IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

WILLIAM F. HOLDNER D/B/A

HOLDNER FARMS,

Plaintiff,

v.

COMMISSIONER OF INTERNAL

REVENUE,

Defendant.

3:16-CV-00475-BR

 

OPINION AND ORDER 

WILLIAM F. HOLDNER

975 S.E. Sandy Blvd

Portland, OR 97214

(503) 233-4601 

Plaintiff, Pro Se

BILLY J. WILLIAMS

United States Attorney

1000 S.W. Third Avenue 

Suite 600

Portland, OR 97204

(503) 727-1000

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 1 of 16
CAROLINE D. CIRAOLO

Principal Deputy Assistant Attorney General

DYLAN C. CERLING

Assistant Attorney General

United States Department of Justice

P.O. Box 683

Washington, DC 20044

(202) 616-3395 

Attorneys for Defendant

BROWN, Judge.

This matter comes before the Court on Defendant’s Motion

(#15) to Dismiss for Lack of Subject-Matter Jurisdiction, Failure

to State a Claim for Relief, and Res Judicata. For the reasons

that follow, the Court GRANTS Defendant’s Motion and DISMISSES

this matter with prejudice.

BACKGROUND

The following facts are taken from Plaintiff’s Complaint and

the parties’ materials related to Defendant’s Motion to Dismiss.

During the relevant period Plaintiff William Holdner and his

son Randal Holdner (collectively referred to as the Holdners) ran

Holdner Farms, a cattle business. The Holdners each “effectively

reported one-half of Holdner Farms' gross income for 2004, 2005,

and 2006 on Schedules F, Profit or Loss From Farming and

Schedules D, Capital Gains and Losses, of their respective

Federal income tax returns for those years.” Decl. of Dylan

Cerling, Ex. 4 at 2. The Holdners, however, did not split the

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 2 of 16
expenses of Holdner Farms equally on their tax returns. 

Plaintiff “deducted most of Holdner Farms’ expenses.” Id. at 3. 

The Holdners also did not file federal partnership returns.

At some point the Internal Revenue Service (IRS) issued

Notices of Deficiency to each of the Holdners in which it

determined: (1) Holdner Farms was a partnership (or a joint

venture taxed as a partnership) for federal income-tax purposes

in 2004-2006, (2) the Holdners were equal partners in the

partnership, and (3) Plaintiff was liable for an accuracy-related

penalty for 2004-2006 pursuant to 26 U.S.C. § 6662. The Holdners

petitioned the United States Tax Court to review the IRS’s

determinations.

On August 4, 2010, the Tax Court issued a Memorandum

Findings of Fact and Opinion in which it found “the allocation of

expenses made by [Plaintiff] had no apparent rational basis and

appeared completely arbitrary.” Cerling Decl., Ex. 4 at 15. The

Tax Court held Holdner Farms was a partnership rather than a

joint venture of two individual proprietorships or at least had

to be treated as such for federal tax purposes. Id. at 29–31. 

Accordingly, the Tax Court held the Holdners had to allocate

income and expenses equally and that the IRS had properly

assessed an accuracy-related penalty for Plaintiff because he had

incorrectly included expenses on his tax return that should have

been included on Randal Holdner’s tax return. Id. at 32-37, 40.

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 3 of 16
On September 7, 2010, Plaintiff filed a motion with the Tax

Court seeking reconsideration of its opinion. On October 22,

2010, the Tax Court denied Plaintiff’s motion for

reconsideration. Plaintiff appealed. On October 12, 2012, the

Ninth Circuit affirmed the Tax Court’s decisions.

At some point Plaintiff brought another action in Tax Court

addressing the same tax years at issue in his 2010 proceeding and

asserting the same arguments against his deficiency and penalty

assessments that he had asserted in his 2010 proceeding. The

parties cross-moved for summary judgment.

On November 13, 2013, the Tax Court granted the

Commissioner’s motion for summary judgment and denied Plaintiff’s

motion for summary judgment noting Plaintiff “is barred by the

doctrine of res judicata from attempting to challenge his

liabilities a second time in this proceeding.” Cerling Decl., 

Ex. 7 at 5.

Plaintiff appealed the Tax Court’s November 2013 decision. 

