Court Opinion

ID: 64342
Source: CourtListenerOpinion
Date Created: 2010-04-26 05:12:47+00
Date Added: 2024-06-11T14:58:51.337155
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                         December 2, 2008

                                     No. 08-10288                     Charles R. Fulbruge III
                                   Summary Calendar                           Clerk

HAROLD W SMITH, III

                                                  Plaintiff - Appellant
v.

UNITED STATES OF AMERICA; KAREN W GARDNER, Individually and in
her capacity as an Internal Revenue Service Employee; WALLACE G
BANKS, Individually and in his capacity as Settlement Officer for Internal
Revenue Service; DEBORAH GLOVER, Individually and in her capacity as
Settlement Officer for Internal Revenue Service; MARY J HOWARD,
Individually and in her capacity as Team Manager for Internal Revenue
Service; MAUREEN A JUDGE, Individually and in her capacity as
Operations Manager, Collections for Internal Revenue Service; REED

                                                  Defendants - Appellees

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 3:07-CV-313

Before WIENER, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:*

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                  No. 08-10288

      Harold W. Smith, III appeals the district court’s dismissal of his action for
lack of subject matter jurisdiction. For the following reasons, we affirm.
                      I. FACTS AND PROCEEDINGS
      In 2001, the Internal Revenue Service (“IRS”) issued to Smith notices of
lien filing and intent to levy with respect to his unpaid federal income taxes for
the years 1986–1988 and 1993–1996, along with a notice of his right to a
collection-due-process (“CDP”) hearing before the IRS Office of Appeals. The IRS
had determined that Smith, who had not filed income tax returns since 1986,
had failed to pay more than $250,000 in income taxes (including penalties and
interest). After failing to appear at the scheduled CDP hearing, Smith filed a
hearing request with the IRS Office of Appeals to obtain a new CDP hearing.
Smith was then offered a telephone CDP hearing but did not avail himself of
that opportunity. In March 2006, the IRS Office of Appeals issued a notice of
determination sustaining the lien filing and proposed levies. The notice of
determination also advised Smith that he could petition the United States Tax
Court (the “Tax Court”) for a redetermination within thirty days.
      Smith never sought relief from the Tax Court. Instead, Smith contested
the notice of determination by filing a complaint against an IRS settlement
officer in the District Court for the Eastern District of Texas; that complaint was
dismissed for lack of jurisdiction based on the Tax Court’s exclusive jurisdiction
to review CDP determinations involving income taxes. Smith then brought this
action in the District Court for the Northen District of Texas seeking judicial
review of the IRS Office of Appeals determinations and damages for alleged
misconduct by IRS employees. The government moved to dismiss the complaint
for lack of subject-matter jurisdiction. On January 22, 2008, upon

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recommendation of the magistrate judge, the district court granted the motion
and dismissed the case. Smith appeals.
                        II. STANDARD OF REVIEW
      This court reviews de novo the dismissal of a case for lack of subject matter
jurisdiction. Chapa v. U.S. Dep’t of Justice, 339 F.3d 388, 389 (5th Cir. 2003).
“Courts must strictly construe all waivers of the federal government’s sovereign
immunity, resolving all ambiguities in favor of the sovereign.” Id. (quotation and
alternation omitted).
                              III. DISCUSSION
      We fully agree with the district court’s conclusion that it lacked subject-
matter jurisdiction to hear the dispute for the reasons stated in the magistrate
judge’s report. “The Tax Court has exclusive jurisdiction over challenges to the
IRS’s CDP determination of an income tax liability.” Barry v. United States, 215
F. App’x 933, 934 (11th Cir. 2007) (unpublished); see 26 U.S.C. § 6330(d)(1)
(appeals from CDP determinations are filed with the Tax Court); 26 C.F.R. §
601.102(b)(1)(i) (income taxes are within the jurisdiction of the Tax Court).
Further, the mere allegation of a due process violation in connection with the
CDP hearing process is insufficient to confer jurisdiction on the district court.
Barry, 215 F. App’x at 935; Voelker v. Nolen, 365 F.3d 580, 581 (7th Cir.2004).
Smith’s attempts to establish district court jurisdiction based on 26 U.S.C. §
7433 and the Paperwork Reduction Act are similarly unavailing. Section 7433
covers improper government conduct in the collection of federal taxes—it “is not
the proper vehicle for recovering damages relating to an improper assessment of
taxes.” Gandy Nursery, Inc. v. United States, 412 F.3d 602, 607 (5th Cir. 2005).
The Paperwork Reduction Act provides a defense to administrative or judicial

