Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-00530/USCOURTS-cand-3_16-cv-00530-1/pdf.json

Parties Involved:
Internal Revenue Service
Defendant
Brent Jason
Plaintiff

Document Text:

ORDER (No. 3:16-cv-00530-LB)

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

San Francisco Division

BRENT JASON,

Plaintiff,

v.

INTERNAL REVENUE SERVICE,

Defendant.

Case No. 3:16-cv-00530-LB 

ORDER GRANTING MOTION TO 

DISMISS

[ECF No. 16]

INTRODUCTION

This case involves a delinquent taxpayer suing the Internal Revenue Service (“IRS”) for 

damages and injunctive relief for alleged overreach and bad faith in its efforts to collect a tax debt. 

The petitioner and taxpayer, Mr. Jason, seeks damages for deprivation of due process, deceptive 

business practices, fraud, perjury, and intentional and negligent infliction of emotional distress.1

Mr. Jason also seeks injunctive relief to stay forfeiture, institute a payment plan, allow for leave to 

file bankruptcy, and allow for leave to secure counsel.2The IRS moves to dismiss the case for lack 

of subject-matter jurisdiction on the grounds of sovereign immunity and failure to exhaust 

 

1 Compl. ‒ ECF No. 1 at 4. Record citations refer to material in the Electronic Case File (“ECF”); 

pinpoint citations are to the ECF-generated page numbers at the tops of the documents.

2

Id.

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ORDER (No. 3:16-cv-00530-LB) 2

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administrative remedies.3The court decides this matter without oral argument and vacates the 

hearing set for July 28, 2016. See Civil L.R. 7-1(b). The court grants the government‟s motion and 

dismisses Mr. Jason‟s claims without prejudice because Mr. Jason has not exhausted his 

administrative remedies under 26 C.F.R. § 301.7433-1(d).

STATEMENT

Brent Jason owes over $20,000 in back taxes, and beginning in March 2015, he attempted to 

set up a payment plan with the IRS.4 Mr. Jason offered the IRS approximately $500 per month in 

installment payments, but the IRS rejected that offer.5 Mr. Jason alleges that the IRS acted in bad 

faith in rejecting his offer to pay his delinquent tax bill by installment payments.6

In August 2015, Mr. Jason received a notice of forfeiture from the IRS, which he alleges did 

not include particular details regarding what property was to be seized, when the forfeiture would 

occur, or any opportunity for a hearing.7 Mr. Jason filed an appeal; he states that he received 

letters thereafter from the IRS that rejected his appeal.

8 Mr. Jason states that his next interaction 

with the IRS was a phone call with an IRS employee he identifies as a “Settlement Officer.”9 Mr. 

Jason claims that the Settlement Officer, to his surprise, was actually conducting his appeal on this 

phone call, despite his belief that the IRS had already rejected his appeal.10 On the call, Mr. Jason 

asked why his installment payments were rejected, requested a continuance of the appeal hearing, 

and asked why he was entitled to a hearing at all after receiving an appeal-rejection letter.11

 

3 Motion to Dismiss ‒ ECF No. 16.

4 Compl. ‒ ECF No. 1 at 2.

5

Id.

6

Id.

7

Id. at 3.

8

Id.

9

Id.

10 Id.

11 Id.

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ORDER (No. 3:16-cv-00530-LB) 3

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Mr. Jason states that he received a letter dated December 31, 2015, which denied his appeal.12

Mr. Jason alleges that the letter misrepresented his testimony during the phone call, including his 

ability to make payments, his employment status, and his request for leave to file for bankruptcy 

protection.13

Mr. Jason claims that because of his treatment by the IRS, he has suffered severe emotional 

distress, which has caused the symptoms of “depression, lack of sleep, headaches, pain associated 

or typically related to cardiac issues in the chest, arms, neck, and head, lack of self-confidence, 

thoughts of helplessness, and fear.”14

To remedy these afflictions, Mr. Jason makes a number of claims, including violation of dueprocess rights, First Amendment rights, deceptive and misleading business practices, fraud and 

misrepresentation, perjury, intentional infliction of emotional distress, and negligent infliction of 

emotional distress. Mr. Jason requests damages, stay of forfeiture, an injunction forcing the IRS to 

accept his payment plan, and leave to file bankruptcy.15

The government moved to dismiss the case for lack of subject-matter jurisdiction, citing 

sovereign immunity and the Tax Anti-Injunction Act as bars to Mr. Jason‟s suit.

16 Mr. Jason 

responded to the motion to dismiss, introducing a new argument regarding the government‟s 

waiver of sovereign immunity under 26 U.S.C. § 7433.17 The government replied, arguing that 

Mr. Jason waived his § 7433 claim by not addressing it in his initial complaint.18

 

12 Id.

13 Id.

14 Id. at 3-4.

15 Id. at 4.

16 See Motion to Dismiss ‒ ECF No. 16.

17 See Opposition to Motion to Dismiss ‒ ECF No. 24.

18 See Reply to Plaintiff‟s Response ‒ ECF No. 25.

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ORDER (No. 3:16-cv-00530-LB) 4

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GOVERNING LAW

1. Rule 12(b)(1) 

A complaint must contain a short and plain statement of the ground for the court‟s jurisdiction.

