Abell v. Sothen

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
January 24, 2007
FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
RO BERT CH AR LES ABELL;
LISA JEAN AB ELL,
Petitioners-Appellants,
v. No. 06-1165
(D.C. No. 05-CV-00706-REB-BNB)
W ILLIAM R. SO THEN, and (D . Colo.)
cow orkers as individuals;
INTERNA L REVENU E SERVICE,
(writ of mandamus),
Respondents-Appellees.
OR D ER AND JUDGM ENT *
Before HO LM ES, M cKA Y, and BROR BY, Circuit Judges.
Robert and Lisa Abell appeal pro se from a district court order that
(1) dismissed in part and denied in part their petition to, among other things,
quash summonses issued by the Internal Revenue Service (IRS) to various
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
financial institutions; and (2) granted the Government’s motion to enforce two of
the summonses. W e have jurisdiction under 28 U.S.C. § 1291, and we affirm.
B ACKGROUND
In April 2005, while investigating the A bells’ federal income-tax liabilities,
revenue agent W illiam Sothen had summonses issued to W ells Fargo Bank,
Indymac Bank Homeloan Servicing, Countrywide Home Loans, and Union Bank
of California. Several days later, the Abells filed in the U.S. District Court for
the District of Colorado a pro se petition against Sothen, his co-workers, and the
IRS, arguing that (1) the summonses should be quashed because there were no
“statutes and implementing regulations . . . that authorize [Sothen] to do anything
he has done in this case,” ROA, Doc. 2 at 7; (2) a bill of particulars should be
issued “documenting probable cause,” id. at 9; (3) restitution should be ordered
against Sothen “from his personal pay and assets” based on a “pattern of
administrative legal abuse [that] has . . . resulted in involuntary servitude,” id.;
and (4) a writ of mandamus should be issued “to compel the supervisors of
this/these errant federal actors and outlaw s to discipline them and compel them to
cease their unlawful activities,” id. The Abells claimed to have “independently
determined . . . that they have no legal duty to pay any internal revenue tax and
are not a ‘taxpayers,’ [sic] and instead are ‘nontaxpayers.’” Id. at 12. The
Government opposed the petition and sought enforcement of the summonses
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issued to W ells Fargo and Countrywide, the only summonsed institutions w ith
business locations in Colorado.
The petition was referred to a magistrate judge, who recommended that it
be dismissed in part and denied in part, and that the summonses issued to W ells
Fargo and Countrywide be enforced. The recommendation concluded with a
conspicuous warning:
[T]he parties have 10 days after service of this recommendation to
serve and file specific, written objections. A party’s failure to serve
and file specific, written objections waives de novo review of the
recommendation by the district judge and also waives appellate
review of both factual and legal questions. A party’s objections to
this recommendation must be both timely and specific to preserve an
issue for de novo review by the district court or for appellate review.
Id., Doc. 34 at 20-21 (citations omitted). Three weeks later, the district judge
summarily adopted the recommendation in its entirety, noting that the Abells had
failed to file any objections.
On appeal, the Abells argue that (1) they “are not tax protestors and legally
should be addressed as ‘non-taxpayers,’” A plt. Br. at 11; (2) the summonses w ere
issued in bad faith and in violation of the First, Fourth, Fifth, Sixth, Ninth, and
Fourteenth Amendments, id. at 15, 20; (3) “[a]bsent implementing regulations, the
only legitimate targets for an administrative IRS summons are federal
employees,” id. at 21; and (4) “the IRS, which in an institutional sense long ago
abandoned civil action against those classified as ‘tax protestors,’ . . . is being
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used by the Justice Department to circumnavigate the traditional function of the
Grand Jury[,]” id. at 30.
D ISCUSSION
W e review for plain error when there are no objections to a magistrate
judge’s recommendation. See M orales-Fernandez v. INS, 418 F.3d 1116, 1122
(10th Cir. 2005). 1 “Plain error occurs when there is (1) error, (2) that is plain,
which (3) affects substantial rights, and which (4) seriously affects the fairness,
integrity, or public reputation of judicial proceedings.” Wardell v. Duncan,
470 F.3d 954, 958 (10th Cir. 2006) (quotation omitted). After reviewing the
record and the parties’ briefs, we conclude that the district court did not plainly
err in dismissing in part and denying in part the Abells’ petition and in enforcing
the summonses issued to W ells Fargo and Countrywide.
1
Notwithstanding a failure to object, a more exacting standard of review
may be available when (1) a pro se litigant has not been warned of the time period
for objecting and the consequences of not objecting or (2) the interests of justice
so require. M orales-Fernadez, 418 F.3d at 1119. Neither exception applies in
this case. First, the magistrate judge specifically informed the Abells of the time
period for objecting and the consequences of failing to object. Second, the Abells
offer no explanation for their failure to object and our independent review of the
record reveals nothing that would implicate the interests-of-justice exception. See
Theede v. U.S. Dep’t of Labor, 172 F.3d 1262, 1268 (10th Cir. 1999) (discussing
the interests-of-justice exception in terms of the circumstances surrounding the
failure to timely object, the litigant’s subsequent efforts to remedy a failure to
object, and the claims’ merits).
