No. 06-1165.United States Court of Appeals, Tenth Circuit.
January 24, 2007.
Appeal from the United States District Court for the District of Colorado.
Robert Charles Abell, Laguna Hills, CA, pro se.
Lisa Jean Abell, Laguna Hills, CA, pro se.
Kurt J. Bohn, Office of the United States Attorney, Denver, CO, Eileen J. O’Connor, Asst. Atty. General, U.S. Department of Justice, Tax Division, Anton L. Janik, United States Department of Justice, Trial Division, Frank P. Cihlar, Robert J. Branman, Department of Justice, Washington, DC, for Respondents-Appellees.
Before HOLMES, McKAY, and BRORBY, Circuit Judges.
ORDER AND JUDGMENT[*]
WADE BRORBY, Circuit Judge.
Robert and Lisa Abell appeal pro se from a district court order that (1) dismissed in part and denied in part their petition to, among other things, quash summonses issued by the Internal Revenue Service (IRS) to various financial institutions; and (2) granted the Government’s motion to enforce two of the summonses. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
In April 2005, while investigating the Abells’ federal income-tax liabilities, revenue agent William Sothen had summonses issued to Wells Fargo Bank, Indymac Bank Homeloan Servicing, Countrywide Home Loans, and Union Bank of California. Several days later, the Abells filed in the U.S. District Court for the District of Colorado a pro se petition against Sothen, his co-workers, and the IRS, arguing that (1) the summonses should be quashed because there were no “statute and implementing regulations . . . that authorize [Sothen] to do anything he has done in this case,” ROA, Doc. 2 at 7; (2) a bill of particulars should be issued “documenting probable cause,” id. at 9; (3) restitution should be ordered against Sothen “from his personal pay and assets” based on a “pattern of administrative legal abuse [that] has . . . resulted in involuntary servitude,”id.; and (4) a writ of mandamus should be issued “to compel the supervisors of this/these errant federal actors and outlaws to discipline them and compel them to cease their unlawful activities,” id. The Abells claimed to have “independently determined . . . that they have no legal duty to pay any internal revenue tax and are not a `taxpayers,’ [sic] and instead are `nontaxpayers.'”Id. at 12. The Government opposed the petition and sought enforcement of the summonses issued to Wells Fargo and Countrywide, the only summonsed institutions with business locations in Colorado.
The petition was referred to a magistrate judge, who recommended that it be dismissed in part and denied in part, and that the summonses issued to Wells Fargo and Countrywide be enforced. The recommendation concluded with a conspicuous warning:
[T]he parties have 10 days after service of this recommendation to serve and file specific, written objections. A party’s failure to serve and file specific, written objections waives de novo
review of the recommendation by the district judge and also waives appellate review of both factual and legal questions. A party’s objections to this recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review.
Id., Doc. 34 at 20-21 (citations omitted). Three weeks later, the district judge summarily adopted the recommendation in its entirety, noting that the Abells had failed to file any objections.
On appeal, the Abells argue that (1) they “are not tax protestors and legally should be addressed as `non-taxpayers,'” Aplt.
Br. at 11; (2) the summonses were issued in bad faith and in violation of the First, Fourth, Fifth, Sixth, Ninth, and Fourteenth Amendments, id. at 15, 20; (3) “[a]bsent implementing regulations, the only legitimate targets for an administrative IRS summons are federal employees,” id.
at 21; and (4) “the IRS, which in an institutional sense long ago abandoned civil action against those classified as `tax protestors,’ . . . is being used by the Justice Department to circumnavigate the traditional function of the Grand Jury[,]”id. at 30.
We review for plain error when there are no objections to a magistrate judge’s recommendation. See Morales-Fernandez v. INS, 418 F.3d 1116, 1122 (10th Cir. 2005). “Plain error occurs when there is (1) error, (2) that is plain, which (3) affects substantial rights, and which (4) seriously affects the fairness, integrity, or public reputation of judicial proceedings.” Wardell v. Duncan, 470 F.3d 954, 958
(10th Cir. 2006) (quotation omitted). After reviewing the record and the parties’ briefs, we conclude that the district court did not plainly err in dismissing in part and denying in part the Abells’ petition and in enforcing the summonses issued to Wells Fargo and Countrywide.
The judgment of the district court is AFFIRMED for substantially the same reasons as set forth in the magistrate judge’s recommendation, which is appended to this order and judgment.
