Hall v. Internal Revenue Services, 629 B.R. 124

Background

In 2014 Hall filed a Form 1040 claiming $3,192,142 "other income," $2,008,142 withholding, and a refund of $851,908; the IRS paid a refund (~$863,823 with interest) and Hall deposited it into Chase and related trust accounts.
In April 2016 the IRS determined Hall’s 2014 return was frivolous, made a quick assessment of $1,022,289.60, and issued jeopardy levies on his Chase accounts.
Hall sued in federal district court (E.D.N.Y.) challenging the levy; that action was dismissed for lack of subject‑matter jurisdiction because he had not shown exhaustion of administrative remedies under 26 U.S.C. § 7429 (dismissed without prejudice). Hall did not appeal.
Hall filed bankruptcy (initial Chapter 13 dismissed; later case converted to Chapter 7) and commenced this adversary proceeding in bankruptcy court naming the IRS and seeking declarations that the IRS has no valid lien/levy and that civil penalties are not tax payments; he also sought damages and injunctive relief.
The United States (appearing for the IRS) moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), arguing the IRS is not a suable entity (the proper defendant is the United States), Hall lacks standing to bring a §7426 wrongful‑levy claim (taxpayers are excluded), he failed to exhaust §7429 administrative remedies (and is time‑barred for §7433), sovereign immunity/FTCA exceptions apply, and declaratory/injunctive relief is barred by the Anti‑Injunction and Declaratory Judgment Acts.
The bankruptcy court treated the suit as against the United States, concluded Hall failed to state a plausible claim and that the court lacked jurisdiction over the challenged levy/assessment (exhaustion and statutory limits), and granted the United States’ motion to dismiss.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper defendant	Hall named IRS; contends he may sue IRS/seek refund and relief	IRS is an agency not suable eo nomine; suit is against the United States	Court treated suit as against United States; IRS not proper defendant eo nomine
Wrongful levy standing (§ 7426)	Hall says lien invalid because assessment shows refund due; civil penalties are not tax payments	§7426 wrongful‑levy suits are available only to third parties with an interest in levied property, not to the taxpayer	Hall (the taxpayer) lacks standing under §7426; cannot maintain wrongful‑levy claim
Jeopardy levy review / administrative exhaustion (§ 7429 / § 7433)	Hall claims administrative exhaustion/FTCA notice satisfied or not required	Hall did not timely seek §7429 administrative review; §7433 remedies require exhaustion and have a two‑year accrual limit	Court finds Hall did not exhaust §7429 remedies and is time‑barred under §7433; lack of jurisdiction to review levy
Declaratory/injunctive relief / sovereign immunity	Hall seeks declaratory judgment that IRS has no lien and an injunction; invokes FTCA/other remedies	Declaratory Judgment Act and Anti‑Injunction Act bar pre‑enforcement tax suits; FTCA waiver does not cover claims ‘‘in respect of’’ tax assessment/collection (28 U.S.C. § 2680(c))	Declaratory/injunctive relief barred; sovereign immunity/FTCA exceptions preclude Hall’s asserted tort remedy

Key Cases Cited

Blackmar v. Guerre, 342 U.S. 512 (agency‑named suit is treated as suit against United States)
Wapnick v. United States, 112 F.3d 74 (2d Cir. 1997) (§7429 exhaustion is jurisdictional for jeopardy levy review)
United States v. Dalm, 494 U.S. 596 (refund suits are time‑limited under statutes governing tax refund jurisdiction)
Bob Jones Univ. v. Simon, 416 U.S. 725 (Anti‑Injunction and Declaratory Judgment Act limits on pre‑enforcement tax relief)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleading)
Ashcroft v. Iqbal, 556 U.S. 662 (courts need not accept legal conclusions as true)
United States v. Orleans, 425 U.S. 807 (FTCA is a limited waiver of sovereign immunity)
Ball v. A.O. Smith Corp., 451 F.3d 66 (elements and limits of collateral estoppel in federal cases)