United States District Court, E.D. California
FINDINGS AND RECOMMENDATIONS
ALLISON CLAIRE UNITED STATES MAGISTRATE JUDGE.
is proceeding in this matter pro se, and pre-trial
proceedings are accordingly referred to the undersigned
pursuant to Local Rule 302(c)(21). Pending before the court
is defendant's renewed motion to dismiss, ECF No. 86,
which has been fully briefed, ECF Nos. 87, 92. The motion was
originally scheduled for hearing on July 10, 2019, but upon
review of the record, the court found the motion appropriate
for submission without oral argument. ECF No. 90. Based upon
review of the record and the parties' briefing, the court
recommends that defendant's motion to dismiss be DENIED.
United States of America (“United States”)
commenced this action against defendant Newman S. Peery, Jr.
(“Peery”) on April 30, 2018. ECF No. 1. On June
22, 2018, the United States filed a first amended complaint
(“Complaint”), which is the operative complaint
in this action. ECF No. 6.
Complaint seeks to reduce to judgment federal tax assessments
against Peery, pursuant to 26 U.S.C. (Internal Revenue Code)
§ 7402. Id. at 2. Defendant has been assessed
for individual federal income taxes, penalties, interest, and
other statutory additions for the taxable years 2009 and
2010. Id. at 2-3. Plaintiff contends that Peery has
“neglected, refused or failed to pay the assessments
against him[.]” Id. at 3. Plaintiff seeks to
reduce to judgment federal tax assessments against Peery in
the amount of $259, 032.55 “inclusive of statutory
interest and other statutory additions as provided by law,
less any payments or credits received.” Id. at
October 2018, Peery moved to dismiss based, in part, on lack
of subject matter jurisdiction. ECF No. 47. The undersigned
found that jurisdiction was proper pursuant to 28 U.S.C.
§§ 1340 and 1345 and 26 U.S.C. (Internal Revenue
Code) § 7402, and recommended denying the motion. ECF
No. 54 at 3, 6. The district judge adopted these findings and
recommendations in January 2019. ECF No. 60. Peery has since
filed numerous affidavits, exhibits, and briefs without any
accompanying motions. ECF Nos. 72-79. On June 5, 2019, Peery
filed the instant renewed motion to dismiss. ECF No. 86.
MOTION TO DIMISS
now seeks to dismiss the complaint, purportedly “due to
lack of personum and subject matter jurisdiction, ”
citing Fed.R.Civ.P. 12(b)(1) and 12(b)(2). ECF No. 86 at 1-6.
Despite this characterization, examination of defendant's
arguments leads the court to construe the motion as seeking
dismissal for failure to state a claim, pursuant to
Fed.R.Civ.P. 12(b)(6). Defendant's arguments do not
challenge the court's power-either to hear the case, as
with a Rule 12(b)(1) motion, or to render an enforceable
judgment against him, as with a Rule 12(b)(2) motion-but,
rather, plaintiff's ability to enforce internal revenue
laws against him through this action. See ECF No. 86
at 20 (“The United States and the Internal Revenue
Service lacks personum jurisdiction in this Case . . .
.”). Moreover, this court has already determined that
subject matter jurisdiction is proper in this case under 28
U.S.C. §§ 1340, 1345 and 26 U.S.C. § 7402. ECF
No. 54 at 3. Regardless of the type of motion to dismiss, all
of defendant's arguments are meritless; most are
frivolous. The court will briefly address each in turn.
purpose of a motion to dismiss pursuant to Rule 12(b)(6) is
to test the legal sufficiency of the complaint. N. Star
Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581
(9th Cir.1983). “Dismissal can be based on the lack of
a cognizable legal theory or the absence of sufficient facts
alleged under a cognizable legal theory.”
Balistreri v. Pacifica Police Dep't, 901 F.2d
696, 699 (9th Cir. 1990). A plaintiff is required to allege
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Thus, a
defendant's Rule 12(b)(6) motion challenges the
court's ability to grant any relief on the
plaintiff's claims, even if the plaintiff's
allegations are true.
determining whether a complaint states a claim on which
relief may be granted, the court accepts as true the
allegations in the complaint and construes the allegations in
the light most favorable to the plaintiff. Hishon v. King
& Spalding, 467 U.S. 69, 73 (1984); Love v.
United States, 915 F.2d 1242, 1245 (9th Cir. 1989). The
court may consider facts established by exhibits attached to
the complaint. Durning v. First Boston Corp., 815
F.2d 1265, 1267 (9th Cir. 1987). The court may also consider
facts which may be judicially noticed, Mullis v. United
States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir.
1987), and matters of public record, including pleadings,
orders, and other papers filed with the court, Mack v.
South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th
Cir. 1986). The court need not accept legal conclusions
“cast in the form of factual allegations.”
Western Mining Council v. Watt, 643 F.2d 618, 624
(9th Cir. 1981).
defendant argues that, as a resident of New
Mexico, he is a “Private Citizen Nonresident
Alien . . . who resides outside of the foreign jurisdiction
to which the Internal Revenue Code (IRC) operates, which is
the District of Columbia and federal territories.” ECF
No. 86 at 15. Section 1 of the Internal Revenue Code
(“IRC”) imposes a tax liability on the taxable
income of every individual, see Grimes v.
Commissioner, 806 F.2d 1451, 1453 (9th Cir. 1986), and
is not limited to the District of Columbia and federal
territories, see In re Becraft, 885 F.2d 547, 548
(9th Cir. 1989) (confirming the constitutional authority for
imposing federal income tax “on United States citizens
residing in the United States and . . . the validity of the
federal income tax laws as applied to such citizens”).
Defendant's first argument is patently frivolous. See
Robinson v. United States, 224 Fed.Appx. 700, 701 (9th
Cir. 2007) (rejecting as frivolous argument that individual
was not a citizen of the United States but of “the
Hawaii-republic”, and therefore not subject to tax);
United States v. Molen, No. 2:10-CV-02591 MCE, 2012
WL 2886669, at *4 (E.D. Cal. July 13, 2012) (rejecting as
frivolous argument that defendants were not subject to
federal tax laws because they were not citizens of
Washington, D.C., or other federal territories).
defendant puts forth three arguments related to his lack of
taxable “wages” and “income”: (1)
that, as a nonresident alien, he cannot have wages or income;
(2) because he did not hold public office in the United
States, he could not have wages, citing 26 U.S.C. §
3401; and (3) because he did not have wages or income related
to a variety of categories listed in 26 C.F.R.
1.861-8(f)(1)(vi), he had no taxable income. ECF No. 86 at
16-19. The first argument fails for the reasons just
discussed. Second, while 26 U.S.C. § 3401(c) specifies
that, for taxation purposes, “the term
‘employee' includes an officer, employee, or
elected official of the United States [among others], ”
it does not thereby exclude others from the IRC's
application. Third, 26 C.F.R. 1.861-8(f) is part of the
United States Treasury regulations concerning whether an item
of a taxpayer's gross income has its source within or
outside the United States. The fact that defendant received
no income that fell within the categories listed in that
regulation has ...