Appendix IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Magistrate Judge Boyd N. Boland Civil Action No. 05-cv-00706-REB-BNB
ROBERT CHARLES ABELL, and LISA JEAN ABELL,
WILLIAM R. SOTHEN, and coworkers as individuals, and INTERNAL REVENUE SERVICE (writ of mandamus),
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This case was initiated by the filing of a document captione Petition to Quash
Summons, Petition for Writ of Mandamus, Demand for a Bill of Particulars, Claim for Personal Damages [Doc. # 2, filed 4/18/05] (the “Petition”). The plaintiffs, Robert Charles Abell and Lisa Jean Abell, are proceeding pro se.
The Petition, which 37 pages in length, is vague, disorganized, and rambling. Filed with the Petition was a document captione Memorandum of Law In Support of Petition to Quash
[Doc. # 3, filed 4/18/05] (the “Brief). The Brief, 24 pages in length, is similarly vague, disorganized, and rambling. Attached to the Brief are 1-1/2 inches of materials identified as the “Tax Audit Defense Manual, ver. 1.15,” bearing a copyright designation for Christopher Hansen and reprinted from the internet at http://famguardian.org/. The Petition does not present a “short and plain” statement of the claims raised, as required by Fed.R.Civ.P. 8.
Also attached to the Brief are copies of four IRS summonses and related materials, which appear to form the principal basis of the plaintiffs’ claims. The IRS summonses are directed to Indymac Bank Homeloan Servicing, in Pasadena, California; Wells Fargo Bank N.A., in Durango, Colorado; Union Bank of California N.A., in San Francisco, California; and Country-wide Home Loans Legal Dept., in Calabasas, California. Each summons seeks financial information about David C. Abell and Lisa J. Abell.
The plaintiffs are tax protestors. The following provides the flavor of their arguments:
The court has in personam jurisdiction against the Defendants but not against the Plaintiff’s under 26 U.S.C. § 7609(h). This results from the fact that the Plaintiff’s do not reside and are not found in any Internal Revenue District or Judicial district. Under Treasury Order 150-02, all Internal Revenue Districts outside of the District of Columbia were abolished as a result of the IRS Restructuring and Reform Act of 1998, 112 Stat. 685, and the Plaintiff’s do not reside within the District of Columbia and do not consent or volunteer to be treated like they do.
* * *
The court does not have jurisdiction under the IRS Restructuring and Reform Act of 1998, 112 Stat. 685, section 3415 entitled “Taxpayers Allowed to Quash All Third Party Summonses” for this particular case. The basis for this conclusion is that the Plaintiff’s are not “taxpayers”, but instead are “nontaxpayers”. Consequently, this petition and Petition to Quash is being pursued under the rules of equity, and not under law.
* * *
Likewise, those who are Christians such as ourselves are precluded by God’s law (the Bible) from depending on the “interpretations of men” of the law, including the Constitution and the Internal Revenue Code. This edict is especially true concerning the proclamations of the Pharisees (lawyers). The law must
stand on its own two feet and not require a Pharisee to interpret, because doing so transforms our “society of law” into a “society of men” in violation of the legislative intent of the Constitution as revealed in Marbury v. Madison. . . .
* * *
Christians, including the Plaintiff’s, are not allowed to “assume” or “presume” anything about any aspect of their legal duties or liabilities either. . . .
Consequently, Americans are left with no reasonable, objective, rational basis or belief
about their “legal duty” and “liability” to pay federal income taxes. What remains is ignorance, superstition,
and a false god and religion called “government” to “worship” and obey, in violation of the First Amendment. Government may not make itself into a god, with powers and privileges beyond any ordinary citizen and beyond the rules and boundaries established by the written law.
* * *
The only resulting suitable basis upon which a concerned and law-abiding American can form a good faith, reasonable belief about “liability” is their own personal reading Internal Revenue Code itself, the regulations that implement it, and the Supreme Court rulings that interpret it. Americans living in states of the union, like the IRS (see IRM 188.8.131.52.9.8), cannot rely on any rulings below the Supreme Court as a basis for belief, because district and circuit courts are precluded from ruling on rights and status in the context of federal income taxes under 28 U.S.C. § 2201, which is a big indication that the Internal Revenue Code does not apply outside of the territories and possessions of the United States and the District of Columbia, which we call the “federal zone” or “federal United States” in this pleading.
These “common persons” [the plaintiffs] have spent five years diligently studying the Constitution, the Internal Revenue Code, and the Treasury Regulations and have independently determined, as the Supreme Court said they must, that they have no legal duty to pay any internal revenue tax and are not “taxpayers”, and instead are “nontaxpayers”. It has been and continues to be the duty of the government in this case to produce a statute and implementing regulation that imposes a legal duty and if it cannot or will not in this specific case, then it is estopped from further enforcement actions under the rules of equity. The first and only legal duty ever imposed by Congress upon Americans in the states, appearing in the Revenue Act of 1894, was declared unconstitutional by the Supreme Court Pollack [Pollock] v. Farmers Loan and Trust, 157 U.S. 429 [15 S.Ct. 673, 39 L.Ed. 759], 158 U.S. 601 [15 S.Ct. 912, 39 L.Ed. 1108] (1895). No legal duty has ever appeared within federal law or within subtitles A through C of the Internal Revenue Code for anything other than federal employees acting in their official capacity.