On November 18, 2015, the Ninth Circuit affirmed the decision and

noted the Tax Court had properly concluded Plaintiff “was

precluded from challenging the validity of the underlying tax

assessments, as the matter had been resolved in prior

litigation.” Cerling Decl., Ex. 8 at 3. The Ninth Circuit also

noted it did “not consider [Plaintiff’s] contentions concerning

the propriety of the judgment entered in his [2010] tax case,

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 4 of 16
which were addressed in a prior appeal.” Id.

On March 18, 2016, Plaintiff filed a Complaint in this Court

pursuant to 42 U.S.C. § 1983 in which he alleges “the collection

of assessments1 for the years 2004, 2005, and 2006 are invalid

under the Internal Revenue Code”; the original Notice of

Deficiency was defective; and “the IRS audit was not conducted in

accordance with statutory and administrative procedures and

therefore the assessments are invalid in violation of due

process.” Compl. at 2.

On September 21, 2016, Defendant filed a Motion to Dismiss

for Lack of Subject-Matter Jurisdiction, Failure to State a Claim

for Relief, and Res Judicata. The Court took Defendant’s Motion

under advisement on October 20, 2016. 

STANDARDS

I. Dismissal for Lack of Jurisdiction Pursuant to Rule 12(b)(1)

Plaintiff “bears the burden of establishing subject matter

jurisdiction by a preponderance of the evidence.” United States

ex rel. Mateski v. Raytheon Co., 816 F.3d 565, 569 (9th Cir.

2016)(quotation omitted). See also Ass'n of Am. Med. Coll. v.

United States, 217 F.3d 770 (9th Cir. 2000).

When deciding a motion to dismiss for lack of subject-matter

1 The record does not reflect Plaintiff has paid the

deficiencies or penalties assessed against him or that he has

filed a refund claim related to tax years 2004-2006.

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jurisdiction under Rule 12(b)(1), the court may consider

affidavits and other evidence supporting or attacking the

complaint's jurisdictional allegations. Rivas v. Napolitano, 714

F.3d 1108, 1114 n.1 (9th Cir. 2013). The court may permit

discovery to determine whether it has jurisdiction. Laub v.

United States Dep't of Interior, 342 F.3d 1080, 1093 (9th Cir.

2003). When a defendant's motion to dismiss for lack of

jurisdiction "is based on written materials rather than an

evidentiary hearing, the plaintiff need only make a prima facie

showing of jurisdictional facts to withstand the motion to

dismiss." Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d

1218, 1223 (9th Cir. 2011)(citation omitted).

II. Dismissal for Failure to State a Claim Pursuant to Rule

12(b)(6)

To survive a motion to dismiss, a complaint must

contain sufficient factual matter, accepted as

true, to “state a claim to relief that is

plausible on its face.” [Bell Atlantic v.

Twombly, 550 U.S. 554,] 570, 127 S. Ct. 1955. A

claim has facial plausibility when the plaintiff

pleads factual content that allows the court to

draw the reasonable inference that the defendant

is liable for the misconduct alleged. Id. at 556.

. . . The plausibility standard is not akin to a

“probability requirement,” but it asks for more

than a sheer possibility that a defendant has

acted unlawfully. Ibid. Where a complaint pleads

facts that are “merely consistent with” a

defendant's liability, it “stops short of the line

between possibility and plausibility of

‘entitlement to relief.’” Id. at 557, 127 S. Ct.

1955 (brackets omitted).

Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). See also Bell

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Atlantic, 550 U.S. at 555-56. The court must accept as true the

allegations in the complaint and construe them in favor of the

plaintiff. Din v. Kerry, 718 F.3d 856, 859 (9th Cir. 2013). 

The pleading standard under Federal Rule of Civil Procedure

8 “does not require ‘detailed factual allegations,’ but it

demands more than an unadorned, the-defendant-unlawfully-harmedme accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550

U.S. at 555). See also Fed. R. Civ. P. 8(a)(2). “A pleading

that offers ‘labels and conclusions’ or ‘a formulaic recitation

of the elements of a cause of action will not do.’” Id. (citing

Twombly, 550 U.S. at 555). A complaint also does not suffice if

it tenders “naked assertion[s]” devoid of “further factual

enhancement.” Id. at 557.

"In ruling on a 12(b)(6) motion, a court may generally

consider only allegations contained in the pleadings, exhibits

attached to the complaint, and matters properly subject to

judicial notice." Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir.

