TP Loves Getting The FrivPens!

[The Observer]

In a rather lengthy (which I cut out) opinion, this TP finally reaches the nirvana of FrivPenhood


KENT CARTER,
Plaintiff,
v.
UNITED STATES OF AMERICA, A FEDERAL CORPORATION,
THE INTERNAL REVENUE SERVICE, AND MICHAEL J. PRYOR,
Defendants.

Release Date: OCTOBER 30, 2009


IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO

MEMORANDUM OPINION

THIS MATTER comes before the Court on the Defendants' Motion to Dismiss Amended Complaint, and Renewed Alternative Motion for Summary Judgement [sic], filed September 26, 2008 [Doc. 37]. The Court entered a summary Order granting the motion on September 30, 2009. See Doc. 48. This Opinion explains the Court's reasoning.

BACKGROUND

The following facts are either undisputed or are viewed in a light most favorable to pro se plaintiff Kent Carter. See Anderson v. Suiters, 499 F.3d 1228, 1232 (10 Cir. 2007). Carter, who is allegedly "domiciled in the geographical mass of land identified as P.O. Box 5033, Carlsbad, New Mexico," Doc. 32 at 3, failed to timely file income tax returns for tax years 1995 through 2001. 1 Accordingly, in 1998-2001 the IRS assessed federal income taxes by creating substitute returns for tax years 1995 through 1999, and in 2005 began attempting to collect those taxes with liens and levies on his property. See Doc. 22, Ex. 1 at paragraph 3 and att. 1-A, 1-B, 1-C, and 1-E. In addition, because Carter had filed administrative refund/abatement claims with the IRS in 2007 that it deemed were frivolous, the IRS also assessed, and began trying to collect, $ 500 penalties for tax years 1995 through 2001. See id. Carter administratively challenged the tax lien and the underlying assessments in April 2007 and demanded the release of the lien and a refund of money that had been levied, but his challenge was denied. See Doc. 1, Exs. A, B. He was offered an opportunity to appeal the administrative decision to the Tax Court, but he did not appeal. See id., Ex. B at 1-2.

Carter filed his original federal Complaint on December 7, 2007, seeking to quiet title to property, injunctive relief, a refund of money the IRS collected using tax levies, and damages. See Doc. 1. But during the process of litigation, the IRS decided to suspend further collection on the 1995 through 1999 income-tax debts and to release all of its existing levies. See Doc. 22, Ex. 1 at paragraph 6. Accordingly, on April 10, 2008, the IRS issued to Carter another "Final Notice, Notice of Intent to Levy and Notice of Your Rights to a Hearing," setting forth the amounts Carter owed for the tax years 1995 through 1999 and informing him of his right to an administrative appeal. Doc. 37, Ex. 1 at 3. On May 8, 2008, Carter filed with the IRS a "Request for a Collection Due Process or Equivalent Hearing" for tax years 1995 through 1999. See id. at 1-2. During the appeals process, Carter again explained why he disputed the prior assessments, the penalties, and the proposed collection activities by raising many of the same arguments he made in his original federal Complaint, and he resubmitted Forms 1040 for tax years 1995 through 1999 that he had signed in February 2007 when he requested a refund/rebate, which also form the basis of some of his federal claims. See Doc. 44, Ex. 1. All of those returns reflected an adjusted gross income of zero, based on Carter's theory of taxation. See id.

On December 18, 2008, the IRS Appeals Office issued to Carter a "Notice of Determination Concerning Collection Actions Under Section 6320 and/or 6330" pertaining to tax years 1995 through 1999, which abated several penalties previously imposed, but which rejected the rest of Carter's arguments and sustained the IRS' proposed levies. See Doc. 44, Ex. 1 at 2. The Appeals Council examined the records and found that Carter had timely been issued statutory notices of deficiency for tax years 1995 through 1999 and that he was "afforded the opportunity to challenge the merits of the underlying 1040 tax liability for the 1995, 1996, 1997, 1998 and 1999 tax years" during the hearing. Id. at 3-4. The Appeals Council also found that the pre-levy notice requirements were met. See id. at 4. But the Appeals Council concluded that the "IRC section 6020 returns" had not been properly prepared by the IRS in 2005, and it abated the penalties issued under section 6651(a)(2). See id. at 6-7. As to Carter's attempt to challenge the validity of the frivolous-return penalties imposed for the 1995-2001 tax years under 26 U.S.C. section 6702, the Appeals Council concluded that Carter had already requested and received a collection-due-process hearing with regard to those penalties, and noted that it had issued a notice of determination sustaining the proposed levy and tax lien pertaining to those penalties on October 4, 2007. See id. As mentioned above, Carter had not appealed from that 2007 determination to the Tax Court. See id.