Petition, pp. 5, 10-12.
The Petition seeks the following relief:
(1) An order quashing the four summonses, id. at pp. 7-9;
(2) A bill of particulars “documenting probable cause on the part of the IRS to proceed with further discovery related to any imputed federal tax liability,” id. at p. 9;
(3) Monetary damages against the revenue agent (William R. Sothen) and his co-workers, “from his personal pay and assets, and not from the government or from the United States as Defendant,” as a result of an alleged “pattern of harassment, intimidation, violation of due process (Fifth Amendment), extortion under the color of law (18 U.S.C. § 872), and abuse of legal process (18 U.S.C. § 1589(3))id.; and
(4) A writ of mandamus, as follows:
[T]o compel the supervisors of this/these errant federal actors [the revenue agents] and outlaws to discipline them and compel them to cease their unlawful
activities to threaten, stalk, harass, and otherwise oppress the natural and Constitutional rights of the Plaintiff’s in violation of 18 U.S.C. § 1589(3).
Id. at pp. 9-10.
The United States responded to the Petition by filing th United States’ Motion for Summary Denial of Petition to Quash (and Its Incorporated Petition for Writ of Mandamus), and for Enforcement of Internal Revenue Service Summonses
[Doc. # 18, filed 7/19/05] (the “Motion to Dismiss”). The United States argues in its Motion to Dismiss, first, that the Petition is a suit against the United States and that the United States should be substituted for the named defendants; second, that the plaintiffs’ claims against the United States for damages are barred by sovereign immunity; third, that no individual action against the revenue agents exists unde Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971); fourth, that the summonses against Wells Fargo Bank and Countrywide Home Loans are proper and should be enforced, and the motion to quash them should be denied; and, finally, that this is not a proper circumstance for a writ of mandamus.
The plaintiffs thereafter filed a document captioned Motion to Dismiss Summary Denial and Enforcement of Internal Revenue Service Summonses [Doc. # 30, filed 8/19/05] (the “Plaintiffs’ Response”). Although captioned as a motion, it is apparent that this is a response to the government’s Motion to Dismiss, and I construe it as such. The Plaintiffs’ Response is devoted to the argument that the court lacks jurisdiction over the plaintiffs to order enforcement of the summonses because “the Plaintiff’s do not reside and are not
found in any Internal Revenue District or Judicial district.” According to the plaintiffs:
Under Treasury Order 150-02, all Internal Revenue Districts outside of the District of Columbia were abolished as a result of the IRS Restructuring and Reform Act of 1998, 112 Stat. 685, and the Plaintiff’s do not reside within the District of Columbia and do not consent or volunteer to be treated like they do.
* * *
This court does not have jurisdiction under 26 U.S.C. 7609(h) over these summonsed parties because they do not reside in ANY United States judicial district. These judicial districts only
include federal properties ceded to the federal government as required by 40 U.S.C. 255 and its successors 40 U.S.C. 3111 and 3112. The court, however, does not need jurisdiction over the parties summonsed in this case, if it orders the Defendant and his employer, the IRS, to dispose of and destroy any evidence illegally obtained, and issues an order not allowing evidence gathered to be used in any future proceeding or investigation because it has been illegally obtained.
Plaintiffs’ Response, pp. 1-2.
I. STANDARD OF REVIEW
As a preliminary matter, I must liberally construe the pro se plaintiffs’ pleadings. Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). I do not act as an advocate for pro se litigants, however, who must comply with the fundamental requirements of the Federal Rules of Civil Procedure. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991).
In ruling on a motion to dismiss, the court must accept the plaintiffs’ well-pleaded allegations as true and must construe all reasonable inferences in favor of the
plaintiffs. City of Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 493, 106 S.Ct. 2034, 90 L.Ed.2d 480 (1986); Mitchell v. King, 537 F.2d 385, 386 (10th Cir. 1976). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90
(1974). A claim should be dismissed only where, without a doubt, the plaintiffs could prove no set of facts in support of the claim that would entitle them to relief. Id.
II. ANALYSIS A. Substitution of the United States
The Petition is brought against “William R. Sothen and coworkers, et al. as individuals; Internal Revenue Service (writ of mandamus) Defendants.”
