Opinion ID: 613863
Heading Depth: 2
Heading Rank: 5

Heading: Levy on Vehicles

Text: On October 4, 2010, the IRS obtained a court order permitting it to enter the taxpayers’ premises to seize by levy property belonging to the taxpayers. Pursuant to the order, the IRS entered the taxpayers’ premises and seized several vehicles, the public sale of which was scheduled for December 15, 2010. F. Amended Complaint and Motion to Cancel Public Sale On October 7, 2010, the taxpayers filed the instant action against the IRS. In their complaint, as amended, the taxpayers sought to (1) set aside the IRS’s jeopardy levy; (2) recover funds collected through the levy; and (3) obtain 4 damages resulting from actions the IRS undertook to effectuate the levy and collect their income tax liability, including recording liens against them and seizing their property.2 The challenge to the jeopardy levy alleged that the IRS improperly issued the jeopardy levy without issuing notices of deficiency and without making a prior assessment. The taxpayers also sought the return of their cars and money, as well as the removal of all liens recorded against them. On December 10, 2010, the taxpayers filed an “Emergency Motion to Cancel Public Sale and Return Property Seized Through Levy,” alleging that the IRS improperly seized and scheduled the public sale of their property without issuing a notice of deficiency or making assessments. On December 13, 2010, the district court denied the taxpayers’ emergency motion, agreeing with the IRS that (1) the relief sought by the taxpayers was barred by the Anti-Injunction Act, I.R.C. § 7421(a), and (2) the exception in § 7429(b) for jeopardy review proceedings was 2 The taxpayers’ amended complaint referred to various statutes but did not specify with clarity which sections of the Internal Revenue Code might entitle the taxpayers to relief. On appeal, the taxpayers cite I.R.C. §§ 7429(b) and 7433 as bases for jurisdiction, while the IRS identifies I.R.C. §§ 7422(a), 7429(b), 7432(a), and 7433(a) as potential statutory bases for the taxpayers’ claims. Out of an abundance of caution, this Court will examine all of the possible statutory bases identified on appeal by the taxpayers and IRS. 5 inapplicable because the taxpayers had failed to exhaust their administrative remedies.3 G. District Court Dismisses Amended Complaint The IRS moved to dismiss the taxpayers’ amended complaint, arguing, inter alia, that the district court lacked jurisdiction to review the jeopardy levy. The IRS contended that the taxpayers (1) failed to exhaust their administrative remedies, as required by the various sections of the Internal Revenue Code under which the taxpayers brought suit, and (2) failed to state a claim on which relief could be granted. The taxpayers argued that they had exhausted their administrative remedies by filing ten verbal and written appeals in response to the IRS’s collection actions. The taxpayers’ purported original written appeals were: (1) an August 21, 2010 letter directed to IRS Territory Manager Juarez; (2) a September 4, 2010 letter directed to Director of Campus Compliance Operations R.A. Mitchel and IRS Revenue Officer Daley; (3) an October 14, 2010 letter sent to IRS Commissioner Douglas Shulman, which challenged the jeopardy levy and other IRS actions; and 3 Under most circumstances, the Anti-Injunction Act (I.R.C. § 7421) provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person . . . .” I.R.C. § 7421(a). However, the Anti-Injunction Act has express exceptions, one of which is for review of a jeopardy assessment or jeopardy levy pursuant to