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The judgment of the district court is AFFIRM ED for substantially the same
reasons as set forth in the magistrate judge’s recommendation, which is appended
to this order and judgment. 2
Entered for the Court
W ade Brorby
Circuit Judge
2
To the extent that the magistrate judge declared that there is complete
im munity from suit for “claims [that] arise out of efforts to collect taxes,” ROA ,
Doc. 34 at 9, we note that 26 U.S.C. § 7433(a) presents a limited waiver of
immunity by authorizing a civil action against “any officer or employee of the
Internal Revenue Service” who recklessly, intentionally, or negligently disregards
any provision of Title 26 or a corresponding regulation in the “collection of
Federal tax.” But nothing in the Abells’ petition implicates § 7433(a).
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Boyd N. Boland
Civil Action No. 05-cv-00706-REB-BNB
ROBERT CHARLES ABELL, and
LISA JEAN ABELL,
Plaintiffs,
v.
WILLIAM R. SOTHEN, and coworkers as individuals, and
INTERNAL REVENUE SERVICE (writ of mandamus),
Defendants.
________________________________________________________________________
______
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
________________________________________________________________________
______
This case was initiated by the filing of a document captioned Petition to Quash
Summons, Petition for Writ of Mandamus, Demand for a Bill of Particulars, Claim for
Personal Damages [Doc. # 2, filed 4/18/05] (the “Petition”). The plaintiffs, Robert
Charles Abell and Lisa Jean Abell, are proceeding pro se.
The Petition, which 37 pages in length, is vague, disorganized, and rambling.
Filed with the Petition was a document captioned Memorandum of Law In Support of
Petition to Quash [Doc. # 3, filed 4/18/05] (the “Brief”). The Brief, 24 pages in length,
is similarly vague, disorganized, and rambling. Attached to the Brief are 1-1/2 inches
of materials identified as the “Tax Audit Defense Manual, ver. 1.15,” bearing a
copyright designation for Christopher Hansen and reprinted from the internet at
http://famguardian.org/. The Petition does not present a “short and plain” statement of
the claims raised, as required by Fed. R. Civ. P. 8.
Also attached to the Brief are copies of four IRS summonses and related
materials, which appear to form the principal basis of the plaintiffs’ claims. The IRS
summonses are directed to Indymac Bank Homeloan Servicing, in Pasadena, California;
Wells Fargo Bank N.A., in Durango, Colorado; Union Bank of California N.A., in San
Francisco, California; and Countrywide Home Loans Legal Dept., in Calabasas,
California. Each summons seeks financial information about David C. Abell and Lisa
J. Abell.
The plaintiffs are tax protestors. The following provides the flavor of their
arguments:
The court has in personam jurisdiction against the
Defendants but not against the Plaintiffs under 26 U.S.C.
§7609(h). This results from the fact that the Plaintiffs do
not reside and are not found in any Internal Revenue District
or Judicial district. Under Treasury Order 150-02, all
Internal Revenue Districts outside of the District of
Columbia were abolished as a result of the IRS Restructuring
and Reform Act of 1998, 112 Stat. 685, and the Plaintiffs do
not reside within the District of Columbia and do not
consent or volunteer to be treated like they do.
* * *
The court does not have jurisdiction under the IRS
Restructuring and Reform Act of 1998, 112 Stat. 685, section
3415 entitled “Taxpayers Allowed to Quash All Third Party
Summonses” for this particular case. The basis for this
conclusion is that the Plaintiffs are not “taxpayers”, but
instead are “nontaxpayers”. Consequently, this petition and
Petition to Quash is being pursued under the rules of equity,
and not under law.
* * *
Likewise, those who are Christians such as ourselves are
precluded by God’s law (the Bible) from depending on the
“interpretations of men” of the law, including the
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Constitution and the Internal Revenue Code. This edict is
especially true concerning the proclamations of the
Pharisees (lawyers). The law must stand on its own two feet
and not require a Pharisee to interpret, because doing so
transforms our “society of law” into a “society of men” in
violation of the legislative intent of the Constitution as
revealed in Marbury v. Madison. . . .
* * *
Christians, including the Plaintiffs, are not allowed to
“assume” or “presume” anything about any aspect of their
legal duties or liabilities either. . . .
Consequently, Americans are left with no reasonable,
objective, rational basis or belief about their “legal duty”
and “liability” to pay federal income taxes. What remains is
ignorance, superstition, and a false god and religion called
“government” to “worship” and obey, in violation of the
First Amendment. Government may not make itself into a
god, with powers and privileges beyond any ordinary citizen
and beyond the rules and boundaries established by the
written law.
* * *
The only resulting suitable basis upon which a concerned
and law-abiding American can form a good faith, reasonable
belief about “liability” is their own personal reading Internal
Revenue Code itself, the regulations that implement it, and
the Supreme Court rulings that interpret it. Americans
living in states of the union, like the IRS (see IRM
4.10.7.2.9.8), cannot rely on any rulings below the Supreme
Court as a basis for belief, because district and circuit courts
are precluded from ruling on rights and status in the context
of federal income taxes under 28 U.S.C. §2201, which is a
big indication that the Internal Revenue Code does not apply
outside of the territories and possessions of the United
States and the District of Columbia, which we call the
“federal zone” or “federal United States” in this pleading.
