Opinion ID: 575297
Heading Depth: 1
Heading Rank: 2

Heading: jurisdiction

Text: 12 In counts I-V of their complaint, the Hugheses sought both declaratory and injunctive relief against the United States. The district court granted the government's motion to dismiss, finding that the court lacked subject matter jurisdiction over these counts. The Hugheses contend on appeal that the district court in fact did have jurisdiction. 13 The existence of subject matter jurisdiction is a question of law reviewed de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). The district court's factual findings on jurisdictional issues must be accepted unless clearly erroneous. Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir.1989). We conclude that the district court properly dismissed these counts.
14 The Anti-Injunction Act (the Act) provides that, with certain exceptions, no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed. 26 U.S.C. § 7421(a). 15 The Hugheses argue that their request for injunctive relief falls within the judicial exception to the Act. To avail themselves of this exception, the Hugheses bear the burden of demonstrating that (1) under no circumstances can the government ultimately prevail on the merits; and (2) the taxpayer will suffer irreparable injury without injunctive relief. Elias v. Connett, 908 F.2d 521, 525 (9th Cir.1990). 16 In an attempt to establish the first prong of the Elias exception, the Hugheses first argue that the IRS failed to make a valid assessment against them so that all current IRS actions to collect from them are unlawful. Thus, the Hugheses argue, the IRS could never succeed on the merits of its claim. We reject this argument. 17 The IRS submitted Certificates of Assessments and Payments (Form 4340) as proof that assessments had been made. Official certificates, such as Form 4340, can constitute proof of the fact that the assessments actually were made. See United States v. Zolla, 724 F.2d 808, 810 (9th Cir.) (postal form 3877 certifying mailing of deficiency notices and an IRS form certifying that taxes and failure-to-pay penalties had been assessed are official certificates that are highly probative, and are sufficient, in the absence of contrary evidence, to establish that the notices and assessments were properly made), cert. denied, 469 U.S. 830, 105 S.Ct. 116, 83 L.Ed.2d 59 (1984); United States v. Chila, 871 F.2d 1015, 1017-18 (11th Cir.) (Certificate of Assessments and Payments is presumptive proof of a valid assessment), cert. denied, 493 U.S. 975, 110 S.Ct. 498, 107 L.Ed.2d 501 (1989). 2 Because Form 4340 is an official document which establishes that assessments were made, and because the Hugheses have presented no contrary evidence indicating that assessments were not made, the Hugheses' argument fails. 18 The Hugheses next argue that the IRS cannot prevail because the IRS did not present any evidence that it mailed notice of assessments and demands for payment as required by 26 U.S.C. § 6303(a). We reject this argument because the Hugheses received numerous final notices (notices of intention to levy) as well as notices of deficiencies, notices of liens, a notice of levy, a notice of sealed bid sale, and a notice of garnishment. These notices satisfied the requirements of § 6303(a) by informing the Hugheses of the amount owed and by requesting payment. These numerous notices were sufficient because [t]he form on which a notice of assessment and demand for payment is made is irrelevant as long as it provides the taxpayer with all the information required under 26 U.S.C. § 6303(a). Elias, 908 F.2d at 525. 19 Next, the Hugheses claim that the IRS cannot prevail because there is no evidence of any delegated authority from the Secretary of Treasury to the various known or unknown agents involved. Relevant statutes and regulations demonstrate, however, that the Secretary does have the power to collect taxes, and that such power can be delegated to local IRS agents. 26 U.S.C. § 6301 provides that [t]he Secretary shall collect the taxes imposed by the internal revenue laws. The actual task of collecting the taxes, however, has been delegated to local IRS directors. The taxes imposed by the internal revenue laws shall be collected by district directors of internal revenue. 26 C.F.R. § 301.6301-1. District directors in turn are authorized to redelegate the levy power to lower level officials such as collection officers. See IRS Delegation Order 191. The delegation of authority down the chain of command, from the Secretary, to the Commissioner of Internal Revenue, to local IRS employees constitutes a valid delegation by the Secretary to the Commissioner, and a redelegation by the Commissioner to the delegated officers and employees. See 26 C.F.R. § 301.7701-9. Therefore, the agents involved in the case at bar were acting within their authority when they collected taxes from the Hugheses. 20 Finally, the Hugheses claim that the IRS's claim is improper because Joan Hughes' debt has already been paid off. This claim fails because the Hugheses have presented no evidence indicating that the IRS assessments are incorrect or that all of Joan Hughes' debts have been paid. 21 Thus, the Hugheses have not met their first burden under the judicial exception to the Act of demonstrating that the government could not prevail on the merits. While that failure alone is sufficient to defeat jurisdiction, the Hugheses also have failed to satisfy the second prong of the judicial exception. They have not shown that they will suffer irreparable harm without injunctive relief. The Hugheses argue that they will be harmed in two ways: they will suffer financially and their due process rights will be violated. These allegations are insufficient. First, the claim of mere financial hardship does not establish irreparable harm. See Elias, 908 F.2d at 526 (irreparable harm not established when plaintiff has failed to show that he will suffer more than mere monetary harm or financial hardship if denied relief). Second, the Hugheses presented no evidence of any due process violation. The Hugheses are claiming that the IRS's collection procedures violated due process because the agents did not follow the requisite statutory procedures. As previously indicated, however, the IRS in this case followed all the required procedures. The IRS provided the Hugheses with the required notices of assessment, and all the agents acted in accordance with their properly delegated authority. The Hugheses have not presented any evidence of procedural irregularities sufficient to establish a constitutional violation, and thus the district court did not err in rejecting their claim of irreparable harm.
