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Ivy v. Commissioner of Internal Revenue Service

United States Court of Appeals, District of Columbia Circuit

December 19, 2017

Reginald L. Ivy, Appellant
v.
Commissioner of Internal Revenue Service, Appellee

          Argued November 21, 2017

         Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-01976)

          Travis Crum, appointed by the court, argued the cause as amicus curiae in support of appellant. With him on the briefs was Brian D. Netter.

          Reginald L. Ivy, pro se, filed the briefs for appellant.

          Clint A. Carpenter, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief was Joan I. Oppenheimer, Attorney.

          Before: Henderson, Circuit Judge, and Williams and Ginsburg, Senior Circuit Judges.

          OPINION

          WILLIAMS SENIOR CIRCUIT JUDGE.

         A provision of the Taxpayer Bill of Rights, 26 U.S.C. § 7433(a), provides for a civil action against the United States if a taxpayer suffers damages as a result of reckless, negligent or intentional disregard of the Code or regulations "in connection with any collection of Federal tax" with respect to that taxpayer. Appellant Reginald L. Ivy invokes § 7433(a) to recover damages he claims to have suffered as a result of a mix-up relating to the refund due him on his 2011 income tax. Because the statute waives the government's sovereign immunity only for damages suffered in connection with collection of federal taxes, and Ivy's injury (if any) related to collection of a student loan debt, § 7433(a) provides no jurisdictional path for Ivy's suit; we affirm the district court's dismissal of his case.

         The underlying tangles begin with Ivy's defaulting on a student loan, prompting the Missouri Department of Higher Education to notify him in August 2009 that any federal tax refunds to which he might become entitled would be used first to pay off his past-due debt. Ivy for a time pursued a course that mooted this threat; for the 2010-12 tax years, he didn't file timely tax returns.

         But while Ivy remained off the radar, someone else- evidently a practitioner of identity theft-filed a 2011 tax return in Ivy's name, claiming a tax refund of $1, 822. The IRS certified the matter to the Fiscal Service (a separate bureau within the Department of the Treasury that was formerly known as the Financial Management Service) for disbursement of the claimed refund. The Fiscal Service, aware of Ivy's "past-due legally enforceable debt, " 26 U.S.C. § 6402(d), sent the $1, 822 to the Department of Education (which, as reinsurer, had taken over the loan after Ivy defaulted). The Department of Education then reduced Ivy's outstanding loan balance by the amount of the claimed refund. Up to this point, the errors worked in favor of Ivy to the tune of $1, 822.

         Nearly a year later, in August 2013, Ivy tended to his student loan debt. He consolidated his loan through one of the federal government's direct loan programs and, as a result, no longer owed any past-due federal debts. In the next month, he belatedly filed his 2011 tax return, claiming a $634 refund.

         The IRS accordingly set out to unscramble the actions taken in response to the imposter's filing, specifically the $1, 822 windfall that had flowed to Ivy. It instructed the Fiscal Service to reduce the amount that had previously been applied to Ivy's student loan balance by $1, 188-the difference between the refund claimed by the imposter ($1, 822) and the refund claimed by Ivy ($634).

         Ivy responded by suing the IRS, seeking damages (including the $634) and expenses. He claimed that the federal government had no right to withhold the $634 because, at the time he belatedly filed his 2011 return and sought a refund, he was no longer subject to a past-due debt that could trigger the offset provisions of § 6402(d).

         To the extent that Ivy's complaint can be read as seeking a refund of $634, all parties agree that any such claim is now moot. During the pendency of this appeal, the IRS directed the Fiscal Service to pay Ivy ...


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