United States District Court, S.D. Indiana, New Albany Division
STEVEN J. CUMMINGS, Plaintiff,
UNITED STATES OF AMERICA, Defendant.
ORDER ON DEFENDANT'S MOTION FOR JUDGMENT ON THE
WALTON PRATT, UNITED STATES DISTRICT COURT JUDGE.
matter is before the Court on a Motion for Judgment on the
Pleadings filed pursuant to Federal Rule of Civil Procedure
12(c) by Defendant United States of America (“the
Government”). (Filing No. 40.) Plaintiff
Steven J. Cummings (“Cummings”) accrued
approximately $125, 000.00 in unpaid tax liabilities. The
Government ultimately issued several levies on Cummings'
wages and Thrift Savings Plan (“TSP”), through
which it collected funds owed. Cummings alleges that those
levies were issued in violation of a statute prohibiting the
collection of funds via levy while the taxpayer has an
Installment Agreement Request (“IAR”) or Offer in
Compromise (“OIC”) pending with the Internal
Revenue Service (“IRS”). Cummings sues for
damages, and the Government has filed the instant 12(c)
motion, arguing that Cummings did not have an IAR or OIC
pending with the IRS at the time that his funds were levied.
For the reasons discussed below, the Court
GRANTS in part and DENIES
in part the Government's motion.
following facts are not necessarily objectively true; but, as
required when reviewing a motion for judgment on the
pleadings, the Court accepts as true all factual allegations
in the Amended Complaint and draws all inferences in favor of
Cummings. See Bielanski v. County of Kane, 550 F.3d
632, 633 (7th Cir. 2008).
accumulated a variety of tax liabilities and civil penalties
amounting to approximately $125, 000.00 related to payroll
taxes in both his individual and business capacities.
(Filing No. 22 at 2.) IRS revenue officer Michael
Ripley (“Ripley”) was assigned to Cummings'
case and began his analysis of Cummings' accrued
liabilities in June 2012. (Filing No. 41 at 5.)
Prior to June 2012, the IRS had been collecting 15% of
Cummings' wages from his employer, the Defense Finance
and Accounting Service (“DFAS”) under the Federal
Payment Levy Program. (Filing No. 41 at 5.) On July
30, 2012, Ripley issued a Notice of Wage Levy to DFAS, but
DFAS did not comply with the Levy. (Filing No. 41 at
5.) Ripley issued a second Notice on January 18, 2013,
and DFAS did not comply with this Levy either. (Filing
No. 41 at 5.) As a result, the IRS did not receive any
payments after May 10, 2013. (Filing No. 41 at 8.)
received a summons to appear at Ripley's Bloomington,
Indiana office on February 26, 2013. (Filing No. 22 at
2.) Cummings and his attorney waited for several hours,
but Ripley did not appear for the appointment. (Filing
No. 22 at 2-3.) On March 23, 2013, Cummings sent by
Certified U.S. Mail an Installment Agreement Request to
Ripley at his Bloomington office. (Filing No. 22 at
3.) Cummings made his request on IRS form 433-D, and he
attached a completed financial information statement on IRS
Form 433-A. (Filing No. 22 at 3.) The package's
tracking information indicated that the request was delivered
to the Ripley's office on March 25, 2013. (Filing No.
22 at 3.)
6 and July 16, 2013, Cummings' counsel faxed
correspondence to Ripley inquiring about the status of
Cummings' IAR. (Filing No. 22 at 3.) Neither
Cummings nor his counsel received any response. (Filing
No. 22 at 3.) On August 29, 2013, Cummings' counsel
left a voicemail message for Ripley inquiring about the
status of Cummings' request, and again, he did not
receive a response. (Filing No. 22 at 3-4.)
September 3, 2013, Ripley discovered that no wage levy
payments had been received on Cummings' liability since
May. (Filing No. 41 at 8.) On that same day, Ripley
contacted DFAS to inquire as to why it had not complied with
the levies, and DFAS responded that it had overlooked them.
(Filing No. 41 at 8.) Ripley sent another Notice of
Levy in early September 2013. (Filing No. 41 at 8.)
On or about October 31, 2013, DFAS sent Cummings a letter
indicating that the employer had received a Levy Notice from
the IRS. (Filing No. 22 at 4.) Cummings received the
letter on or around November 4, 2013, and this was his first
notice that a wage levy had been issued. (Filing No. 22
at 4.) At the time that Cummings received the Notice, he
had not been informed that his IAR had been rejected.
(Filing No. 22 at 4.) DFAS began withholdings from
Cummings' paycheck on December 6, 2013. (Filing No.
41 at 8.) That levy continued until it was released on
June 17, 2015. (Filing No. 22 at 5.)
November 6, 2013, Cummings' counsel requested assistance
from the IRS Taxpayer Assistance Service, and on December 10,
2013, the Taxpayer Assistance Service submitted another IAR
on Cummings' behalf to Ripley. (Filing No. 22 at
4.) On December 10, 2013, Ripley informed Cummings'
counsel that he recommended the rejection of Cummings'
IAR on the basis that Cummings could afford a higher payment.
