IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLUMBIA
HAROLD PATRIOT; ) SHERRIE PATRIOT, ) Civil No. 1:08-CV-000 Plaintiffs, ) ) v. ) ) COMPLAINT FOR CIVIL DAMAGES UNITED STATES OF AMERICA; et al, ) UNDER 26 USC §7432 and §7433 ) Jury Trial Requested Defendants. ) ____________________________________________________________________________________________
COMPLAINT
Plaintiffs Sherrie Patriot and Harold Patriot complain of Defendants United States of America and Internal Revenue Service and seek damages for Illegal Tax Collections under 26 U.S.C. 7433 and for an illegal tax lien under 26 U.S.C. 7432.
INTRODUCTION
This complaint is being filed under FRCP 4.
Plaintiffs request trial by jury, pursuant to FRCP 38.
This is an action brought under 26 U.S.C. 7432 and 7433.
Defendant is a federal agency, and Plaintiff is a citizen and resident of Duval County, Florida.
This Court has jurisdiction to hear this case. “The United States may be named a party in any civil action or suit in any district court… (1) to quiet title to … real or personal property on which the United States has or claims a mortgage or other lien.” 28 USC §2410. When the taxpayer challenges the procedural regularity of the tax lien and the procedures used to enforce the lien, and not the validity of the tax assessment, sovereign immunity is waived and the district court does have jurisdiction over a quiet title action. Brewer v. C.I.R., 430 F. Supp. 2d 1254, 1255 (S.D. Ala. 2006).
Taxpayer's allegations that the Internal Revenue Service (IRS) imposed tax liens to collect taxes that he did not actually owe, that the IRS failed to release those liens despite taxpayer's requests that it do so, and that the IRS failed to develop proper procedures governing the collection of unpaid taxes alleged misconduct in connection with the collection of income taxes, such that taxpayer's claims for damages based on these allegations fell within the limited waiver of sovereign immunity in statute permitting taxpayer suits for damages for misconduct in the collection of tax. Buaiz v. U.S., D.D.C.2007, 471 F.Supp.2d 129. United States 125(20)
This Court has jurisdiction pursuant to 28 U.S.C. Section 1331 as this action involves federal statutes and Defendant Internal Revenue Service is a federal agency.
I.R.C. § 7432 waives the government's sovereign immunity for private causes of action for civil damages arising from the IRS's failure to release a lien.
“If any officer or employee of the Internal Revenue Service knowingly, or by reason of negligence, fails to release a lien under section 6325 on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.” 26 USC § 7432.
Defendant is liable to the plaintiff for damages in an amount equal to the lesser of $1,000,000 ($100,000, in the case of negligence) or the sum of (1) actual, direct economic damages sustained by the Plaintiff as a proximate result of the reckless or intentional or negligent actions of the officer or employee, and (2) the costs of the action – for illegal Internal Revenue Service levies on plaintiff’s assets, return of monies illegally taken plus interest. 26 U.S.C.A. § 7433(b) and § 301.7433-1.
This complaint involves Defendant’s failure to release a lien against Plaintiffs’ real property and Defendant’s liability to plaintiffs for damages and costs. The facts and the law will clearly show that Defendant interfered with Plaintiffs’ right to use and dispose of their property while Defendant did not follow legally prescribed methods in placing liens on Plaintiffs’ home.
FACTS
On November 30, 2004, Plaintiffs were supposed to close on the sale of their home so that they could move to another state to take care of Mrs. Patriot’s father who is ill and living by himself. They packed up their four bedroom house, garage and attic. At the closing, they were told by an attorney that they could sell their home, but they would have to turn over the money to the IRS.
Plaintiffs learned that the IRS unlawfully placed five Notices of Liens on their home totaling $52,617.29. Plaintiffs were shocked since they did not previously receive a notice for any liens and did not become aware of them until the closing.
Plaintiffs, their daughter, and Mrs. Patriot’s father were very upset by this disturbing news and suffered severe and unnecessary hardship. If they had known about the liens, they surely would not have placed their home on the market, packed up all their belongings, went through the process of showing their home, getting an appraisal, and going through an inspection. In addition, Mr. Patriot would not have quit his job in anticipation of moving to another state.
