Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-06798/USCOURTS-cand-3_06-cv-06798-0/pdf.json

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

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COURT

For the Northern District of California

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UNITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DALE C. ALLEN and RIO COLORADO

TRUST,

Plaintiffs,

 v.

COMMISSIONER OF THE INTERNAL

REVENUE SERVICE,

Defendant.

_____________________________________/

No. C 06-6798 MHP

ORDER

Motion to Dismiss

Plaintiff Dale C. Allen (“Allen”) initiated this action on November 6, 2006 by filing a

complaint seeking relief from an October 7, 2006 United States Tax Court (“Tax Court”) judgment

and an October 17, 2006 Internal Revenue Service (“IRS”) notice of deficiency against him. Allen

asks the court to vacate both the Tax Court judgment and the IRS notice of deficiency and to award

him costs and attorneys’ fees. Now before the court is the IRS’s motion to dismiss under Federal

Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction.

BACKGROUND1

On March 18, 2004 the IRS notified Allen that it intended to audit Allen, his wife and the

Rio Colorado Trust, an unincorporated business trust of which Allen is a trustee. Allen conducts

business in Mexico and California using the unincorporated business trust entity. Allen contends

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that he was selected for an audit because unincorporated business trusts are presumed to be suspect

and because he reported his business activities contrary to IRS regulations. In the course of its audit,

the IRS requested that Allen submit various forms of documentation. Allen claims to have complied

with these requests but states that certain documents had to be sent from Mexico and that he

experienced delays, a lost package and communications problems. Further delays in the resolution

of Allen’s audit resulted from his diagnosis with throat cancer, for which the IRS allowed him a

temporary suspension, and from the temporary reassignment of Allen’s auditor at IRS.

On June 8, 2005 the IRS sent Notices of Deficiency to both Allen and the Rio Colorado

Trust. Weill Dec. Exh. 1, 2. The Notices were issued with respect to both parties’ tax liabilities

from 2000 and 2001. Id. Allen filed petitions for redetermination of deficiency in Tax Court

contesting the validity of the Notices. In the course of proceedings in Tax Court, Allen claims to

have been prohibited from presenting certain pieces of evidence he believed to be necessary for his

argument. Additionally, his accountant was diagnosed with pancreatic cancer. Allen requested a

forty-five day continuance which the Tax Court denied without comment. On October 6, 2006 the

Tax Court granted a motion to dismiss for lack of prosecution. Weill Dec. Exh. 4. The Tax Court

issued a decision finding Allen responsible for tax deficiencies in the amount of $39,299.00 and

$26,020.00 for 2000 and 2001, respectively. Id. The Tax Court further found Allen responsible for

additions to tax per I.R.C. section 6651(a)(1) in the amount of $9,870.00 and $6,665.25 for 2000 and

2001, respectively, and for additions to tax per I.R.C. section 6662 in the amount of $7,859.80 and

$5,204.00 for 2000 and 2001, respectively. Weill Dec. Exh. 4. 

On November 6, 2006 Allen filed the present action, asking this court to vacate both the Tax

Court judgment and the IRS notice of deficiency, and to award him costs and attorneys’ fees. On

December 27, 2006 the IRS filed a motion to dismiss, arguing that this court lacks jurisdiction to

vacate either a Tax Court order or a notice of deficiency. Def.’s Mot. Dismiss at 2. The IRS further

argues that Rio Colorado Trust must be dismissed as a plaintiff from the instant action because in

federal court a trust must be represented by an attorney and Allen, though its trustee, is not a lawyer. 

Id.

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Allen did not respond to the IRS’s motion to dismiss for nearly two months. In light of the

greater leniency owed to pro se litigants, see Hughes v. Rowe, 449 U.S. 5, 9 (1980) (per curiam), the

court took it upon itself to encourage Allen to file a reply to the motion to dismiss so as to ensure

that the court fully understands all relevant facts and legal arguments before rendering judgment. 

The court’s deputy made a number of phone calls and left multiple messages for Allen. After

several attempts, and having received no response from Allen, the deputy managed to reach him and

encouraged him to file a reply immediately. On February 16, 2007 Allen filed a reply, conceding

that he filed his appeal improperly and asking the court to grant him an extension of the statute of

limitations set forth in 26 U.S.C. section 7481.

