Clark, Sharocco v. United States

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-3049
SHAROCCO CLARK,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Indiana, South Bend Division.
No. 3:01cv0723AS—Allen Sharp, Judge.
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SUBMITTED MARCH 11, 2003—DECIDED APRIL 22, 2003
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Before EASTERBROOK, ROVNER, and EVANS, Circuit
Judges.
PER CURIAM. Sharocco Clark sued the United States,
alleging that the Internal Revenue Service tortiously re-
fused to issue him a new tax refund check after one of his
family members stole his check and cashed it. He de-
manded a replacement check as well as compensatory and
punitive damages for the IRS’s alleged misconduct. The
district court dismissed Clark’s claim for damages for lack
of subject matter jurisdiction, invoking a provision of the
Federal Tort Claims Act (“FTCA”), 28 U.S.C. § 2680(c), that
exempts the government from tort liability for tax-related
claims. To the extent that Clark was merely seeking a
replacement check from the government, the district court
2 No. 02-3049
concluded that that claim was premature because his
administrative claim for a new check under 31 U.S.C.
§ 3343 was pending before the Financial Management
Service, a division of the Treasury Department. Indeed,
following the district court’s decision, the Financial Man-
agement Service determined that Clark met the require-
ments of § 33431 and sent him a replacement check for
the full amount of his 1998 tax refund. On appeal, Clark
argues that, although he now has received his tax refund,
the government is liable under the FTCA for injuries
resulting from the IRS’s refusal to issue him the replace-
ment check a year and a half earlier.
To maintain an action against the United States in
federal court, a plaintiff must identify a statute that con-
fers subject matter jurisdiction on the district court and
a federal law that waives the sovereign immunity of the
United States to the cause of action. Macklin v. United
States, 300 F.3d 814, 819 (7th Cir. 2002); Kanar v. United
States, 118 F.3d 527, 530 (7th Cir. 1997). The FTCA
provides both a jurisdictional grant and a waiver of sover-
eign immunity: 28 U.S.C. § 1346(b)(1) creates federal
jurisdiction to decide cases against the United States “for
injury or loss of property, or personal injury or death caused
by the negligent or wrongful act or omission of any em-
ployee of the Government while acting within the scope
of his office or employment, under circumstances where
the United States, if a private person, would be liable to
the claimant in accordance of the law of the place where
1
Under 31 U.S.C. § 3343, the Secretary of the Treasury has the
authority to issue a replacement check, without interest, if it
determines (1) that the check was lost or stolen without fault
of the payee; (2) the check was negotiated and paid on a forged
endorsement of the payee’s name; and (3) the payee did not
participate in any part of the proceeds from the negotiation. See
31 U.S.C. § 3343(b).
No. 02-3049 3
the act or omission occurred”; 28 U.S.C. § 2674, in turn,
waives the sovereign immunity of the United States,
making it liable in tort “in the same manner and to the
same extent as a private individual under like circum-
stances.” However, the FTCA incorporates several excep-
tions whereby the United States retains its immunity
from suit including § 2680(c), which, among other things,
exempts the government from liability for “[a]ny claim
arising in respect of the assessment or collection of any
tax.” 28 U.S.C. § 2680(c). The district court concluded
that this exception deprived it of subject matter jurisdic-
tion over Clark’s tort claim. Though a number of decisions
have treated statutory exceptions to liability under the
FTCA similarly, see, e.g., Smith v. United States, 507 U.S.
197, 199-201 (1993); Aragon v. United States, 146 F.3d 819,
823 (10th Cir. 1998); Rothrock v. United States, 62 F.3d
196, 198, 200 (7th Cir. 1995); Paul v. United States, 929
F.2d 1202, 1204 (7th Cir. 1991), recent authority from this
circuit suggests that the district court’s treatment of the
exception as “jurisdictional,” rather than an aspect of
Clark’s statutory right to relief, might not have been
technically correct, see Frey v. EPA, 270 F.3d 1129, 1135
(7th Cir. 2001); United States v. Cook County, 167 F.3d 381,
388-89 (7th Cir. 1999); Kanar, 118 F.3d at 530; see also
Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 93-95 (1990)
(holding that strict compliance with limitations period
is not a jurisdictional prerequisite to employment discrimi-
nation suit against the government). In any case, the
distinction does not matter here. Either way we look at
it, jurisdictionally or in terms of the statement of a claim,
the district court correctly concluded that Clark’s claim
against the United States could not proceed under the
FTCA.