Part of the plaintiffs’ claim is for an award of damages personally against Revenue Agent Sothen. In particular, at page 9 of the Petition, the plaintiffs state:
Restitution is sought from the Defendant [Sothen] from his personal pay and assets, and not
from the government or from the United States as Defendant, since no statute and implementing regulation published in the federal register has been demonstrated authorizing the Defendant to do what he is doing. . . .
Petition, p. 9 at ¶ 6.3.2. The facts alleged in support of the claim, however, all involve Revenue Agent Sothen’s actions in his official capacity in connection with tax collection efforts, as follows:
A pattern of harassment, intimidation, violation of due process (Fifth Amendment), extortion under the color of law (18 U.S.C. § 872), and abuse of legal process (18 U.S.C. § 1589(3)) has characterized the actions of both the Defendant and his coworkers as individuals. This pattern of administrative legal abuse has prejudiced the Constitutional rights of the Plaintiff’s and resulted in involuntary servitude responding to the illegal activities of the Defendants and his coworkers. Plaintiff’s thereby request of this honorable court the restitution called for under 18 U.S.C. § 1593 for considerable, involuntary time and expense resulting from the need to respond to frivolous and unauthorized actions of the Defendant in the mis-enforcement of the internal revenue laws of the federal United States.
Id. at ¶ 6.3.1. See also Brief, at pp. 15-17 (further detailing the “History of of Interaction With Defendant(s) and Their Employer”).
Under similar facts, the Tenth Circuit Court of Appeals ruled in Atkinson v. O’Neill, 867 F.2d 589, 590 (10th Cir. 1989), that “[w]hen an action is one against named individual defendants, but the acts complained of consist of actions taken by defendants in their official capacity as agents of the United States, the action is in fact one against the United States.” Accord Burgos v. Milton, 709 F.2d 1 (1st Cir. 1983) (holding that “[a]lthough the . . . action is nominally one against individual defendants, the acts complained of consist of actions taken by defendants in their official capacity as agents of the United States,” and that “[u]nder such circumstances, the action is in fact one against the United States”).
Insofar as the Petition may be read to assert claims against Revenue Agent Sothen and his co-workers in their official capacities, I agree that the United States must be substituted as the proper defendant.
The Petition also names the Internal Revenue Service as a defendant. The Internal Revenue Service is not an entity
capable of being sued. Posey v. United States Dept. of the Treasury — Internal Revenue Service, 156 B.R. 910, 917 (W.D.N.Y. 1993) (stating that “suit against the IRS or the Treasury Department is not available in federal court”) Krouse v. United States Government Treasury Dept. Internal Revenue Service, 380 F.Supp. 219, 221 (C.D.Cal. 1974) (holding that “[t]he Department of the Treasury and the Internal Revenue Service are not entities subject to suit and they should be dismissed”). A suit purporting to bring claims against the IRS is deemed to be a suit against the United States. Posey, 156 B.R. at 917.
B. The United States Is Immune From Suit
The plaintiffs’ claims against the revenue agents in their official capacities and against the Internal Revenue Service are claims against the United States. “It is well settled that the United States and its employees, sued in their official capacities, are immune from suit, unless sovereign immunity has been waived.” Atkinson, 867 F.2d at 590. As the circuit court explained in Fostvedt v. United States, 978 F.2d 1201 (10th Cir. 1992), another case involving a tax protest:
The United States may not be sued without its consent. Such a waiver of sovereign immunity must be strictly construed in favor of the sovereign and may not be extended beyond the explicit language of the statute. It long has been established that the United States, as sovereign, is immune from suit save as it consents to be sued and the terms of its consent to be sued in any court define that court’s jurisdiction to entertain suit. A waiver of sovereign immunity cannot be implied, but must be explicitly expressed.
* * *
The burden is on the taxpayer to find and prove an explicit waiver of sovereign immunity.
Id. at 1202-03 (internal quotations and citations omitted).
The plaintiffs have not identified any waiver of sovereign immunity applicable to this case, and I am not aware of any. To the contrary, courts presented with similar facts have consistently held that the United States has not waived its immunity:
The United States may consent to be sued, and the federal government has waived immunity for some tort claims under the Federal Tort Claims Act, 28 U.S.C. § 1346, allowing agents of the government to be sued in a tort action. The Act, however, specifically excludes claims arising out of the assessment of any tax. 28 U.S.C. § 2680(c). Section 2680(c) has been interpreted broadly to preclude suits for damages arising out of allegedly tortious activities of IRS agents when those activities were in any way related to an agent’s official duties.
Provenza v. Rinaudo, 586 F.Supp. 1113, 1117
(D.Md. 1984) (citing Capozzoli v. Tracey, 663 F.2d 654, 658 (5th Cir. 1981); Stankevitz v. IRS, 640 F.2d 205, 206 (9th Cir. 1981); and Broadway Open Air Theatre v. U.S., 208 F.2d 257, 258-59 (4th Cir. 1953)).