These “common persons” [the plaintiffs] have spent five
years diligently studying the Constitution, the Internal
Revenue Code, and the Treasury Regulations and have
independently determined, as the Supreme Court said they
must, that they have no legal duty to pay any internal
revenue tax and are not “taxpayers”, and instead are
“nontaxpayers”. It has been and continues to be the duty of
the government in this case to produce a statute and
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implementing regulation that imposes a legal duty and if it
cannot or will not in this specific case, then it is estopped
from further enforcement actions under the rules of equity.
The first and only legal duty ever imposed by Congress upon
Americans in the states, appearing in the Revenue Act of
1894, was declared unconstitutional by the Supreme Court
Pollack v. Farmers Loan and Trust, 157 U.S. 429, 158 U.S.
601 (1895). No legal duty has ever appeared within federal
law or within subtitles A through C of the Internal Revenue
Code for anything other than federal employees acting in
their official capacity.
Petition, pp.5, 10-12. 3
The Petition seeks the following relief:
(1) An order quashing the four summonses, id. at pp.7-9;
(2) A bill of particulars “documenting probable cause on the part of the IRS
to proceed with further discovery related to any imputed federal tax liability,” id. at
p.9;
(3) Monetary damages against the revenue agent (William R. Sothen) and his
co-workers, “from his personal pay and assets, and not from the government or from
the United States as Defendant,” as a result of an alleged “pattern of harassment,
intimidation, violation of due process (Fifth Amendment), extortion under the color of
law (18 U.S.C. §872), and abuse of legal process (18 U.S.C. §1589(3)). . . ,” id.; and
(4) A writ of mandamus, as follows:
[T]o compel the supervisors of this/these errant federal
actors [the revenue agents] and outlaws to discipline them
and compel them to cease their unlawful activities to
threaten, stalk, harass, and otherwise oppress the natural and
3
Quotations are taken directly from the Petition. I have not attempted to identify
gramm ar or punctuation errors in the quoted portions, although I am aw are that
they exist.
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Constitutional rights of the Plaintiffs in violation of 18
U.S.C. § 1589(3).
Id.at pp.9-10.
The United States responded to the Petition by filing the United States’ Motion
for Summary Denial of Petition to Quash (and Its Incorporated Petition for Writ of
Mandamus), and for Enforcement of Internal Revenue Service Summonses [Doc. # 18,
filed 7/19/05] (the “Motion to Dismiss”). The United States argues in its Motion to
Dismiss, first, that the Petition is a suit against the United States and that the United
States should be substituted for the named defendants; second, that the plaintiffs’
claims against the United States for damages are barred by sovereign immunity; third,
that no individual action against the revenue agents exists under Bivens v. Six
Unknown Named Agents, 403 U.S. 388 (1971); fourth, that the summonses against
Wells Fargo Bank and Countrywide Home Loans are proper and should be enforced,
and the motion to quash them should be denied; and, finally, that this is not a proper
circumstance for a writ of mandamus.
The plaintiffs thereafter filed a document captioned Motion to Dismiss Summary
Denial and Enforcement of Internal Revenue Service Summonses [Doc. # 30, filed
8/19/05] (the “Plaintiffs’ Response”). Although captioned as a motion, it is apparent
that this is a response to the government’s Motion to Dismiss, and I construe it as such.
The Plaintiffs’ Response is devoted to the argument that the court lacks jurisdiction
over the plaintiffs to order enforcement of the summonses because “the Plaintiffs do not
reside and are not found in any Internal Revenue District or Judicial district.”
According to the plaintiffs:
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Under Treasury Order 150-02, all Internal Revenue Districts
outside of the District of Columbia were abolished as a
result of the IRS Restructuring and Reform Act of 1998, 112
Stat. 685, and the Plaintiffs do not reside within the District
of Columbia and do not consent or volunteer to be treated
like they do.
* * *
This court does not have jurisdiction under 26 U.S.C.
7609(h) over these summonsed parties because they do not
reside in ANY United States judicial district. These judicial
districts only include federal properties ceded to the federal
government as required by 40 U.S.C. 255 and its successors
40 U.S.C. 3111 and 3112. The court, however, does not
need jurisdiction over the parties summonsed in this case, if
it orders the Defendant and his employer, the IRS, to dispose
of and destroy any evidence illegally obtained, and issues an
order not allowing evidence gathered to be used in any
future proceeding or investigation because it has been
illegally obtained.
Plaintiffs’ Response, pp.1-2.
I. STANDARD OF REVIEW
As a preliminary matter, I must liberally construe the pro se plaintiffs’
pleadings. Haines v. Kerner, 104 U.S. 519, 520-21 (1972). I do not act as an advocate
for pro se litigants, however, who must comply with the fundamental requirements of
the Federal Rules of Civil Procedure. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.
1991).
In ruling on a motion to dismiss, the court must accept the plaintiffs’ well-
pleaded allegations as true and must construe all reasonable inferences in favor of the
plaintiffs. City of Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 493
(1986); Mitchell v. King, 537 F.2d 385, 386 (10th Cir. 1976). “The issue is not whether
a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence
to support the claims.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A claim should
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be dismissed only where, without a doubt, the plaintiffs could prove no set of facts in
support of the claim that would entitle them to relief. Id.II. ANALYSIS
A. Substitution of the United States
The Petition is brought against “William R. Sothen and coworkers, et al. as
individuals; Internal Revenue Service (writ of mandamus) Defendants.”
