Opinion ID: 814753
Heading Depth: 3
Heading Rank: 1

Heading: Motion to Dismiss—Section 7433 Claims

Text: First, Gessert and the Group sought damages under I.R.C. § 7433 for purportedly improper collection actions taken by the government. Both parties alleged that Johnson refused to follow Jonynas’s verbal instruction and misapplied voluntary payments to the non-trust fund portion of the Group’s liability. As a result, Gessert’s personal liability under the trust fund recovery penalty remained the same after the payments. They also alleged that the IRS wrongfully levied funds from DePuy and Pfizer. They argued that the money owed by DePuy and Pfizer to the Group was not due, meaning the IRS lacked authority to levy the accounts. Finally, the parties alleged general “misconduct” surrounding the collection process and various violations of Code provisions and a Treasury Regulation. The district court dismissed all of Gessert’s claims under this section. It held that the statute only authorizes suit by the taxpayer who is subject to the improper collection activities. Because the taxpayer was the corporation instead of Gessert, he lacked standing. The IRS had never taken any collection activities against Gessert personally, even though he owed a substantial sum under the trust fund recovery penalty. 6 No. 09-3380 The district court also dismissed the Group’s damages claims regarding its allegation that the Government applied the Group’s voluntary payments to the wrong obligation. The Group could not meet section 7433’s requirement that the wrongful activity result in actual economic damages because the application lowered the Group’s tax liability by the same amount either way. The Group moved for reconsideration, arguing that the $1,500 insufficient funds charge was pecuniary harm. The district court dismissed this motion because the fee occurred beyond the two-year statute of limitations period.