In summary, the plaintiffs’ claims against Revenue Agent Sothen and his co-workers, in their official capacities, and against the Internal Revenue Service are claims against the United States. The claims arise out of efforts to collect taxes. Consequently, these claims are barred by sovereign immunity.
Similarly, the plaintiffs have failed to identify any waiver of sovereign immunity which would entitle them to relief in the nature of a bill of particulars “documenting probable cause on the part of the IRS to proceed with further discovery related to
any imputed federal tax liability.” Petition, p. 9. Courts presented with similar claims have dismissed them as barred by sovereign immunity. Watts v. Internal Revenue Service, 925 F.Supp. 271, 276 (D.N.J. 1996).
C. No Bivens Action Exists Against the Revenue Agents as Individuals
The plaintiffs also appear to be attempting to assert claims against Revenue Agent Sothen and his co-workers in their individual capacities under Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619
(1971). The plaintiffs allege, in conclusory terms, the following:
A pattern of harassment, intimidation, violation of due process (Fifth Amendment), extortion under the color of law (18 U.S.C. § 872), and abuse of legal process (18 U.S.C. § 1589(3)) has characterized the actions of both the Defendant and his coworkers as individuals. This pattern of administrative legal abuse has prejudiced the Constitutional rights of the Plaintiff’s and resulted in involuntary servitude responding to the illegal activities of the Defendant and his coworkers.
Petition, p. 9 at § 6.3.1.
Bivens claims are not available in this tax-related dispute because Congress has created a comprehensive statutory scheme which provides alternative remedies for the types of wrongs alleged here. As the circuit court explained i National Commodity and Barter Ass’n, National Commodity Exchange v. Gibbs, 886 F.2d 1240, 1248 (10th Cir. 1989):
The same considerations which led the Supreme Court in [Schweiker v. Chilicky, 487 U.S. 412, 108 S.Ct. 2460, 101 L.Ed.2d 370 (1988)] to conclude that the recognition of a Bivens claim would be inappropriate [in a claim involving the social security system, i.e., the presence of an elaborate mechanism for the resolution of claims] are applicable here with respect to the NCBA’s allegations of violations of the fifth amendment due process clause and of various provisions of the Internal Revenue Code. Although there may be no established mechanism for the recovery of damages against federal authorities for unconstitutional conduct, the unavailability of complete relief does not mandate the creation of a Bivens remedy when other “meaningful safeguards or remedies for the rights of persons situated as were the plaintiffs” are available. In this case, the NCBA has recourse to challenge the legality of the penalty assessment under several provisions of the Internal Revenue Code.
Accord Dahn v. United States, 127 F.3d 1249, 1254
(10th Cir. 1997) (holding that “in light of the comprehensive administrative scheme created by Congress to resolve tax-related disputes, individual agents of the IRS are also not subject to Bivens actions”).
The conduct which gives rise to this action is the plaintiffs’ objection to the government’s efforts, through the four summonses, to obtain financial information about them. The plaintiffs have an alternative remedy, however, other than Bivens action for money damages, and one which is specifically designed to address
the particular problems involved here. In particular, 26 U.S.C. § 7609 contains special procedures applicable to third party summonses, as are at issue here. Section 7609(b)(1)-(2) specifically allows the party whose records are being sought to intervene or to move to quash the summons.
Here, as in the Gibbs case, the plaintiffs have a means to challenge the legality of the summonses under provisions of the Internal Revenue Code. It therefore would be inappropriate to recognize a Bivens remedy under these facts. Gibbs, 886 F.2d at 1248.
D. Mandamus Is Not Available
The plaintiffs also seek a writ of mandamus to unspecified federal officers, alleging in part:
The accompanying Petition for Writ of Mandamus is submitted to compel the supervisors of this/these errant federal actors and outlaws to discipline them and compel them to cease their unlawful activities to threaten, stalk, harass, and otherwise oppress the natural and Constitutional rights of the Plaintiff’s in violation of 18 U.S.C. § 1589(3) [a criminal statute prohibiting forced labor].
* * *
In addition, a Writ of Mandamus is requested to compel the IRS to rebut the evidence of its wrongful activities to enforce and collect federal income taxes against the Plaintiff’s, and to produce facts and evidence upon which they and the public at large can rely upon to reach a reasonable belief that they have a legal duty and liability.
* * *
The Plaintiff’s therefore alleges that any enforcement actions by this court of the Defendant are completely illegal because not specifically authorized by both a statute and an implementing regulation published in the federal register. . . .
