Henry, Michael v. United States

NONPRECEDENTIAL DISPOSITION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 February 20, 2008*
Decided May 2, 2008
By the Court:
No. 07-3337
MICHAEL F. HENRY, Appeal from the United States District
Plaintiff-Appellant, Court for the Northern District of Illinois,
Eastern Division
v.
No. 06 C 7087
UNITED STATES OF AMERICA, et al.,
Defendants-Appellees. David H. Coar,
Judge.
ORDER
Michael F. Henry sued the IRS, the Department of Justice (DOJ), and some of their
employees alleging that the defendants violated the Internal Revenue Code when they sent him a
purportedly fraudulent notice assessing a tax deficiency. The district court dismissed Henry’s
claims, and we affirm.
This case is one in a panoply of lawsuits filed by Henry in a lengthy and bitter dispute
with the IRS over the taxes he owes for the 1999 tax year. The troubles began in 2002, when
Henry sued the IRS in the Eastern District of Louisiana asserting that he overpaid taxes in 1999
and was entitled to a refund on the income he had reported. See Henry v. United States, No. 02-
0968 (E.D. La. filed Apr. 1, 2002). He had some success—he was awarded $123,000 after a jury
trial—but he was not finished with the IRS, and has appealed, insisting that he is entitled to
more. See Henry v. United States, No. 02-0968 (E.D. La. Apr. 30, 2007) (judgment), appeal
docketed, No. 07-30581 (5th Cir. June 27, 2007). And the IRS was not finished with Henry. On
December 2, 2004, it sent him a deficiency notice, assessing a debt of over $3 million in back
taxes on underreported income in 1999. (Interest and penalties have accrued, and the IRS says
that Henry now owes nearly $6 million.) Furious at the limited success of his first lawsuit and at
*
After an examination of the briefs and the record, we have concluded that oral
argument is unnecessary.  Thus, the appeal is submitted on the briefs and the record.
See FED. R. APP. P. 34(a)(2).
No. 07‐3337 Page 2
what he characterizes as the defendants’ “fraud” in assessing his tax deficiency, he has brought
no fewer than nine lawsuits in Louisiana and Illinois—including this one—naming scores of
defendants (including U.S. senators and representatives) who he believes have committed fraud
and violated various provisions of the Internal Revenue Code. See, e.g., Henry v. United States,
No. 07 C 4814 (N.D. Ill. filed Aug. 27, 2007 ); Henry v. Murphy, No. 05-1185 (E.D. La. filed
Mar. 29, 2005). We already have dismissed one of his appeals arising out of this dispute. See
Henry v. United States, No. 07-2583 (7th Cir. Nov. 7, 2007) (unpublished order).
In this case, Henry originally brought fourteen claims against dozens of defendants, but
he later requested that the district court dismiss most of the claims and defendants; it did so. Two
of the appellees, the DOJ and Lynne Murphy, an attorney at the DOJ, are not named in any of
Henry’s surviving claims, but they were not dismissed from the suit, and so we include them in
our analysis for the sake of completeness. In his amended complaint, Henry asserted that the
United States, the DOJ, Murphy, the IRS, and an employee of the IRS, Debbie Arceneaux,
conspired to “ignore the rulings of the Supreme Court” by “fabricating Deficiency Notices and
attempting extortion.” He contends that in so doing they violated provisions of the tax code that
require the release of liens and regulate the collection of taxes. See 26 U.S.C. §§ 7432, 7433.
The defendants moved to dismiss the complaint. The district court granted the motion,
concluding that Henry failed to pursue his administrative remedies in the time required, and, in
the alternative, that he filed his lawsuit too late.
