The opinion of the court was delivered by: Judge Sean J. McLaughlin
This matter is before the Court upon Defendant's motion for summary judgment.
Plaintiff, Gary Harris, has been criminally convicted for income tax evasions on three separate occasions between 1995 and 2006. See United States v. Harris, No. 1:94-cr-353 (N.D.Oh. Dec. 14, 1995), aff'd, United States v. Harris, 1997 U.S. App. LEXIS 16402 (6th Cir. 1997); United States v. Harris, No. 1:96-cr-122 (N.D.Oh. July 7, 1998); United States v. Harris, No. 1:03-cr-264 (N.D.Oh. Aug. 2, 2004), aff'd, United States v. Harris, No. 04-3996 (6th Cir. 2006). In November, 1997, Harris signed a plea agreement with the Internal Revenue Service ("IRS") in connection with his criminal conviction for his tax liabilities for the years 1987-1990. (Stoduto Decl. ¶ 3; Gov. Ex. 101). In March, 1998, Harris signed an affidavit acknowledging that he had $100,000 in income tax liability for the years 1991-1996. (Stoduto Decl. ¶ 4; Gov. Ex. 102). Plaintiff's tax liabilities, as set forth in the plea agreement and affidavit, were assessed in 1998. (Stoduto Decl. ¶¶ 5-6; Gov. Ex. 103-104).
On September 20, 1999, a Magistrate Judge for the United States District Court for the Northern District of Ohio signed a search warrant for a bank vault belonging to Harris and located in Ashtabula, Ohio. Pursuant to the search warrant, the Criminal Division of the IRS found and seized a large collection of firearms, coins, jewelry and art. (Stoduto Decl. ¶ 14; Gov. Ex. 112). Harris brought suit against the United States seeking the return of the property, see Harris v. United States, No. 1:00-cv-1125 (N.D.Oh. Feb. 12, 2001), but the district court and the Sixth Circuit Court of Appeals each determined that Harris was not entitled to the property seized. Id; see also Harris v. United States, 39 Fed. Appx. 123 (6th Cir. 2002).*fn1
On January 4, 2000, a notice of federal tax lien was filed against Harris in Lake County, Ohio, as part of the IRS's efforts to collect Harris' tax liabilities. (Stoduto Decl. ¶ 7; Gov. Ex. 105). The notice indicated that Harris' tax liability was in excess of $580,000 and notified him of his right to a hearing under Internal Revenue Code § 6320. (Id; Stoduto Decl. ¶ 8; Gov Ex. 106). Harris exercised his right to a due process hearing in 2000 and, subsequently, the IRS Appeals Office sustained the notice of federal tax lien. (Yurick Decl. ¶¶ 5-8).
On or about February 2, 2005, the IRS filed four notices of federal tax lien against property titled in the names of nominees and alter egos of Harris and notified Harris of the action. (Stoduto Decl. ¶ 9; Gov. Ex. 107). The IRS notification included a "Form 12153" which bore the title "Request for a Collection Due Process Hearing" and stated that such a request must be made by March 4, 2005. Harris executed and returned Form 12153 on March 3, 2005. However, on June 9, 2005, the IRS Appeals Office sent Harris a notice that it had received his request for a CDP Hearing but that the request was untimely. The notice further stated that Harris would be provided with an equivalency hearing instead. (Stoduto Decl. ¶ 12; Gov. Ex. 109). On September 6, 2005, the IRS Appeals Office reviewed Harris' file and informed him that he did not have the right to a CDP Hearing relative to the 2005 notice of federal tax liens. The rationale provided by the IRS Appeals Office was that the thirty day period in which Harris could request a CDP hearing had expired on February 7, 2000, 30 days after the first notice of federal tax lien that included the relevant tax periods at issue in the 2005 notice had been filed. In the instant case, the IRS has supplied uncontradicted affidavits which establish that Form 12153 was forwarded to Harris in error and that Harris did not have a right to a CDP Hearing in 2005. (Yurick Decl. ¶ 12; Studuto Decl. ¶ 11; Gov. Ex. 110).
On March 21, 2005, the Small Business/Self-Employed (SB/SE) Division of the IRS served a levy upon the Criminal Division of the IRS seeking the items seized pursuant to the 1999 search warrant. The SB/SE Division notified Harris of the seizure and levy and of its intention to sell the property to satisfy Harris' tax liability. (Stoduto Decl. ¶ 15; Gov. Ex. 113). Harris filed a motion in the United States District Court of the Northern District of Ohio to try to halt the sale of his assets by the SB/SE Division, but the motion was denied. United States v. Harris, No. 1:96-cr-122 (N.D. Oh. 1996) (See motion filed August 8, 2005). The assets were eventually sold and the funds applied to Harris' outstanding tax liabilities.
On December 6, 2006, Harris filed the instant action pursuant to 26 U.S.C. § 7433 seeking damages based upon the allegedly illegal and improper seizure and sale of his assets by the IRS. On April 28, 2008, the IRS moved for summary judgment. This matter is ripe for review.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In order to withstand a motion for summary judgment, the non-moving party must "make a showing sufficient to establish the existence of [each] element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In evaluating whether the non-moving party has established each necessary element, the Court must grant all reasonable inferences from the evidence to the non-moving party. Knabe v. Boury Corp., 114 F.3d 407, 410, n.4 (3d Cir. 1997) (citingMatsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986)). "Where the record taken as a whole could not lead a reasonable trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. (quoting Matsushita, 475 U.S. at 587).
Harris claims that he is entitled to damages pursuant to 26 U.S.C. § 7433 as a result of the allegedly illegal and improper sale of property seized by the IRS in connection with his convictions for tax evasion. Specifically, he contends that, had the IRS provided him a due process hearing in connection with the sale of his property, he could have established that the value of the property was much greater than the sale price. The IRS counters that this Court lacks jurisdiction to hear Harris' claim because Harris has failed to exhaust his administrative remedies.
It is axiomatic that a sovereign cannot be sued without its consent. See, e.g., Block v. North Dakota, 461 U.S. 273 (1983) ("The basic rule of federal sovereign immunity is that the United States cannot be sued at all without the consent of Congress."). Thus, the existence of a Congressional waiver of sovereign immunity is a prerequisite for jurisdiction in the district court. Id. The statute under which Harris seeks relief, 26 U.S.C. § 7433, provides a limited waiver of sovereign immunity for claims arising from the collection of taxes when any officer or employer recklessly or intentionally, or by reason of negligence, disregards any provision of the Internal Revenue Code. Section 7433(d) provides that "[a] judgment for damages shall not be awarded... unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service." It is well-established that "when Congress attaches conditions to legislation waiving the sovereign immunity of the United States, those conditions must be strictly construed, and exceptions thereto are not to be lightly implied." Block ...