Byers v. Yellen

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

ASHEVILLE DIVISION

CIVIL CASE NO. 1:22-cv-00126-MR

MAURICE JAQUAN BYERS, )

)

Plaintiff, )

)

vs. ) O R D E R

)

INTERNAL REVENUE SERVICE )

COMMISSIONER CHARLES )

RETTIG and U.S. SECRETARY OF )

TREASURY JANET YELLEN, )

)

Defendants. )

_______________________________ )

THIS MATTER is before the Court on initial review of the Complaint

[Doc. 1]. Also pending the pro se Plaintiff’s “Motion to Proceed In Forma

Pauperis Despite Prison’s Refusal to Comply with Court Order in

Accordance with 28 U.S.C. § 1915.” [Doc. 9].

I. BACKGROUND

The pro se Plaintiff, who is a state prisoner, brings this action against

the Defendants Internal Revenue Service Commissioner Charles Rettig and

Secretary of the United States Treasury Janet Yellen, alleging that the

Defendants violated his due process rights and violated the Administrative

Procedures Act by failing to provide him with federal economic impact

payments (“EIPs”) authorized by the Coronavirus Aid, Relief, and Economic

Security (CARES) Act, 26 U.S.C. § 6428(a)(1), the Consolidated

Appropriations Act of 2021 (CAA), 26 U.S.C. § 6428A(a)(1), and the

American Rescue Plan Act (ARPA), 26 U.S.C. § 6428B. [Doc. 1 at 6-7]. The

Plaintiff also claims that the Defendants violated his due process rights by

failing to respond to his report of suspected identify theft and refund fraud

committed by his brother, in violation of 26 U.S.C. § 7529. [Id. at 7]. For

relief, the Plaintiff requests, inter alia, that the Court issue an order directing

the Defendants to send him the three EIPs that he claimed on his 2020 tax

return, investigate the Plaintiff’s allegations of suspected identity theft and

refund fraud, and advise him of the results of that investigation. [Id. at 11-

12].

II. STANDARD OF REVIEW

Because the Plaintiff is proceeding in forma pauperis, the Court must

review the Complaint to determine whether it is subject to dismissal on the

grounds that it is “(i) frivolous or malicious; (ii) fails to state a claim on which

relief may be granted; or (iii) seeks monetary relief against a defendant who

is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B); see 28 U.S.C. §

1915A (requiring frivolity review for prisoners’ civil actions seeking redress

from governmental entities, officers, or employees).

In its frivolity review, a court must determine whether the Complaint

raises an indisputably meritless legal theory or is founded upon clearly

baseless factual contentions, such as fantastic or delusional scenarios.

Neitzke v. Williams, 490 U.S. 319, 327-28 (1989). Furthermore, a pro se

complaint must be construed liberally. Haines v. Kerner, 404 U.S. 519, 520

(1972). However, the liberal construction requirement will not permit a

district court to ignore a clear failure to allege facts in his complaint which set

forth a claim that is cognizable under federal law. Weller v. Dep’t of Soc.

Servs., 901 F.2d 387 (4th Cir. 1990).

III. DISCUSSION

A. Motion to Proceed In Forma Pauperis

At the time that he filed his Complaint, the Plaintiff also submitted an

application to proceed without prepaying fees or costs in this matter. [Doc.

2]. Because the Plaintiff is a prisoner, the Clerk of Court requested a copy

of his prisoner trust account statement from his place of incarceration, Marion

Correctional Institution (“Marion CI”). [Doc. 5]. After receiving this statement

from Marion CI, the Clerk entered an Order waiving the initial partial filing fee

and directing monthly payments from the Plaintiff’s prison account. [Doc. 8].

Thereafter, the Court received the present motion to proceed in forma

pauperis from the Plaintiff. [Doc. 9]. In that motion, the Plaintiff expresses

concern that Marion CI had not complied with the Clerk’s Order for the

production of his prisoner trust account statement, and he asks to proceed

in forma pauperis despite the prison’s purported lack of compliance. [Id.].

As noted, however, the prison did comply with the Clerk’s Order, and the

Plaintiff has been permitted to proceed in forma pauperis. Accordingly, the

Plaintiff’s second motion to proceed in forma pauperis [Doc. 9] is denied as

moot.

B. Plaintiff’s Substantive Claims

As an initial matter, the Court notes that the Plaintiff purports to bring

his claims pursuant to 42 U.S.C. § 1983. Section 1983, however, applies

only to state actors acting under color of state law, not to federal actors. Tun-

Cos v. Perrotte, 922 F.3d 514, 520 (4th Cir. 2019); Dowe v. Total Action

Against Poverty in Roanoke Valley, 145 F.3d 653, 658 (4th Cir. 1998). Thus,

to the extent that the Plaintiff attempts to bring this action pursuant to § 1983,

his claims must be dismissed.

