Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_11-cv-00158/USCOURTS-azd-4_11-cv-00158-1/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7426 IRS: Wrongful Levy for Taxes

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UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

George O. Thurman and Elizabeth Thurman,

husband and wife,

Plaintiff,

v. 

Internal Revenue Service,

Defendant. ______________________________________

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CV 11-158 TUC DCB

ORDER

On March 21, 2012, the Honorable D. Thomas Ferraro, United States Magistrate Judge,

filed a Report and Recommendation ("R&R") in this action. The R&R advised the Court to

dismiss the Plaintiffs’ Complaint for lack of subject matter jurisdiction or, alternatively, to

dismiss the Complaint for failure to state a claim, with leave to amend. The Court considers the

R&R as to dismissal for lack of subject matter jurisdiction to be thorough and well-reasoned.

The United States and its agencies can only be sued to the extent the Government has expressly

waived its sovereign immunity. Kaiser v. Blue Cross of California, 347 F.3d 1107, 1107, 1117

(9th Cir. 2003). With very limited exceptions, a legal suit to restrain the assessment or collection

of a federal tax is expressly precluded by statute, 26 U.S.C. § 7421(a). “If a taxpayer does not

establish that he satisfies one of the exceptions, this Court does not have jurisdiction and the

case must be dismissed.” (R&R at 3 (citing Jensen v. I.R.S., 835 F.2d 196, 198 (9th Cir. 1987)).

The Magistrate Judge found that Plaintiffs did not argue and did not assert any facts to

which any statutory exception applies. The Magistrate Judge also considered the one judicial

exception, which allows suit when “it is clear that under no circumstances could the

Government ultimately prevail,” and “equity jurisdiction otherwise exists.” Id. (quoting Enoghs

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v. Williams Packing Co., 370 U.S. 1, 7 (1962). On the record before the Magistrate Judge, there

was no information nor evidence to suggest this exception applies in this case.

After a de novo review of the record and the Complaint, the Court adopts the

recommendation of the Magistrate Judge to dismiss the Complaint for lack of jurisdiction, with

leave to amend. 

STANDARD OF REVIEW

The duties of the district court in connection with a R&R by a Magistrate Judge are

set forth in Rule 72 of the Federal Rules of Civil Procedure and 28 U.S.C. § 636(b)(1). The

district court may “accept, reject, or modify, in whole or in part, the findings or

recommendations made by the magistrate judge.” Fed.R.Civ.P. 72(b), 28 U.S.C. § 636(b)(1). 

Where the parties object to a Report and Recommendation, “[a] judge of the [district] court

shall make a de novo determination of those portions of the [R&R] to which objection is

made.” 28 U.S.C. § 636(b)(1); see Thomas v. Arn, 474 U.S. 140, 149-50 (1985). When no

objections are filed, the district court need not review the R&R de novo.“‘[a] judge of the

[district] court shall make a de novo determination of those portions of the [R&R] to which

objection is made.’” Thomas v. Arn, 474 U.S. 140, 149-50 (1985) (quoting 28 U.S.C. §

636(b)(1)).

This Court's ruling is a de novo determination as to those portions of the R&R to

which there are objections. 28 U.S.C. § 636(b)(1)(C); Wang v. Masaitis, 416 F.3d 992, 1000

n. 13 (9th Cir.2005); United States v. Reyna-Tapia, 328 F.3d 1114, 1121-22 (9th Cir.2003)

(en banc). To the extent that no objection has been made, arguments to the contrary have

been waived. Fed. R. Civ. P. 72; see 28 U.S.C. § 636(b)(1) (objections are waived if they

are not filed within fourteen days of service of the Report and Recommendation), see also

McCall v. Andrus, 628 F.2d 1185, 1187 (9th Cir. 1980) (failure to object to Magistrate's

report waives right to do so on appeal); Advisory Committee Notes to Fed. R. Civ. P. 72

(citing Campbell v. United States Dist. Court, 501 F.2d 196, 206 (9th Cir. 1974) (when no

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timely objection is filed, the court need only satisfy itself that there is no clear error on the

face of the record in order to accept the recommendation)).

