Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-03265/USCOURTS-cand-3_18-cv-03265-0/pdf.json

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

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

v.

ROZANN M. SOUSA, et al.,

Defendants.

Case No. 18-cv-03265-EMC 

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS

Docket No. 19

Plaintiff the United States has filed suit against, inter alia, the following persons and 

entities: Rozann M. Stenshoel Sousa; Michael Stenshoel; Anna Stenshoel; PJ Trust; Family Trust; 

the Cade Corporation; and Norman R. Angell (collectively, “Stenshoel Defendants”). In the 

action, the United States seeks, among other things, to reduce to judgment outstanding federal tax 

assessments made against Ms. Sousa and the Stenshoels. The United States also seeks a ruling 

that Ms. Sousa and the Stenshoels made improper transfers to trusts they established to avoid their 

federal income tax liabilities. Currently pending before the Court is the Stenshoel Defendants’ 

motion to dismiss. Having considered the papers submitted, the Court hereby finds this matter 

suitable for resolution without oral argument, and thus the hearing on December 12, 2018, is 

VACATED. The Stenshoel Defendants’ motion is GRANTED but the United States has leave

amend.

In the motion to dismiss, the Stenshoel Defendants argue that the tax assessment claims 

should be dismissed based on the statute of limitations and that, as the remaining claims are 

dependent on the tax assessment claims, they should also be dismissed. 

“Federal courts have repeatedly held that a plaintiff is not required to plead facts in his 

complaint in order to avoid potential affirmative defenses. Dismissal of claims as barred by the 

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United States District Court

Northern District of California

statute of limitations on a Rule 12(b)(6) motion is therefore appropriate only where it is apparent 

from the face of the complaint that an action will be time barred.” Belluomini v. CitiGroup, Inc., 

No. CV 13-01743 CRB, 2013 U.S. Dist. LEXIS 103882, at *8 n.3 (N.D. Cal. July 23, 2013). In 

the instant case, there is no dispute that “the statute of limitations for collection of a tax is ten 

years after the assessment of the tax. 26 U.S.C. § 6502(a).” United States v. Kidwell, No. 2:16-

433 WBS EFB, 2017 U.S. Dist. LEXIS 25653, at *6 (E.D. Cal. Feb. 22, 2017). Given the 

assessment dates identified in the complaint, there does – as a facial matter – appear to be a time 

bar.

The United States argues, however, that there is no time bar because of tolling. More 

specifically, “[t]he ten year statute of limitations period is ‘suspended for the period during which 

the [IRS] is prohibited . . . from making a levy[,]’ [26 U.S.C.] § 6331(i)(5),” and “[t]he IRS cannot 

levy a tax while an offer-in-compromise is pending and for thirty days after any rejection or appeal 

of the rejection.” Kidwell, 2017 U.S. Dist. LEXIS 25653, at *7. “Thus, the statute of limitations 

tolls while an offer-in-compromise is pending and for thirty days after any rejection of the offer by 

the IRS.” Id. According to the United States, the Stenshoel Defendants made offers-incompromise with respect to the tax assessments at issue that result in tolling.

Because the United States has asserted tolling – and offered evidence to support its tolling 

theory – the Court shall dismiss the complaint but shall give the United States leave to amend to 

include allegations to support the application of tolling. The Court notes that, although the 

Stenshoel Defendants have challenged the United States’ evidence, the Court is dealing with a 

12(b)(6) motion only, and evidentiary questions cannot be resolved at the 12(b)(6) phase. 

Moreover, the Stenshoel Defendants’ argument against tolling may be problematic in light 

of the Ninth Circuit’s decision United States. v. McGee, 993 F.2d 184 (9th Cir. 1993) – a case that 

the Stenshoel Defendants did not address in their papers. In McGee, the Ninth Circuit rejected the

defendant’s argument that “the IRS had abandoned its consideration of his offer in compromise, 

thereby impliedly rejecting the offer”; the court held that “the waiver [of the benefit of the statute 

of limitations] remained in effect until the offer in compromise was either terminated, withdrawn, 

or formally rejected by the government.” Id. at 186. “[T]axpayers were not left unprotected” by 

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this approach “because they were free at any time to withdraw the offer[-in-compromise], thus 

restarting the statute of limitations clock.” Id. 

The McGee court further rejected the defendant’s alternative contention that a letter he 

received from the IRS was a final rejection of his offer in compromise. According to the court, 

“[t]hat letter was merely noticed of a proposed rejection” – stating, inter alia, that, “‘if we do not 

hear from you within 15 days, we will have to send you a formal rejection of your offer in 

compromise.’” Id. The letter in McGee bears some similarity to the letter provided by the 

Stenshoel Defendants in the instant case. See Kenneally Reply Decl., Ex. F (in letter to the 

Stenshoels dated November 6, 2012, stating that “we are unable to recommend acceptance of your 

offer for the amount you indicated” but that “[w]e can . . . recommend acceptance of an amended 

offer in the amount of $121,556.00”; adding that, “[i]f you do not respond by 11/16/12, your offer 

will be rejected”) (emphasis omitted and added).

For the foregoing reasons, the Stenshoel Defendants’ motion to dismiss is granted but the 

United States has leave to amend. The amended complaint shall be filed within four (4) weeks of 

the date of this order. 

This order disposes of Docket No. 19.

IT IS SO ORDERED.

Dated: November 8, 2018

______________________________________

EDWARD M. CHEN

United States District Judge

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