Part of the plaintiffs’ claim is for an award of damages personally against
Revenue Agent Sothen. In particular, at page 9 of the Petition, the plaintiffs state:
Restitution is sought from the Defendant [Sothen] from his
personal pay and assets, and not from the government or
from the United States as Defendant, since no statute and
implementing regulation published in the federal register has
been demonstrated authorizing the Defendant to do what he
is doing. . . .
Petition, p.9 at ¶6.3.2. The facts alleged in support of the claim, however, all involve
Revenue Agent Sothen’s actions in his official capacity in connection with tax
collection efforts, as follows:
A pattern of harassment, intimidation, violation of due
process (Fifth Amendment), extortion under the color of law
(18 U.S.C. §872), and abuse of legal process (18 U.S.C.
§1589(3)) has characterized the actions of both the
Defendant and his coworkers as individuals. This pattern of
administrative legal abuse has prejudiced the Constitutional
rights of the Plaintiffs and resulted in involuntary servitude
responding to the illegal activities of the Defendants and his
coworkers. Plaintiffs thereby request of this honorable court
the restitution called for under 18 U.S.C. §1593 for
considerable, involuntary time and expense resulting from
the need to respond to frivolous and unauthorized actions of
the Defendant in the mis-enforcement of the internal revenue
laws of the federal United States.
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Id. at ¶6.3.1. See also Brief, at pp.15-17 (further detailing the “History of of
Interaction With Defendant(s) and Their Employer”).
Under similar facts, the Tenth Circuit Court of Appeals ruled in Atkinson v.
O’Neill, 867 F.2d 589, 590 (10th Cir. 1989), that “[w]hen an action is one against
named individual defendants, but the acts complained of consist of actions taken by
defendants in their official capacity as agents of the United States, the action is in fact
one against the United States.” Accord Burgos v. Milton, 709 F.2d 1 (1st Cir.
1983)(holding that “[a]lthough the . . . action is nominally one against individual
defendants, the acts complained of consist of actions taken by defendants in their
official capacity as agents of the United States,” and that “[u]nder such circumstances,
the action is in fact one against the United States”).
Insofar as the Petition may be read to assert claims against Revenue Agent
Sothen and his co-workers in their official capacities, I agree that the United States
must be substituted as the proper defendant.
The Petition also names the Internal Revenue Service as a defendant. The
Internal Revenue Service is not an entity capable of being sued. Posey v. United States
Dept. of the Treasury--Internal Revenue Service, 156 B.R. 910, 917 (W.D.N.Y.
1993)(stating that “suit against the IRS or the Treasury Department is not available in
federal court”); Krouse v. United States Government Treasury Dept. Internal Revenue
Service, 380 F. Supp. 219, 221 (C.D. Cal. 1974)(holding that “[t]he Department of the
Treasury and the Internal Revenue Service are not entities subject to suit and they
should be dismissed”). A suit purporting to bring claims against the IRS is deemed to
be a suit against the United States. Posey, 156 B.R. at 917.
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B. The United States Is Immune From Suit
The plaintiffs’ claims against the revenue agents in their official capacities and
against the Internal Revenue Service are claims against the United States. “It is well
settled that the United States and its employees, sued in their official capacities, are
immune from suit, unless sovereign immunity has been waived.” Atkinson, 867 F.2d at
590. As the circuit court explained in Fostvedt v. United States, 978 F.2d 1201 (10th
Cir. 1992), another case involving a tax protest:
The United States may not be sued without its consent.
Such a waiver of sovereign immunity must be strictly
construed in favor of the sovereign and may not be extended
beyond the explicit language of the statute. It long has been
established that the United States, as sovereign, is immune
from suit save as it consents to be sued and the terms of its
consent to be sued in any court define that
court’s jurisdiction to entertain suit. A waiver of sovereign
immunity cannot be implied, but must be explicitly
expressed.
* * *
The burden is on the taxpayer to find and prove an explicit
waiver of sovereign immunity.
Id., at 1202-03 (internal quotations and citations omitted).
The plaintiffs have not identified any waiver of sovereign immunity applicable to
this case, and I am not aware of any. To the contrary, courts presented with similar
facts have consistently held that the United States has not waived its immunity:
The United States may consent to be sued, and the federal
government has waived immunity for some tort claims under
the Federal Tort Claims Act, 28 U.S.C. § 1346, allowing
agents of the government to be sued in a tort action. The
Act, however, specifically excludes claims arising out of the
assessment of any tax. 28 U.S.C. § 2680(c). Section
2680(c) has been interpreted broadly to preclude suits for
damages arising out of allegedly tortious activities of IRS
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agents when those activities were in any way related to an
agent’s official duties.
Provenza v. Rinaudo, 586 F. Supp. 1113, 1117 (D. Md. 1984) (citing Capozzoli v.
Tracey, 663 F.2d 654, 658 (5th Cir. 1981); Stankevitz v. IRS, 640 F.2d 205, 206 (9th
Cir. 1981); and Broadway Open Air Theatre v. U.S., 208 F.2d 257, 258-59 (4th Cir.
1953)).
