holding the court’s discretion to deny 17 leave to amend is “particularly broad” where the plaintiff has previously amended his complaint
How later courts described this case
- holding the court’s discretion to deny 17 leave to amend is “particularly broad” where the plaintiff has previously amended his complaint
- “When a proposed amendment would be futile, there is no need to 15 prolong the litigation by permitting further amendment.”
- “The filing of a timely claim is 23 jurisdictional for a refund suit and cannot be waived.”
Written by the judges who cited it.
The opinion
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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11 PETER SIERRA, Case No. 1:22-cv-01226-SAB
12 Plaintiff, FINDINGS AND RECOMMENDATIONS
RECOMMENDING DISMISSAL OF FIRST
13 v. AMENDED COMPLAINT AND TO CLOSE
CASE
14 INTERNAL REVENUE SERVICE,
ORDER DIRECTING CLERK OF COURT
15 Defendant. TO RANDOMLY ASSIGN DISTRICT
JUDGE
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(ECF No. 4)
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OBJECTIONS DUE WITHIN FOURTEEN
18 DAYS
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20 I.
21 INTRODUCTION AND BACKGROUND
22 Peter Sierra (“Plaintiff”), a state prisoner proceeding pro se and in forma pauperis, filed
23 this action against the Internal Revenue Service (“IRS”) on July 25, 2022. (ECF No. 1.) The
24 action was initially assigned to Magistrate Judge Allison Claire, in the Sacramento Division of the
25 Eastern District. On August 25, 2022, Judge Claire screened the Plaintiff’s complaint, and
26 granted Plaintiff thirty (30) days to file an amended complaint that addressed the specific
27 deficiencies identified in the initial complaint. (ECF No. 3.) On September 8, 2022, Plaintiff
28 filed a first amended complaint. (ECF No. 4.) On September 26, 2022, Judge Claire issued an
1 order that transferred this action to the Fresno Division of the Eastern District, and the action was
2 assigned to Magistrate Judge Stanley A. Boone. (ECF No. 5.) The Plaintiff’s first amended
3 complaint is currently before the Court for screening.
4 II.
5 SCREENING REQUIREMENT
6 The Court is required to screen complaints brought by prisoners seeking relief against a
7 governmental entity or officer or employee of a governmental entity. 28 U.S.C. § 1915A(a). The
8 Court must dismiss a complaint or portion thereof if the prisoner has raised claims that are legally
9 “frivolous or malicious,” that “fail[] to state a claim on which relief may be granted,” or that
10 “seek[] monetary relief against a defendant who is immune from such relief.” 28 U.S.C. §
11 1915(e)(2)(B).
12 A complaint must contain “a short and plain statement of the claim showing that the
13 pleader is entitled to relief. . . .” Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not
14 required, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere
15 conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell
16 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Moreover, Plaintiff must demonstrate
17 that each defendant personally participated in the deprivation of Plaintiff’s rights. Jones v.
18 Williams, 297 F.3d 930, 934 (9th Cir. 2002).
19 Prisoners proceeding pro se in civil rights actions are entitled to have their pleadings
20 liberally construed and to have any doubt resolved in their favor. Wilhelm v. Rotman, 680 F.3d
21 1113, 1121 (9th Cir. 2012) (citations omitted). To survive screening, Plaintiff’s claims must be
22 facially plausible, which requires sufficient factual detail to allow the Court to reasonably infer
23 that each named defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678–79; Moss
24 v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009). The “sheer possibility that a defendant
25 has acted unlawfully” is not sufficient, and “facts that are ‘merely consistent with’ a defendant’s
26 liability” falls short of satisfying the plausibility standard. Iqbal, 556 U.S. at 678; Moss, 572 F.3d
27 at 969.
28 / / /
1 III.
2 DISCUSSION
3 A. Initial Screening Order
4 As summarized in the previous screening order, Plaintiff’s original complaint alleged a
5 sole cause of action for not receiving the Economic Incentive Payments (“EIP(s)”) that he
6 claimed he was entitled to given he filed taxes. (ECF No. 3 at 3.) Plaintiff previously described
7 sending the IRS letters but the IRS office wrote back informing Plaintiff they could not confirm
8 his identity, despite him providing his social security number. (Id.) Plaintiff alleged he was
9 denied $5,300 in stimulus money, and attached a letter from the IRS, dated February 18, 2022,
10 that provided instructions on how Plaintiff could verify his identity. (Id.)