(Filing No. 22 at 4.) On February 26, 2014,
Cummings' counsel appealed the installment agreement
rejection through the Collective Appeals Program and
requested a return of the wages that had been levied from
Cummings. (Filing No. 22 at 5.) On March 7,
2014, the IRS issued a determination letter sustaining the
installment agreement rejection. (Filing No. 22 at
point, Cummings (or the Taxpayer Assistance Service) drafted
the OIC in which he offered to pay a $15, 000.00 lump-sum
payment in full satisfaction of his roughly $125, 000.00 tax
liability. (Filing No. 41 at 10.) On March 10, 2015,
the Taxpayer Assistance Service issued a Taxpayer Assistance
Order (“TAO”), which ordered the IRS to consider
Cummings' OIC, which was attached to the TAO. (Filing
No. 22 at 5.) The TAO also ordered the IRS to apply
funds that had been “wrongfully” levied from
Cummings' wages to the application fee and initial
payment of the OIC. (Filing No. 22 at 5.)
letter dated April 9, 2015, the Deputy Commissioner for
Services and Enforcement rescinded the TAO issued by Taxpayer
Assistance Service. (Filing No. 26-7.) The letter
explained that Cummings had failed to send his OIC to the
Brookhaven Service Center, where it would be determined
whether the offer qualified to be accepted for processing.
(Filing No. 26-7 at 2.) It also stated that Cummings
failed to include a check for the application fee and the
statutorily required twenty percent down-payment when
offering a lump sum OIC. (Filing No. 26-7 at 2.) For
these reasons, “a processability determination has not
been made.” (Filing No. 26-7 at 2.)
April 13, 2015, Ripley issued a Notice of Levy addressed to
the administrator of Cummings' TSP account. (Filing
No. 22 at 6; Filing No. 41 at 10.) On April 28,
2015, the IRS Centralized OIC Unit (“COIC”)
informed Cummings that his OIC was being returned as
non-processable, because Cummings did not submit the
application fee and initial payment. (Filing No. 41 at
11.) On April 29, 2015, Cummings' counsel appealed
the TSP levy, and the levy was sustained in full on May 13,
2015. (Filing No. 22 at 6.) Shortly after May 13,
2015, approximately $60, 000.00 was removed pursuant to the
IRS levy from Cummings' TSP account. (Filing No. 22
at 6.) Cummings filed suit in this Court, alleging that
the IRS levied his wages and TSP account in violation of 26
U.S.C. § 633(k). (Filing No. 1.) After filing
an Answer to the Complaint, (Filing No. 26), the IRS
moved to dismiss Cummings' claim pursuant to Fed.R.Civ.P.
12(c), (Filing No. 40). Cummings opposes that
motion. (Filing No. 45.)
Rule of Civil Procedure 12(c) permits a party to move for
judgment after the parties have filed a complaint and an
answer. Rule 12(c) motions are analyzed under the same
standard as a motion to dismiss under Rule 12(b)(6).
Pisciotta v. Old Nat'l Bancorp., 499 F.3d 629,
633 (7th Cir. 2007); Frey v. Bank One, 91 F.3d 45,
46 (7th Cir. 1996). The complaint must allege facts that are
“enough to raise a right to relief above the
speculative level.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Although
“detailed factual allegations” are not required,
mere “labels, ” “conclusions, ” or
“formulaic recitation[s] of the elements of a cause of
action” are insufficient. Id. Stated
differently, the complaint must include “enough facts
to state a claim to relief that is plausible on its
face.” Hecker v. Deere & Co., 556 F.3d 575,
580 (7th Cir. 2009) (internal citation and quotation marks
omitted). To be facially plausible, the complaint must allow
“the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556).
Rule 12(b)(6) motion, the court will grant a Rule 12(c)
motion only if “it appears beyond doubt that the
plaintiff cannot prove any facts that would support his claim
for relief.” N. Ind. Gun & Outdoor Shows, Inc. v.
City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998)
(quoting Craigs, Inc. v. Gen. Elec. Capital Corp.,
12 F.3d 686, 688 (7th Cir. 1993)). The factual allegations in
the complaint are viewed in a light most favorable to the
non-moving party; however, the Court is “not obliged to
ignore any facts set forth in the complaint that undermine
the plaintiff's claim or to assign any weight to
unsupported conclusions of law.” Id.
(quoting R.J.R. Serv., Inc. v. Aetna Cas. & Sur.
Co., 895 F.2d 279, 281 (7th Cir. 1989)). “As the
title of the rule implies, Rule 12(c) permits a judgment
based on the pleadings alone.... The pleadings include the
complaint, the answer, and any written instruments attached
as exhibits.” Id. (internal citations
Legal Framework: Relevant Tax Code
Government may not be sued without its consent, and waivers
to its sovereign immunity are both not implied and are
construed narrowly against a plaintiff. Gessert v. United
States, 703 F.3d 1028, 1033 (7th Cir. 2013) (citing
Soriano v. United States, 352 U.S. 270, 276 (1957)).
Section 7433 provides such a waiver. Id. That
provision authorizes a taxpayer to seek damages through a
civil action against the United States when “in
connection with any collection of Federal tax with respect to
a taxpayer, any officer or employee of the Internal Revenue
Service recklessly or intentionally, or by reason of
negligence, disregards any provision of this title, or any
regulation promulgated under this title….” 26
U.S.C. § 7433.
Code provision 26 U.S.C. § 6331(a) authorizes the IRS to
collect unpaid tax liabilities through the issuance of a
upon all property and rights to property (except such
property as is exempt under section 6334) belonging to such
person …. Levy may be made upon the accrued salary or
wages of any officer, employee, or elected official, of the
United States, the District of Columbia, or any agency or
instrumentality of the United States or the District of
Columbia, by serving a notice of levy on the employer (as
defined in section 3401(d)) of such officer, employee, or
26 U.S.C. § 6331(a). Subsection (k) of that provision
specifies that, however, under certain circumstances, a levy
may not properly be issued. That subsection provides as
(k) No levy while certain offers pending or
installment agreement pending or in effect.
(1) Offer-in-compromise pending.--No levy
may be made under subsection (a) on the property or rights to
property of any person with ...