United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS RE:
DKT. NOS. 8, 10, 12, 14
JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE
Thomas
Tait, proceeding pro se, filed this action on behalf of
himself and his minor son, Nicholas Tait, against the
Internal Revenue Service ("IRS"), the Department of
the Treasury, and Ursula S. Dean, an IRS employee
(collectively "Defendants") seeking a declaration
that they are exempt from federal taxes. Now pending before
the Court is Defendants' motion to dismiss the complaint
pursuant to Federal Rule of Civil Procedure 12(b)(1) and
12(b)(6). (Dkt. No. 8.) After carefully considering the
record in this case, and having had the benefit of oral
argument on July 7, 2016, the Court GRANTS Plaintiff's
Motion to Dismiss without leave to amend.[1] Among other
things, the Court lacks subject matter jurisdiction to hear
this suit due to Plaintiff's failure to exhaust his
administrative remedies pursuant to 28 U.S.C. § 1346,
rendering any amendment to the pleadings futile.
BACKGROUND
Plaintiff
Thomas Tait alleges that nearly a year ago he sent the IRS a
demand for an explanation of the legal authority that
required him to pay income taxes. He did not demand the
return of taxes paid; instead, he asked for a letter stating
that he is exempt from paying federal taxes. (Dkt. No. 1 at
¶ 4, and at pp. 9-10.) In response, the IRS sent
Plaintiff several letters indicating that it was researching
the issue, but never substantively responded to
Plaintiff's letter. (Id. at ¶ 9 and at
pp.11-12, 15-16.)
Mr.
Tait, proceeding pro se, thereafter filed this civil action
against the IRS, the Department of the Treasury, and Ursula
S. Dean, naming himself and his minor son Nicholas Tait as
Plaintiffs. (Dkt. No. 1.) The complaint alleges a single
cause of action for "Trespass on the Case" and
seeks a declaratory judgment that: (1) Defendants have no
jurisdiction to tax Plaintiffs, (2) Plaintiffs are not
required to file any income tax returns, (3) Plaintiffs are
exempt from paying income taxes, past, present and future,
(4) Plaintiffs have a right to a refund of all federal income
taxes, past, present and future, (5) Plaintiffs' use of a
Social Security Number does not have any bearing on tax
liability, (6) Defendants are precluded from suing Plaintiffs
regarding any tax issue, (7) Any accounts or trusts in
Plaintiffs' names are exempt from income taxes, (8) Mr.
Tait's corporation, Global Innovation Solutions, Inc., is
exempt from taxes, (9) Plaintiffs are not required to have
health insurance, (10) Defendants cannot audit Plaintiffs,
and (11) Defendants or Plaintiffs may order that all records
in this case may be sealed. (Id. at ¶¶
A-M.[2])
In
response, Defendants filed the underlying motion to dismiss
for lack of subject matter jurisdiction and failure to state
a claim. (Dkt. No. 8.) Mr. Tait filed an Opposition, wherein
he agreed to dismiss Dean as a defendant, and argued that
"this case involves matters of federal law, . . . which
confers subject matter jurisdiction to the court, " and
that his injury is "clearly spelled out in the
correspondence and, that, coupled with the characteristics of
Superior courts, is also sufficient to establish
jurisdiction." (Dkt. No. 10 at 2, 4.) Following
submission of Defendants' reply, Plaintiffs filed a
further response which reiterates the arguments he previously
raised. (Dkt. No. 14.) At oral argument, Mr. Tait clarified
that he does not seek a refund for taxes paid.
DISCUSSION
Defendants
move to dismiss for lack of subject matter jurisdiction on
several grounds. First, on the grounds that suits against the
United States, and its agents in their official capacity, are
barred by sovereign immunity. Second, that the Declaratory
Judgment Act bars claims for declaratory relief with respect
to federal taxes and the anti-injunction act prohibits
restraints on the government's ability to collect taxes.
Finally, that Plaintiff has failed to exhaust his
administrative remedies with respect to any claim for a tax
refund.
I.
Mr. Tait Cannot Represent his Minor Son or
Corporation
As a
preliminary matter, the Court notes that the suit names both
Thomas Tait and his minor son, Nicholas Tait, as plaintiffs
but minors do not have the capacity to bring suit on their
own behalf. See Fed. R. Civ. Pro. 17(c). Nor could
Mr. Tait bring this suit on behalf of his minor son as his
guardian; he cannot sue on behalf of his minor son without
retaining an attorney. See Johns v. Cty. of San
Diego, 114 F.3d 874, 877 (9th Cir. 1997) (holding that a
parent or guardian cannot bring an action on behalf of a
minor child without retaining a lawyer); see also C.E.
Pope Equity Trust v. United States, 818 F.2d 696, 697
(9th Cir. 1987) (noting that a non-lawyer "has no
authority to appear as an attorney for others than
himself"). Further, it unclear why Nicolas Tait is named
as a plaintiff since there is no allegation that he paid
taxes and he is a minor. Likewise, to the extent that
Plaintiff seeks a determination regarding the tax liability
of his corporation Global Innovation Solutions, Inc., he
cannot sue as an individual on behalf of his corporation.
See Sherman v. British Leyland Motors, Ltd., 601
F.2d 429, 439 (9th Cir. 1979) (holding that shareholder
lacked standing to bring suit on company's behalf in his
individual capacity). Further, a corporation must be
represented by an attorney. In re Highley, 459 F.2d
554, 555 (9th Cir. 1972) (citations omitted). The Court thus
construes this lawsuit as being brought by Mr. Tait regarding
the federal taxes he himself had paid and will pay.
II.
Plaintiff has not Established Subject Matter
Jurisdiction
"Federal
courts are courts of limited jurisdiction." Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994). The party asserting jurisdiction, that is the party
that brought the case to federal court (here Plaintiff),
bears the burden of establishing that the court has subject
matter jurisdiction. Id. "Subject matter
jurisdiction is fundamental" and cannot be waived.
Billingsley v. C.I.R., 868 F.2d 1081, 1085 (9th Cir.
1989). "The requirement that jurisdiction be established
as a threshold matter spring[s] from the nature and limits of
the judicial power of the United States and is inflexible and
without exception." Steel Co. v. Citizens for a
Better Env't, 523 U.S. 83, 94-95 (1998) (internal
citations and quotation marks omitted).
A.
The Court does not Have Jurisdiction of the Declaratory or
Injunctive Relief Claims
The
Declaratory Judgment Act excludes claims for declaratory
relief "with respect to Federal taxes." 28 U.S.C.
§ 2201(a); see also Bob Jones University v.
Simon, 416 U.S. 725, 742 n.7, n.15 (1974) (outlining the
legislative history of the federal tax exception to the
Declaratory Judgment Act). "[U]nder the specific terms
of § 2201 the courts have no jurisdiction to enter
declaratory judgments with respect to Federal taxes."
Mitchell v. Riddell, 402 F.2d 842, 846 (9th
Cir.1968). Plaintiff's request for a declaration that he
is not liable for paying income taxes past, present and
future falls squarely within this prohibition and thus the
Court lacks subject matter jurisdiction. ...