Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-05025/USCOURTS-cand-4_04-cv-05025-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 28:1334(c) R&amp;R re motions for abstention (non-core)

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

NOT FOR CITATION

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SHARON DE EDWARDS, M.D.,

Plaintiff, No. C 04-5025 PJH

v. ORDER GRANTING

MOTION TO DISMISS

INTERNAL REVENUE SERVICE, 

et al.,

Defendants.

_______________________________/

Before the court is the motion of defendants Internal Revenue Service and United

States of America to dismiss the complaint for lack of subject matter jurisdiction and for failure

to state a claim. Having read the parties’ papers and carefully considered their arguments

and the relevant legal authority, and good cause appearing, the court hereby GRANTS the

motion for the following reasons.

BACKGROUND

Plaintiff Sharon De Edwards is a physician in private practice. She filed this action on

November 29, 2004, against the Internal Revenue Service (“IRS”), seeking declaratory and

injunctive relief, and also seeking damages. Plaintiff alleges that prior to 1997, she owed

Case 4:04-cv-05025-PJH Document 30 Filed 12/30/05 Page 1 of 6
United States District Court

For the Northern District of California

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 The court interprets this as a reference to § 6213(a), not § 6313, which has no

subsection (a), and no apparent relevance to the claims asserted in the complaint herein. 

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approximately $78,000 in federal taxes, penalties, and interest. She claims that starting in

1997 the IRS began levying on her bank accounts and on health plans that owed her money

for professional services, without providing her with a deficiency notice prior to each

assessment, in violation of 26 U.S.C. §§ 6212(a) and 6313(a).1 She asserts that as of the

time of the filing of the complaint, the IRS had executed levies in the amount of $196,029.80.

She alleges that the IRS has refused to stop the levies, despite the fact that the amount

collected now exceeds the amount of her tax liability, and despite the fact that she has

requested on numerous occasions that the levies cease. She claims that the IRS has also

refused to provide her with an accounting of how the money collected has been applied. 

Defendants seek an order dismissing the complaint for lack of subject matter

jurisdiction.

DISCUSSION

A. Legal Standard

The term "subject-matter jurisdiction" refers to the court's authority over the category of

the claim in suit. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577 (1999). Subject matter

jurisdiction is fundamental and cannot be waived. Billingsly v. C.I.R., 868 F.2d 1081, 1085

(9th Cir. 1989). It must be established as a threshold matter, inflexibly and without exception. 

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998). The burden of establishing

federal jurisdiction rests on the party seeking to invoke it. Kokkonen v. Guardian Life Ins. Co.

of America, 511 U.S. 375, 377 (1994). 

Federal district courts are courts of limited jurisdiction. In most cases, there must be

both constitutional and statutory authority for a federal court to act. Id. When suit is brought

against the United States, an additional threshold question arises – that is, whether the action

is barred by sovereign immunity. See F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994). Without a

waiver of that immunity, there can be no jurisdiction over the claim in any court. Id. Moreover,

when the United States consents to be sued, the terms of its waiver of sovereign immunity

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precisely define the extent of the court's jurisdiction. United States v. Mottaz, 476 U.S. 834,

841 (1986).

B. Defendants’ Motion

Defendants submit that plaintiff’s intent, as reflected in the complaint, is to seek

damages from the IRS and from the United States. They argue, however, that the IRS must be

dismissed from the case because it lacks the capacity to be sued. 

Defendants also assert that the claims against the United States should be dismissed

because plaintiff fails to allege any waiver of the United States’ sovereign immunity, because

plaintiff failed to file an administrative claim for a refund pursuant to the Internal Revenue

Code, because the federal courts lack jurisdiction over any suit seeking a declaratory

judgment with respect to federal taxes, and because plaintiff’s suit does not fall within the

exceptions to the Anti-Injunction Act. 

Plaintiff concedes that the court lacks subject matter jurisdiction, and requests, in lieu of

dismissal, that the court transfer the action to the United States Tax Court, pursuant to 28

U.S.C. § 1631. 

The government is correct in arguing that the IRS has no capacity to be sued. See

Blackmar v. Guerre, 342 U.S. 512, 514 (1952). Thus, the proper party in this litigation is the

United States. To be amenable to suit, the United States must waive its sovereign immunity. 

Under 28 U.S.C. § 1346, district courts have original jurisdiction, concurrent with the United

States Court of Federal Claims, of 

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, or any sum alleged to have been

excessive or in any manner wrongfully collected under the internal-revenue laws. 

28 U.S.C. § 1346(a)(1). This provision waives the sovereign immunity of the United States to

permit suit for the recovery of taxes which have been erroneously collected. 