22 The district court's exercise of jurisdiction also was barred by 28 U.S.C. § 2201. That section provides the district court with jurisdiction over cases seeking declaratory relief. A specific exception exists, however, for disputes with respect to Federal taxes. Because the case at bar involves federal taxes, the district court once again was correct in refusing to exercise jurisdiction. 3
23 The Hugheses argue in the alternative that the district court had jurisdiction over this case pursuant to the judicial review provision of the Administrative Procedure Act, 5 U.S.C. § 702. We reject this claim. 24 Section 702 waives the government's sovereign immunity, and thus permits the exercise of jurisdiction, in actions seeking non-monetary relief with respect to agency action. The section, however, also creates an exception to the waiver of immunity. 25 Nothing herein (1) affects other limitations on judicial review or the power or duty of the court to dismiss any action or deny relief on any other appropriate legal or equitable ground; or (2) confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought. 26 5 U.S.C. § 702. Both 26 U.S.C. § 7421 and 28 U.S.C. § 2201 are statutes that, in this case, expressly forbid the relief which is sought by the Hugheses. Legislative history confirms the conclusion that the limited waiver of 5 U.S.C. § 702 does not override the limitations of § 7421 and § 2201. Statutory or rule provisions denying authority for injunctive relief (e.g., the Anti-Injunction Act, 26 U.S.C. section 7421, and 28 U.S.C. section 2201, prohibiting injunctive and declaratory relief against collection of federal taxes) ... remain unchanged [by § 702]. H.R.Rep. No. 94-1656, 94th Cong., 2d Sess. 12, reprinted in 1976 U.S.Code Cong. & Admin.News, 6121, 6132-33 [hereinafter H.R.Rep. No. 94-1656]. Section 702 therefore does not confer jurisdiction over the Hugheses' claim. 27 The Hugheses present two arguments as to why the Anti-Injunction Act and 28 U.S.C. § 2201 do not fall within the exception to § 702. First, they claim that because the Anti-Injunction Act does not by any means 'grant consent to suit', it simply does not come within the meaning of the language of [5 U.S.C. § 702]. Even if the Anti-Injunction Act is not a grant of consent to suit under clause 2 of the exception to § 702, however, it still is an other limitation on judicial review, under clause 1 of the exception. The Anti-Injunction Act is therefore a jurisdictional bar. Furthermore, the legislative history specifically indicates that the Anti-Injunction Act falls within the clause 1 exception to § 702. See H.R.Rep. No. 94-1656, supra, at 12. 28 The Hugheses also argue that 28 U.S.C. § 2201 does not create an exception to the general waiver of immunity under § 702. They claim that § 2201 only operates to bar suits involving federal taxes, but that their suit actually is a due process action, not a tax-based action. This is a recharacterization of the action that we decline to accept. See supra note 3. 29 5 U.S.C. § 702, therefore, does not create jurisdiction in the district court to adjudicate the Hugheses' action.
