Steven Denk v. Douglas Shulman , 405 F. App'x 65 ( 2010 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted November 30, 2010*
Decided December 21, 2010
Before
FRANK H. EASTERBROOK, Chief Judge
RICHARD A. POSNER, Circuit Judge
DIANE P. WOOD, Circuit Judge
No. 10-2563 Appeal from the United
States District Court for the
STEVEN C. DENK, Northern District of Illinois,
Plaintiff-Appellant, Eastern Division.
v.
No. 09 C 5891
UNITED STATES OF AMERICA, Charles R. Norgle, Judge.
Defendant-Appellee.
Order
The Internal Revenue Service notified Steven Denk that he owes $1.2 million in tax-
es. The notice told Denk that he could contest this assessment in the Tax Court, or that
he could pay and sue for a refund in a United States District Court. Denk did not take
either option. Without paying, he filed this suit in district court—not against the United
States (the right defendant in a suit seeking a refund), but against the Commissioner of
Internal Revenue and eight of the Commissioner’s subordinates. The complaint makes
several tax-protest arguments, such as that Congress is powerless to tax incomes of nat-
ural persons and that the defendants have violated the Constitution by refusing to con-
* After examining the briefs and the record, we have concluded that oral argument is unnecessary.
See Fed. R. App. P. 34(a); Cir. R. 34(f).
No. 10-2563 Page 2
cede that their collection efforts are unlawful. Denk asked the judge to enjoin the de-
fendants from trying to enforce the Internal Revenue Code against him.
The United States filed a certificate under the Westfall Act, 28 U.S.C. §2679(b)(2), (d),
and the district court substituted the United States as the defendant, which explains the
caption on this order. The substitution requires the litigation to proceed under the Fed-
eral Tort Claims Act, which, because it does not cover any claim related to the “assess-
ment or collection of any tax,” 28 U.S.C. §2680(c), does not offer Denk any prospect of
success. He would prefer to retain the individual defendants, but they are not proper
parties. Denk wants to proceed under the implied remedy recognized in Bivens v. Six
Unknown Federal Narcotics Agents, 403 U.S. 388 (1971), but we held in Cameron v. IRS, 773
F.2d 126 (7th Cir. 1985), that Bivens does not displace the elaborate statutory system for
litigating claims related to taxation. Accord, Adams v. Johnson, 355 F.3d 1179 (9th Cir.
2004); Judicial Watch, Inc. v. Rossotti, 317 F.3d 401 (4th Cir. 2003); Shreiber v. Mastrogio-
vanni, 214 F.3d 148 (3d Cir. 2000); Dahn v. United States, 127 F.3d 1249 (10th Cir. 1997);
Vennes v. Unidentified Agents, 26 F.3d 1448 (8th Cir. 1994); McMillen v. Department of the
Treasury, 960 F.2d 187 (1st Cir. 1991). These decisions implement the Supreme Court’s
directive that courts not use Bivens to circumvent limitations integral to statutory sys-
tems for contesting particular kinds of administrative action. See, e.g., Hui v. Castaneda,
130 S. Ct. 1845 (2010); Wilkie v. Robbins, 551 U.S. 537 (2007).
The Internal Revenue Service told Denk where, and how, to contest the agency’s
view of Denk’s tax obligations. By choosing to disregard that advice, Denk ensured that
his suit had no chance of success. A federal district court lacks jurisdiction to review
unpaid tax assessments; to obtain review in a district court, Denk had to pay and sue for
a refund. 28 U.S.C. §1346(a)(1); Flora v. United States, 362 U.S. 145, 177 (1960). What is
more, the Tax Injunction Act, 26 U.S.C. §7421(a), bars the sort of prospective relief that
Denk seeks.
Denk’s appeal is frivolous. We give Denk 14 days to show cause why we should not
impose a sanction of $4,000, the normal fine for frivolous tax-protest appeals. See Szopa
v. United States, 460 F.3d 884, 887 (7th Cir. 2006). The judgment is affirmed, and an order
to show cause is issued.