However, this provision is subject to additional jurisdictional prerequisites. For

example, "[n]o suit [for refund] . . . shall be maintained in any court . . . until a claim for refund

or credit has been duly filed with the Secretary [of the Treasury], according to the provisions of

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law in that regard, and the regulations of the Secretary established in pursuance thereof." 26

U.S.C. § 7422(a). Another jurisdictional prerequisite is that the challenged tax assessment

must be paid in full. See 28 U.S.C. § 1346(a)(1); Flora v. United States, 362 U.S. 145,

150-51 (1960) (assessment must be paid in full before income tax refund suit can be

maintained in federal district court); see also PCCE, Inc. v. United States, 159 F.3d 425,

428-29 (9th Cir. 1998) (district court lacked jurisdiction over plaintiff's refund claim because

assessment was not paid in full). 

Section 1346 must also be read in conjunction with 26 U.S.C. § 7421, known as the

“Anti-Injunction Act," which provides that “no suit for the purpose of restraining the assessment

or collection of any tax shall be maintained in any court by any person, whether or not such

person is the person against whom such tax was assessed.” 26 U.S.C. § 7421(a). In other

words, an aggrieved taxpayer must file a suit for a refund, rather than seek an injunction. 

Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 7 (1962). 

Defendants assert, and plaintiff does not dispute, that she did not file an administrative

claim for a refund and did not pay the disputed taxes and penalties in full before bringing suit. 

Absent compliance with these two requirements before instituting suit, this district court lacks

subject-matter jurisdiction. Therefore, this suit must be dismissed. 

Plaintiff argues that defendants argue in their motion to dismiss that “this matter

properly belongs in Tax Court.” The court has reviewed defendants’ papers carefully, and

finds no such assertion. 

Plaintiff also claims that she has “presented evidence” of “mis-allocation of corporate

funds on the part of the defendant;” of “duplicate separate filing of 1040 tax return by the

defendant allegedly on behalf of [p]laintiff, even though [p]laintiff had already filed joint 1040 tax

returns for the same year;” of “filing inflated 941 tax returns allegedly on behalf or [sic] the

corporation;” and of “the defendant’s failure to account for all the funds it received by way of

levies.” None of this “evidence” is before the court, as plaintiff filed a two-page “request to

transfer” with no supporting exhibits, declarations or other “evidence.” In any event, plaintiff

does not explain how the “evidence” would establish that a transfer of this case would be

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 However, the liabilities at issue, as shown by the documents attached to the Declaration

of Cynthia Stier in support of defendant’s motion to dismiss, were for Form 941 and 940

employment taxes, which are exempt from the notice deficiency requirement of 

§ 6212(a). Section 6212(a) applies to taxes imposed by subtitle A or B or chapter 41, 42, 43,

or 44, whereas Forms 941 and 940 taxes are imposed by subtitle C, chapters 21 and 22. See

Miller v. C.I.R., 310 F.3d 640, 644 n.5 (9th Cir. 2002). 

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proper.

Plaintiff contends that the only considerations for the court in ruling on a § 1631 motion

to transfer are whether the action was timely filed and whether a transfer would be in the

interests of justice. However, the Ninth Circuit has held that transfer is appropriate under §

1631 if (1) the transferring court lacks jurisdiction, (2) the transferee court could have

exercised jurisdiction at the time the action was filed, and (3) the transfer is in the interest of

justice. Arreola-Arreola v. Ashcroft, 383 F.3d 956, 964 (9th Cir. 2004). Plaintiff has made no

showing that transfer is warranted under this standard. 

 As is true with all federal courts, the Tax Court is a court of limited jurisdiction. 

Jurisdiction of the Tax Court is governed by the Internal Revenue Code. 26 U.S.C. 

§ 7442. The Tax Court’s jurisdiction is generally limited to redetermining deficiencies in

income taxes, estate and gift taxes, and certain specified excise taxes that are subject to

deficiency procedures. See 26 U.S.C. §§ 6212, 6213, 6214. Plaintiff did not file this action

as an appeal of the IRS’ final notice and determination of a deficiency. Instead, she alleged

that the IRS executed the levies without providing a deficiency notice, prior to each

assessment, claiming that this asserted failure to provide deficiency notices violated 

§§ 6212(a) and 6213(a).2 Moreover, plaintiff filed this action in her individual capacity, while

the relief she seeks is directed toward the federal employment tax liabilities of her corporation

and her sole proprietorship. 

CONCLUSION

The court finds that defendant’s unopposed motion to dismiss must be GRANTED. 

Plaintiff’s request to transfer is DENIED, as she has not met her burden of showing that the

action could have been brought in the Tax Court or that interests of justice will be served by

transferring the action. 

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IT IS SO ORDERED.

Dated: December 30, 2005

______________________________

PHYLLIS J. HAMILTON

United States District Judge

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