30 The Hugheses argue that, because their action is actually a request to quiet title, the district court had jurisdiction pursuant to 28 U.S.C. § 2410. In essence, the Hugheses are claiming that, because this is a quiet title action, any potential jurisdictional bar to declaratory or injunctive relief, such as 26 U.S.C. § 7421 or 28 U.S.C. § 2201, does not apply in this case. 31 28 U.S.C. § 2410(a) states in relevant part that the United States may be named a party in any civil action or suit in any district court ... to quiet title to ... real or personal property on which the United States has or claims a mortgage or other lien. This section waives sovereign immunity and vests the district court with jurisdiction to consider matters falling within the scope of the statute. See Arford v. United States, 934 F.2d 229, 234 (9th Cir.1991). We, however, have strictly limited the reach and application of this statute. 32 Under 28 U.S.C. § 2410, the United States may be joined as a party to a quiet title action affecting property upon which it claims a lien. A taxpayer may not use a section 2410 action to collaterally attack the merits of an assessment. Rather, the taxpayer may only contest the procedural validity of a tax lien. 33 Elias, 908 F.2d at 527 (citations and footnote omitted); see also Arford, 934 F.2d at 232. 34 To the extent that the Hugheses are attempting to challenge the merits of the assessment, jurisdiction is lacking under § 2410. Therefore, the Hugheses' broad claims that the tax deficiencies are null and void, and that no lawful assessments even exist, are jurisdictionally barred. See Elias, 908 F.2d at 527. 35 The Hugheses, however, attempt to attack the procedural validity of the IRS's liens by arguing that there was no evidence of any notice and demand having been mailed under 26 U.S.C. 6303(a). The Hugheses also appear to attack the procedural validity of the liens by referring to procedural lapses in an assessment under 26 U.S.C. § 6203. 26 U.S.C. § 6203 requires, as a procedural matter, that a taxpayer be furnished with a copy of his assessment record if he so requests. We reject these arguments for several reasons. 36 First, while a taxpayer may contest the procedural validity of a tax lien under § 2410, he may do so only if, at the time the action is commenced, the government still claims a lien or a mortgage on the property. If the government has sold the property prior to the filing of the suit, and no longer claims any interest in the property, § 2410 does not apply. See, e.g., Goodwin v. United States, 935 F.2d 1061, 1063-64 (9th Cir.1991) (taxpayer permitted to bring action to quiet title under § 2410(a)(1) even though government had already sold property to third party because taxpayer had filed lis pendens prior to recording of quitclaim deed that was issued to third party); Kulawy v. United States, 917 F.2d 729, 733-34 (2d Cir.1990) (court had jurisdiction over § 2410 quiet title action, even though government had sold property, because government still had lien on property at time suit was commenced) (citing Bank of Hemet v. United States, 643 F.2d 661, 665 (9th Cir.1981)). Similarly, such an action is jurisdictionally barred if, at the time it is commenced, the government claims a title interest rather than a lien interest. See, e.g., Bertie's Apple Valley Farms v. United States, 476 F.2d 291, 292 (9th Cir.1973). 37 Therefore, the district court lacked jurisdiction under § 2410 to evaluate the procedural validity of the tax liens that had been placed on the real property (such as the house that the Highs now own) which the government had sold prior to the commencement of this action. Jurisdiction also is lacking on any claims relating to personal property, such as previously garnished wages, in which the government now claims a title interest, instead of a mere lien interest. The practical upshot is that the Hugheses can only use § 2410 to challenge the continued collection of taxes through the garnishment of their wages. 38 Second, the Hugheses' procedural attack based on the IRS's alleged failure to send notices of assessment and demand for payment under 26 U.S.C. § 6303(a) is insufficient to support a claim under § 2410. The district court found that the Internal Revenue Service properly gave notice to the plaintiffs of the taxes due and requested payment of the amounts due. Evidence of numerous notices supports the district court's conclusion. See supra Part II(A)(1). Therefore, while the Hugheses did properly allege a procedural defect, the district court properly found that no such defect existed. As a result, the Hugheses' § 2410 claim fails. See Elias, 908 F.2d at 527-28 (allegation of IRS's failure to follow § 6303(a) procedures did not support § 2410 claim because evidence demonstrated that requirements of § 6303(a) were satisfied). 39 Finally, the Hugheses' allegation that the IRS never furnished them with a copy of the record of assessment after being requested to do so also is insufficient to support a claim under § 2410. 26 U.S.C. § 6203 requires that the Secretary provide a taxpayer with a copy of the record of assessment if requested to do so. The Hugheses, however, have presented no evidence that, at the time the various assessments were being made, they ever requested a copy of the record of assessment. Because the Hugheses presented no evidence that they made such a request, they cannot now argue that the IRS failed to follow statutory procedures by neglecting to provide the Hugheses with the required copy. 4 The Hugheses' § 2410 claim fails, therefore, because of the absence of any evidence that the IRS's tax liens were procedurally defective. 5