Clark contends that § 2680(c) does not foreclose his
claim because the claim does not relate to the IRS’s “assess-
ment or collection” of taxes, but rather its refusal to issue
4 No. 02-3049
a replacement tax refund. We are not convinced. This court
has not yet addressed the scope of § 2680(c)’s tax-related
exemption in a published opinion, but the Fifth Circuit
has stated, “[I]n enacting Section 2680(c) of the FTCA,
Congress intended to insulate the IRS from tort liability
stemming from any of its revenue-raising activities.”
Capozzoli v. Tracey, 663 F.2d 654, 657 (5th Cir. 1981). And,
other circuits have held that a wide range of activity by
the IRS “arises in respect of” its collection or assessment
of taxes, see Jones v. United States, 16 F.3d 979, 980-81
(8th Cir. 1994) (§ 2680(c) applies to overzealous IRS inves-
tigation into plaintiff’s tax practices); Murray v. United
States, 686 F.2d 1320, 1323-24 (8th Cir. 1982) (tort claim
based on IRS’s refusal to allow redemption of property
seized for non-payment of taxes was claim “arising in
respect of the collection of a tax” under § 2680(c)); Am.
Assoc. of Commodity Traders v. Dep’t of Treasury, 598 F.2d
1233, 1235 (1st Cir. 1979) (suit seeking damages for denial
of tax-exempt status falls within § 2680(c)), including
the payment of tax refunds, see Aetna Cas. & Sur. Co. v.
United States, 71 F.3d 475, 477-78 (2d Cir. 1995). See also
Kosak v. United States, 465 U.S. 848, 854 (1984) (reading
phrase “arising in respect of” in § 2680(c) to mean any claim
“arising out of” the detention of goods). In Aetna, the
Second Circuit held that a surety’s claim that the IRS
tortiously converted its interest in a subrogee’s tax refund
was foreclosed by § 2680(c). In so holding, the Second
Circuit stated, “We understand the § 2680(c) exception to
cover claims arising out of the operation of the govern-
ment’s mechanism for assessing and collecting taxes. The
payment of refunds when due is an integral part of that
mechanism.” 71 F.3d at 478. Similarly, Clark’s claim based
on the IRS’s refusal to issue him another tax refund check
after his was cashed by someone else likely would arise out
of the IRS’s assessment or collection mechanism.
But we need not resolve whether § 2680(c)’s exemption
encompasses Clark’s FTCA claim, because he could not
No. 02-3049 5
avail himself of the Act in any event—“The Tort Claims
Act applies only to torts.” Paul, 929 F.2d at 1204 (emphasis
in original). Clark’s allegations against the government
do not add up to any state-law tort. He merely alleges
that the IRS violated federal law by failing to promptly
issue him a replacement check under 31 U.S.C. § 3343. An
alleged violation of a federal statutory duty cannot form
the basis of a FTCA claim. Ochran v. United States, 273
F.3d 1315, 1317 (11th Cir. 2001) (“[T]he FTCA was not
intended as a mechanism for enforcing federal statutory
duties.”); Johnson v. Sawyer, 47 F.3d 716, 728 (5th Cir.
1995) (en banc) (FTCA does not apply where the alleged
negligence “arises out of the failure of the United States to
carry out a [federal] statutory duty”). Moreover, § 3343
does not create any duty on the part of the IRS to issue
replacement checks; that responsibility lies with other
officials of the Treasury Department—namely, the Finan-
cial Management Service, which has now issued Clark
a new check after completing its investigation. See 31
C.F.R. § 245.1; see also Your Ins. Needs Agency Inc. v.
United States, 274 F.3d 1001, 1006 (5th Cir. 2002) (gov-
ernment fulfilled obligation to pay tax refund by sending
refund check to the address shown on the taxpayer’s re-
turn; § 3343 provides mechanism for replacement check
claims). So, whether or not we would agree with Clark
about § 2680(c), the FTCA provides no basis for his claim
for damages against the United States.
AFFIRMED
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-22-03