The December 2008 Notice set forth the appeals process, which requires the taxpayer to "file a petition with the United States Tax Court within 30 days from the date of this letter" if he desires to challenge the Appeals Council's determinations. See id. at 1. The Notice explained that, "[t]he courts cannot consider your case if you file late. If an appeal is filed in the incorrect court (e.g., United States District Court), you will not be able to refile in the United States Tax Court if the time period for appeal has expired." Id.

On August 20, 2008, before he received the December 2008 decision of the Appeals Council, Carter filed an Amended Complaint in this case See Doc. 32. The bulk of Carter's allegations in his Amended Complaint challenge the validity of the underlying 1995-1999 income-tax assessments, and most are legal conclusions. For example, he contends that "during the years 1995 through 2008, [he] exercised his right to sell his labor in exchange for compensation received as wages to provide for the fundamentals of his livelihood," Doc. 32, paragraph 10 at 5, and that he, therefore, did not earn or receive any taxable income, see id., paragraph 17 at 6. And he complains about the "method of accounting" the United States used to calculate his underlying income tax liability in the substitute returns, contending that the Defendants engaged in "unlawful collection activity" by "failing to establish when, where, or how they applied the method of accounting . . . within the meaning of 26 U.S.C. section 441(a) and 446(a)." Id. paragraph 21, at 7, paragraph 25 at 8. Carter also contends that the United States engaged in unlawful collection activity by failing to establish when Carter's "compensation received from his labor property was involved, used, or intended to be used in violation of the internal revenue laws." Id. paragraph 26, at 8. Carter is confident that he does not have any federal tax liability because of his theory of taxation. See id., paragraphs 17 & 19 at 6.
.
.
.
V.

Count V avers that the United States and Pryor wrongfully disclosed Carter's confidential information, specifically his social security number, by including it on the notices of federal tax liens that were filed in the public records and in the notices of levy that were issued to third parties. See Doc. 32 paragraphs 66-69 at 17-18. Carter asserts that, as a result, he is entitled to statutory and punitive damages under 26 U.S.C. section 6103, 7431, and 7433. See id., paragraph 74 at 19.

Although section 6103 prohibits the disclosure of a taxpayer's personal information in the tax collection process, it specifically authorizes an IRS employee to disclose, to the extent necessary, tax return information "relating to any . . . collection activity." See section 6103(k)(6). The applicable Treasury Regulations specifically permit disclosure of personal information "to locate assets in which the taxpayer has an interest . . . [and] to apply the provisions of the Code relating to establishment of liens against such assets." Treas. Reg. section 301.6103(k)(6)-1T(a)(1) (2003). Thus, "the general rule is that liens and levies do not constitute unauthorized disclosures under section 6103." Long v. United States, 972 F.2d 1174, 1180 (10 Cir. 1992); see Mann v. United States, 204 F.3d 1012, 1018 (10th Cir. 2000) (stating, "6103(k)(6) and the relevant regulations do permit disclosure of tax return information when made in notices of lien and levy"). Carter has failed to state any facts to support a claim of unlawful disclosure under section 6103 and Count V must, therefore, be dismissed. See Iqbal, 129 S.Ct. at 1251.

NOW, THEREFORE, Carter's Amended Complaint, Doc. 32, is DISMISSED WITH PREJUDICE.

IT IS SO ORDERED.

Martha Vazqez
Chief United States District
Judge