In summary, the plaintiffs’ claims against Revenue Agent Sothen and his co-
workers, in their official capacities, and against the Internal Revenue Service are claims
against the United States. The claims arise out of efforts to collect taxes.
Consequently, these claims are barred by sovereign immunity.
Similarly, the plaintiffs have failed to identify any waiver of sovereign immunity
which would entitle them to relief in the nature of a bill of particulars “documenting
probable cause on the part of the IRS to proceed with further discovery related to any
imputed federal tax liability.” Petition, p.9. Courts presented with similar claims have
dismissed them as barred by sovereign immunity. Watts v. Internal Revenue Service,
925 F. supp. 271, 276 (D. N.J. 1996).
C. No Bivens Action Exists Against the
Revenue Agents as Individuals
The plaintiffs also appear to be attempting to assert claims against Revenue
Agent Sothen and his co-workers in their individual capacities under Bivens v. Six
Unknown Named Agents, 403 U.S. 388 (1971). The plaintiffs allege, in conclusory
terms, the following:
A pattern of harassment, intimidation, violation of due
process (Fifth Amendment), extortion under the color of law
(18 U.S.C. § 872), and abuse of legal process (18 U.S.C. §
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1589(3)) has characterized the actions of both the Defendant
and his coworkers as individuals. This pattern of
administrative legal abuse has prejudiced the Constitutional
rights of the Plaintiffs and resulted in involuntary servitude
responding to the illegal activities of the Defendant and his
coworkers.
Petition, p.9 at §6.3.1. 4
Bivens claims are not available in this tax-related dispute because Congress has
created a comprehensive statutory scheme which provides alternative remedies for the
types of wrongs alleged here. As the circuit court explained in National Commodity
and Barter Ass’n, National Commodity Exchange v. Gibbs, 886 F.2d 1240, 1248 (10th
Cir. 1989):
The same considerations which led the Supreme Court in
[Schweiker v. Chilicky, 487 U.S. 412 (1988)] to conclude
that the recognition of a Bivens claim would be
inappropriate [in a claim involving the social security
system, i.e., the presence of an elaborate mechanism for the
resolution of claims] are applicable here with respect to the
NCBA’s allegations of violations of the fifth amendment due
process clause and of various provisions of the Internal
Revenue Code. Although there may be no established
mechanism for the recovery of damages against federal
authorities for unconstitutional conduct, the unavailability of
complete relief does not mandate the creation of a Bivens
remedy when other “meaningful safeguards or remedies for
the rights of persons situated as were the plaintiffs are
available. In this case, the NCBA has recourse to challenge
the legality of the penalty assessment under several
provisions of the Internal Revenue Code.
4
Arguments similar to the plaintiffs’ claim that they have been subjected to
involuntary servitude prohibited by the Thirteenth Amendment because they have
been required to expend “involuntary time and expense” to respond to tax
collection efforts, Petition at ¶ 6.3.1, have been considered by the courts and
rejected as frivolous. See, e.g., Van Stafford v. Spitzer, 1992 U.S. Dist. LEXIS
16163 *7 (D. Colo. Sept. 28, 1992)
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Accord Dahn v. United States, 127 F.3d 1249, 1254 (10th Cir. 1997)(holding that “in
light of the comprehensive administrative scheme created by Congress to resolve tax-
related disputes, individual agents of the IRS are also not subject to Bivens actions”).
The conduct which gives rise to this action is the plaintiffs’ objection to the
government’s efforts, through the four summonses, to obtain financial information
about them. The plaintiffs have an alternative remedy, however, other than a Bivens
action for money damages, and one which is specifically designed to address the
particular problems involved here. In particular, 26 U.S.C. § 7609 contains special
procedures applicable to third party summonses, as are at issue here. Section
7609(b)(1)-(2) specifically allows the party whose records are being sought to intervene
or to move to quash the summons.
Here, as in the Gibbs case, the plaintiffs have a means to challenge the legality
of the summonses under provisions of the Internal Revenue Code. It therefore would be
inappropriate to recognize a Bivens remedy under these facts. Gibbs, 886 F.2d at 1248.
D. Mandamus Is Not Available
The plaintiffs also seek a writ of mandamus to unspecified federal officers,
alleging in part:
The accompanying Petition for Writ of Mandamus is
submitted to compel the supervisors of this/these errant
federal actors and outlaws to discipline them and compel
them to cease their unlawful activities to threaten, stalk,
harass, and otherwise oppress the natural and Constitutional
rights of the Plaintiffs in violation of 18 U.S.C. § 1589(3) [a
criminal statute prohibiting forced labor].
* * *
In addition, a Writ of Mandamus is requested to compel the
IRS to rebut the evidence of its wrongful activities to
enforce and collect federal income taxes against the
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Plaintiffs, and to produce facts and evidence upon which
they and the public at large can rely upon to reach a
reasonable belief that they have a legal duty and liability.
* * *
The Plaintiffs therefore alleges that any enforcement actions
by this court of the Defendant are completely illegal because
not specifically authorized by both a statute and an
implementing regulation published in the federal register. . .
. Authority over alcohol, tobacco, firearms, terrorism,
drugs, or internal revenue taxes within states of the Union
was never surrendered to the federal government under the
Constitution or any of the amendments since, violates the
legislative intent of the Constitution, and illegally and
unconstitutionally displaces or supersedes the police powers
and sovereignty of the states of the Union.