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enforcement actions, but does not create a private right of action for alleged
violations of the statute. See 44 U.S.C. § 3512; see also Sutton v. Providence St.
Joseph Med. Ctr., 192 F.3d 826, 844 (9th Cir. 1999).
      Rather than presenting rational arguments challenging the holdings of the
district court, Smith’s brief contains nothing more than tax protestor rhetoric
and new baseless arguments. Smith argues at length that the Federal Register
Act of 1935 and the Administrative Procedures Act of 1946 exempt him from the
imposition of federal taxes. We fail to see how this has anything to do with the
district court’s jurisdiction over the dispute. Finally, Smith’s invocation of the
Fair Debt Collection Act is entirely without merit, as the statute expressly
excludes “any officer or employee of the United States . . . to the extent that
collecting or attempting to collect any debt is in the performance of his official
duties” from the definition of “debt collector.”       15 U.S.C. § 1692a(6)(C).
Accordingly, we affirm the judgment of the district court.
      Also before this court is the government’s motion requesting that Smith
be sanctioned for bringing a frivolous appeal pursuant to 28 U.S.C. § 1912 and
Rule 38 of the Federal Rules of Appellate Procedure. We agree that sanctions
are warranted. Smith’s appeal is “patently frivolous,” because it is “completely
devoid of relevant legal authority” and fails to set forth a “single comprehensible
legal argument” relevant to the district court’s dismissal for lack of subject
matter jurisdiction. Rayner v. United States, No. 00-60625, 2001 WL 422610, at
*1 (5th Cir. March 29, 2001) (unpublished); see also Olympia Co., Inc. v. Celotex
Corp., 771 F.2d 888, 893 (5th Cir.1985) (“A frivolous appeal is one which involves
legal points not arguable on their merits.” (internal quotation omitted)). Smith
barely mentions the jurisdictional issues central to this case, contending that

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subject matter jurisdiction—the very authority of a court to hear a case—is a
mere “technicality.”     Instead, he devotes most of his brief to untenable
arguments that, as a resident of Texas, he is not subject to federal income taxes,
and that federal taxes are voluntary. “Although some latitude may be afforded
to pro se taxpayers who misunderstand the nature of the tax laws, pro se status
is not a license to litter the dockets of the federal courts with ridiculous
allegations” such as those set forth by Smith. Parker v. Comm’r, 117 F.3d 785,
787 (5th Cir. 1997). We also note that Smith chose to file this frivolous lawsuit
even though he was well aware that the Tax Court had jurisdiction to review the
IRS Office of Appeals’ determination—his first complaint in another district
court had already been dismissed for that exact reason.
      The government seeks an award of $8,000 as a lump sum sanction to
partially compensate it for the costs of defending Smith’s appeal. This court has
approved the practice of imposing a lump sum sanction in lieu of costs because
it “saves the government the additional cost of calculating its expenses, and also
saves the court the time and expense of reviewing the submission of costs.” Id.
Considering that, according to the government’s brief, the average expense
incurred by the Tax Division of the Department of Justice in the defense of
frivolous taxpayer appeals amounts to over $11,000, and in light of our previous
awards of sanctions in similar cases, we agree that an $8,000 lump sum sanction
is appropriate. See Wallis v. Commissioner, 203 F. App’x 591, 594 (5th Cir.
2006) (unpublished) (awarding an $8,000 flat fee sanction against taxpayer
appellant for filing a frivolous appeal). This sanction should deter Smith from
filing yet a third lawsuit in the district courts.

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                               No. 08-10288

                           IV. CONCLUSION
     For the foregoing reasons, the judgment of the district court is AFFIRMED
and the government’s motion for sanctions in the amount of $8,000 is
GRANTED.

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