2012)(citation omitted). A court, however, "may consider a

writing referenced in a complaint but not explicitly incorporated

therein if the complaint relies on the document and its

authenticity is unquestioned." Swartz v. KPMG LLP, 476 F.3d 756,

763 (9th Cir. 2007)(citation omitted).

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 7 of 16
DISCUSSION

Defendant moves to dismiss Plaintiff’s Complaint on the

grounds that this Court lacks subject-matter jurisdiction, this

matter is barred by res judicata, and Plaintiff fails to state a

claim.

I. Substitution of United States for Commissioner.

The Supreme Court and Ninth Circuit have made clear that a

claim against an officer or agent of the United States concerning

actions taken in his official capacity must be construed as an

action against the United States. See Dugan v. Rank, 372 U.S.

609 (1963). See also Gilbert v. DaGrossa, 756 F.2d 1455, 1458

(9th Cir. 1985)(“[A] suit against IRS employees in their official

capacity is essentially a suit against the United States.”); Lai

v. Ipson, 474 F. App’x 595, 596 (9th Cir. 2012)(same).

Accordingly, the Court substitutes the United States as

Defendant in this matter.

II. This Court lacks subject-matter jurisdiction.

In his Complaint Plaintiff “prays the collection of the

assessments and penalties are reversed.” Compl. at 8.

28 U.S.C. § 1346(a)(1) provides district courts have

“original jurisdiction, concurrent with the United States Court

of Federal Claims” over 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

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 8 of 16
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.” The Supreme Court

noted: “Despite its spacious terms, § 1346(a)(1) must be read in

conformity with other statutory provisions which qualify a

taxpayer's right to bring a refund suit upon compliance with

certain conditions.” United States v. Dalm, 494 U.S. 596, 601

(1990). Specifically, 26 U.S.C. § 7422(a) 

limits a taxpayer’s right to bring a refund suit

by providing that “[n]o suit or proceeding shall

be maintained . . . for the recovery of any

internal revenue tax alleged to have been

erroneously or illegally assessed or collected, or

of any penalty claimed to have been collected

without authority, or of any sum alleged to have

been excessive or in any manner wrongfully

collected, until a claim for refund or credit has

been duly filed with the Secretary.”

Id. (quoting § 7422(a)). See also Byrne v. United States, 127

Fed. Cl. 284, 290 (2016)(“To file a federal tax refund suit . . .

a plaintiff first must file a claim for refund with the IRS,

within the time period proscribed by 26 U.S.C. § 6511(a).”).

In addition, the Supreme Court has held a taxpayer must

fully pay a tax assessment before he may bring a refund action

pursuant to § 1346. Flora v. United States, 362 U.S. 145, 177

(1960). See also Intersport Fashions West, Inc. v. United

States, 84 Fed. Cl. 454, 456 (2008)(“[T]he Supreme Court has

limited the jurisdiction of this court (and the district courts)

in tax refund suits to those claims in which the taxpayer has

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 9 of 16
paid fully all tax assessed for the tax year at issue prior to

the initiation of the claim.”); Byrne v. United States, 127 Fed.

Cl. 284, 290 (2016)(“[B]efore filing suit, a taxpayer must pay

the full amount of the tax alleged to be due.”). 

Finally, 26 U.S.C. § 6512 provides “no suit by the taxpayer

for the recovery of any part of the tax shall be instituted in

any court” when “the Secretary has mailed to the taxpayer a

notice of deficiency . . . and . . . the taxpayer files a

petition with the Tax Court . . . [and] the Secretary has

determined the deficiency shall be allowed or made.” 

Accordingly, § 6512 “precludes a district court from

redetermining tax liability once the Tax Court has done so.” 

George v. United States, No. C07-01369 MJJ, 2007 WL 2318922, at

*2 (N.D. Cal. Aug. 13, 2007)(citing First Nat’l Bank of Chicago

v. United States, 792 F.2d 954, 956 (9th Cir. 1986). The Ninth

Circuit has held § 6512 has a “broad general application [such]

that if the taxpayer files a petition with the tax court, the

mere filing of the petition operates to deprive the district

court of jurisdiction to entertain a subsequent suit for refund.” 

First Nat'l Bank of Chicago, 792 F.2d at 956. The court stated

this is the rule even when the issues sought to be litigated in

the district court were not presented in the Tax Court. Id. at

955 (“It is not the decision which the Tax Court makes but the

fact that the taxpayer has resorted to that court which ends his

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 10 of 16
opportunity to litigate in the District Court his tax liability

for the year in question.”).

