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Wrhel v. United States

United States District Court, W.D. Wisconsin

September 29, 2017


          OPINION & ORDER


         Eric Thomas Wrhel, a Madison resident appearing pro se, brings the latest in a series of lawsuits against the United States concerning the alleged miscalculation of his taxes related to gambling income, as well as harassing behavior of Internal Revenue Service officials. I dismissed his previous cases in part because he had failed to exhaust administrative remedies on his potential claims under 26 U.S.C. § 7422 (“Civil actions for refund”) and § 7433 (“Civil damages for certain unauthorized collection actions”). See Wrhel v. United States, No. 15-cv-732-jdp, 2016 WL 4507393 (W.D. Wis. Aug. 26, 2016); Wrhel v. U.S. Treasury-Internal Revenue Serv., No. 15-cv-39-jdp, 2016 WL 1122103 (W.D. Wis. Mar. 22, 2016). The United States has filed a motion to dismiss the new case, Dkt. 11, which I will grant in part and deny in part. Wrhel has filed a series of motions asking for the court to issue injunctions or subpoena parties who are not part of the action, so I will deny those motions. The case will proceed only on Wrhel's claims under §§ 7422 and 7433.

         A. Motion to dismiss

         Wrhel's new complaint is similar to his previous ones: he presents a difficult-to-follow story about his ongoing dispute with the IRS, mostly about the IRS's apparent mistake in attempting to collect taxes due on Wrhel's 2010 gambling winnings after failing to send a notice of deficiency to a proper last-known address for him. He includes a list of legal theories underlying his claims, including “Conspiracy to Defraud, 2 counts Illegal Search and Seizure, Trespassing, Harassment, Spoliation of Evidence, Illegal Taxation, Gross Negligence, Suppression of Evidence, [and] Violat[ion of] Treasury Regulation § 301.7433-1.” Dkt. 1, at 2.

         The United States moves to dismiss the case under Federal Rule of Civil Procedure 12(b)(1) (lack of subject-matter jurisdiction) and 12(b)(6) (failure to state a claim upon which relief can be granted). The government is correct that generally, the United States has not waived its sovereign immunity regarding tort or constitutional claims against the IRS and its officials. See, e.g., F.D.I.C. v. Meyer, 510 U.S. 471 (1994); Clark v. United States, 326 F.3d 911 (7th Cir. 2003). So Wrhel cannot bring most of the causes of action listed in his complaint, and I will grant the motion to dismiss regarding these causes of action. But as I have stated in Wrhel's previous cases, the United States has waived its sovereign immunity with regard to claims that can be brought against it under the Internal Revenue Code concerning tax collection and refunds. Wrhel specifically mentions the IRS regulation expanding on 26 U.S.C. § 7433, but even if he did not, he is not required to plead his legal theories. Hatmaker v. Mem'l Med. Ctr., 619 F.3d 741 (7th Cir. 2010). In his previous cases, I have discussed his potential claims regarding “unauthorized collection actions” under § 7433 and claims for refund under 26 U.S.C. § 7422. Those are the causes of action under which this lawsuit may be brought.

         I dismissed those claims previously because of exhaustion problems, but the United States no longer seeks dismissal based on Wrhel's failure to exhaust his administrative remedies because it concedes that Wrhel exhausted his remedies through an administrative claim denied by the IRS in November 2016. See Dkt. 1-1. Instead, the government contends that Wrhel's current allegations fail to state cognizable claims under these statutes, in large part because his allegations are conclusory and vague.

         To state a claim upon which relief can be granted, a complaint must provide a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8 “does not require ‘detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A complaint must offer “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citations omitted).

         I routinely explain to pro se plaintiffs that to satisfy Rule 8, a complaint should be drafted as if the plaintiff were telling a story to people who knew nothing about the plaintiff's situation. Wrhel's current complaint fails on that score, but I will not dismiss the case outright because of it. I would usually have the pro se litigant file an amended complaint to better explain the events that he believes show the violation of his rights. Here, Wrhel has beaten me to the punch. In his brief opposing the motion to dismiss, he states, “I think I was pretty straightforward in my summons and complaint for why we are here. There seems to be a lack of seriousness by the defendants with regard to what they have done to me so let me explain further . . . .” Dkt. 13, at 2. He then provides a detailed statement of the events underlying his claims. The government addresses these allegations in its reply. Because Wrhel has already done what I likely would have ordered him to do in response to the motion to dismiss, I will consider the recitation of events in his brief as a supplement to his complaint. In that supplement, Wrhel states the following:

         1. Allegations of fact

         Starting in July 2014, IRS agents began contacting Wrhel about unfiled returns. Wrhel responded to the letter by writing back, stating that he had hired an accounting firm to work on the problem. In early August, Wrhel saw a person “illegally parked in front of [his] home, taking pictures, with their cell phone, of items sitting on [his] property.... [Wrhel] had no idea who this person was.” About a week later, Wrhel's housekeeper notified him that a man was “on [his] property.” The man left “IRS literature” and the business card for an IRS agent at the door. On the card, a note was written stating that Wrhel “must call” him back by 4 p.m. the next day. Wrhel met with his accountant, called the agent, and arranged to have his returns filed by mid-September 2014. Wrhel states that that was earlier than he had originally believed because he had earlier submitted a request for extension, which the IRS now claimed it had not received. After firing his accountant and hiring a new one, Wrhel submitted his forms in mid-October 2014.

         But this did not stop communications from the IRS. A few days later, Wrhel received a tax bill for $393.53 for unpaid 2010 taxes. He later received notification that a “seizure action had been taken against [him].” After speaking with IRS personnel, Wrhel learned that this tax assessment concerned winnings from a casino. He also learned that the IRS had sent out notices to him at an incorrect address in Iowa, even though his Madison address was on his return for the 2010 and previous years. When Wrhel pressed the IRS for information about the address confusion, it withheld the information from him until he requested the information via court order.

         Wrhel filed a petition for redetermination in the United States Tax Court, and the court concluded that the IRS never properly sent Wrhel a notice of deficiency. Wrhel received a check form the IRS for $335.59, apparently as a partial refund for the amount it had incorrectly taxed. But the IRS also subjected Wrhel to additional penalties and interest on this amount.

         2. Claims under the Internal Revenue Code

         The United States has waived its sovereign immunity with respect to taxpayer suits for refunds. See 26 U.S.C. § 7422. Wrhel alleges that he was incorrectly forced to pay $393.53 in 2010 taxes and then also pay penalties and interest associated with that incorrect assessment. In its reply, the United States contends that Wrhel has no claim for refund because he has already been refunded the correct amount, and he does not allege that the refund check he received is for the incorrect amount. Wrhel does not explicitly say that he was refunded the wrong amount, but I must construe his pro se complaint “liberally” and hold it to “less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus,551 U.S. 89, 94 (2007) (per curiam) (internal quotations omitted). The figures he incudes in the supplement show that the amount of the refund he received is less than the amount he was assessed. ...

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