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Hall v. United States

United States District Court, E.D. New York

July 13, 2017

ANTHONY HALL, Plaintiff,
v.
UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE, UNITED STATES DEPARTMENT OF THE TREASURY, MARY ANN ACONE and NATALIE CASSADFNE, Defendants.

          MEMORANDUM & ORDER

          MARGO K. BRODIE, United States District Judge.

         Plaintiff Anthony Hall, proceeding pro se, commenced the above-captioned action on April 27, 2016 against Defendants the United States of America, the Internal Revenue Service ("IRS"), the United States Department of the Treasury, Mary Ann Acone and Natalie Cassadine, [1]alleging an "unconstitutional theft of [Plaintiffs] proprietary interest in [his] private property" and the "capricious, wrongful and unreasonable imposition of [a] jeopardy levy." (Compl. 1, Docket Entry No. 1 (capitalizations omitted).) Defendants move to dismiss the Complaint for lack of subject matter jurisdiction and for failure to state a claim pursuant to Rules 12(b)(1) and 12(b)(6), respectively, of the Federal Rules of Civil Procedure. (Defs. Mot. to Dismiss with Incorporated Mem. of Law ("Defs. Mem."), Docket Entry No. 11; Decl. of Natalie Cassadine ("Cassadine Decl."), Docket Entry No. 11-1.) Based on Plaintiffs request that the Court "quash[] the unlawful institution of [the] jeopardy levy and release ... all holds, liens and restraints currently placed on [Plaintiffs] bank accounts, " (Compl. ¶ 12 (capitalizations omitted)), the Court construes Plaintiffs claims to seek review of a jeopardy levy under 26 U.S.C. § 7429 ("section 7429") or to assert a wrongful levy action under 26 U.S.C. § 7426 ("section 7426").[2]

         For the reasons set forth below, the Court grants Defendants' motion to dismiss the Complaint.

         I. Background

         The Court assumes the truth of the factual allegations in the Complaint for purposes of this Memorandum and Order. On April 13, 2016, Plaintiff received a notice from the IRS informing him that he had a "balance due" of $1, 022, 289.60 from an allegedly fraudulent federal tax return that Plaintiff had filed for the 2014 tax year. (Compl. ¶ 5.) The balance represented Plaintiffs 2014 tax refund of $851, 908 and accrued interest.[3] (Cassadine Decl. ¶ 4; see Notice of Tax Due on Federal Tax Return at 12, annexed to Compl. as Ex. B.) By letter dated April 14, 2016, the IRS informed Plaintiff that it had approved a jeopardy levy[4] to collect the amount Plaintiff owed. (Compl. ¶ 6; Notice of Jeopardy Levy and Right of Appeal ("Notice of Jeopardy Levy"), annexed to Compl. as Ex. A.) The Notice of Jeopardy Levy also informed Plaintiff that he was entitled to request an administrative review of the action and was required to do so before he requested judicial review in a United States District Court. (Notice of Jeopardy Levy at 1.) On April 24, 2016, Plaintiff received a notice from J.P. Morgan Chase Bank, N.A., placing holds in the amounts of $181, 095.84 and $204, 915.50 on the balance in Plaintiffs personal account and an account named the "Hall Sovereign Irrevocable Private Trust." (Compl. ¶ 7; Notice of Hold, annexed to Compl. as Ex. C.) Plaintiff commenced this action on April 27, 2016. (See Compl.)

         II. Discussion

         a. Standard of review

         i. Rule 12(b)(1)

         A district court may dismiss an action for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) when the court "lacks the statutory or constitutional power to adjudicate it." Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)); Shabaj v. Holder, 718 F.3d 48, 50 (2d Cir. 2013) (quoting Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005)); see also Chau v. S.E.C., 665 F.App'x 67, 70 (2d Cir. 2016). The plaintiff has the burden to prove that subject matter jurisdiction exists, and in evaluating whether the plaintiff has met that burden, '"[t]he court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff, ' but 'jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.'" Morrison v. Nat'lAustl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (citations omitted), affd, 561 U.S. 247 (2010). A court may consider matters outside of the pleadings when determining whether subject matter jurisdiction exists. M.E.S., Inc. v. Snell, 712 F.3d 666, 671 (2d Cir. 2013); Romano v. Kazacos, 609 F.3d 512, 520 (2d Cir. 2010).

         ii. Rule 12(b)(6)

         A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Ail. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson v. Bd. of Educ, 631 F.3d 57, 63 (2d Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Although all allegations contained in the complaint are assumed to be true, this tenet is "inapplicable to legal conclusions." Iqbal, 556 U.S. at 678. In reviewing a pro se complaint, the court must be mindful that a plaintiffs pleadings should be held "to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (quotingEstelle v. Gamble, 429 U.S. 97, 104-105 (1976)); see Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (noting that even after Twombly, the court "remain[s] obligated to construe apro se complaint liberally").

         b. The Court lacks subject matter jurisdiction over Plaintiffs section 7429 claim

         Defendants argue that the Court lacks subject matter jurisdiction over Plaintiffs challenge to the jeopardy levy under section 7429 because Plaintiff failed to exhaust his administrative remedies. (Defs. Mem. 10.) Plaintiff does not respond to this argument.

         A taxpayer seeking to challenge a jeopardy levy under section 7429(b) must follow the administrative procedures set forth in section 7429(a) before bringing an action in federal court. Zuckman v. Dep 't of Treasury, 448 F.App'x 160, 161 (2d Cir. 2012) ("To the extent that Zuckman challenges the levy on his wages, there is no indication that he exhausted his administrative remedies. Thus, the district court properly dismissed those claims for lack of subject matter jurisdiction."). Under section 7429(a), a taxpayer may seek administrative review of a jeopardy levy by filing a written request with the Area Director[5] within thirty days of the date on which the IRS provided the taxpayer with the written statement of the information on which it ...


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