United States District Court, D. Colorado
ROBERT A. PFAFF, Plaintiff,
UNITED STATES OF AMERICA Defendant.
PHILIP A. BRIMMER, UNITED STATES DISTRICT JUDGE.
This matter is before the Court on the Motion to Dismiss [Docket No. 18] pursuant to Fed.R.Civ.P. 12(b)(1) filed by the United States. This Court has jurisdiction pursuant to 28 U.S.C. § 1346(a)(1).
This case arises out of the Internal Revenue Service’s (“IRS”) assessment of tax penalties against plaintiff Robert Pfaff. The IRS notified plaintiff on or about June 30, 2003 that it had begun an investigation to determine his potential liability for tax shelter promoter penalties under 26 U.S.C. § 6707. Docket No. 1 at 2, ¶ 5. On or about February 15, 2011, the IRS issued a report that determined plaintiff was subject to personal liability under 26 U.S.C. § 6707 for failure to register a tax shelter. Id., ¶ 6; Docket No. 19 at 3. On or about September 11, 2011, the IRS assessed civil penalties against plaintiff in the amounts of $1, 397, 574 for 1997, $17, 824, 803 for 1998, $105, 039, 593 for 1999, and $35, 970, 056 for 2000. Docket No. 1 at 2, ¶ 8. Plaintiff has at all times disputed the allegations and protested the penalties assessed against him. Id. at 3, ¶ 11.
On or about April 19, 2012, plaintiff made a payment of $228, 460 attributable to one of the fifteen OPIS transactions in 1999. Id., ¶ 12. Simultaneous with the payment, plaintiff filed a claim for refund of the $228, 460 payment. Id. On or about December 12, 2012, the United States denied plaintiff’s claim for a refund and told plaintiff that he was required to pay the full $105, 039, 593 penalty for the 1999 period before his refund claim would be considered. Id., ¶ 13. On or about December 12, 2012, after an administrative appeal of the civil penalties assessed against plaintiff, the United States reduced the civil penalty assessments to the amounts of $252, 594 for 1997, $1, 395, 780 for 1998, $40, 776, 749 for 1999, and $25, 236, 246 for 2000. Id. at 4, ¶ 17.
On December 10, 2014, plaintiff filed a complaint requesting (1) a refund of the $228, 460 civil penalty; (2) declaratory judgment that he is not liable for the civil penalties assessed against him for failure to register a tax shelter; and (3) an order directing the United States “to suspend its collection efforts pending the outcome of this tax refund suit.” Docket No. 1 at 5, ¶¶ 20-22.
On April 15, 2015, the United States filed the instant motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1). The United States argues that the Court lacks subject matter jurisdiction over plaintiff’s tax refund suit. Docket No. 19 at 2. Specifically, the United States argues that (1) the Court does not have jurisdiction over plaintiff’s tax refund claim because plaintiff’s claim is subject to the “full-payment rule” established in Flora v. United States, 362 U.S. 145 (1960); (2) the Court does not have jurisdiction over plaintiff’s declaratory judgment claim under the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq.; and (3) under the Anti-Injunction Act, 26 U.S.C. § 7421(a), the Court does not have jurisdiction over plaintiff’s request for injunctive relief. Docket No. 19 at 7, 12, 13.
II. STANDARD OF REVIEW
Dismissal pursuant to Fed.R.Civ.P. 12(b)(1) is appropriate if the Court lacks subject matter jurisdiction over claims for relief asserted in the complaint. Rule 12(b)(1) challenges are generally presented in one of two forms: “[t]he moving party may (1) facially attack the complaint's allegations as to the existence of subject matter jurisdiction, or (2) go beyond allegations contained in the complaint by presenting evidence to challenge the factual basis upon which subject matter jurisdiction rests.” Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d 1072, 1074 (10th Cir. 2004) (quoting Maestas v. Lujan, 351 F .3d 1001, 1013 (10th Cir. 2003)). When resolving a facial attack on the allegations of subject matter jurisdiction, the Court “must accept the allegations in the complaint as true.” Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995). To the extent the defendant attacks the factual basis for subject matter jurisdiction, the Court “may not presume the truthfulness of the factual allegations in the complaint, but may consider evidence to resolve disputed jurisdictional facts.” SK Finance SA v. La Plata County, 126 F.3d 1272, 1275 (10th Cir. 1997). “Reference to evidence outside the pleadings does not convert the motion to dismiss into a motion for summary judgment in such circumstances.” Id. Ultimately, and in either case, plaintiff has “[t]he burden of establishing subject matter jurisdiction” because he is “the party asserting jurisdiction.” Port City Props. v. Union Pac. R.R. Co., 518 F.3d 1186, 1189 (10th Cir. 2008).
A. Tax Refund
The United States makes a factual attack to this Court’s jurisdiction with respect to plaintiff’s tax refund claim. Docket No. 19 at 6.
The United States argues that, pursuant to the Flora “full-payment rule, ” this Court does not have jurisdiction over plaintiff’s tax refund claim. Docket No. 19 at 7. In Flora, the Supreme Court held that “§ 1346(a)(1), correctly construed, requires full payment of the assessment before an income tax refund suit can be maintained in a Federal District Court.” 362 U.S. at 177; see Ardalan v. United States, 748 F.2d 1411, 1413 (10th Cir. 1984) (“The Supreme Court, this circuit, and all other federal circuits have long held that [§ 1346(a)(1)] requires the taxpayer to first pay the full amount of an income tax deficiency assessed by the IRS before he/she may challenge the assessment in a suit ...