The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
OBE E. JOHNSON : CIVIL ACTION
:
v. : NO. 22-64
:
INTERNAL REVENUE SERVICE :
MEMORANDUM
KEARNEY, J. September 16, 2022
An incarcerated citizen pro se sues the Internal Revenue Service asking it to send him
COVID-19 stimulus checks he claims are owed to him. We granted the incarcerated person leave
to proceed without paying the filing fees requiring we screen his complaint for merit before
proceeding with issuing summons to begin service. We screened his amended Complaint. He does
not plead whether he exhausted his administrative remedies with the Service. He does not show
how exhausting administrative remedies would be futile. We must dismiss his amended Complaint
without prejudice for him to timely plead how he exhausted his administrative remedies. We will
close the case if he cannot do so under the accompanying Order but nothing in today’s result
precludes the citizen from pursuing his administrative remedies with the Service and then later sue
should he find the Service did not comply with the law.
I. Alleged pro se facts
An unidentified government presently incarcerates Philadelphia business owner Obe E.
Johnson in Puerto Rico. Mr. Johnson did not receive Economic Impact Payments, also known as
“stimulus checks,” from the Acts of Congress granting COVID-19 aid.1 Mr. Johnson does not
plead contact with the Internal Revenue Service seeking the Economic Impact Payments. He also
does not plead filing a tax return for the tax years 2020 or 2021. Mr. Johnson now sues the Internal
Revenue Service to recover the Economic Impact Payments.2
II. Analysis
We granted Mr. Johnson leave to proceed without paying the filing fees given his present
sworn indigency and financial status.3 We granted Mr. Johnson leave to file an amended complaint
after Mr. Johnson first sued the wrong party, the “United States District Court for Philadelphia,”
and failed to state a claim.4 We construed Mr. Johnson’s Motion for leave to file an amended
Complaint as an amended Complaint under Section 1915(e)(2)(B)(ii).5 He now sues the Internal
Revenue Service in his amended complaint.6
Congress directs we dismiss a claim filed without paying fees which we find frivolous or
malicious, fails to state a claim on which relief may be granted, or seeks monetary relief against a
defendant who is immune from such relief.7 When considering whether to dismiss a complaint for
failure to state a claim under Section 1915(e)(2)(B)(ii), we apply the same standard used under
Federal Rule of Civil Procedure 12(b)(6).8 Under Rule 12(b)(6), we accept all factual allegations
in Mr. Johnson’s amended complaint as true and construe those facts in the light most favorable
to him to determine whether he states a claim to relief plausible on its face.9
We are directed by our Court of Appeals to be “mindful of our ‘obligation to liberally
construe a pro se litigant’s pleadings . . . .’”10 We are to “remain flexible” and “apply the relevant
legal principle even when the complaint has failed to name it.”11 But “pro se litigants still must
allege sufficient facts in their complaints to support a claim” and “cannot flout procedural rules –
they must abide by the same rules that apply to all other litigants.”12
Mr. Johnson now sues the proper government agency. The Service is responsible for
verifying eligibility for Economic Impact Payments and dispersing the payments.13 We liberally
infer Mr. Johnson is seeking an individual Economic Impact Payment, not a small business
payment because small business payments were not in the form of Economic Impact Payments or
“stimulus checks” and Mr. Johnson refers to the Economic Impact Payments or “stimulus checks”
more frequently than small business aid.14
Economic Impact Payments are a creature of tax law.15 Congress through the Coronavirus
Aid, Relief, and Economic Security Act, codified in part at 26 U.S.C. § 6428 (a), provided
emergency financial assistance during the early days of the COVID-19 pandemic through
Economic Impact Payments.16
In Rueda, Judge Hollander recognized Economic Impact Payments under Section 6428
come in the form of a credit against tax owed in the year of the payment.17 Most credits will only
be recognized as a deduction from a taxpayer’s tax burden resulting in a larger refund of smaller
payment when the taxpayer files his taxes.18 Economic Impact Payments, however, are an advance
tax credit distributed to taxpayers immediately rather than forcing taxpayers to wait until tax
season to appreciate the credit.19
Congress in 26 U.S.C. § 7422 created a civil action for the correction of a tax refund.20 The
Supreme Court directs section 7422 claims may only succeed if the claimant exhausted all
administrative remedies.21 We liberally construe Mr. Johnson’s amended complaint as a section
7422 claim.22 Our Court of Appeals recognizes incarcerated persons like Mr. Johnson may file a
Section 7422 claim to recover Economic Impact Payments but require administrative exhaustion.23
Administrative exhaustion is required in all “suits ‘for the recovery of any internal revenue tax.’”24
Tax issues concerning the amount of a refund, including the advance payment of tax credit, are
first assessed by the Internal Revenue Service.25 A taxpayer must file (or amend) a tax return,
protest the Service’s assessment of the tax return, and attend an appeals conference to show he
exhausted all administrative remedies.26 The taxpayer must, at the very least, file a tax return to
qualify as a “taxpayer” under Section 7244.27
The exhaustion requirement may be waived if the exhaustion process would be “arduous,
expensive, and long” and other Judges have found the exhaustion requirement too extreme.28 For
example, Judge Hollander in Amador held it would be too extreme to force a class of taxpayers to
file their tax returns to challenge a policy withholding Economic Impact Payments because their
spouses’ did not have a social security number could never provide the taxpayers with relief.29
Judge Hollander held exhausting the administrative remedies would be “an exercise in futility”
because the Coronavirus Aid, Relief, and Economic Security Act excluded the class of taxpayers
from receiving Economic Interest Payments.30
Mr. Johnson fails to plead exhaustion of all other avenues of relief. Mr. Johnson has not
alleged he already filed a tax return or exhausted the Service’s other administrative remedies. We
find there is no way to construe Mr. Johnson’s amended Complaint to show filing a tax return
would be useless. Unlike in Amador, there is no official policy from the Service or express
statutory language automatically preventing Mr. Johnson from obtaining relief. Unlike in Amador,
Mr. Johnson filing a tax return with the Service may result in an Economic Interest Payment.
