The opinion of the court was delivered by: Judge Sylvia H. Rambo
In this civil action arising out of civil penalty taxes assessed by the Internal Revenue Service pursuant to 26 U.S.C. § 6702, Plaintiff has sued the United States of America (incorrectly identified by Plaintiff as the Internal Revenue Service) for causing him mental anguish due to the Internal Revenue Service's breach of an alleged agreement. Presently before the court is Defendant's motion to dismiss Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). For the reasons stated below, Defendant's motion will be granted.
Proceeding in this matter pro se, Plaintiff, Donald Edward Cool, filed his complaint commencing this civil action on March 29, 2012. (Doc. 1.) Pursuant to this court's March 30, 2012 order granting Plaintiff's motion for leave to proceed in forma pauperis (Doc. 5), the Clerk of Courts issued a Summons to the named Defendant, the "United States Treasury - Internal Revenue Service," the receipt of which was acknowledged by the United States Attorney for the Middle District of Pennsylvania on April 2, 2012 (Doc. 6). On May 29, 2012, Defendant filed its motion to dismiss (Doc. 8) and brief in support (Doc. 9), which Plaintiff responded to on June 7, 2012 (Doc. 10).*fn1 On July 5, 2012, Defendant timely filed a reply brief. (Doc. 14.) Thus, the parties have briefed the issues, and the matter is ripe for disposition.
In his complaint, Plaintiff alleges that the Internal Revenue Service
("IRS") caused him mental anguish by assessing against him civil
penalties in response to his filing frivolous tax returns for 2007 and
2009. (Doc. 1.) Plaintiff alleges that he and the IRS entered into an
agreement on August 5, 2011. (Id.) The alleged agreement,*fn3
which was attached to the complaint and incorporated therein
as Exhibit A, is a handwritten document signed only by Plaintiff that
was dated August 5, 2011, and titled "Actual and Constructive Notice
Notice of Intent To Recind [sic]" ("Actual and Constructive Notice").
The substance of the document provides, in its entirety, as
NOTICE- While the undersigned was incarcerated the undersigned came under the understanding that it was ok and proper to file taxes on inmate income. The undersigned did so for 2007, 2008, 2009 and 2010 in good faith and clean hands under this understanding. On August 4th 2010 the undersigned came to the new understanding that such filings are frivolous. The undersigned herein recinds [sic] and releases any and all claims to any and all refunds for 2007, 2008, 2009 and 2010, to avoid any and all penalties, fines, costs, etc. from the I.R.S.
Plaintiff alleges that Defendant breached said agreement when the IRS
imposed a civil penalty tax in the amount of $5,000.00.*fn4
(Doc. 1, at ¶ 3; Ex. B ("March 1, 2012 Letter").) The
assessment of the civil tax penalty against Plaintiff was in response
to a claim, filed by Plaintiff for the tax period ending on December
31, 2009, that the IRS had deemed "frivolous," and which Plaintiff did
not rescind or submit a valid return, although he was apparently given
the option to do so pursuant to a "3176C letter." (See Doc. 1, Ex. B.)
In his response to Defendant's motion to dismiss, Plaintiff submitted
a document dated May 14, 2012, from the IRS, which gave Plaintiff
notice of the agency's intent to levy his property to satisfy the tax.
(Doc. 10, "Notice of Intent to Levy.")
Plaintiff's complaint alleges that he is "full of mental anguish" due
to the assessment of the penalty and levy thereon. (Doc. 1, at ¶ 3.)
Additionally, Plaintiff asks for clarification as to whether the
United States Treasury is "seeking to
purchase Secured Creditor's Superior Title" and questions the basis
for "Agents of the Internal Revenue Service ask[ing] plaintiff to
consider coming to work for [the IRS]." (Id.) In his prayer for
relief, Plaintiff requests the court to: (1) remove all civil
penalties assessed against him; (2) order Plaintiff's accounts,
presumably with the IRS, be adjusted to zero; and (3) award to him
damages in the amount of $7 million for "mental anguish."*fn5
(Id., at ¶ 4.)