To the extent that the Plaintiff’s claims can be construed as being

brought pursuant to Bivens v. Six Unknown Named Agents of the Federal

Bureau of Narcotics, 403 U.S. 338 (1971), the Plaintiff fares no better. A

Bivens action is a judicially created remedy designed to redress violations of

constitutional rights by federal actors. See id. at 395-97. While the Plaintiff

casts both of his claims in term of due process violations, he is in fact

asserting a failure of federal officials to comply with various federal statutes,

which does not implicate the Plaintiff’s constitutional rights. Thus, the Court

will analyze the Plaintiff’s claims directly under the statutes that he alleges

were violated in this case.

1. Action for Payment of EIPs

The Plaintiff first seeks to compel the payment of three economic

impact payments, or EIPs, which were authorized pursuant to the CARES

Act, the CAA, and the ARPA. Specifically, the CARES Act created a $1,200

tax credit for eligible individuals. 26 U.S.C. § 6428(a). This tax credit was

authorized to be distributed as an advance refund on 2020 taxes. 26 U.S.C.

§ 6428(f). As such, qualified individuals would directly receive the rebate as

an EIP or so-called “stimulus check.” The CARES Act directed the Secretary

of the Treasury to issue the credit “as rapidly as possible” and specified that

no impact payment “shall be made or allowed” after December 31, 2020. 26

U.S.C. § 6428(f)(3)(A). The CCA authorized a second tax credit of $600,

which also was authorized to be paid as an EIP. 26 U.S.C. § 6428A(a), (f).

This Act also directed the Secretary to issue the credit “as rapidly as

possible” and specified that no impact payment “shall be made or allowed ...

after January 15, 2021.” 26 U.S.C. § 6428A(f)(3)(A)(i)-(ii). The ARPA, which

was signed into law in 2021, authorized a third EIP in the amount of $1,400

to eligible individuals. 26 U.S.C. § 6428B(b). The ARPA similarly directed

the Secretary to issue the refund or credit “as rapidly as possible,” and

specified that no impact payment “shall be made or allowed . . . after

December 31, 2021.” 26 U.S.C. § 6428B(g)(3).

Initially, the IRS took the position that incarcerated individuals were not

eligible for the EIPs. In response, a group of prisoners brought an action in

the United States District Court for the Northern District of California,

asserting violations of the Administrative Procedures Act. Scholl v. Mnuchin,

489 F. Supp. 3d 1008 (N.D. Cal. 2020) (Scholl I). These prisoners sought

class certification and ultimately obtained a permanent national injunction

barring the IRS from withholding EIPs solely on the basis of a person's

incarcerated status. Specifically, the Scholl I court preliminary certified the

following class:

All United States citizens and legal permanent

residents who:

(a) are or were incarcerated (i.e., confined in a jail,

prison, or other penal institution or correctional facility

pursuant to their conviction of a criminal offense) in

the United States, or have been held to have violated

a condition of parole or probation imposed under

federal or state law, at any time from March 27, 2020

to the present;

(b) filed a tax return in 2018 or 2019, or were exempt

from a filing obligation because they earned an

income below $12,000 (or $24,400 if filing jointly) in

the respective tax year;

(c) were not claimed as a dependent on another

person's tax return; and

(d) filed their taxes with a valid Social Security

Number, and, if they claimed qualifying children or

filed jointly with another person, those individuals

also held a valid Social Security Number.

Excluded from the class are estates and trusts;

defendants; the officers, directors, or employees of

any defendant agency; and [ ] any judicial officer

presiding over this action and his/her immediate

family and judicial staff.

Id. at 1047. The court ultimately granted final certification of this class and

entered the following declaratory relief:

[T]he court finds and declares that title 26 U.S.C. §

6428 does not authorize defendants to withhold

advance refunds or credits from class members

solely because they are or were incarcerated. The

court further finds and declares that defendants’

policy that persons who are or were incarcerated at

any time in 2020 were ineligible for advance refunds

under the Act is both arbitrary and capricious and not

in accordance with law.

Scholl v. Mnuchin (Scholl II), 494 F. Supp. 3d 661, 692 (N.D. Cal. 2020). The

court entered a permanent injunction and directed the Defendants to

reconsider EIPs that were denied solely due to an individual's incarcerated

status. Id. at 692-93.

With respect to specific payments, the Scholl II court stated as follows:

The court takes no position on whether plaintiffs or

class members are in fact owed advance refund

payments or the amount of those payments. Indeed,

the court's Rule 23(b)(2) finding was premised on the

“indivisible nature of the injunctive or declaratory

remedy warranted but not an individualized award of

monetary damages.” Dkt. 50 at 42 (quoting Wal-Mart

Stores, Inc. v. Dukes, 564 U.S. 338, 360-61, 131

S.Ct. 2541, 180 L.Ed. 2d 374 (2011)). The court's

determination in this order is that the IRS's action

was “arbitrary, capricious, ... or otherwise not in

accordance with law” and the appropriate remedy is

to “hold unlawful and set aside” that agency action. 5

U.S.C. § 706(2). It is incumbent on the IRS, as the

agency charged by Congress, to make individual

determinations whether an individual is an “eligible

individual” and meets the various criteria delineated

in the Act.

Id. at 691.

