# United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

Submitted December 20, 2012 *

Decided December 20, 2012

Before

WILLIAM J. BAUER, Circuit Judge

JOEL M. FLAUM, Circuit Judge

KENNETH F. RIPPLE, Circuit Judge

No. 12

‐ 2650

GARY D. BOWERS,

Plaintiff

‐ Appellant

,

v.

UNITED STATES OF AMERICA,

Defendant

‐ Appellee

. Appeal from the United States District

Court for the Central District of Illinois.

No. 11

‐ 1224

James E. Shadid,

Chief Judge

.

ORDER

Gary Bowers receives Social Security retirement benefits, but in 2010 the Internal

Revenue Service imposed a levy on those benefits to recover some of the $100,000 Bowers NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with

Fed. R. App. P. 32.1

* After examining the briefs and the record, we have concluded that oral argument is

unnecessary. The appeal is thus submitted on the briefs and the record. See F ED

. R. A PP

. P.

34(a)(2)(C).No. 12

‐ 2650 Page 2

owed in unpaid taxes. The IRS began levying almost two

‐ thirds of his monthly benefits.

See 26 U.S.C. § 6331. (IRS records reveal that Bowers also receives over $40,000 annually

from union pension funds.) Bowers believes that the IRS is violating 26 U.S.C. § 6331(h)(1),

which prohibits the IRS from imposing a “continuing levy” on more than 15% of certain

payments. He sued in federal district court for the return of funds that the IRS has obtained

above the 15% cap and to halt further levies. Concluding that the 15% cap did not apply to

his benefits, the district court dismissed for failure to state a claim. Because Bowers did not

exhaust his administrative remedies and cannot obtain declaratory and injunctive relief, we

affirm the judgment.

After the IRS began its levy, Bowers wrote to a local Taxpayer Advocate Service and

to the IRS office in Washington, DC. He demanded the return of the portion of the levies

above 15% of the payment amounts, with interest, and requested that future levies stay

below the 15% threshold. He did not cite any provision of law that required the IRS to abide

by a 15% cap.

When he received no response, Bowers turned to district court. He invoked 26 U.S.C.

§ 7433, which allows a recovery for damages for wrongful tax collection, and alleged that he

had exhausted his administrative remedies. He maintained that the IRS intentionally

disregarded the 15% cap set by 26 U.S.C. § 6331(h)(1), which Bowers contends applies to his

Social Security retirement benefits. He requested the return of the excessive portion of the

levies, an injunction of future excessive levies, and a declaratory judgment in his favor.

The IRS moved to dismiss or in the alternative for summary judgment, raising

procedural defenses and contesting the applicability of the 15% cap. It supported its motion

with tax documents and correspondence that show Bowers’s income and tax liability.

Because the court relied on those attachments, it should have notified Bowers that it was

approaching the motion as one for summary judgment. See F ED

. R. C IV

. P. 12(d); Miller v.

Herman

, 600 F.3d 726, 733 (7th Cir. 2010). Still, the court’s procedural misstep was harmless

for three reasons. First, the IRS’s hybrid motion provided sufficient notice that summary

judgment was in play, and Bowers did not challenge any of the submitted documents or

offer, as he could have, any evidence in rebuttal. See Edgenet, Inc. v. Home Depot U.S.A., Inc.

,

658 F.3d 662, 665 (7th Cir. 2011); Miller

, 600 F.3d at 733. Second, the court informed Bowers

(as a pro se litigant) that his failure to respond to the motion could result in the disposition

of his case—and Bowers did indeed respond. See Outlaw v. Newkirk

, 259 F.3d 833, 841–42

(7th Cir. 2001); Timms v. Frank

, 953 F.2d 281, 285 (7th Cir. 1992). Third, the only document

outside of the complaint that is relevant to our review is Bowers’s letter to the IRS protesting

the levy, which he submitted himself. We therefore can review the district court’s ruling as a

grant of summary judgment, examining it de novo. Miller

, 600 F.3d at 733; see also F ED

. R.

C IV

. P. 56(a).No. 12

‐ 2650 Page 3

In granting the IRS’s motion, the court bypassed the government’s procedural

defenses and decided the merits. It ruled that the 15% cap § 6331(h) does not apply to “one

‐

time” levies under § 6331(a). It then explained that a levy placed on a stream of Social

Security benefit payments is effectively a one

‐ time levy because the beneficiary has a

predetermined right to the payments. See T REAS

. R EG

. § 301.6331

‐ 1(a)(1). Accordingly, the

15% cap did not apply to Bowers’s retirement benefits.

On appeal Bowers challenges the district court’s conclusion that the 15% levy cap of

§ 6331(h) does not apply to Social Security benefits. The government offers three responses.

First, it contends that the district court lacked jurisdiction under § 7433 because Bowers did

not exhaust his administrative remedies, a prerequisite to the government’s waiver of

sovereign immunity for damages suits. Second, the Anti

‐ Injunction Act, 26 U.S.C. § 7421,

and Declaratory Injunction Act, 28 U.S.C. § 2201(a), bar Bowers from enjoining future tax

collections or obtaining a declaratory judgment. Finally, on the merits the IRS maintains that

the 15% cap does not limit the levy on Bowers’s retirement benefits.

Although the IRS characterizes its first argument about sovereign immunity as

“jurisdictional,” our circuit does not view sovereign immunity that way. Sovereign

immunity can be waived; jurisdiction cannot. Collins v. United States

, 564 F.3d 833, 837–38

(7th Cir. 2009) (collecting cases). Nonetheless, we must evaluate the contention that Bowers

did not exhaust his administrative remedies and therefore did not satisfy the requirements

for the waiver of sovereign immunity. Waivers of sovereign immunity are narrowly

construed because the immunity protects the public fisc. See West v. Gibson

, 527 U.S. 212, 222

(1999); Nelson v. Miller

, 570 F.3d 868, 883–84 (7th Cir. 2009). Thus “complete” exhaustion of

administrative remedies is a condition of the waiver of sovereign immunity. McNeil v.