Fed. R. Civ. P. 8(a)(1). The plaintiff has the burden of establishing jurisdiction. See Kokkonen v. 

Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Farmers Ins. Exchange v. Portage La 

Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). A defendant‟s Rule 12(b)(1) 

jurisdictional attack can be either facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 

2000). “A „facial‟ attack asserts that a complaint‟s allegations are themselves insufficient to 

invoke jurisdiction, while a „factual‟ attack asserts that the complaint‟s allegations, though 

adequate on their face to invoke jurisdiction, are untrue.” Courthouse News Serv. v. Planet, 750 

F.3d 776, 780 n.3 (9th Cir. 2014). This is a facial attack; the court thus “accept[s] all allegations of 

fact in the complaint as true and construe[s] them in the light most favorable to the plaintiffs.” 

Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003).

If a court dismisses a complaint, it should give leave to amend unless the “the pleading could 

not possibly be cured by the allegation of other facts.” Cook, Perkiss and Liehe, Inc. v. N. Cal.

Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).

2. Sovereign Immunity

“It is axiomatic that the United States may not be sued without its consent and that the 

existence of consent is a prerequisite for jurisdiction.” Jachetta v. United States, 653 F.3d 898, 

903 (9th Cir. 2011) (quoting United States v. Mitchell, 463 U.S. 206, 212 (1983)). This is the 

doctrine of sovereign immunity. The Ninth Circuit has explained: “Before we may exercise 

jurisdiction over any suit against the government, we must have „a clear statement from the United 

States waiving sovereign immunity, together with a claim falling within the terms of the waiver.‟” 

Id. (quoting in part United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003)).

“[L]imitations and conditions upon which the Government consents to be sued must be strictly 

observed and exceptions thereto are not to be implied.” Mollison v. United States, 568 F.3d 1073, 

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ORDER (No. 3:16-cv-00530-LB) 5

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1075 (9th Cir. 2009) (citing Soriano v. United States, 352 U.S. 270, 276 (1957)) (internal 

quotations omitted; alteration in original).

Absent a waiver, “a court does not have authority to award relief against the United States or a 

federal agency . . . .” Isaacs v. United States, No. 13-cv-01394-WHO, 2013 WL 4067597, at *1

(N.D. Cal. Aug. 1, 2013). “As the party asserting a claim against the United States, [the plaintiff] 

has the burden of „demonstrating unequivocal waiver of immunity.‟” United States v. Park Place 

Assocs., Ltd., 563 F.3d 907, 924 (9th Cir. 2009) (quoting Cunningham v. United States, 786 F.2d 

1445, 1446 (9th Cir. 1986)).

Sovereign immunity should be decided on the merits and can be raised at any time because it 

speaks to a court‟s jurisdiction. Tobar v. United States, 639 F.3d 1191, 1195 (9th Cir. 2011) 

(citing I.R.S. v. Fed. Labor Relations Auth., 521 F.3d 1148, 1152 (9th Cir. 2008)).

3. Civil Damages Suits Against the IRS

A taxpayer may bring suit against the United States for civil damages in relation to collection 

efforts of federal tax liabilities. 26 U.S.C. § 7433(a). Liability requires an officer or employee of 

the IRS to recklessly, intentionally, or negligently violate a provision of the Tax Code. Id. A suit 

under § 7433 is the exclusive remedy regarding civil suits for violations of the Tax Code. Id.

Damages under § 7433 are limited to the lesser of $1,000,000 for intentional and reckless 

violations and $100,000 for negligent violations, or the sum of actual damages proximately caused 

by the IRS employee or officer and costs of the action. 26 U.S.C. § 7433(b).

To file a claim under § 7433, the taxpayer must first exhaust all administrative remedies 

available. 26 U.S.C. § 7433(d)(1). A suit may not be filed in a federal district court until the earlier 

of two dates: the date of the decision of an administrative claim, or six months after the filing date 

of an administrative claim. 26 C.F.R. § 301.7433-1(d)(1). The administrative claim must be filed 

pursuant to 26 C.F.R. § 301.7433-1(e). The district court suit following exhaustion of 

administrative remedies cannot seek greater damages than sought in the administrative claim. 26 

C.F.R. § 301.7433-1(f). The taxpayer has two years from the time the cause of action accrues until 

he or she files suit in federal court. 26 C.F.R. § 301.7433-1(g)(1).