The parties were sent copies of the R&R and instructed that, pursuant to 28 U.S.C. §

636(b)(1), they had 14 days to file written objections. See also, Fed. R. Civ. P. 72 (party

objecting to the recommended disposition has fourteen (14) days to file specific, written

objections). The Court has considered the objections filed by the Plaintiffs, the

Government’s Response, and the parties’ briefs considered by the Magistrate Judge.

OBJECTIONS

On April 2, 2012, Plaintiffs filed objections to the R&R in a document captioned:

“Memorandum Against USDC Motion to Dismiss 21 Mr ‘12.” Plaintiffs appear to

understand that this is a court of limited jurisdiction and is expressly without jurisdiction to

enjoin the IRS from collecting a federal tax, except in the most limited circumstances. The

Magistrate Judge explained why it appeared that no statutory exception applied in this case. 

(R&R at 3-4.) Plaintiffs assert in their objection that after they made required tax filings in

2005, the IRS never acknowledged the filings, never requested an audit, nor ever rejected

the filings. While there is no jurisdiction in this Court for Plaintiffs to challenge the amount

of the assessment against them, they are permitted to raise procedural challenges, including

any procedural irregularities which may have precluded Plaintiffs from securing review in

the Tax Court of the amount of tax liability assessed them by the Defendants. Guthrie v.

Sawyer, 970 F.2d 733 (10th Cir. 1992), Robinson v. United States, 920 F.2d 1157 (3rd Cir.

1991), Elias v. Connett, 908 F.2d 521 (9th Cir. 1990), Koff v. United States, 3 F.3d 1297 (9th

Cir. 1993). 

The Court notes that the record in this case is surprisingly devoid of any

documentation regarding the IRS action(s) challenged by the Plaintiffs, except for the

Government’s assertion that Plaintiffs currently have outstanding income tax liabilities for

the 1997 and 1998 tax years, and Plaintiff George Thurman has outstanding income tax

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 1This case is not a continuance of the judicial enforcement proceeding which brought

Plaintiff George Thurman before this Court in 2005, pursuant to a petition to enforce an IRS

summons. 28 U.S.C. § 7402(b), 28 U.S.C. § 7604(a). After Plaintiff Thurman appeared and

complied with the IRS summons, the Government filed a notice of compliance and motion to

dismiss, which was granted on September 12, 2005.

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liabilities for the 1999 and 2000 tax years, as well as civil penalties for frivolous tax returns

for the 1998, 1998 (sic) and 2000 tax years. (Doc. 11: Motion to Dismiss at 2.) In Plaintiffs

objections to the R&R, they assert the Government falsely stated in its memorandum to the

Court, dated October 3, 2011, that the Plaintiff had tax liabilities from 1997 through 2000. 

Plaintiffs may amend the Complaint if they can allege facts to clearly show that under no

circumstances could the Government ultimately prevail on these claims of outstanding

income tax liabilities, but Plaintiffs should note collecting officers need to only make a

minimal showing of a good faith assessment and assert the tax claim is valid. Enoghs, 370

U.S. at 1129.

In deciding whether or not to amend the Complaint, the Plaintiff must also state

claims within the two-year statute of limitation period. (R&R at 3.) The Court reviewed the

original Complaint and finds the latest date alleged therein is 2005, when Plaintiffs allege

Mr. Thurman met with the IRS “in the Court meeting room August 2005.” Plaintiffs allege

that Mr. Thurman agreed to provide various documents to the IRS to get Plaintiffs back on

track to paying taxes in exchange for the IRS’ agreement that the debt was bogus. Plaintiffs

allege they provided the requested documents within the next six months. These allegations

to not place this cause of action within the two-year limitation period.1

A taxpayer must bring suit within two years from the date the action accrues. 26

U.S.C. § 7433(d)(3). A cause of action accrues when the taxpayer has had a reasonable

opportunity to discover all essential elements of a possible cause of action. Plaintiffs

amended complaint must allege facts showing that a cause of action accrued within two

years prior to when he filed this case: March 16, 2011. 