Thus, in order for this Court to have jurisdiction over this

matter, Plaintiff must establish he has filed a claim for refund

with the IRS, he has paid the full amount of tax allegedly due,

and he has not filed a petition with the Tax Court. 

Plaintiff did not allege in his Complaint or in his Response

to Defendant’s Motion to Dismiss that he has filed a refund claim

with the IRS. In addition, the record filed by Defendant that

includes a report summarizing Plaintiff’s tax returns,

assessments, deficiencies, and payments does not reflect

Plaintiff has filed any refund claim. Plaintiff, therefore, has

not established he filed a refund claim before he filed this

action. In addition, it is undisputed that Plaintiff has not

fully paid his taxes and penalties for the period at issue. 

Finally, the record reflects Plaintiff has twice challenged the

IRS’s Notices of Deficiency for tax years 2004-2006 in Tax Court. 

Thus, Plaintiff has not established this Court has subject-matter

jurisdiction as to Plaintiff’s refund claim. 

Accordingly, the Court grants Defendant’s Motion to Dismiss

Plaintiff Complaint for lack of subject-matter jurisdiction.

III. The Anti-Injunction Act bars Plaintiff’s claim to the extent

that he seeks declaratory or prospective relief.

Defendant asserts to the extent that Plaintiff seeks

declaratory or prospective relief, this Court lacks subject11 - OPINION AND ORDER

Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 11 of 16
matter jurisdiction due to the Anti-Injunction Act, 26 U.S.C. 

§ 7421. Specifically, the Anti-Injunction Act states: “[E]xcept

as provided in [sections of the Internal Revenue Code not

relevant here] no suit for the purpose of restraining the

assessment or collection of any tax shall be maintained in any

court by any person.” 26 U.S.C. § 7421(a). The Supreme Court

has held the “principal purpose” of the Anti-Injunction Act is to

“protect[] . . . the Government's need to assess and collect

taxes as expeditiously as possible with a minimum of

preenforcement judicial interference, and to require that the

legal right to the disputed sums be determined in a suit for

refund.” Bob Jones Univ. v. Simon, 416 U.S. 725, 736

(1974)(quotation omitted). See also Hansen v. Dep’t of Treasury,

528 F.3d 597, 600 (9th Cir. 2007)(same).

The Ninth Circuit has held an action that does not fall

within an exception to the Anti-Injunction Act must be dismissed

for lack of subject-matter jurisdiction. See Elias v. Connett,

908 F.2d 521, 526 (9th Cir. 1990)(concluding the district court

did not have subject-matter jurisdiction when the plaintiff did

not establish his action fell within any exception to the AntiInjunction Act). See also Hansen, 528 F.3d at 601 (“[T]he

Anti–Injunction Act precludes federal jurisdiction over Hansen's

claim [seeking an exemption from self-employment social security

taxes] unless he is able to satisfy the judicially created

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Case 3:16-cv-00475-BR Document 22 Filed 11/23/16 Page 12 of 16
exception to the Act.”). 

It is undisputed that none of the statutory exceptions to

the Anti-Injunction Act apply here. The Supreme Court, however,

has also recognized a limited judicial exception when a taxpayer

establishes: (1) “under no circumstances” could the United

States ultimately prevail on the merits and (2) the plaintiff

would suffer irreparable injury for which they do not have any

adequate remedy at law. Enochs v. Williams Packing & Navigation

Co., 370 U.S. 1, 6–8 (1962). See also United States v. Clintwood

Elkhorn Min. Co., 553 U.S. 1, 12-13 (2008)(same). Plaintiff,

however, cannot satisfy either prong of the judicial exception. 

Specifically, Plaintiff cannot establish the United States will

not prevail on the merits of this matter under any circumstances

because the IRS has already prevailed in Tax Court and in the

Ninth Circuit on the issues raised in Plaintiff’s claim. In

addition, Plaintiff has not established his tax and penalty

assessments have placed him in danger of immediate, irreparable

injury for which he does not have any adequate remedy at law. 

