Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-00729/USCOURTS-azd-2_14-cv-00729-5/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7401 IRS: Tax Liability

---

WO IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA 

UNITED STATES OF AMERICA, )

) 

 Plaintiff, ) 

) 

vs. ) 

)

MICHAEL A. BIGLEY, et al., )

) No. 2:14-cv-0729-HRH

 Defendants. )

_______________________________________) 

O R D E R

Motion to Dismiss

Pursuant to Rules 12(b)(1) and 12(h)(3), Federal Rules of Civil Procedure, defendant

Michael Bigley again moves to dismiss plaintiff’s complaint on the ground that this court

lacks subject matter jurisdiction.1 This motion is opposed.2 Oral argument has not been

requested and is not deemed necessary.

“A motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) or

12(h)(3) challenges the [c]ourt’s subject matter jurisdiction.” Coble v. DeRosia, 823 F.

Supp. 2d 1048, 1050 (E.D. Cal. 2011). This court has previously held that it has subject

1Docket No. 175. 

2Docket No. 182. 

-1-

Case 2:14-cv-00729-HRH Document 188 Filed 11/22/16 Page 1 of 5
matter jurisdiction of plaintiff’s complaint pursuant to 28 U.S.C. §§ 1340 and 1345 and 26

U.S.C. §§ 7402 and 7403. Nothing has happened in this case to change that holding. The

court continues to have subject matter jurisdiction of plaintiff’s complaint pursuant to 28

U.S.C. §§ 1340 and 1345 and 26 U.S.C. §§ 7402 and 7403. 

In the instant motion, Mr. Bigley argues that he is not a taxpayer and thus plaintiff’s

claims, which are based on a presumption that he is a taxpayer, must fail.

3 This is an

argument more properly raised in a Rule 12(b)(6) motion for failure to state a claim. “To

survive a Rule 12(b)(6) motion to dismiss, a ‘plaintiff must allege enough facts to state a

claim to relief that is plausible on its face.’” Turner v. City and County of San Francisco,

788 F.3d 1206, 1210 (9th Cir. 2015) (quoting Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580,

588 (9th Cir. 2008)). 

Plaintiff has asserted four claims for relief in its complaint: 1) a claim to reduce

federal tax assessments to judgment, 2) a claim seeking a determination that the Kelsos and

ISA Ministries were the nominees or alter egos of the Bigleys, 3) a fraudulent transfer claim

against the Bigleys, and 4) a claim seeking to foreclose the federal tax liens encumbering the

real property at issue. 

3To the extent that Mr. Bigley has advanced any other arguments in the instant motion

to dismiss and his reply to plaintiff’s opposition, these arguments are frivolous and the court

declines to address them in detail. See Crain v. C.I.R., 737 F.2d 1417, 1417 (5th Cir. 1984)

(finding “no need to refute” frivolous “arguments with somber reasoning and copious citation

of precedent” because “to do so might suggest that these arguments have some colorable

merit”). 

-2-

Case 2:14-cv-00729-HRH Document 188 Filed 11/22/16 Page 2 of 5
Congress has authorized the IRS to collect outstanding tax

liabilities. Pursuant to 26 U.S.C. § 7402(a), the United States

can bring an action to obtain a judgment in order to enforce the

internal revenue laws. Pursuant to 26 U.S.C. § 7403(a), where

the taxpayer refuses or neglects to pay his federal taxes, the

United States can bring a civil action in federal court to enforce

a tax lien or to subject a taxpayer’s property to payment of such

federal taxes. Section 7403(b) requires the United States to

name as defendants all persons who have an interest in, or a lien

upon, the property at issue. Section 7403(c) provides that, after

all parties have been notified of the action, the court shall

determine the merits of all claims to and liens upon the property. 

Where the United States establishes its interest in the property,

the court can direct a sale of the property[.] 

United States v. Suganuma, 546 F. Supp. 2d 996, 1000 (D. Hawai’i 2008). 

Plaintiff has alleged that taxes and penalties of $214,912.78 have been assessed

against Mr. Bigley.