The illegal liens caused the cancellation of a closing on the sale of Plaintiffs’ home, prevented Plaintiffs from selling their property but still incurred immense costs – such as real property taxes, legal fees, maintenance, etc.
One of the major maintenance issues at Plaintiffs’ home is a 17 by 43 foot beautiful in-ground pool. At the time of the closing, it was in a perfect condition. Since Plaintiffs could not close on their home, they had to let it go green – which bred tons of frogs. The neighbors complained about the noise. As a result, Plaintiffs had to drain the pool, poke a hole in the bottom, and fill it up with $900 worth of dirt. Now, Plaintiffs have a dirt hole with concrete around it. It breaks their hearts every time they see their backyard in this manner.
Also after the cancellation of closing, Mr. Patriot had to find another job to make house payments (such as electricity, phone, water, and mortgage payments to avoid foreclosure) and the family faced severe financial burden. The process of dealing with Defendant’s illegal actions caused Plaintiffs anxiety, emotional distress, mental anguish, severe health problems.
The five liens on Plaintiffs’ home could be described as follows:
Lien A with a serial # 599731923 was issued on March 13, 1997 (Exhibit A on the List of Exhibits to be filed separately).
Lien B with a serial # 599855578 was issued on September 29, 1998 for the amount of $3,000 (Exhibit B, see list of exhibits).
Lien C with a serial # 599857629 was issued on December 9, 1998 for the amount of $3,500.77 (Exhibit C, see list of exhibits).
Lien D with a serial # 599961650 was issued on August 23, 1999 for the amount of $5,500 (Exhibit D, see list of exhibits).
Lien E with a serial # 141294803 was issued on October 29, 2003 for the amount of $33,925.80 (Exhibit E, see list of exhibits).
Every day the invalid liens are attached to Plaintiffs’ property, Plaintiffs are financially and emotionally damaged. Plaintiffs bring this action against Defendant seeking (1) removal of these illegal liens, (2) costs for Defendant’s failure to remove the unlawful liens, and (3) monetary damages.
LEGAL ARGUMENT
Today, the IRS has five tax liens against Plaintiffs’ property which are defective or illegal. A prospective purchaser of Plaintiffs’ home would be misled by these liens which harm Plaintiffs in many ways. These liens are illegal and should be removed.
First, the tax liens were invalid simply because Defendant failed to notify Plaintiffs as required by law. According to 26 USC § 6320 (a)(2), the Secretary shall notify Plaintiffs in writing “not more than 5 business days after the day of the filing of the notice of lien.” Such a notification never took place.
26 U.S.C. § 6320 and 26 U.S.C. § 6330 extend different rights to a taxpayer. Section 6320 provides for an administrative hearing and administrative appeal after the IRS files a notice of a federal tax lien. See 26 U.S.C. § 6320(a)(3)(B) & (C). Section 6330 provides for an administrative hearing and a court appeal before the IRS can actually levy on the property. See id. § 6330(b) & (d).
Section 6320 specifies the timing and content of a notice to a taxpayer upon filing a notice of lien and grants the right to a fair hearing upon request. See 26 U.S.C. § 6320(a) & (b). The hearing must be conducted by an IRS employee who has had no prior involvement with respect to the unpaid tax unless the taxpayer waives that requirement. Id. § 6320(b)(3).
Section 6320 also sets forth procedures applicable to afford protections for taxpayers in lien situations. Section 6320(a)(1) establishes the requirement that the Secretary notify in writing the person described in section 6321 of the filing of a notice of lien under section 6323. This notice required by section 6320 must be sent not more than 5 business days after the notice of tax lien is filed and must advise the taxpayer of the opportunity for administrative review of the matter in the form of a hearing before the Internal Revenue Service Office of Appeals. Sec. 6320(a)(2) and (3). Section 6320(b) and (c) grants a taxpayer, who so requests, the right to a fair hearing before an impartial Appeals officer, generally to be conducted in accordance with the procedures described in section 6330(c), (d), and (e).