Plaintiff could pay the assessed taxes, file a proper refund

claim with the IRS, and file a refund action if the IRS denies

that claim. See Hansen, 528 F.3d at 601 (finding the plaintiff

could not satisfy the judicial exception because “[t]his is not a

case in which an aggrieved party has no access at all to judicial

review. . . . [The plaintiff] may pay income taxes, or, in their

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absence, an installment of FICA or FUTA taxes, exhaust the

Service's internal refund procedures, and then bring suit for a

refund. These review procedures offer petitioner a full, albeit

delayed, opportunity to litigate [his claims].”). Thus, the

Court concludes the Anti-Injunction Act applies to Plaintiff’s

claim and, therefore, this Court lacks subject-matter

jurisdiction as to Plaintiff’s claim to the extent that he seeks

declaratory or prospective relief.

IV. Even if this Court has subject-matter jurisdiction,

Plaintiff’s claim is barred by res judicata.

Defendant asserts even if this Court has jurisdiction,

Plaintiff’s claim is barred by res judicata because Plaintiff

already has litigated his claims twice in the Tax Court.

Although Plaintiff asserts in his Response that res judicata

“may not be a bar to Federal Due Process Rights or a challenge of

a collection of tax in violation of the tax code,” the Ninth

Circuit has made clear that “[r]es judicata principles apply in

tax litigation.” Russell v. Comm’r, 678 F.2d 782, 785 (9th Cir.

1982)(citing Comm’r v. Sunnen, 333 U.S. 591 (1948)). See also

Singh v. United States, No. 2:13–cv–780–TLN–EFB PS, 2015 WL

1801347, at *2 (E.D. Cal. Mar. 31, 2015)(“Plaintiff essentially

seeks to relitigate the issues already resolved by the Tax Court,

which are the subject of appeals pending before the Ninth

Circuit. He is barred from doing so. This Court lacks

jurisdiction to review the decision of the Tax Court. . . . 

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Furthermore, Plaintiff's claim is barred by the doctrine of res

judicata.”)(citing Russell, 678 F.2d at 785)). In addition,

“[p]arties are bound by res judicata as to both matters decided

and matters which could have been raised once a court of

competent jurisdiction has entered a final judgment on the merits

of an action.” Russell, 678 F.2d at 785)(citing Roberts v.

United States, 423 F. Supp. 1314, 1317 (C.D. Cal. 1976)(prior Tax

Court decision on the merits is absolute bar to all matters which

might have been decided)). In fact, the Ninth Circuit

specifically held in Plaintiff’s appeal of his second action that

any challenge of his tax assessments was barred by res judicata:

The Tax Court properly sustained the collection

action because Holdner was precluded from

challenging the validity of the underlying tax

assessments, as the matter had been resolved in

prior litigation. See 26 U.S.C. §§ 6330(c)(2)(B),

6330(c)(4)(A)(i)(limiting issues a taxpayer may

challenge at a Collection Due Process hearing);

Comm'r v. Sunnen, 333 U.S. 591, 598–99

(1948)(discussing the application of res judicata

principles in tax litigation); Mpoyo v. Litton

Electro–Optical Sys., 430 F.3d 985, 988 (9th Cir.

2005)(summary judgment is a final judgment on the

merits for res judicata purposes); Baker v. IRS

(In re Baker), 74 F.3d 906, 910 (9th Cir.

1996)(res judicata precludes relitigation of

issues that were or could have been raised in the

prior action; “once a taxpayer's liability for a

particular year is litigated, ‘a judgment on the

merits is res judicata as to any subsequent

proceeding involving the same claim and the same

tax year.’” (citation omitted)).

Holdner v. C.I.R., 623 F. App’x 892, 893 (9th Cir. 2015).

Here Plaintiff seeks to challenge for a third time the

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deficiency and penalty assessments for tax years 2004-2006. The

issues Plaintiff raises in this action are one that he either

raised or could have raised in his previous two tax actions. It

is undisputed that the Tax Court has twice sustained the IRS and

the Ninth Circuit has twice affirmed the Tax Court. The Court,

therefore, concludes even if this Court has subject-matter

jurisdiction, Plaintiff’s claim is barred by res judicata.

Accordingly, the Court grants Defendant’s Motion to Dismiss

and dismisses this matter with prejudice. 

CONCLUSION

For these reasons, the Court GRANTS Defendant’s Motion (#15)

to Dismiss for Lack of Subject-Matter Jurisdiction, Failure to

State a Claim for Relief, and Res Judicata and DISMISSES this

matter with prejudice.

IT IS SO ORDERED.

DATED this 23rd day of November, 2016.

 s/ Anna J. Brown 

ANNA J. BROWN

United States District Judge

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