Agility Network Services, Inc. v. United States
848 F.3d 790
| 6th Cir. | 2017Background
- Agility Network Services, Cinnamon Denny, and Chandler Denny received a notice of federal tax lien (Apr 17, 2012) and a notice of intent to levy (May 21, 2012) for unpaid employment taxes.
- Agility requested a Collection Due Process (CDP) hearing on May 23, 2012; the IRS did not hold the first hearing until Dec. 20, 2012. Taxpayers allege Revenue Officer McKinzie delayed forwarding the request to Appeals.
- At the Dec. 20 hearing, Appeals Agent Jaclyn Allen limited topics, declined to investigate certain claims, refused penalty abatement and an installment plan, and made remarks suggesting familiarity with McKinzie’s intent.
- After Appeals Manager reassigned the matter, Agent Leonard Hanline held a second hearing (July 15, 2013) and again denied withdrawal of the lien, penalty abatement, and an installment plan; he found no misconduct by McKinzie or Allen.
- Taxpayers filed suit against the United States seeking damages under 26 U.S.C. § 7433 for IRS misconduct "in connection with any collection of Federal tax" and sought a temporary restraining order (TRO) halting further collection. The district court dismissed all claims; the Dennys appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 7433's waiver of sovereign immunity covers misconduct during CDP hearings | § 7433 applies because Appeals agents' conduct occurred while handling matters related to collection of taxes and thus is "in connection with any collection of Federal tax." | § 7433 is limited to affirmative collection activity; CDP hearings are protective, temporarily impede collection, and therefore fall outside § 7433. | CDP hearing conduct is not "in connection with any collection of Federal tax" under § 7433; sovereign immunity bars the suit. |
| Whether the Tax Anti-Injunction Act (26 U.S.C. § 7421(a)) bars the requested TRO against further collection | TRO sought to stop ongoing collection and return auctioned property; plaintiffs argue equitable relief is appropriate given asserted misconduct. | The request is an injunction to restrain collection and is barred by § 7421(a); Enochs exception does not apply because plaintiffs’ § 7433 claim was dismissed. | TRO request is barred by the Tax Anti-Injunction Act; Enochs exception does not apply, so injunction properly dismissed. |
Key Cases Cited
- Ford Motor Co. v. United States, 768 F.3d 580 (6th Cir. 2014) (statutory interpretation principle: avoid surplusage)
- Blackmon v. United States, 807 F.2d 70 (6th Cir. 1986) (waivers of sovereign immunity construed narrowly)
- Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (U.S. 1988) (administrative rules not given retroactive effect absent clear intent)
- Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (U.S. 1962) (narrow exception allowing injunctions against tax collection where government cannot ultimately prevail and equity otherwise exists)