Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-03240/USCOURTS-ca10-89-03240-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 

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PUBLISH 

P l t~o United Shlff.~ t~utJ ~f ApJ'eals ·tenth Circuit 

S~P G 't§§O 

UNITED STATES COURT OF APPEALS ROBERT L. HOECKER 

TENTH CIRCUIT Clerk 

ESLEY E. SCHMIDT and MILDRED R. 

SCHMIDT, 

Plaintiffs-Appellants, 

v. 

CLARENCE M. KING, JR., District 

Director, MAX J. KENNEDY, Revenue 

Officer, INTERNAL REVENUE SERVICE, 

COMMISSIONER OF THE INTERNAL REVENUE 

SERVICE, UNITED STATES OF AMERICA, 

DOES I THROUGH X INCLUSIVE, 

Defendants-Appellees. 

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No. 89-3240 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF KANSAS 

(D.C. No. 87-2612-S) 

Submitted on the briefs: 

Esley E. Schmidt and Mildred R. Schmidt, pro se. 

Shirley D. Peterson, Assistant Attorney General, Gary R. Allen, 

Kenneth L. Greene, and Curtis c. Pett, Attorneys, Tax Division, 

Department of Justice, Washington, D.C., (Benjamin L. Burgess, 

Jr., United States Attorney, Wichita, Kansas, of Counsel), for 

Defendants-Appellees. 

Before SEYMOUR, BRORBY, and EBEL, Circuit Judges. 

PER CURIAM. 

Appellate Case: 89-3240 Document: 01019708247 Date Filed: 09/06/1990 Page: 1 
The initial issue before us in this case is whether the 

district court had jurisdiction to consider this action, which 

plaintiffs Esley E. and Mildred R. Schmidt characterize as an 

action to quiet title under 28 U.S.C. § 2410. Because Mr. and 

Mrs. Schmidt were actually challenging the Internal Revenue 

Service's deficiency assessment and collection of taxes, which may 

not be attacked under the authority of section 2410, we conclude 

the district court lacked jurisdiction to consider this lawsuit. 1 

Mr. and Mrs. Schmidt did not file tax returns for the years 

1978 through 1983. The I.R.S. thereafter assessed tax 

deficiencies for those years. When the Schmidts ignored the 

deficiencies, the I.R.S. filed liens and issued a notice of levy 

on eleven parcels of their property. The I.R.S. seized all of the 

property and sold four of the parcels. Because the tax liability 

was not satisfied by the sale, the I.R.S. filed additional tax 

liens. 

Subsequently, the Schmidts filed a complaint in district 

court against the United States, I.R.S., and various I.R.S. 

employees (I.R.S.), seeking damages for assessing and collecting 

taxes and seizing and selling their property, and injunctive and 

declaratory relief to prevent the I.R.S. from engaging in future 

collection activities. The Schmidts primarily alleged that (1) 

1 After exam~n~ng the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); lOth Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

2 

Appellate Case: 89-3240 Document: 01019708247 Date Filed: 09/06/1990 Page: 2 
the I.R.S. made an unlawful deficiency assessment and failed to 

follow proper procedure in making the assessment, (2) they are not 

subject to income taxes, (3) they were improperly labeled as 

taxpayers, and (4) the I.R.S. did not issue a notice of assessment 

and demand for payment prior to levying on and selling their 

property. Defendants filed a motion for summary judgment 

asserting, among other things, that the district court lacked 

jurisdiction under section 2410 to hear this action. The district 

court dismissed the portions of the complaint seeking damages and 

injunctive relief. The court determined that it had jurisdiction 

only over the claims that challenged the tax lien, levy, and sale 

because those claims sought to quiet title under the section 2410 

waiver of sovereign immunity. Although the district court decided 

the I.R.S. had made a valid tax assessment, it concluded a factual 

question existed on whether the I.R.S. had made a proper notice of 

assessment and demand for payment. In a subsequent order, after 

defendants again filed a motion for summary judgment, the district 

court held that the Schmidts did receive the proper notice and 

demand requisite to a valid tax lien. 

Although Mr. and Mrs. Schmidt raise several arguments on 

appeal relating to the merits of this action, we do not address 

those arguments because we conclude the district court lacked 

jurisdiction to consider this action. A suit naming the United 

States as a party may be brought in district court "to quiet title 

to . . . property on which the United States has or claims a 

mortgage or other lien." 28 u.s.c. § 2410(a). If a taxpayer 

seeks to quiet title to property upon which the United States has 

3 

Appellate Case: 89-3240 Document: 01019708247 Date Filed: 09/06/1990 Page: 3 
a lien, he may bring a quiet title action under section 2410(a), 

without paying the tax. Section 2410(a) waives the United States' 

sovereign immunity for actual quiet title actions. See United 

States v. John Hancock Mut. Life Ins. Co., 364 U.S. 301 (1960). 

Waivers of sovereign immunity under section 2410(a) must be read 

narrowly. See, e.g., Estate of Johnson, 836 F.2d 940, 943-44 (5th 

Cir. 1988). Federal courts considering the issue of waiver of 

sovereign immunity under section 2410(a) have unanimously 

concluded that it may not be construed as permitting a collateral 

attack on the merits of a tax assessment. See, e.g., Pollack v. 

United States, 819 F.2d 144, 145 (6th Cir. 1987); Laino v. United 

States, 633 F.2d 626, 633 n.8 (2d Cir. 1980); Aqua Bar & Lounge, 

Inc. v. United States Dep't of Treasu~, I.R.S., 539 F.2d 935, 

938-39 (3d Cir. 1976); Rodriguez v. United States, 629 F. Supp. 

333, 336 (N.D. Ill. 1986); Viva Ltd. v. United States, 490 

F. Supp. 1002, 1007 (D. Colo. 1980). 

When the taxpayer challenges the procedural regularity of the 

tax lien and the procedures used to enforce the lien, and not the 

validity of the tax assessment, sovereign immunity is waived and 

the district court does have jurisdiction over a quiet title 

action. Aqua Bar & Lounge, 539 F.2d at 939; see also Rodriguez, 

629 F. Supp. at 339 (action challenging only procedure used in 

making levy, not merits of assessment, not contrary to rule that 

deficiency determination can be challenged only in Tax Court 

unless paid first); Yannicelli v. Nash, 354 F. Supp. 143, 151 

(D.N.J. 1972)(suit questioning legality of procedure used to 

enforce jeopardy assessment within jurisdiction of section 2410). 

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Appellate Case: 89-3240 Document: 01019708247 Date Filed: 09/06/1990 Page: 4 
Typically, a taxpayer with a valid quiet title action will admit 

any assessed taxes are due. ~ 

The taxpayers in this case do not challenge the procedures 

used to enforce the tax lien. Rather, they attack the procedures 

of the assessment and notice and demand and, ultimately, the 

adjudication of whether they owe taxes. Section 2410 does not 

extend to challenges for procedural irregularities in assessment 

or collection of taxes. Thus, the taxpayers were required to pay 

their taxes first before filing an action in district court. See 

Falik v. United States, 343 F.2d 38, 42-43 (2d Cir. 1965). 

Section 2410 does not waive sovereign immunity for an action such 

as this, and the district court therefore lacked jurisdiction to 

consider this action. 

The judgment of the United States District Court for the 

District of Kansas is VACATED, and the action is REMANDED for 

dismissal for lack of jurisdiction. 

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Appellate Case: 89-3240 Document: 01019708247 Date Filed: 09/06/1990 Page: 5