LEGAL STANDARD

A motion to dismiss will be denied unless it appears that the plaintiff can prove no set of

facts which would entitle him or her to relief. Conley v. Gibson, 355 U.S. 41, 45–46 (1957);

Fidelity Financial Corp. v. Federal Home Loan Bank of San Francisco, 792 F.2d 1432, 1435 (9th

Cir. 1986), cert. denied, 479 U.S. 1064 (1987). All material allegations in the complaint will be

taken as true and construed in the light most favorable to the plaintiff. NL Industries, Inc. v. Kaplan,

792 F.2d 896, 898 (9th Cir. 1986). Although the court is generally confined to consideration of the

allegations in the pleadings, when the complaint is accompanied by attached documents, such

documents are deemed part of the complaint and may be considered in evaluating the merits of a

Rule 12(b)(6) motion. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir.), cert. denied

sub nom. Wyoming Community Dev. Auth. v. Durning, 484 U.S. 944 (1987).

DISCUSSION

The IRS asks the court to dismiss Allen’s complaint for three reasons. First, IRS argues that

this court lacks jurisdiction to review Tax Court decisions. Second, IRS notes that Allen does not

state that he has filed a claim for refund with the Treasury Department. Third, IRS contends that a

trust must be represented by a lawyer and since Allen is not a lawyer he cannot represent Rio

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Colorado Trust.

Allen asks this court to vacate the Tax Court judgment against him. Under I.R.C section

7482(a), however, only the United States Courts of Appeals, excepting the Court of Appeals for the

Federal Circuit, have jurisdiction to review the decisions of the Tax Court. The only exception to

this general rule is provided by 28 U.S.C. section 1254, which permits the United States Supreme

Court to review cases before the Courts of Appeals before or after a judgment is rendered or upon

certification of a particular question of law. Since I.R.C. section 7482(a) conveys exclusive

jurisdiction over review of Tax Court decisions to the Courts of Appeal, this court lacks jurisdiction

to hear Allen’s complaint. Allen concedes as much in his reply.

Allen also asks this court to vacate the IRS notice of deficiency. This court does have

jurisdiction to hear civil actions 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 without authority 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). Allen alleges the

erroneous assessment of taxes and additions to taxes. However, although civil suits against the

United States are permitted for these causes of action, a plaintiff must first file a claim for refund

with the Secretary of the Treasury. 26 U.S.C. § 7422(a). Allen does not purport to have filed a

claim for refund and offers no suggestion that would permit the court to construe that he has done

so. As a result, this court cannot reach the merits of his claim.

As the court is without jurisdiction to review the decisions of the Tax Court and Allen has

failed to meet a necessary prerequisite to the pursuit of his civil action against the United States, it is

unnecessary for the court to rule on his ability to represent the Rio Colorado Trust. However, the

court notes that the law in this area is clear. Although a non-attorney may appear in his own behalf,

he has no authority to appear as an attorney for any others. C.E. Pope Equity Trust v. United States,

818 F.2d 696, 697-98 (9th Cir. 1987). A non-lawyer’s status as the trustee of a trust does not give

that person the right to represent the trust in court. Id. at 698.

Finally, Allen asks this court to grant him an extension of the statute of limitations set by 26

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U.S.C. section 7481. The court notes that it has no power to grant such a request.

In sum, the court GRANTS the IRS’s motion to dismiss. This motion shall be effective

thirty (30) days from the date of the filing of this order during which time plaintiff may file his

complaint or appeal. This court does not opine on the timeliness of such filing or whether the time

within which to file has been tolled. That question is for the court in which plaintiff files.

CONCLUSION

For the foregoing reasons, the IRS’s motion to dismiss is GRANTED effective within thirty

(30) days of the date of the filing of this order.

IT IS SO ORDERED.

Dated: February 28, 2007 

MARILYN HALL PATEL

United States District Court Judge

Northern District of California

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1. Unless otherwise indicated, all facts are taken from plaintiff’s complaint.

ENDNOTES

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