* * *
Consequently, the Plaintiffs request that this hopefully
honorable court issue a Writ of Mandamus compelling the
Defendant and his employer, the Internal Revenue Service,
to rebut the overwhelming evidence provided in Exhibit
(1A) showing that there are no laws that authorize the
enforcement of Subtitle A or C federal income taxes upon
Americans who are born in and domiciled in states of the
Union and who are not “citizens of the United States” under
8 U.S.C. § 1401 or “residents” under 26 U.S.C. §
7701(b)(1)(A).
Section 1361, 28 U.S.C., grants district courts original jurisdiction in actions in
the nature of mandamus “to compel an officer or employee of the United States or any
agency thereof to perform a duty owed to the plaintiff.” In Paniagua v. Moseley, 451
F.2d 228, 229 (10th Cir. 1971), the circuit court held:
Mandamus is an extraordinary remedial process and before
relief of this nature can be afforded it must appear that the
claim is clear and certain and the duty of the officer
involved must be ministerial, well defined, and peremptory
to the end that the duty must be a
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positive command and so plainly prescribed as to be free
from doubt.
The plaintiffs argue in conclusory terms that the revenue agents threatened,
stalked, harassed, and otherwise oppressed them. The factual underpinning of these
claims, however, appears to be the issuance of the summonses on banks in furtherance
of the government’s efforts to collect taxes. This argument, as well as the plaintiffs’
assertion that the revenue agents’ efforts to collect taxes are “completely illegal
because not specifically authorized by both a statute and an implementing regulation
published in the federal register,” have been considered and rejected in this circuit and
throughout the country. For example, in Lonsdale v. United States, 919 F.2d 1440,
1448 (10th Cir. 1990), the plaintiffs argued, as do the plaintiffs here, that “the Internal
Revenue Service has no power to impose levies because orders delegating such power
were not published in the Federal Register as required by law. . . .” The circuit court
determined that the arguments were frivolous and held:
As the cited cases, as well as may others, have made
abundantly clear, the following arguments alluded to by the
[plaintiffs] are completely lacking in legal merit and
patently frivolous:
(1) individuals (“free born, white, preamble, sovereign,
natural, individual common law ‘de jure’ citizens of a state,
etc.”) are not “persons” subject to taxation under the Internal
Revenue code;
(2) the authority of the United States is confined to the
District of Columbia; (3) the income tax is a direct tax
which is invalid absent apportionment, and Pollock v.
Farmers’ Loan & Trust Co., . . . is authority for that and
other arguments against the government’s power to impose
income taxes on individuals; (4) the Sixteenth Amendment
to the Constitution is either invalid or applies only to
corporations; (5) wages are not income; (6) the income tax is
voluntary; (7) no statutory authority exists for imposing an
income tax on individuals; (8) the term “income” as used in
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the tax statutes is unconstitutionally vague and indefinite;
(9) individuals are not required to file tax returns fully
reporting their income; and
(10) the Anti-Injunction Act is invalid
To this short list of rejected tax protester arguments we now
add as equally meritless the additional arguments made
herein that (1) the Commissioner of Internal Revenue
Service and employees of the Internal Revenue Service have
no power or authority to administer the Internal Revenue
laws, including power to issue summons, liens and levies,
because of invalid or nonexistent delegations of authority,
lack of publication or delegations of authority in the Federal
Register, violations of the Paperwork Reduction Act, and
violations of the Administrative Procedure Act, including
the Freedom of Information Act; and (2) tax forms,
including 1040, 1040A, 1040EZ and other reporting forms,
are invalid because they have not been published in the
Federal Register.
In view of the well established authority of the Internal Revenue Service and its
agents to engage in tax collection efforts of the nature undertaken here, including
particularly the issuance of summonses, it is clear that the plaintiffs have failed to
establish any right to the relief they seek, much less a clear and certain duty or positive
command so plainly prescribed as to be free from doubt, and mandamus is not
available.
E. The Government’s Motion to Enforce the Summonses
Against Wells Fargo Bank and Countrywide Home Loans
Should Be Granted and the Motion to Quash the
Summonses Must Be Denied
The authority of the United States to issue summonses in taxpayer cases is
established in 26 U.S.C. § 7602(a):
For the purpose of ascertaining the correctness of any return,
making a return where none has been made, determining the
liability of any person for any internal revenue tax or the
liability at law or in equity of any transferee or fiduciary of
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any person in respect of any internal revenue tax, or
collecting any such liability, the Secretary is authorized--
(1) To examine any books, papers, records, or other data
which may be relevant or material to such inquiry;
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(2) To summon . . . any person having possession, custody,
or care of books of account containing entries relating to the
business of the person liable for tax . . . to appear before the
Secretary at a time and place named in the summons and to
produce such books, papers, records, or other data, . . . as
may be relevant or material to such inquiry. . . .
The Supreme Court affirmed the authority of the IRS to summon books and
records in United States v. Powell, 379 U.S. 48, 53-54 and 57-58 (1964), holding:
We . . . hold that the Government need make no showing of
probable cause to suspect fraud unless the taxpayer raises a
substantial question that judicial enforcement of the
administrative summons would be an abusive use of the
court’s process, predicated on more than the fact of re-
examination and the running of the statute of limitations on
ordinary tax liability.
