No. 1 at 4.) The letter states three payments were made to Plaintiff, in the amounts of: (1) $1,200 on May 13, 2020; (2) $600 on January 4, 2021; and (3) $1,400 on April 7, 2021. (Id.) However, the letter states the first EIP was offset to a debt owed to another agency. (Id. at 1, 4.) The letter also states the IRS has no record of receiving a 2019 or 2020 tax return from Plaintiff. (Id. at 4.) Plaintiff alleges he never received the second EIP but he did receive the third EIP. (Id. at 2.) A copy of Plaintiff's prison trust account statement also indicates a payment of $1,400 was added to Plaintiff's trust account on May 5, 2021, and placed in a lockbox. (Id. at 2-3, 11, 12.)

On May 11, 2022, Plaintiff mailed a certified letter to Mr. Matthews at the IRS, in which he indicated there was a mistake that needed to be corrected. (Id. at 2, 8-9; Ex. 5, ECF No. 1 at 10.) More specifically, Plaintiff's letter states he never made an inquiry dated January 21, 2021; his full name is only “Tony Taylor,” not “Tony D. Taylor”; he never received the first two EIPs; the taxpayer ID/social security number 454-31-6171 is not his; and he disputed the offset of the first payment, on the basis that he “never owed anyone.” (ECF No. 1 at 8.) Though the letter does not request payment of the EIPs, Plaintiff requests the disputed matters “be corrected,” and he requests further information on the agency to which the first EIP was offset and the address to which the other EIPs were made. (Id. at 9.) Plaintiff alleges he never received a response to this letter. (Id. at 2.)

On July 12, 2022, Plaintiff mailed a second letter to Mr. Matthews at the IRS, in which he informed Mr. Matthews of his intent to file a lawsuit to seek recovery of the missing EIPs. (Id.; Ex. 6, ECF No. 1 at 11; Ex. 7, ECF No. 1 at 10.) Plaintiff alleges he has also received no response to his second letter. (ECF No. 1 at 2.)

Thus, Plaintiff asserts he did not receive the first or second EIPs. (See id.) He brings this action seeking payments in the amount of $6,800.00. (Id. at 3.)

III. DISCUSSION

A. Applicable Law

1. Jurisdiction Under 28 U.S.C. § 1346(a)

“It is well settled that the United States is a sovereign, and, as such, is immune from suit unless it has expressly waived such immunity and consented to be sued.” Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). “The waiver of sovereign immunity is a prerequisite to federal-court jurisdiction.” Tobar v. U.S., 639 F.3d 1191, 1195 (9th Cir. 2011). If a plaintiff cannot establish that its action against the United States falls within a waiver of sovereign immunity, the action must be dismissed. See Dunn & Black, P.S. v. U.S., 492 F.3d 1084, 1088 (9th Cir. 2007).

Congress has waived the United States' sovereign immunity with respect to civil actions seeking a refund or credit on overpaid taxes. See 28 U.S.C. § 1346(a)(1); see also Imperial Plan, Inc. v. U.S., 95 F.3d 25, 26 (9th Cir. 1996). However, individuals bringing such suits must meet a number of requirements for the waiver of sovereign immunity to apply. Congress has specified that:

No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected ... until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.

26 U.S.C. § 7422(a).

Simply put, before filing suit in federal court for credit or refund of overpaid taxes, a taxpayer must first comply with the tax refund scheme established in the Code by filing an administrative claim with the IRS. U.S. v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 4 (2008); Omohundro v. U.S., 300 F.3d 1065, 1066 (9th Cir. 2002); see 26 U.S.C. § 7422(a). More specifically, the taxpayer must file a claim for refund, which the IRS then either rejects or does not act upon within six months. Thomas v. U.S., 755 F.2d 728, 729 (9th Cir. 1985) (citations omitted).

Treasury Regulations establish a number of additional requirements for claims for tax refunds. “If the refund claim does not meet the requirements of the Code and the regulations, the suit must be dismissed because filing pursuant to the rules is a jurisdictional prerequisite.” Boyd v. U.S., 762 F.2d 1369, 1371 (9th Cir. 1985) (citations omitted); see Washington v. U.S., No. 20-cv-5801-TSH, 2021 WL 199279, at *5-8 (N.D. Cal. Jan. 20, 2021) (dismissing refund-related cause of action for failure to show plaintiff made a proper administrative claim with the IRS); Trakhter v. U.S., No. 20-cv-02282-SI, 2020 WL 3971621 (N.D. Cal. Jul. 14, 2020) (dismissing refund suit for failure to comply with jurisdictional prerequisites); Catholic Answers, Inc. v. U.S., No. 09-CV-670-IEG (AJB), 2009 WL 3320498, at *6 (S.D. Cal. Oct. 14, 2009) (“Filing a claim for refund in compliance with 26 U.S.C. § 7422(a) and Treasury Regulation § 301.6402-2(b)(1) is a jurisdictional prerequisite to a suit for a refund.”) (citation omitted).

For example, a refund claim “must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof.” 26 C.F.R. § 301.6402-2(b); see also Provenzano v. U.S., 123 F.Supp.2d 554, 557-58 (S.D. Cal. 2020) (dismissing plaintiff's suit for refund for failure to comply with jurisdictional prerequisites, including a failure to “provide sufficient detail” in the claim submitted to the IRS). Dunn & Black, 492 F.3d at 1091 (“[T]he taxpayer cannot recover in its suit for refund on a different ground...