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ORDER (No. 3:16-cv-00530-LB) 6

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4. Tax Anti-Injunction Act

Lawsuits against the United States government regarding federal tax matters may not seek to 

restrain “the assessment or collection of any tax . . . .” 26 U.S.C. § 7421(a). There are “several 

statutory exceptions and one judicial exception” to this rule. Elias v. Connett, 908 F.2d 521, 523 

(9th Cir. 1990). A district court “must dismiss for lack of subject-matter jurisdiction any suit that 

does not fall within one of the exceptions to the [Tax Anti-Injunction] Act.” Id. (citing Alexander 

v. Americans United, Inc., 416 U.S. 752, 757-58 (1974)).

ANALYSIS

1. Sovereign Immunity Does Not Bar Mr. Jason’s Lawsuit

The government correctly states that “no suit can be maintained against the United States 

unless it is in exact compliance with the terms of a statute under which sovereign immunity has 

been waived.”19 Although this requirement is strictly construed, 26 U.S.C. § 7433 provides 

precisely the type of explicit, unequivocal statutory waiver of sovereign immunity that the 

standard demands.

In its reply brief, the government argues that Mr. Jason cannot rely on § 7433 to establish 

waiver of sovereign immunity because he addressed the statute for the first time in his response 

brief, rather than in the complaint.20 The government cites an axiom that the “complaint may not 

be amended by the briefs in opposition to a motion to dismiss.” Frenzel v. AliphCom, 76 F. Supp. 

3d 999, 1009 (N.D. Cal. 2014) (citation omitted) (citing Lee v. City of Los Angeles, 250 F.3d 668, 

688 (9th Cir. 2001)). Frenzel addresses the standard for a motion to dismiss under Federal Rule of 

Civil Procedure 12(b)(6) for failure to state a claim — not, as here, for a motion to dismiss under 

Rule 12(b)(1) for lack of subject-matter jurisdiction. Id. at 1005. Subject-matter jurisdiction may 

be raised at any time in litigation and is not forfeited or waived when not raised in a complaint; 

courts have an affirmative duty to continuously examine whether subject-matter jurisdiction 

 

19 Motion to Dismiss ‒ ECF No. 16 at 2.

20 Reply to Plaintiff‟s Response ‒ ECF No. 25 at 1-2.

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ORDER (No. 3:16-cv-00530-LB) 7

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exists. Mashiri v. Dep’t of Educ., 724 F.3d 1028, 1031 (9th Cir. 2013). 

Because the court dismisses the complaint with leave to amend for other reasons described 

below, there is no need to dismiss on this technicality. 

2. Mr. Jason Failed to Exhaust Administrative Remedies 

In order to file a lawsuit in this court for damages under § 7433, Mr. Jason must first exhaust 

his administrative remedies by following the regulatory procedure provided in 26 C.F.R. § 

301.7433-1(d) & (e).21

The court dismisses Mr. Jason‟s claims without prejudice for failure to exhaust his 

administrative remedies, except as discussed below.

3. Mr. Jason’s Requests for Injunctive Relief Violate the Tax Anti-Injunction Act

In addition to damages for alleged violations of his civil rights and for emotional distress, Mr. 

Jason requests five forms of injunctive relief: (1) stay of all forfeiture; (2) mandated institution of 

a payment plan for his delinquent taxes; (3) leave to file bankruptcy; (4) leave to obtain counsel; 

and (5) an order or recommendation to the IRS requesting policy changes in the way it handles 

appeals. 

The first two requested injunctions relate directly to Mr. Jason‟s efforts to restrain the IRS‟s

collection of his delinquent taxes. This falls squarely into the type of relief prohibited by the Tax 

Anti-Injunction Act. See 26 U.S.C. § 7421(a). Although there are a number of exceptions to this 

act, none of them apply here. No additional facts that Mr. Jason could allege would change this 

fact. Therefore, this court does not have jurisdiction to grant this relief, and dismisses with 

prejudice Mr. Jason‟s requests to stay forfeiture and mandate a payment plan.

Regarding Mr. Jason‟s requests for leave to file bankruptcy and to obtain counsel, the court 

dismisses these claims with prejudice because Mr. Jason can do either or both of these things at 

 

21 Helpful information on the administrative claims process can be found at 

https://www.irs.gov/irm/part25/irm_25-003-003.html and at https://www.irs.gov/pub/irspdf/p4235.pdf. 

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ORDER (No. 3:16-cv-00530-LB) 8

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any time.

Regarding Mr. Jason‟s final request for injunctive relief, making policy requests is generally 

not within courts‟ jurisdiction. To the extent that the court is able to make policy 

recommendations, it declines to do so and dismisses this request with prejudice.

CONCLUSION

The court dismisses without prejudice Mr. Jason‟s claims for damages against the IRS because 

he has not exhausted administrative remedies. The court dismisses with prejudice Mr. Jason‟s 

requests for injunctive relief.

IT IS SO ORDERED.

Dated: July 27, 2016

______________________________________

LAUREL BEELER

United States Magistrate Judge

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