This lawsuit is has no merit. We have given it the required de novo review. See Conyers
v. Abitz, 416 F.3d 580, 584 (7th Cir. 2005) (de novo review for dismissals based on failure to
exhaust administrative remedies); Woidtke v. St. Clair County, 335 F.3d 558, 562 (7th Cir. 2003)
(same for dismissals based on statute of limitations). Bearing in mind that we can affirm the
district court’s judgment on any ground supported by the record, see Remet Corp. v. City of
Chicago, 509 F.3d 816, 817 (7th Cir. 2007), we agree with the district court that this case should
be dismissed. We begin with the claims against Arceneaux and Murphy. Even if we generously
construe the complaint as bringing claims against them in their individual capacities under
Bivens v. Six Unknown Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388 (1971),
these claims fail. The Internal Revenue Code already protects taxpayers “against an overzealous
officialdom.” Cameron v. IRS, 773 F.2d 126, 129 (7th Cir. 1985). An aggrieved taxpayer
cannot circumvent the remedies Congress has created by suing individual tax collectors. See id.;
see also Adams v. Johnson, 355 F.3d 1179, 1184-85 (9th Cir. 2004); Judicial Watch, Inc. v.
Rossotti, 317 F.3d 401, 412 (4th Cir. 2003); Shreiber v. Mastrogiovanni, 214 F.3d 148, 152 (3d
Cir. 2000); Dahn v. United States, 127 F.3d 1249, 1254 (10th Cir. 1997); Vennes v. An
Unknown No. of Unidentified Agents of the U.S., 26 F.3d 1448, 1454 (8th Cir. 1994); McMillen
v. U.S. Dep’t of Treasury, 960 F.2d 187, 190-91 (1st Cir. 1991).
Henry’s claims against the IRS, the DOJ, and Murphy and Arceneaux (to the extent
Henry attempts to sue them in their official capacities) fare no better. These defendants cannot be
sued in an action under §§ 7432 and 7433 because the United States is the only proper defendant,
and a suit naming other government actors is “essentially a suit against the United States.”
Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985); see 26 U.S.C. §§ 7432(a), 7433(a).
No. 07‐3337 Page 3
That leaves only Henry’s contentions that the United States is liable for improper tax
collection practices and failure to release a lien. Henry bases his claim for improper tax
collection solely on the “fraudulent” assessment notice that he received from the IRS in 2004.
But the federal courts have no subject matter jurisdiction over such a claim against the United
States. The United States has waived its sovereign immunity only “[i]f, in connection with any
collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal
Revenue Service recklessly or intentionally, or by reason of negligence disregards any
provision” of the Internal Revenue Code. 26 U.S.C. § 7433(a) (emphasis added). Thus a taxpayer
can recover only for improper tax collection, not for an incorrect assessment of tax liability. See
Judicial Watch, 317 F.3d at 411; Gandy Nursery, Inc. v. United States, 318 F.3d 631, 636 (5th
Cir. 2003); Miller v. United States, 66 F.3d 220, 223 (9th Cir. 1995); Gonsalves v. IRS, 975 F.2d
13,16 (1st Cir. 1992). Tax collection enforces an assessed liability; the assessment notice, by
contrast, merely informs the taxpayer of the amount of the liability and always precedes
enforcement. See Murray v. Comm'r of Internal Revenue, 24 F.3d 901, 903 (7th Cir. 1994)
(noting that a notice of deficiency must be sent before the IRS takes any action to collect); 26
U.S.C. § 6213(a) (requiring the IRS to wait 90 days after sending notice of deficiency before
taking collection action).
In this case, Henry is not complaining that the IRS ever tried to collect, much less that its
employees used any improper means to recoup, the amount he owes. If Henry disagrees with the
assessment, as apparently he does, his only remedy is to petition the Tax Court for a
redetermination of the deficiency. See 26 U.S.C. § 6213(a); Gonsalves, 975 F.2d at 16. But
because the United States has not waived its sovereign immunity as to claims of improper tax
assessment, Henry’s recourse does not lie in federal district court. See Miller, 66 F.3d at 223;
FED. R. CIV. P. 12(b)(1).
Henry also attempts to make out a claim that the United States is liable under 26 U.S.C.
§ 7432, which allows a taxpayer to sue under certain circumstances if an employee of the IRS
fails to release a lien on the taxpayer’s property. See 26 U.S.C. § 7432(a). But Henry’s
grievance is all about the assessment, which he believes is incorrect; he is not complaining that
the IRS put a lien on his property (either through the notice or otherwise), much less that it
improperly failed to release it. Properly characterized, this claim, too, falls outside the
boundaries of the district court’s jurisdiction.
AFFIRMED.