Authority over alcohol, tobacco, firearms, terrorism, drugs, or internal revenue taxes within states of the Union was never surrendered to the federal government under the Constitution or any of the amendments since, violates the legislative intent of the Constitution, and illegally and unconstitutionally displaces or supersedes the police powers and sovereignty of the states of the Union.
Consequently, the Plaintiff’s request that this hopefully honorable court issue a Writ of Mandamus compelling the Defendant and his employer, the Internal Revenue Service, to rebut the overwhelming evidence provided in Exhibit (1A) showing that there are no laws that authorize the enforcement of Subtitle A or C federal income taxes upon Americans who are born in and domiciled in states of the Union and who are not “citizens of the United States” under 8 U.S.C. § 1401 or “residents” under 26 U.S.C. § 7701(b)(1)(A).
Section 1361, 28 U.S.C., grants district courts original jurisdiction in actions in the nature of mandamus “to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.” In Paniagua v. Moseley, 451 F.2d 228, 229 (10th Cir. 1971), the circuit court held:
Mandamus is an extraordinary remedial process and before relief of this nature can be afforded it must appear that the claim is clear and certain and the duty of the officer involved must be ministerial, well defined, and peremptory to the end that the duty must be a positive command and so plainly prescribed as to be free from doubt.
The plaintiffs argue in conclusory terms that the revenue agents threatened, stalked, harassed, and otherwise oppressed them. The factual underpinning
of these claims, however, appears to be the issuance of the summonses on banks in furtherance of the government’s efforts to collect taxes. This argument, as well as the plaintiffs’ assertion that the revenue agents’ efforts to collect taxes are “completely illegal because not specifically authorized by both a statute and an implementing regulation published in the federal register,” have been considered and rejected in this circuit and throughout the country. For example, i Lonsdale v. United States, 919 F.2d 1440, 1448 (10th Cir. 1990), the plaintiffs argued, as do the plaintiffs here, that “the Internal Revenue Service has no power to impose levies because orders delegating such power were not published in the Federal Register as required by law. . . .” The circuit court determined that the arguments were frivolous and held:
As the cited cases, as well as may others, have made abundantly clear, the following arguments alluded to by the [plaintiffs] are completely lacking in legal merit and patently frivolous:
(1) individuals (“free born, white, preamble, sovereign, natural, individual common law `de jure’ citizens of a state, etc.”) are not “persons” subject to taxation under the Internal Revenue code; (2) the authority of the United States is confined to the District of Columbia; (3) the income tax is a direct tax which is invalid absent apportionment, and Pollock v. Farmers’ Loan Trust Co., . . . is authority for that and other arguments against the government’s power to impose income taxes on individuals; (4) the Sixteenth Amendment to the Constitution is either invalid or applies only to corporations; (5) wages are not income; (6) the income tax is voluntary; (7) no statutory authority exists for imposing an income tax on individuals; (8) the term “income” as used in the tax statutes is unconstitutionally vague and indefinite; (9) individuals are not required to file tax returns fully reporting their income; and (10) the Anti-Injunction Act is invalid
To this short list of rejected tax protester arguments we now add as equally meritless the additional arguments made herein that (1) the Commissioner of Internal Revenue Service and employees of the Internal Revenue Service have no power or authority to administer the Internal Revenue laws, including power to issue summons, liens and levies, because of invalid or nonexistent delegations of authority, lack of publication or delegations of authority in the Federal Register, violations of the Paperwork Reduction Act, and violations of the Administrative Procedure Act, including the Freedom of Information Act; and (2) tax forms, including 1040, 1040A, 1040EZ and other reporting forms, are invalid because they have not been published in the Federal Register.
In view of the well established authority of the Internal Revenue Service and its agents to engage in tax collection efforts of the nature undertaken here, including particularly the issuance of summonses, it is clear that the plaintiffs have failed to establish any right to the relief they seek, much less a clear and certain duty or positive command so plainly prescribed as to be free from doubt, and mandamus is not available.
E. The Government’s Motion to Enforce the Summonses Against Wells Fargo Bank and Countrywide Home Loans Should Be Granted and the Motion to Quash the Summonses Must Be Denied
The authority of the United States to issue summonses in taxpayer cases is established in 26 U.S.C. § 7602(a):
For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized —
(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
(2) To summon . . . any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax . . . to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, . . . as may be relevant or material to such inquiry. . . .
The Supreme Court affirmed the authority of the IRS to summon books and records in United States v. Powell, 379 U.S. 48, 53-54 and 57-58, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), holding:
We . . . hold that the Government need make no showing of probable cause to suspect fraud unless the taxpayer raises a substantial question that judicial enforcement of the administrative summons would be an abusive use of the court’s process, predicated on more than the fact of re-examination and the running of the statute of limitations on ordinary tax liability.
