Reginald Ivy v. Cmsnr. IRS
877 F.3d 1048
| D.C. Cir. | 2017Background
- Ivy defaulted on a federal student loan; Missouri notified him in 2009 that federal tax refunds could be applied to the debt under 26 U.S.C. § 6402(d).
- An identity thief filed a 2011 return in Ivy’s name claiming a $1,822 refund; the Fiscal Service sent $1,822 to the Department of Education, which applied it to Ivy’s loan.
- In August 2013 Ivy consolidated his loan, eliminating any past-due federal debt; in September 2013 he filed his own 2011 return claiming a $634 refund.
- The IRS instructed the Fiscal Service to recoup $1,188 (the $1,822 earlier applied less Ivy’s $634 claim) from the amount applied to the loan, leaving Ivy alleging he was wrongfully deprived of $634.
- Ivy sued under 26 U.S.C. § 7433(a) seeking damages for IRS misconduct; the refund claim later became moot after the Fiscal Service paid Ivy $717.71 (refund plus interest).
- The district court dismissed for lack of jurisdiction as § 7433(a) waives sovereign immunity only for injuries "in connection with any collection of Federal tax." Ivy appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 7433(a) waives sovereign immunity for damages arising from the alleged wrongful offset of Ivy’s 2011 refund | Ivy: § 7433(a) applies because the IRS handled tax funds and the conduct was "collection-related" | Gov: § 7433(a) covers only misconduct tied to collection of federal taxes; here the offset collected a non-tax student-loan debt | Held: § 7433(a) does not apply; the alleged injury was tied to collection of a non-tax debt, so no jurisdiction under § 7433(a) |
| Whether the IRS (as opposed to Fiscal Service) must have committed the challenged acts for § 7433(a) to apply | Ivy: IRS activities were collection-related and should be covered; amicus supports broad reading | Gov: The Fiscal Service (not the IRS) effectuated the disbursement/offset; in any event the acts were not tax-collection actions | Held: Court declined to reach this fully because the first ground (non-tax collection) disposes of the case |
| Whether a Bivens claim for constitutional damages survives | Ivy: sought damages including punitive and compensatory relief | Gov: Bivens claim improperly asserted against federal agencies/officials in this context | Held: District court properly dismissed the Bivens claim; affirmed |
| Whether Ivy retained other remedies against the entity that received the offset | Ivy: argued he was wrongfully deprived of refund amount | Gov: § 6402(g) preserves actions against the agency that was paid the reduction (Department of Education) | Held: § 6402(g) does not preclude actions against the agency paid the reduction; the court’s reading of § 7433(a) remains consistent with that preservation |
Key Cases Cited
- FDIC v. Meyer, 510 U.S. 471 (U.S. 1994) (sovereign immunity bars suit absent waiver)
- Kim v. United States, 632 F.3d 713 (D.C. Cir. 2011) (§ 7433 covers collection-related activities such as executing liens and demanding payment)
- Kim v. United States, 707 F.3d 335 (D.C. Cir. 2013) (distinguishing non-collection correspondence from collection efforts)
- Agility Network Servs., Inc. v. United States, 848 F.3d 790 (6th Cir. 2017) (§ 7433 reaches affirmative steps to recover taxes)
- Gonsalves v. IRS, 975 F.2d 13 (1st Cir. 1992) (refusing to apply § 7433 to an alleged wrongful refusal to refund)