Opinion
CIV. NO. 02-00768 ACK-LEK
June 20, 2003
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
BACKGROUND
Between December 5, 2001 and December 26, 2001, plaintiffs Wilbert and Deanna Kaimikaua ("Plaintiffs") filed tax returns with the Internal Revenue Service ("IRS") for the tax years 1996 through 2000. Each of the returns had zeroes on all lines reflecting income or tax due to the government, however, Plaintiffs attached copies of W-2 wage statements indicating that they had received wages, tips, or other compensation in each of the tax years 1996 through 2000. (Complaint, Exs. A-L.) Plaintiffs also attached statements to each of the returns which set forth arguments as to why they believed they did not owe federal income taxes.
On December 3, 2002, Plaintiffs filed this action against the United States of America ("Defendant") seeking a refund of all amounts withheld from their wages during tax years 1996 through 2000. The Complaint indicates that Plaintiffs' sole argument in support of their refund claims is that they cannot be liable for income taxes unless the IRS first assesses the taxes against them. (Complaint ¶ 9.) Plaintiffs argue that because the IRS never assessed the taxes against them, they are entitled to a refund of the monies withheld.
On February 14, 2003, the government filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiffs filed their opposition on February 24, 2003, and they filed an errata to this opposition on March 10, 2003. This matter was heard on April 28, 2003.
The caption on Plaintiffs' opposition reads: "Motion for Judgment as a Matter of Law," which could be interpreted as Plaintiff bringing a motion for summary judgment. However, the caption on the errata reads: "Motion for Judgment as a Matter of Law Filed on February 24, 2003 in Opposition to Defendant's Motion to Dismiss, filed on February 14, 2003." In addition, Defendant, on March 27, 2003, filed a Response to Plaintiffs' Motion for Judgment as a Matter of Law.
Based on the errata caption as well as Plaintiffs' representations to the Court, the Court construes Plaintiffs' documents as an opposition to Defendant's Motion to Dismiss and not a motion for summary judgment brought by Plaintiff.
STANDARD
Under Rule 12(b)(6), in deciding a motion to dismiss for failure to state a claim upon which relief can be granted, this Court must accept as true the plaintiff's allegations contained in the complaint and view them in a light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686 (1974); Wileman Bros. Elliott, Inc. v. Giannini, 909 F.2d 332, 334 (9th Cir. 1990); Shah v. County of Los Angeles, 797 F.2d 743, 745 (9th Cir. 1986). Thus, the complaint must stand unless it appears beyond doubt that the plaintiff has alleged no facts that would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02 (1957); Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). A complaint may be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts alleged under a cognizable legal theory.Balistreri, 909 F.2d at 699, Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984).
In essence, as the Ninth Circuit has stated, "[t]he issue is not whether a plaintiff's success on the merits is likely but rather whether the claimant is entitled to proceed beyond the threshold in attempting to establish his claims." De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978), cert. denied, 441 U.S. 965 (1979). The Court must determine whether or not it appears to a certainty under existing law that no relief can be granted under any set of facts that might be proved in support of plaintiff's claims. Id.
A motion under Rule 12(b)(6) should also be granted if an affirmative defense or other bar to relief is apparent from the face of the Complaint, such as lack of jurisdiction or the statute of limitations. 2A J. MOORE, W. TAGGART J. WICKER, MOORE'S FEDERAL PRACTICE ¶ 12.07 at 12-68 to 12-69 (2d ed. 1991 supp. 1191-92) (citing Imbler v. Pachtman, 424 U.S. 409 (1976)) (emphasis added).
DISCUSSION
Plaintiffs' Complaint raises only one argument in support of their refund claim; they contend that they need not pay the tax liabilities at issue because those liabilities have not been assessed. The government contends that this argument entirely lacks merit, and the Court agrees.
"[A]n assessment is not a prerequisite to tax liability." Moran v. United States, 63 F.3d 663, 666 (7th Cir. 1995), overruled on other grounds by Malachinski v. C.I.R., 268 F.3d 497 (7th Cir. 2001). Conversely, "the absence of a tax assessment does not prove that a taxpayer owes no taxes." Sarnelli v. United States, 78 F. Supp.2d 1131, 1133 (D. Nev. 1999). Rather, the Internal Revenue Code imposes a duty on all individuals to file tax returns containing self-assessments of their tax liabilities. 26 U.S.C. § 1, 61, 6012. Individuals earning sufficient income to be liable for taxes must pay the liabilities "without assessment or notice and demand from the Secretary [of the Treasury]." 26 U.S.C. § 6151.
In the present matter, Plaintiffs owed tax liabilities on the income in tax years 1996 through 2000. They attached W-2 forms to each of the returns allegedly submitted to the IRS, indicating that they received wages in the years at issue. Wages constitute income, and any argument to the contrary is frivolous. See Wilcox v. Commissioner, 848 F.2d 1007, 1008-09 (9th Cir. 1998) (sanctioning taxpayer $1,500 for arguing that wages are not income), Olson v. United States, 760 F.2d 1003, 1005 (9th Cir. 1985), Gattuso v. Pecorella, 733 F.2d 709, 710 (9th Cir. 1984). Because Plaintiffs received wage income in the years at issue, they are liable for income taxes for those years, and they have not stated a viable claim supporting their request for a refund of the amount withheld.
CONCLUSION
Based on the foregoing reasons, the Court GRANTS Defendant United States' Motion to Dismiss for failure to state a claim upon which relief can be granted. The Court finds that the Complaint could not possibly be cured to permit Plaintiff to bring a claim for a refund of amounts withheld from their wages during 1996 through 2000, and thus Plaintiffs' action is dismissed with prejudice.IT IS SO ORDERED.