United States

, 508 U.S. 106, 112 (1993). The reason for strict enforcement, as the Supreme

Court explained in the related context of the Federal Tort Claims Act, is that “[e]very

premature filing

. . . imposes some burden on the judicial system and on the Department of

Justice which must assume the defense of such actions.” Id. Accordingly, we have

rigorously enforced exhaustion requirements that precede damage actions, like Bowers’s,

against the government. E.g.

, Nick’s Cigarette City, Inc.

, v. United States

, 531 F.3d 516, 521 (7th

Cir. 2008); Kikalos v. United States

, 479 F.3d 522, 525–26 (7th Cir. 2007).

Treasury Regulations specify how Bowers must exhaust his administrative remedies.

See T REAS

. R EG

. § 301.7433

‐ 1. A taxpayer action for damages arising from wrongful tax

collection “may not be maintained” unless the taxpayer “has filed an administrative claim

pursuant to paragraph (e).” Id. § 301.7433

‐ 1(a). Paragraph (e) requires the taxpayer to send

the claim to the local Area Director. Id. § 301.7433

‐ 1(e). The claim must specify the

“grounds, in reasonable detail, for the claim,” the dollar amount of the claim, and any

damages incurred. Id.No. 12

‐ 2650 Page 4

Bowers did not comply with these requirements. He alleges in his complaint that he

exhausted administrative remedies, but a complaint does not create a factual dispute; the

only evidence of exhaustion is the letter he mailed, and that letter was ineffective for two

reasons. First, Bowers did not send his letter to the correct IRS office. See Hoogerheide v.

I.R.S.

, 637 F.3d 634, 639 (6th Cir. 2011) (disqualifying § 7433 administrative claim for being

sent to incorrect address); Kuhl v. United States

, 467 F.3d 145, 148 (2d Cir. 2006) (same). He

rightly notes the IRS’s regulation refers anachronistically to the office of the “Area

Director”—an office that no longer exists. Therefore, he explains, he mailed his letter to two

IRS

‐ affiliated offices that he thought would suffice. But the IRS has published a notice

referring taxpayers to the agency’s website, which lists the updated address that taxpayers

must use. I.R.S. Notice 2010

‐ 53, 2010

‐ 31 IRB 182. (Bowers should have mailed his claim to

Stop 5012 CHI, 230 S. Dearborn Room 2630, Chicago, IL 60604. See Where to File Certain

Elections, Statements, Returns and Other Documents

, IRS, http://www.irs.gov/uac/Where

‐

to

‐ File

‐ Certain

‐ Elections,

‐ Statements,

‐ Returns

‐ and

‐ Other

‐ Documents (last updated Aug. 3,

2012).) Furthermore, Bowers acknowledges that he received no response to his mailing. But

rather than explore whether he contacted the wrong offices, he simply sued.

Even if we overlooked as understandable Bowers’s misdirected mailing, his

administrative claim could not overcome the bar of sovereign immunity for a second

reason: It did not articulate the grounds for his claim “in reasonable detail.” T REAS

. R EG

. § 301.7433

‐ 1(e)(2)(ii). Although the letter demanded that the IRS levy no more than 15% of

his retirement benefits, Bowers did not identify the law that the IRS was allegedly violating,

a requirement that we have repeatedly enforced. E.g.

, United States v. Oestreich

, 286 F.3d

1026, 1028 (7th Cir. 2002) (ruling insufficient § 7433 administrative claim that did not

identify law violated); see also Nick’s

, 531 F.3d at 521 (deeming insufficient taxpayer’s refund

claim that alleged improper assessment but did not explain which law IRS violated); Kikalos

,

479 F.3d at 525–26 (concluding administrative claim inadequate when it provided no details

about grounds for refund). Without giving the IRS fair notice of the law that it allegedly

violated, Bowers did not meet the strict, “complete exhaustion” requirement. Accordingly,

his claim for damages cannot overcome the defense of sovereign immunity.

Finally we turn to Bowers’s claim for equitable relief. Bowers cannot demonstrate the

“certainty of success” that would allow him to elude the Anti

‐ Injunction Act’s otherwise

categorical bar on suits “for the purpose of restraining the assessment or collection” of taxes.

26 U.S.C. § 7421(a); see also Bob Jones Univ. v. Simon

, 416 U.S. 725, 737, 740 (1974); Enochs v.

Williams Packing & Navigation Co.

, 370 U.S. 1, 7–8 (1962). Success is not “certain” because at

least four federal district courts (beyond the one in this case) have already ruled that the

15% cap of § 6331(h) does not diminish the IRS ʹ s power to levy 100% of assets under §

6331(a), which is the provision that the IRS invoked here. Hines v. United States

, 658 F. Supp.

2d 139, 146–47 (D.D.C. 2009) (applying conclusion to Social Security benefits); Duran v. IRS

,No. 12

‐ 2650 Page 5

No. CV

‐ F

‐ 09

‐ 345OWW/DLB, 2009 WL 700518, at *4 (E.D. Cal. Mar. 16, 2009); Beam v. United

States

, No. 07

‐ 6035

‐ TC, 2007 WL 1674083, at *1 (D. Or. June 6, 2007); United States v. Marsh,

89 F. Supp. 1171, 1179 (D. Haw. 2000). Likewise, Bowers cannot escape the Declaratory

Judgment Act’s absolute bar on declaratory judgments “with respect to Federal taxes.” 28

U.S.C. § 2201(a). Thus, Bowers cannot pursue equitable relief from the tax levy.

AFFIRMED.