Defendant failed to issue Plaintiffs a notice as required by 26 USC § 6320 (a)(2). Defendants’ failure caused Plaintiffs to miss an opportunity for an administrative review of the matter or to request a fair hearing under 26 USC § 6320(b). Plaintiffs do certainly want to be heard.
“The fundamental requisite of due process of law is the opportunity to be heard.” Grannis v. Ordean, 234 U.S. 385, 394; Louisville & N. R. Co. v. Schmidt, 177 U.S. 230, 236, 44 S. L. ed. 747, 750, 20 Sup. Ct. Rep. 620; Simon v. Craft, 182 U.S. 427, 436, 45 S. L. ed. 1165, 1170, 21 Sup. Ct. Rep. 836. “It is an opportunity which must be granted at a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545, 552. (1965). "The right to be heard before being condemned to suffer grievous loss of any kind, even though it may not involve the stigma and hardships of a criminal conviction, is a principle basic to our society." Matthews v. Eldridge, 424 U.S. 319 (1976).
Plaintiffs request that this Court orders the withdrawals of the notices of liens based on 26 USC 6323(j)(1)(A) which states that the Secretary may withdraw a notice of a lien if the Secretary determines that the filing of such notice was “not in accordance with administrative procedures of the Secretary.” The remaining liens meet the condition for withdrawal. Such a withdrawal would also be in the best interest of Plaintiffs and the United States. 26 USC 6323(j)(1)(D)
Plaintiffs request that this Court orders the release of the notices of liens based on 26 USC 6325 which states that the Secretary shall issue a certificate of release of any lien imposed if the Secretary finds that the liability “has become legally unenforceable.” 26 USC 6325(a)(1) The existing liens are legally unenforceable because they are illegal and must be removed.
“Language borrowed from the United States Supreme Court in another tax case, which illuminates the duty owed by the Government under appropriate circumstances is: ‘If that which the sovereign retains was unjustly taken in violation of its own statute, the withholding is wrongful. The unjust detention is immoral and amounts in law to a fraud on the taxpayer's rights.’ Bull v. United States, 295 U.S. 247, 260, 261, 55 S.Ct. 695, 700, 79 L.Ed. 1421 (1935).” Id.
“If any officer or employee of the Internal Revenue Service knowingly, or by reason of negligence, fails to release a lien under section 6325 on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.” 26 USC § 7432.
In addition, the recording of three notices of federal tax lien against taxpayer in the public record involved the "collection of a federal tax" by the Internal Revenue Service (IRS), within the meaning of statute providing exclusive remedy for intentional, reckless, or negligent disregard of tax code in connection with the collection of federal tax. Evans v. U.S., D.D.C.2007, 2007 WL 869039. Internal Revenue 4915
On that basis, the recording of five illegal liens in public record against Plaintiffs' property can be defined as an unauthorized collection of federal tax – and therefore entitles Plaintiffs for damages under 7432 for the illegal lien and under 7433 for unauthorized collection.
It is clear that Defendant is not following the prescribed methods in acquiring Plaintiffs' assets. Therefore, Plaintiffs must be compensated for the improper tax collection practices taken against them.
Since the liens are unquestionably invalid, they should be removed. Keeping these incorrect liens on record harms Plaintiffs in many ways. Plaintiffs request from this court to order (Writ of Mandamus) the Secretary (the IRS) to issue a Certificate of Release and notify the county clerk to release the NFTL.
EXHAUST ADMINISTRATIVE REMEDIES
Since the time of the wrongful lien, Plaintiff had sent the IRS dozens of letters. The IRS was clearly notified several times that the liens were illegal because Plaintiffs never received their notice.
Plaintiffs have exhausted their administrative remedies by filing many administrative claims. Please refer to Exhibits G through AC (see list of exhibits).
In addition to these administrative claims, Plaintiffs also engaged in correspondence with courts, departments, and officials.
DAMAGES
Claim that IRS agent failed to release illegal liens with knowledge or negligence alleged sufficient facts to assert damages against the United States; government was sufficiently apprised of alleged conduct to defend itself. Kersting v. U.S., D.Hawai'i 1992, 818 F.Supp. 297, affirmed 206 F.3d 817. Internal Revenue 4915
According to 26 U.S.C.A. § 7433(b) and § 301.7433-1, Defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000, in the case of negligence) or the sum of— (1) actual, direct economic damages sustained by the Plaintiff as a proximate result of the reckless or intentional or negligent actions of the officer or employee, and (2) the costs of the action.