* * *
Section 7602[, 26 U.S.C.] authorizes the Commissioner to investigate any such liability. If, in order to determine the existence or nonexistence of fraud in the taxpayer’s returns, information in the taxpayer’s records is needed which is not already in the Commissioner’s possession, we think the examination is not “unnecessary” within the meaning of § 7605(b). Although a more stringent interpretation is possible, one which would require some showing of cause for suspecting fraud, we reject such an interpretation because it might seriously hamper the Commissioner in carrying out investigations he thinks warranted.
* * *
Reading the statutes as we do, the Commissioner need not meet any standard of probable cause to obtain enforcement of his summons, either before or after the three year statute of limitations has expired. He must show that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner’s possession, and that the administrative steps required by the Code have been followed — in particular, that the “Secretary or his delegate,” after investigation, has determined the further examination to be necessary and has notified the taxpayer in writing to that effect. This does not make meaningless the adversary hearing to which the taxpayer is entitled before enforcement is ordered. At the hearing he “may challenge the summons on any appropriate ground.” Nor does our reading of the statutes mean that under no circumstances may the court inquire into the underlying reasons for the examination. It is the court’s process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the
particular investigation. The burden of showing an abuse of the court’s process is on the taxpayer, and it is not met by a mere showing, as was made in this case, that the statute of limitations for ordinary deficiencies has run or that the records in question have already been once examined.
(Internal citations and notes omitted.)
The Tenth Circuit Court of Appeals applied the rule announced in Powell in United States v. Balanced Financial Management, Inc., 769 F.2d 1440 (10th Cir. 1985), and explained:
The Government sought to enforce the IRS administrative summons to taxpayers . . . pursuant to the provisions of 26 U.S.C. § 7602(b). . . . To enforce the summons the Commissioner of Internal Revenue must meet the standards set out in Powell. He must show that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already in the Commissioner’s possession, and that the administrative steps required by the Code have been followed.
The burden is a slight one because the statute must be read broadly in order to ensure that the enforcement powers of the IRS are not unduly restricted. The requisite showing is generally made by affidavit of the agent who issued the summons and who is seeking enforcement. . . .
The burden then shifts to the taxpayers. The burden is a heavy one. The taxpayer must establish any defenses or prove that enforcement would constitute an abuse of the court’s process. He must prove a lack of good faith, that the government has abandoned in the institutional sense its pursuit of possible civil penalties. The taxpayer must do more than just produce evidence that would call into question the Government’s prima facie case. The burden of proof in these contested areas rests squarely on the taxpayer. . . .
Allegations supporting a bad faith defense are insufficient if conclusionary. It at this stage the taxpayer cannot refute the government’s prima facie Powell showing or cannot factually support a proper affirmative defense, the district court should dispose of the proceeding on the papers before it and without an evidentiary hearing.
Id. at 1443-44 (internal citations and quotations omitted).
The United States submitted the Declaration of Internal Revenue Service Revenue Agent William R. Sothen [Doc. #15, filed 7/13/05] (the “Sothen Deck”) in support of its Motion to Dismiss. The Sothen declaration is unrefuted and establishes that Revenue Agent Sothen is conducting an investigation to determine the federal income tax liabilities of the plaintiffs, Sothen Deck, ¶ 3; that he issued the summonses to Wells Fargo Bank and Countrywide Home Loans in connection with that investigation, id. at ¶ 4; that the summonses were issued in good faith and for the purpose of obtaining information to aid in determining the plaintiffs’ tax liabilities id. at ¶¶ 6, 9; that all administrative steps required by the Internal Revenue Code in connection with issuing the summonses were followed, id. at ¶¶ 5, 7; and that the materials summoned are not already in the possession of the IRS. Id. at ¶ 8.
Section 7604(a), 26 U.S.C., provides that jurisdiction to enforce a summons under section 7602 lies in the United States district court for the district in which the summoned party “resides or is found.” Similarly, 26 U.S.C. § 7609(h)(1) provides that jurisdiction to determine motions to quash IRS summonses lies in the United
States district court for the district where the party summoned resides or is found. The unrefuted evidence establishes that only Wells Fargo Bank and Countrywide Home Loans are found in the District of Colorado. Sothen Decl. at ¶¶ 11-12. Neither Indymac Bank nor Union Bank of California are found in this district. Id. at ¶¶ 13-14. Consequently, this court lacks jurisdiction either to enforce of the quash the summonses to Indymac Bank and Union Bank of California, and the Petition must be dismissed insofar as it seeks an order quashing those summonses.
The United States has met its burden to establish a prima facie case for the enforcement of the summonses to Wells Fargo Bank and Countrywide Home Loans. The burden therefore shifts to the plaintiffs to establish a defense to the summonses or that the summonses constitute an abuse of the court’s process. Balanced Financial, 769 F.2d at 1444.