* * *
Section 7602[, 26 U.S.C.] authorizes the Commissioner to
investigate any such [tax] liability. If, in order to determine
the existence or nonexistence of fraud in the taxpayer’s
returns, information in the taxpayer’s records is needed
which is not already in the Commissioner’s possession, we
think the examination is not “unnecessary” within the
meaning of § 7605(b). Although a more stringent
interpretation is possible, one which would require some
showing of cause for suspecting fraud, we reject such an
interpretation because it might seriously hamper the
Commissioner in carrying out investigations he thinks
warranted.
* * *
Reading the statutes as we do, the Commissioner need not
meet any standard of probable cause to obtain enforcement
of his summons, either before or after the three year statute
of limitations has expired. He must show that the
investigation will be conducted pursuant to a legitimate
purpose, that the inquiry may be relevant to the purpose, that
the information sought is not already within the
Commissioner’s possession, and that the administrative steps
required by the Code have been followed--in particular, that
the “Secretary or his delegate,” after investigation, has
determined the further examination to be necessary and has
notified the taxpayer in writing to that effect. This does not
make meaningless the adversary hearing to which the
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taxpayer is entitled before enforcement is ordered. At the
hearing he “may challenge the summons on any appropriate
ground.” Nor does our reading of the statutes mean that
under no circumstances may the court inquire into the
underlying reasons for the examination. It is the court’s
process which is invoked to enforce the administrative
summons and a court may not permit its process to be
abused. Such an abuse would take place if the summons had
been issued for an improper purpose, such as to harass the
taxpayer or to put pressure on him to settle a collateral
dispute, or for any other purpose reflecting on the good faith
of the particular investigation. The burden of showing an
abuse of the court’s process is on the taxpayer, and it is not
met by a mere showing, as was made in this case, that the
statute of limitations for ordinary deficiencies has run or
that the records in question have already been once
examined.
(Internal citations and notes omitted.)
The Tenth Circuit Court of Appeals applied the rule announced in Powell in
United States v. Balanced Financial Management, Inc., 769 F.2d 1440 (10th Cir. 1985),
and explained:
The Government sought to enforce the IRS administrative
summons to taxpayers . . . pursuant to the provisions of 26
U.S.C. § 7602(b). . . . To enforce the summons the
Commissioner of Internal Revenue must meet the standards
set out in Powell . He must show that the investigation
will be conducted pursuant to a legitimate purpose, that the
inquiry may be relevant to the purpose, that the information
sought is not already in the Commissioner’s possession, and
that the administrative steps required by the Code have been
followed.
The burden is a slight one because the statute must be read
broadly in order to ensure that the enforcement powers of
the IRS are not unduly restricted. The requisite showing is
generally made by affidavit of the agent who issued the
summons and who is seeking enforcement. . . .
The burden then shifts to the taxpayers. The burden is a
heavy one. The taxpayer must establish any defenses or
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prove that enforcement would constitute an abuse of the
court’s process. He must prove a lack of good faith, that the
government has abandoned in the institutional sense its
pursuit of possible civil penalties. The taxpayer must do
more than just produce evidence that would call into
question the Government’s prima facie case. The burden of
proof in these contested areas rests squarely on the taxpayer.
...
Allegations supporting a bad faith defense are insufficient if
conclusionary. It at this stage the taxpayer cannot refute the
government’s prima facie Powell showing or cannot
factually support a proper affirmative defense, the district
court should dispose of the proceeding on the papers before
it and without an evidentiary hearing.
Id. at 1443-44 (internal citations and quotations omitted).
The United States submitted the Declaration of Internal Revenue Service
Revenue Agent William R. Sothen [Doc. # 15, filed 7/13/05] (the “Sothen Decl.”) in
support of its Motion to Dismiss. The Sothen declaration is unrefuted and establishes
that Revenue Agent Sothen is conducting an investigation to determine the federal
income tax liabilities of the plaintiffs, Sothen Decl., ¶3; that he issued the summonses
to Wells Fargo Bank and Countrywide Home Loans in connection with that
investigation, id. at ¶4; that the summonses were issued in good faith and for the
purpose of obtaining information to aid in determining the plaintiffs’ tax liabilities id.
at ¶¶6, 9; that all administrative steps required by the Internal Revenue Code in
connection with issuing the summonses were followed, id. at ¶¶5, 7; and that the
materials summoned are not already in the possession of the IRS. Id. at ¶8.
Section 7604(a), 26 U.S.C., provides that jurisdiction to enforce a summons
under section 7602 lies in the United States district court for the district in which the
summoned party “resides or is found.” Similarly, 26 U.S.C. § 7609(h)(1) provides that
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jurisdiction to determine motions to quash IRS summonses lies in the United States
district court for the district where the party summoned resides or is found. The
unrefuted evidence establishes that only Wells Fargo Bank and Countrywide Home
Loans are found in the District of Colorado. Sothen Decl. at ¶¶11-12. Neither Indymac
Bank nor Union Bank of California are found in this district. Id. at ¶¶13-14.