III. Conclusion
Mr. Johnson fails to plead he has already filed a tax return and exhausted the remedies
necessary for a Section 7422 claim. We dismiss Mr. Johnson’s claim against the Internal Revenue
Service without prejudice for Mr. Johnson to timely amend his complaint if he can do so in good
faith to establish exhaustion.
1 ECF Doc. No. 17.
2 ECF Doc. No. 17.
3 ECF Doc. No. 5.
4 ECF Doc. No. 5.
5 ECF Doc. No. 18.
6 ECF Doc. No. 17.
7 28 U.S.C. § 1915(e)(2)(B).
8 Elansari v. Univ. of Pa., 779 F. App’x 1006, 1008 (3d Cir. 2019) (citing Allah v. Seiverling, 229
F.3d 220, 223 (3d Cir. 2000)).
9 Id. (quoting Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir. 2012)).
10 Dooley v. Wetzel, 957 F.3d 366, 374 (3d Cir. 2020) (quoting Higgs v. Att’y Gen., 655 F.3d 333,
339 (3d Cir. 2011)).
11 Yogt v. Wetzel, 8 F.4th 182, 185 (3d Cir. 2021) (quoting Mala v. Crown Bay Marina, Inc., 704
F.3d 239, 244 (3d Cir. 2013)).
12 Id. (quoting Mala, 704 F.3d at 245).
13 See I.R.C. § 6428.
14 ECF Doc. No. 17.
15 See e.g., Morton v. United States Virgin Islands, 128 A.F.T.R.2d 2021-7051 (3d Cir. Dec. 29,
2021) (recognizing a section 7422 claim by prisoners seeking Economic Impact Payments has
proper standing but still required administrated exhaustion with the Internal Revenue Service);
Rueda v. Yellen, No. 20-1102, 2022 WL 684143, at *1 (D. Md. Mar. 7, 2022) (recognizing the
“stimulus payments” are advanced refunds of a tax credit); Amador v. Mnuchin, 476 F. Supp. 3d
125, 144 (D. Md. 2020) (casting Economic Impact Payments as a tax issue, but waiving the
administrative exhaustion requirement); Scholl v. Mnuchin, 494 F. Supp. 3d 661, 675 (N.D. Cal.
2020), appeal dismissed (Dec. 11, 2020) (casting Economic Impact Payments as a tax issue and
recognizing exhaustion is required for suits to recover any internal revenue tax).
16 PL 116-136, 134 Stat 281; see also 26 U.S.C. § 6428 (a); Morton v. United States Virgin Islands,
128 A.F.T.R.2d 2021-7051 (3d Cir. Dec. 29, 2021).
17 Rueda v. Yellen, 2022 WL 684143, at *1; see also 26 U.S.C. § 6428
18 See, e.g., I.R.C. § 32 (earned income tax credit).
19 Rueda v. Yellen, 2022 WL 684143, at *1.
20 26 U.S.C. § 7422; See, e.g., Morton, 128 A.F.T.R.2d 2021-7051, at *3 n. 6.
21 United States v. Williams, 514 U.S. 527, 533 (1995).
22
23 Morton, 128 A.F.T.R.2d 2021-7051, at *3 n. 6.
24 Scholl v. Mnuchin, 494 F. Supp. 3d 661, 681 (N.D. Cal. 2020), appeal dismissed (Dec. 11, 2020)
(quoting Cohen v. United States, 650 F.3d 717, 731 (D.C. Cir. 2011)).
25 See IRC § 7422; United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1 (2008).
26 See IRS Publication 5, Your Appeal Rights and How to Prepare a Protest if You Disagree, IRS,
https://www.irs.gov/newsroom/taxpayer-bill-of-rights-5 (last updated May 17, 2022). The Internal
Revenue Service has also implemented more informal procedures as to Economic Impact
Payments to resolve the issue without requiring a Formal Written Protest. See Economic Impact
Payments, IRS, https://www.irs.gov/coronavirus/economic-impact-payments (last updated May
17, 2022).
27 United States v. Williams, 514 U.S. 527, 533 (1995).
28 U.S. Army Corps of Engineers v. Hawkes Co., 578 U.S. 590, 601 (2016).
29 Amador, 476 F. Supp. 3d at 144.
30 Id.; see also 26 U.S.C. § 6428 (a).