So far as I can discern, the plaintiffs arguments against enforcement of the summonses and to quash them are that (1) this court lacks personal jurisdiction over the plaintiffs because they do not reside in a “United States judicial district” or in the District of Columbia, Petition, p. 5; and (2) the revenue agents involved in the investigation “were unable to produce both statutes and implementing regulations . . . that authorize him/them to do anything he has done in this case. . . .” Id. at p. 7.
The plaintiffs give as their address 123 El Diente Drive, Durango, Colorado. Petition, “Notice of Lodgement,” p. 2. The state of Colorado composes a single federal judicial district, created by 28 U.S.C. § 85. The plaintiffs’ argument that they do not reside in a United States judicial district is frivolous. See Lonsdale, 919 F.2d at 1448 (holding as frivolous the argument that “individuals (`free born, white, preamble, sovereign, natural, individual common law “de jure” citizens of a state, etc.’) are not `persons’ subject to taxation under the Internal Revenue Code”). Moreover, sections 7604(a) and 7609(h)(1), 26 U.S.C., expressly confer jurisdiction on this court and under these facts to determine the competing motions to enforce and to quash the IRS summonses issued to Wells Fargo Bank and Countrywide Home Loans.
The plaintiffs’ second argument, that the tax laws are invalid because they are not supported by “both statutes and
implementing regulations,” also has been repeatedly rejected as lacking merit. For example, in Watts v. Internal Revenue Service, 925 F.Supp. 271, 277 (D.N.J. 1996), the court explained:
The Watts’ second argument is that the IRS, through is employees, is unable to act under 26 U.S.C. § 6321
[concerning liens to enforce taxes], without implementing regulations as set forth in 26 U.S.C. § 7805(a). Section 7805(a) provides, in relevant part, “the Secretary shall prescribe all needful rules and regulations for the enforcement of this title.” By “needful rules and regulations,” Congress did not intend to require the promulgation of unnecessary regulations. Section 6321 has the force of law which Congress gave it, with or without implementing regulations.
(Internal citations and notes omitted.) Accord United States v. Dawes, 161 Fed. Appx. 742, 744-15 (10th Cir. 2005); Gass v. United States Dept. of Treasury, 2000 WL 743671 *4 (10th Cir. June 9, 2000).
Similarly here, section 7602 authorizes issuance of the summonses, has the force of law, and does not require any implementing regulations.
Nor is there any indication or evidence that the summonses issued here constitute
an abuse of the court’s process. To the contrary, the summonses are appropriate process to assist the government in its legitimate and good faith investigation of the tax liabilities of the plaintiffs.
For the reasons stated, I respectfully RECOMMEND that the Petition be DISMISSED and the request to quash the summonses issued to Wells Fargo Bank and Countrywide Home Loans be DENIED, and that the Motion to Dismiss be GRANTED and the summonses issued to Wells Fargo Bank and Countrywide Home Loans be ENFORCED, as follows:
(1) That the United States be substituted as the defendant insofar as the Petition asserts claims against William R. Sothen and his co-workers, in their official capacities, and against the Internal Revenue Service;
(2) That the claims against the United States be DISMISSED with prejudice as barred by sovereign immunity;
(3) That the claims against William R. Sothen and his co-workers, in their individual capacities, be DISMISSED with prejudice as not available under Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971);
(4) That the Petition be DISMISSED with prejudice insofar as it seeks a writ of mandamus;
(5) That the Petition be DENIED for lack of jurisdiction insofar as it seeks an order quashing the summonses served on Indymac Bank and Union Bank of California; and
(6) That the United States’ request to enforce the summonses served on Wells Fargo Bank and Countrywide Home Loans be GRANTED.
FURTHER, IT IS ORDERED that pursuant to 28 U.S.C. § 636(b)(1)(C) and Fed.R.Civ.P. 72(b), the parties have 10 days after service of this recommendation to serve and file specific, written objections. A party’s failure to serve and file specific, written objections waives de novo
review of the recommendation by the district judge, Fed.R.Civ.P. 72(b); Thomas v. Am, 474 U.S. 140, 147-48, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985), and also waives appellate review of both factual and legal questions. In re Key Energy Resources Inc., 230 F.3d 1197, 1199-1200 (10th Cir. 2000). A party’s objections to this recommendation must be both timely and specific to preserve an issue for de novo
review by the district court or for appellate review United States v. One Parcel of Real Property, 73 F.3d 1057, 1060 (10th Cir. 1996).
Dated February 14, 2006.
BY THE COURT:
s/ Boyd N. Boland
United States Magistrate Judge