Consequently, this court lacks jurisdiction either to enforce of the quash the summonses
to Indymac Bank and Union Bank of California, and the Petition must be dismissed
insofar as it seeks an order quashing those summonses.
The United States has met its burden to establish a prima facie case for the
enforcement of the summonses to Wells Fargo Bank and Countrywide Home Loans.
The burden therefore shifts to the plaintiffs to establish a defense to the summonses or
that the summonses constitute an abuse of the court’s process. Balanced Financial, 769
F.2d at 1444.
So far as I can discern, the plaintiffs arguments against enforcement of the
summonses and to quash them are that (1) this court lacks personal jurisdiction over the
plaintiffs because they do not reside in a “United States judicial district” or in the
District of Columbia, Petition, p.5; and (2) the revenue agents involved in the
investigation “were unable to produce both statutes and implementing regulations . . .
that authorize him/them to do anything he has done in this case. . . .” Id. at p.7.
The plaintiffs give as their address 123 El Diente Drive, Durango, Colorado.
Petition, “Notice of Lodgement,” p.2. The state of Colorado composes a single federal
judicial district, created by 28 U.S.C. § 85. The plaintiffs’ argument that they do not
reside in a United States judicial district is frivolous. See Lonsdale, 919 F.2d at 1448
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(holding as frivolous the argument that “individuals (‘free born, white, preamble,
sovereign, natural, individual common law “de jure” citizens of a state, etc.’) are not
‘persons’ subject to taxation under the Internal Revenue Code”). Moreover, sections
7604(a) and 7609(h)(1), 26 U.S.C., expressly confer jurisdiction on
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this court and under these facts to determine the competing motions to enforce and to
quash the IRS summonses issued to Wells Fargo Bank and Countrywide Home Loans.
The plaintiffs’ second argument, that the tax laws are invalid because they are
not supported by “both statutes and implementing regulations,” also has been
repeatedly rejected as lacking merit. For example, in Watts v. Internal Revenue
Service, 925 F. Supp. 271, 277 (D. N.J. 1996), the court explained:
The Watts’ second argument is that the IRS, through is
employees, is unable to act under 26 U.S.C. § 6321[concerning liens to enforce taxes], without implementing
regulations as set forth in 26 U.S.C. § 7805(a). Section
7805(a) provides, in relevant part, “the Secretary shall
prescribe all needful rules and regulations for the
enforcement of this title.” By “needful rules and
regulations,” Congress did not intend to require the
promulgation of unnecessary regulations. Section 6321 has
the force of law which Congress gave it, with or without
implementing regulations.
(Internal citations and notes omitted.) Accord United States v. Dawes, 2005 WL
3278027 *1 (10th Cir. Dec. 5, 2005); Gass v. United States Dept. of Treasury, 2000 WL
743671 *4 (10th Cir. June 9, 2000).
Similarly here, section 7602 authorizes issuance of the summonses, has the force
of law, and does not require any implementing regulations.
Nor is there any indication or evidence that the summonses issued here constitute
an abuse of the court’s process. To the contrary, the summonses are appropriate
process to assist the government in its legitimate and good faith investigation of the tax
liabilities of the plaintiffs.
III. RECOMMENDATION
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For the reasons stated, I respectfully RECOMMEND that the Petition be
DISMISSED and the request to quash the summonses issued to Wells Fargo Bank and
Countrywide Home Loans be DENIED, and that the Motion to Dismiss be GRANTED
and the summonses issued to Wells Fargo Bank and Countrywide Home Loans be
ENFORCED, as follows:
(1) That the United States be substituted as the defendant insofar as the
Petition asserts claims against William R. Sothen and his co-workers, in their official
capacities, and against the Internal Revenue Service;
(2) That the claims against the United States be DISMISSED with prejudice
as barred by sovereign immunity;
(3) That the claims against William R. Sothen and his co-workers, in their
individual capacities, be DISMISSED with prejudice as not available under Bivens v.
Six Unknown Named Agents, 403 U.S. 388 (1971);
(4) That the Petition be DISMISSED with prejudice insofar as it seeks a writ
of mandamus;
(5) That the Petition be DENIED for lack of jurisdiction insofar as it seeks an
order quashing the summonses served on Indymac Bank and Union Bank of California;
and
(6) That the United States’ request to enforce the summonses served on Wells
Fargo Bank and Countrywide Home Loans be GRANTED.
FURTHER, IT IS ORDERED that pursuant to 28 U.S.C. § 636(b)(1)(C) and Fed.
R. Civ. P. 72(b), the parties have 10 days after service of this recommendation to serve
and file specific, written objections. A party’s failure to serve and file specific,
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written objections waives de novo review of the recommendation by the district judge,
Fed. R. Civ. P. 72(b); Thomas v. Arn, 474 U.S. 140, 147-48 (1985), and also waives
appellate review of both factual and legal questions. In re Key Energy Resources Inc.,
230 F.3d 1197, 1199-1200 (10th Cir 2000). A party’s objections to this
recommendation must be both timely and specific to preserve an issue for de novo
review by the district court or for appellate review. United States v. One Parcel of Real
Property, 73 F.3d 1057, 1060 (10th Cir. 1996).
Dated February 14, 2006.
BY THE COURT:
s/ Boyd N. Boland
United States Magistrate Judge
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