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Deborah Slutter v. United States of America

November 28, 2012


The opinion of the court was delivered by: Stengel, J.


This is the second action brought by Deborah Slutter against the United States of America seeking the return of $20,000 which she offered in compromise for the full discharge of her tax indebtedness for tax years 2003, 2004, and 2005. In 2007, the Internal Revenue Service rejected the offer initially and on appeal, and applied the sum to the $57,242.67 she owed the government for those tax years. I dismissed her first action for lack of subject matter jurisdiction, having found that Miss Slutter had failed to meet the jurisdictional prerequisite of exhaustion of administrative remedies. See Slutter v. United States of America, No. 08-3046, 2011 U.S. Dist. LEXIS 59916 (E.D. Pa. Jan. 20, 2011). The defendant has filed a motion to dismiss Miss Slutter's current action pursuant to Rule 12(b)(1)*fn1 of the Federal Rules of Civil Procedure. For the following reasons, I will grant the motion.


On August 28, 2007, with the assistance of a certified public accountant, Miss Slutter submitted IRS Form 656, entitled Offer in Compromise, to the Internal Revenue Service together with a lump-sum payment of $20,000. Three months later, the government rejected the offer, yet retained the money. A month later, Miss Slutter appealed the decision but her appeal was denied the following April. She received notice from the Internal Revenue Service that part of the $20,000 payment was used to satisfy her liability for tax year 2003, and the remaining amount, i.e., $9,649.45, was characterized as an overpayment and applied toward her liability for tax year 2004. Miss Slutter then filed her first complaint characterizing the government's decision to retain the lump sum offer as an "outrageous abuse of discretion and a violation of its own regulations."

Unfortunately, Miss Slutter had not exhausted her administrative remedies before bringing her first complaint here. Because administrative exhaustion is a prerequisite for Miss Slutter's claim to overcome the United States' sovereign immunity, I dismissed the action for lack of subject matter jurisdiction.

In an effort to exhaust those remedies, Miss Slutter's attorney hand-delivered an administrative claim for relief to the IRS Appeals Unit on March 24, 2010. In May 2010, however, the IRS Appeals Unit informed Miss Slutter that it did not have her administrative claim. Miss Slutter then mailed a copy to the Unit on May 25, 2010.

Following the September 2010 denial of her administrative claim, Miss Slutter moved to reinstate her previous action here, arguing that because the impediment to the resolution of her case had been cured, it would have been equitable to allow her to reinstate her complaint. That, however, was not possible because where Congress intends to require the exhaustion of remedies, exhaustion must be complete before an invocation of the judicial process. McNeil v. United States, 508 U.S. 106, 111-112 (1993) (strict adherence to the procedural requirements specified by the legislature is the best guarantee of evenhanded administration of the law). Accordingly, I denied Miss Slutter's motion to reinstate, finding that the court could not re-open a case over which it had no jurisdiction. Miss Slutter then brought this second action against the government.


A motion to dismiss pursuant to Rule 12(b)(1) may be treated as either a facial or factual challenge to the court's subject matter jurisdiction. Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). Facial attacks contest the sufficiency of the pleadings, and the trial court must accept the complaint's allegations as true. Dismissal under a facial challenge is proper only when the claim appears to be immaterial and made solely for the purpose of obtaining jurisdiction, or is wholly insubstantial and frivolous. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1408-1409 (3d Cir. 1991).

In contrast, a trial court considering a factual attack, i.e., an attack based on the sufficiency of jurisdictional fact, accords a plaintiff's allegations no presumption of truth. Turicentro, S.A. v. Am. Airlines, Inc., 303 F.3d 293, 300 n.4 (3d Cir. 2002). Where, as here, subject matter jurisdiction "in fact" is challenged, the trial court's very power to hear the case is at issue, and the court is therefore "free to weigh the evidence and satisfy itself as to the power to hear the case." Mortensen v. First Federal Savings and Loan Assoc., 549 F.2d 884, 891 (3d Cir. 1977).


The United States is immune from suit, unless it consents to be sued by waiving its sovereign immunity. Lehman v. Nakshian, 453 U.S. 156, 160 (1981); see also United States v. Testan, 424 U.S. 392, 399 (1976) (the United States, including its agencies and its employees, can be sued only to the extent that it has expressly waived its sovereign immunity). Moreover, when a plaintiff seeks to sue the United States, she may not rely on the general federal question jurisdiction of 28 U.S.C. ' 1331, but must identify a specific statutory provision that waives the government's sovereign immunity from suit. Such a waiver must be "unequivocally expressed," and any waiver will be strictly construed in favor of the sovereign. United States v. Nordic Village, Inc., 503 U.S. 30, 33-34 (1992); see also Clinton County Comm'rs v. United States EPA, 116 F.3d 1018, 1021 (3d Cir. 1997). Where the sovereign has waived immunity, no suit can be maintained unless it is in exact compliance with the terms of the statute under which the sovereign has consented to be sued. United States v. King, 395 U.S. 1, 4 (1969).

Title 28 of the United States Code, Section 1346(a)1) provides that the district courts shall have original jurisdiction of:

(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive ...

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