Tait v. Internal Revenue Service

          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. ...