4 Plaintiff alleges that it has given Mr. Bigley timely notice of these

assessments and has made a demand for payment, but that Mr. Bigley “has neglected,

refused, or failed to make payment of the assessed amount....”5 Plaintiff further alleges that

Mr. Bigley “petitioned the United States Tax Court to contest the merits of the notice of

deficiency by the IRS for the 2004 tax year. The Tax Court issued a decision in favor of the

IRS, sustaining the deficiency determinations for the 2004 tax year[.]”6 These allegations

4Complaint to Reduce Federal Tax Assessments to Judgment and Foreclose Federal

Tax Liens at 6-7, ¶ 22, Docket No. 1. 

5

Id. at 8, ¶¶ 23-24. 

6

Id. at ¶ 25. 

-3-

Case 2:14-cv-00729-HRH Document 188 Filed 11/22/16 Page 3 of 5
are sufficient to make plaintiff’s claims against Mr. Bigley plausible on their face, unless, as

Mr. Bigley now argues, he is not a “taxpayer.” 

Mr. Bigley argues that he is not a “taxpayer” as that term is defined in 26 U.S.C. §

7701(a)(14). Section 7701(a)(14) defines “taxpayer” to mean “any person subject to any

internal revenue tax.” Mr. Bigley argues that he does not meet this definition because he

cannot be subject to an internal revenue tax on the income which is the basis for plaintiff’s

tax assessment. Mr. Bigley contends that 

[t]he “internal revenue tax” is limited to that of a tax levied or

imposed upon an object of interstate commerce that is a proper

subject of the Congressional power to tax under U.S. Const. Art.

I, § 8 to the exclusion of any other tax levied or imposed upon

activity or object under that same power....[7]

Mr. Bigley argues that his income was not an object of interstate commerce because it was

earned only in Arizona and not while he was engaged in interstate commerce. According to

Mr. Bigley, if his income was not an object of interstate commerce, then an internal revenue

tax could not be levied or imposed upon it, and if no internal revenue tax could be levied or

imposed upon his income, then he could not be a taxpayer for purposes of Title 26.

The meaning of “internal revenue tax” is not limited in the manner that Mr. Bigley

suggests. “‘The authority conferred upon Congress by § 8 of article 1 to lay and collect

taxes, duties, imposts and excises is exhaustive and embraces every conceivable power of

taxation’” including the authority “‘... to lay and collect income taxes.’” Parker v. C.I.R., 724

7Memorandum of Law Internal Revenue Tax and “Taxpayer” at 1, Docket No. 175. 

-4-

Case 2:14-cv-00729-HRH Document 188 Filed 11/22/16 Page 4 of 5
F.2d 469, 471 (5th Cir. 1984) (quoting Brushaber v. Union Pacific Ry. Co., 240 U.S. 1, 12-13

(1916)). “The Sixteenth Amendment provides[,]” in pertinent part that “[t]he Congress shall

have power to lay and collect taxes on incomes, from whatever source derived[.]” Murphy

v. United States, 992 F.2d 929, 930 (9th Cir. 1993). The Sixteenth Amendment “is a broad

grant of power to tax income from whatever source it is derived, including income derived

fromwhollyintrastate actions or property.” Secora v. United States, Case No. 4:CV96–3356,

1997 WL 460162, at *6 (D. Neb. April 18, 1997) (emphasis added). That Mr. Bigley’s

income may have been earned solely within Arizona does not mean that any tax imposed on

that income is not an “internal revenue tax.” As a person who has received income, Mr.

Bigley is a person “subject to any internal revenue tax.” 26 U.S.C. § 7701(a)(14). Mr.

Bigley is a “taxpayer” for purposes of Title 26, and, as set out above, plaintiff’s claims

against Mr. Bigley are not implausible.

Mr. Bigley’s motion to dismiss8 is denied. 

 DATED at Anchorage, Alaska, this 21st day of November, 2016. 

/s/ H. Russel Holland 

United States District Judge

8Docket No. 175. 

-5-

Case 2:14-cv-00729-HRH Document 188 Filed 11/22/16 Page 5 of 5