11 The Court construed the complaint as only contending he did not receive his stimulus
12 payments under the CARES Act. (Id. at 3.) Based on the applicable law, the Court found that
13 Plaintiff was in the process of validating his identity with the IRS per the instructions in the
14 February 2022 letter, and that it appeared Plaintiff had not filed an administrative claim with the
15 IRS, a prerequisite to bringing a claim in federal court. (Id. at 4.) The Court found it thus did not
16 have jurisdiction to consider Plaintiff’s claims. (Id.) The Court granted Plaintiff leave to file an
17 amended complaint that cure such identified deficiency, or alternatively, the Court suggested that
18 if Plaintiff had not filed an administrative claim with the IRS, Plaintiff could dismiss the action
19 without prejudice until he exhausted the administrative requirement. (Id. at 4-5.)
20 Under the section entitled leave to amend, the Court specifically advised Plaintiff that if
21 “Plaintiff chooses to amend the complaint, the amended complaint must allege facts establishing
22 the existence of federal jurisdiction; specifically, plaintiff must allege that an administrative
23 action has been filed and completed with the IRS and that plaintiff has a right to bring this case to
24 federal court.” (Id. at 5.) Plaintiff was additionally advised of this specific requirement in the
25 section entitled “PRO SE PLAINTIFF’S SUMMARY,” wherein the Court stated: “The court
26 cannot tell from your complaint whether you have taken the actions necessary to bring this case to
27 federal court—specifically, whether you have filed and completed an administrative action with
28 the IRS . . . [y]ou are being given 30 days to submit an amended complaint that provides a proper
1 basis for federal jurisdiction and demonstrates that you have completed an administrative action
2 with the IRS.” (Id. at 6.)
3 B. Plaintiff’s Operative First Amended Complaint
4 Plaintiff’s amended complaint explains that Plaintiff completed paperwork to receive his
5 EIPs, and assisted thirty-two other inmates who did receive their payments, but Plaintiff was the
6 only one that did not receive his payments. (ECF No. 4 at 2.) Plaintiff alleges that throughout
7 2020, he submitted multiple 1040 forms, 3030 forms, and recovery rebate credits. (Id.) Plaintiff
8 also proffers that he communicated with the IRS more than ten times, and received four responses
9 inquiring to verify his identity, to which he accommodated to no avail. (Id. at 2-3.) Plaintiff
10 states he sent them forms of identification. (Id. at 3.) Plaintiff states that in an attempt to
11 establish permission to sue, the IRS requested he call a toll free number, but Plaintiff “established
12 that [he] [did] not have outside contacts who can help expedite these requested phone calls.” (Id.)
13 While Plaintiff complains of the issues regarding the IRS requesting verification while other
14 inmates apparently received their payments, Plaintiff makes no specific allegation that the
15 administrative requirement was completed.
16 C. Applicable Law
17 The CARES Act, codified in part at Section 6428 of the Internal Revenue Code, 26 U.S.C.
18 § 6428, establishes a mechanism for the IRS to issue economic impact payments (“EIPs”) to
19 eligible individuals in the form of a tax credit. Scholl v. Mnuchin (Scholl I), 489 F. Supp. 3d
20 1008, 1020 (N.D. Cal. 2020), appeal dismissed, No. 20-16915, 2020 WL 9073361 (9th Cir. Nov.
21 20, 2020). Under § 6428(a), eligible individuals may receive a tax credit in the amount of $1,200
22 ($2,400 if filing a joint return), plus $500 multiplied by the number of qualifying children. Scholl
23 I, 489 F. Supp. 3d at 1020 (citing 26 U.S.C. § 6424(a)). This amount is credited against the
24 individual’s federal income tax for the year 2020. Id. For purposes of the CARES Act, an
25 eligible individual is defined as “any individual” other than (1) a nonresident alien individual, (2)
26 an individual who is allowed as a dependent deduction on another taxpayer’s return, or (3) an
27 estate or trust. Id. at 1021 (citing 26 U.S.C. § 6424(d)).
28 The CARES Act provides that “each individual who was an eligible individual for such
1 individual’s first taxable year beginning in 2019 shall be treated as having made a payment
2 against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance
3 refund amount for such taxable year.” Id. (quoting 26 U.S.C. § 6428(f)(1)). Therefore, the Act
4 provides that “if an eligible individual filed a tax return in 2018 or 2019 or filed one of the
5 enumerated Social Security forms, then the Act directs the IRS to treat those taxpayers as eligible
6 for an advance refund of the tax credit.” Id. Congress provided that “[n]o refund or credit shall
7 be made or allowed under this subsection after December 31, 2020.” 26 U.S.C. § 6428(f)(3)(A).