Plaintiff also attaches to the complaint a document titled "Non-Negotiable Private Bond for Setoff,"*fn6 and a copy of a handwritten letter addressed to "Internal Revenue Service, Office of the Commissioner" in Washington, D.C., that purports to have been mailed on or about March 22, 2012 ("March 22, 2012 Letter"). (Id., Ex. C.) Apparently, Plaintiff's letter*fn7 was sent for the purpose of putting the IRS on notice that Plaintiff intended to file a lawsuit in response to the IRS's actions, and that the actions complained of constituted a breach of an agreement, presumably the "agreement" set forth at Exhibit A. (Id.; see also Doc. 1, Ex. A.) Based upon a fair reading of Plaintiff's complaint, and construing the pleading in a liberal manner "as to do justice" as required by Federal Rule of Civil Procedure 8(e), the court interprets Plaintiff's claim to be one arising out of the allegedly improper collection practices of a federal tax by the Internal Revenue Service, a cause of action cognizable under 26 U.S.C. § 7433.*fn8 This characterization is consistent with Defendant's motion to dismiss (Doc. 9 (characterizing Plaintiff's cause of action as one arising 26 U.S.C. § 7433)) and Plaintiff's response thereto (Doc. 10), which neither clearly refuted Defendant's characterization of his claim nor presented an alternative cause of action upon which his claim arose. Instead, Plaintiff's response ultimately supported a cause of action arising under Section 7433 by "clarifying" that Defendant has "harassed, intimidated and or threatened the Plaintiff's bank accounts, wages and property" in connection with the imposition of the civil penalty tax. (See id., at ¶ 1.8.)
Defendant's motion to dismiss argues that the court lacks subject matter jurisdiction due to Plaintiff's failure to exhaust administrative remedies, or alternatively, that Plaintiff's pro se complaint fails to state a claim upon which relief can be granted. Failure of a plaintiff to exhaust administrative remedies pursuant to 26 U.S.C. § 7433(d)(1) has been treated as both a jurisdictional bar to a district court's subject matter jurisdiction, see, e.g., Venen v. United States, 38 F.3d 100, 103 (3d Cir. 1994); Shearin v. United States, 193 F. App'x 135, 137 (3d Cir. 2006); Kenny v. United States, 2009 U.S. Dist. LEXIS 8322, *16-19 (D.N.J. 2009) (citing Venen, 38 F.3d at 103), as well as a substantive element to a cause of action under 26 U.S.C. § 7433(a), see, e.g., Stuler v. United States, 2008 U.S. Dist. LEXIS 30879, *6 n. 2 (W.D. Pa. Apr. 8, 2008) (resolving the matter pursuant to 12(b)(6) and noting that the "exhaustion of [administrative] remedies are generally more appropriately addressed under Rule 12(b)(6) than 12(b)(1)") (citing Anjelino v. New York Times Co., 200 F.3d 73, 87 (3d Cir. 1999)), aff'd 301 F. App'x 104, 106-07 (3d Cir. 2008) (affirming District Court's order of dismissal, but noting that plaintiff's failure to allege the exhaustion of administrative remedies deprived the lower court of jurisdiction to consider a § 7433 claim); Chocallo v. IRS Dep't of the Treasury, 2007 U.S. Dist. LEXIS 52145, *11 (E.D. Pa. July 16, 2007) (citing Arbaugh v. Y & H Corp., 546 U.S. 500 (2006)) (treating the exhaustion requirement as a substantive element of the claim), aff'd in part, vacated in part sub nom Chocallo v. United States, 299 F. App'x 112, 116 n. 6 (3d Cir. 2008) (noting district court's reliance on Arbaugh rather than Venen, but declining to revisit issue of whether exhaustion requirement is jurisdictional in nature). For the reasons that follow, Plaintiff's complaint must be dismissed under either analysis.
Pro se complaints are held to less-stringent requirements than are formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520-21 (1972); Fischer v. Cahill, 474 F.2d 991, 993 (3d Cir. 1973); Pugh v. IRS, 472 F. Supp. 350, 351 (E.D. Pa. 1979). However, even a pro se plaintiff must be able to prove a "set of facts in support of his claim which would entitle him to relief." Haines, 505 U.S. at 520-21 (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Accordingly, a most sympathetic reading of Plaintiff's complaint is that the IRS engaged in improper assessment and collection practices in relation to a civil tax penalty assessed against Plaintiff in response to his filing of frivolous tax return claims. In addition, Plaintiff ...