According to 26 U.S.C.A. § 7432(b), and upon a finding of liability, “the defendant shall be liable to the plaintiff in an amount equal to the sum of - (1) actual, direct economic damages sustained by the plaintiff which, but for the actions of the defendant, would not have been sustained, plus (2) the costs of the action.”
Plaintiffs have exhausted their administrative remedies and are entitled to damages.
The illegal liens caused the cancellation of a closing on the sale of a piece of property owned by Plaintiffs who were unable to sell the property but still incurred immense costs such as real property taxes, legal fees, maintenance, etc.
Plaintiffs are suffering irreparable harm due to the cancellation of the closing of the sale of the real estate. They have no alternative remedy by law.
The injuries for this claim include severe and unnecessary hardship to Plaintiffs’ family. The cancellation of the sale of their home prevented them from moving to another state to take care of Mrs. Patriot’s father. They were also unable to pay bills since Mr. Patriot had to quit his job in anticipation of moving to another state.
Due to reasons outlined herein, Plaintiffs suffered a number of damages due to the reckless, intentional, or negligent actions committed by Defendant or its officer, employee, or agent. The illegal IRS actions caused immense financial hardship to them.
Further, Plaintiffs were forced to hire and retain tax professionals to assist them, to write letters and explain avenues of contesting some IRS illegal measures against them. Plaintiffs experienced immense costs in attempting to remove illegal liens. Plaintiffs have expended a vast amount of time and resources in contesting these invalid liens.
The illegal liens on plaintiffs’ real property, the cancellation of the closing, and other illegal collection measures taken against Plaintiffs caused severe and unnecessary financial hardship to Plaintiffs and their family. They were denied some necessities of life, had to incur debt and not pay bills, and suffered anxiety, emotional distress, mental anguish, and health problems.
Plaintiffs lost use of their money, plus reasonable interest.
Plaintiffs’ damages include, but not limited to:
The illegal liens on Plaintiffs’ home for the amount of $52,617.29;
Costs for the cancellation of the sale and contesting the illegal liens;
Damages permitted under Sections 7432 and 7433 and other relief the Court deems appropriate;
Attorney’s fees and costs.
Plaintiffs request that damages permitted under Sections 7432 and 7433 be multiplied by the number of IRS violations committed against Plaintiffs.
This Court should grant Plaintiffs the damages they seek and other relief authorized by law and/or this Court deems appropriate.
CONCLUSION
The Congress of the United States enacted the Unauthorized Tax Collection Act as part of the Taxpayer Bill of Rights II. The elected representatives of the people passed remedial legislation governing the conduct of IRS agents in collecting taxes. In order to encourage citizens like plaintiff who were aggrieved, Congress made this a self-help enactment with ample provisions for attorney fees and damages, similar to other federal bounty hunter statutes.
This Court should encourage government attorneys to expediently resolve and settle cases, instead of fighting them while knowing that the IRS is at fault. To encourage quick settlement, judicial economy, and fairness to common citizens, this court should maximize damages against Defendant.
Plaintiffs requests that this Honorable Court do grant the removal of the illegally issued notices of federal tax lien from Plaintiffs’ property, consider these notices null and void, and grant Plaintiffs damages, fees, costs, and other relief allowed by law or the Court deems appropriate.
WHEREFORE Plaintiffs request that this Honorable Court do grant the relief herein requested, along with fees, costs, and other relief the Court deems appropriate.
___________________________ Date: May 15, 2008
Lawyer Patriot, Esq.
Arlington, VA 22209-2004
AFFIDAVIT OF SERVICE
I, Lawyer Patriot, hereby declare that on or about the 15th day of May, 2008, I will mail a copy of this complaint, certified mail requested, to
The United States of America,
The U.S. Attorney for the District of Columbia,
Internal Revenue Service, and
The U.S. Attorney General.
______________________________
Lawyer Patriot, Esq.
Arlington, VA 22209-2004