8 Pursuant to 28 U.S.C. § 1346, the United States consents to be sued in the district court
9 for refund of taxes. 28 U.S.C. § 1346(a)(1). But, the United States consents to be sued for a tax
10 refund only where the taxpayer has followed the conditions set forth in 26 U.S.C. § 7422(a),
11 which states: “No suit or proceeding shall be maintained in any court for the recovery of any
12 internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . until a
13 claim for refund or credit has been duly filed with the Secretary, according to the provisions of
14 law in that regard, and the regulations of the Secretary established in pursuance thereof.” 26
15 U.S.C. § 7422(a).
16 Before filing suit in federal court for credit or refund of overpaid taxes, a taxpayer must
17 first comply with the tax refund scheme established in the Code by filing an administrative claim
18 with the IRS. United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 4 (2008); Omohundro v.
19 United States, 300 F.3d 1065, 1066 (9th Cir. 2002); see 26 U.S.C. § 7422(a) (2002).
20 Furthermore, to overcome sovereign immunity in a tax refund action, the taxpayer must file a
21 refund claim with the IRS within the time limits established by the Internal Revenue Code. N.
22 Life Ins. Co. v. United States, 685 F.2d 277, 279 (9th Cir. 1982) (“The filing of a timely claim is
23 jurisdictional for a refund suit and cannot be waived.”).1 Thus, “[a] taxpayer’s failure to file an
24 administrative claim within the time periods imposed by statute divests the district court of
25 jurisdiction over an action for a refund or credit.” Omohundro, 300 F.3d at 1066–67; Danoff v.
26 U.S., 324 F. Supp. 2d 1086, 1092 (C.D. Cal. 2004).
27 1 The IRS regulations require that the administrative claim must be filed: “within 3 years from the time the return was
filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed
28 by the taxpayer, within 2 years from the time the tax was paid.” 26 U.S.C. § 6511(a).
1 D. The Court finds Plaintiff’s Amended Complaint does not Cure the
Deficiencies Specifically Identified in the Previous Screening Order
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3 Upon review of the first amended complaint, the Court finds Plaintiff has not cured the
4 previously identified pleading defects with respect to jurisdiction. As previously noted, in order
5 to bring a suit against the Government to seek a tax refund, Plaintiff was required to file an
6 administrative claim with the IRS. 26 U.S.C. § 7422(a). Even liberally construing Plaintiff’s
7 alleged correspondences to the IRS as an administrative claim, the Court cannot find Plaintiff
8 received a decision on his claim, given the communications admittedly revolved around
9 confirming identification. See 26 U.S.C. § 6532(a)(1).2 Therefore, the Court finds that it lacks
10 jurisdiction over the matter.
11 Because Plaintiff was granted an opportunity to amend but appears unable to cure the
12 previously identified pleading defects, the Court recommends Plaintiff’s amended complaint be
13 dismissed without leave to amend and that this action be dismissed. See Gardner v. Martino, 563
14 F.3d 981, 990 (9th Cir. 2009) (“When a proposed amendment would be futile, there is no need to
15 prolong the litigation by permitting further amendment.”); see also Ecological Rights Found. v.
16 Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (holding the court’s discretion to deny
17 leave to amend is “particularly broad” where the plaintiff has previously amended his complaint).
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2 Section 6532 provides: “No suit or proceeding under section 7422(a) for the recovery of any internal revenue tax,
penalty, or other sum, shall be begun before the expiration of 6 months from the date of filing the claim required
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under such section unless the Secretary renders a decision thereon within that time, nor after the expiration of 2 years
from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the
28 disallowance of the part of the claim to which the suit or proceeding relates.”
1 IV.
2 RECOMMENDATION AND ORDER
3 Based on the foregoing, IT IS HEREBY RECOMMENDED that:
4 1. Plaintiff's first amended complaint, (ECF No. 4), be DISMISSED, without leave
5 to amend, for lack of jurisdiction; and
6 2. The Clerk of the Court be directed to CLOSE this case.
7 These findings and recommendations are submitted to the district judge assigned to this
8 || action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within fourteen
9 | (14) days of service of these recommendations, any party may file written objections to these
10 | findings and recommendations with the Court and serve a copy on all parties. Such a document
11 | should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The
12 | district judge will review the magistrate judge’s findings and recommendations pursuant to 28
13 | U.S.C. § 636(b)(1)(C). The parties are advised that failure to file objections within the specified
14 | time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th
15 } Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)).
16 IT IS FURTHER ORDERED that the Clerk of the Court be DIRECTED to randomly
17 | assign a District Judge to this action.
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19 IT IS SO ORDERED. DAM Le
20 | Dated: _December 22, 2022 _ OO
UNITED STATES MAGISTRATE JUDGE
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