Based on the allegations in his Complaint, it appears that the Plaintiff

is a member of the Scholl class. The Plaintiff has been incarcerated since

2018, and he alleges that he filed tax returns in which he requested EIPs,

but that such payments were denied solely due to his incarcerated status.

Because the Plaintiff is already a member of the Scholl class, “he is not

entitled to separate individual relief.” Vaughan v. U.S. Dep’t of Treasury, No.

21-cv-05674-PJH, 2021 WL 3373280, at *3 (N.D. Cal. Aug. 3, 2021).

While the court in Scholl found that EIPs could not be denied solely

based upon an individual’s status of incarceration, the court took no position

as to whether individual prisoners were entitled to recover the EIPs. “That

responsibility [falls] to the IRS to make an individual determination.” Id.; see

also Bynoe v. Yellen, No. 3:21-cv-00509-MMD-WGC, 2022 WL 1516592, at

*5 (Jan. 5, 2022), report and recommendation adopted, 2022 WL 1014982

(D. Nev. Apr. 5, 2022) (“Plaintiff's relief, it seems, is to make sure he has

verified his identity with the IRS so that his 2020 tax return can be processed

and the refund check issued. If Plaintiff has further issues with the payment

of the funds, his recourse is to contact the IRS.”).

To the extent that the Plaintiff asks the Court to compel the IRS to

provide his EIPs, he is not entitled to assert a private cause of action for

disbursement of these funds. See Bynoe, 2022 WL 1516592, at *5 (“[I]t does

not appear that a private cause of action can be maintained under the

legislation authorizing the disbursement of these funds. The laws do not

indicate that there is a private cause of action for non-receipt of funds.”);

Phelps v. Mnuchin, No. 3:21-CV-327-JD-MGG, 2021 WL 2138506, at *4

(N.D. Ind. May 26, 2021) (“there is no suggestion there is a private cause of

action under the CARES Act for receipt of specific non-disbursed funds, and

it is not this Court’s function to raise up a cause of action where a statute has

not created one”) (citation and internal quotation marks omitted).

In any event, the funds that the Plaintiff seeks cannot now be

distributed. The CARES Act imposed a deadline of December 31, 2020, for

EIPs to be made or allowed, 26 U.S.C. § 6428(f)(3)(A); the CAA imposed a

deadline of January 15, 2021, 26 U.S.C. § 6428A(f)(3)(A)(i)–(ii); and the

ARPA imposed a deadline of December 31, 2021, 26 U.S.C. § 6428B(g)(3).

As these deadlines have now passed, and no more funds may be issued,

the Plaintiff cannot obtain the relief that he requests. See Hudson v. Dep’t

of Treasury, No. 1:21-cv-392, 2021 WL 5782471, at *3 (W.D. Mich. Dec. 7,

2021); Vaughan, 2021 WL 3373280, at *3.

For all these reasons, the Plaintiff’s claim for payment of his EIPs must

be dismissed.

2. Claim for Failing to Investigate Identity Theft and Fraud

As his second claim for relief, the Plaintiff claims that the Defendants

violated his due process rights by failing to respond to his report of suspected

identify theft and refund fraud committed by his brother. [Doc. 1 at 7].

In asserting this claim, the Plaintiff alleges that the Defendants violated

26 U.S.C. § 7529, which sets forth the procedure to be followed in the event

that the Secretary determines that there has been or may have been an

unauthorized use of an individual’s identity. However, “[p]rivate citizens

cannot enforce the provisions of the Tax Code. That is the duty of the

Secretary of the Treasury and the Commissioner of the Internal Revenue

Service, who are charged with the responsibility of administering and

enforcing the Tax Code, including allegations of suspected fraud.” Seabury

v. City of New York, No. 06-CV-1477 (NGG), 2006 WL 1367396, at *5

(E.D.N.Y. May 18, 2006). As the Plaintiff cannot maintain a private cause of

action for any purported violation of § 7529, this claim also must be

dismissed.

IV. CONCLUSION

For all these reasons, the Court concludes that the Plaintiff has failed

to state a claim for relief. The Plaintiff’s Complaint will be dismissed without

leave to amend, as it is clear that no amendment would cure the deficiencies

noted herein. See United States ex rel. Carson v. Manor Care, Inc., 851

F.3d 293, 305 n. 6 (4th Cir. 2017) (“when a complaint is incurable through

amendment, dismissal is properly rendered with prejudice and without leave

to amend”) (citation omitted).

IT IS, THEREFORE, ORDERED that the Complaint [Doc 1] is

DISMISSED WITH PREJUDICE pursuant to 28 U.S.C. §§ 1915(e)(2)(B)(i)-

(ii).

IT IS FURTHER ORDERED that the Plaintiff's “Motion to Proceed In

Forma Pauperis Despite Prisons Refusal to Comply with Court Order in

Accordance with 28 U.S.C. § 1915.” [Doc. 9] is DENIED AS MOOT.

The Clerk of Court is respectfully directed to close this civil action.

IT IS SO ORDERED.

Signed: August 6, 2022

Martifi Reidinger ee

Chief United States District Judge AS

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