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 2Plaintiff is advised to type the Amended Complaint because her handwriting is difficult to read and

there were instances where the Court could not read certain words contained in the Complaint.

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CONCLUSION

After de novo review of the issues raised in Plaintiffs’ objections, this Court

agrees with the findings of fact and conclusions of law made by the Magistrate Judge in his

R&R for determining the pending Motion to Dismiss. The Court adopts the R&R, and for

the reasons stated in the R&R, the Court grants the Defendant’s Motion to Dismiss, with

leave for Plaintiffs to file an Amended Complaint.

Accordingly,

IT IS ORDERED that after a full and independent review of the record, in respect to

the objections, the Magistrate Judge's Report and Recommendation (Doc. 25) is accepted

and adopted as the findings of fact and conclusions of law of this Court.

IT IS FURTHER ORDERED that Defendant's Motion to Dismiss (Doc. 10) is

GRANTED.

IT IS FURTHER ORDERED that Plaintiffs have leave to file an Amended

Complaint by May 21, 2012.

IT IS FURTHER ORDERED that THE AMENDED COMPLAINT MUST BE

CLEARLY DESIGNATED AS "AMENDED COMPLAINT" ON THE FACE OF THE

DOCUMENT. The Amended Complaint must state specific allegations against proper

Defendant(s), named as Defendant(s); and identify who participated in which activities

alleged in the Complaint; and state what injury, if any, Plaintiff suffered as a result of the

activities of each Defendant. THE AMENDED COMPLAINT MUST BE RETYPED2

 OR

REWRITTEN IN ITS ENTIRETY AND MAY NOT INCORPORATE ANY PART OF

THE ORIGINAL COMPLAINT BY REFERENCE. Local Rule 7.1(c).

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 3The Local Rules of Practice for the United States District Court, District of Arizona, may

be obtained at the Pima County Law Library or accessed on the Court's website:

www.azd.uscourts.gov.

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IT IS FURTHER ORDERED that the Clerk of the Court is directed to DISMISS all

claims and to close this case, without further notice to Plaintiffs, if Plaintiffs fail to file the

Amended Complaint by May 21, 2012.

IT IS FURTHER ORDERED that in the event Plaintiffs proceed with this action,

they must follow the Federal Rules of Civil Procedure and the Local Rules of Practice for

the U.S. District Court of Arizona (local rules).3

 Plaintiffs are instructed to take special

notice of Local Rule 7.2 which provides specifics for civil motions, especially subsection (i)

which provides that failure to file a timely response, or any other such non-compliance,

"may be deemed a consent to the denial or granting of the motion and the Court may dispose

of the motion summarily."

IT IS FURTHER ORDERED that in the event Plaintiffs proceed with this action,

they must comply with the rules of service. Fed. R. Civ. P. 4-6. Plaintiffs shall serve upon

Defendants or upon their counsel, a copy of every further pleading submitted to the Court. 

Plaintiffs shall include a certificate stating the date a true and correct copy of any document

was mailed to Defendant’s counsel. The Court will disregard any document which has not

been filed with the Clerk or which fails to include a Certificate of Service.

IT IS FURTHER ORDERED that the Plaintiff shall not have any ex parte

communications with this Court, including telephone calls and letters.

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IT IS FURTHER ORDERED that this matter remains referred to Magistrate Judge

D. Thomas Ferraro for all pretrial proceedings and Report and Recommendation in

accordance with the provisions of 28 U.S.C. § 636(b)(1) and the Rules of Practice for the

United States District Court, District of Arizona (Local Rules), Rules (Civil) 72.1.

DATED this 30th day of April, 2012.

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