Retfalvi v. Commissioner, 216 F. Supp. 3d 648

Background

Plaintiff, a Canadian citizen living/working in the U.S., had Canadian income-tax liabilities after selling Canadian property; CRA finalized an assessment in 2011 and the plaintiff did not pay.
CRA sent a Mutual Collection Assistance Request under Article 26A of the U.S.-Canada Income Tax Convention; the IRS (Service) accepted and issued a Final Notice of Intent to Levy for $124,286.83.
Plaintiff sued in federal court seeking declaratory and injunctive relief, arguing Article 26A is unconstitutional and that the Service lacks authority to collect the Canadian revenue claim.
Defendant moved to dismiss for lack of subject-matter jurisdiction under Fed. R. Civ. P. 12(b)(1) and for failure to state a claim; defendant invoked the Anti-Injunction Act (AIA) and the Declaratory Judgment Act (DJA).
The court treated the treaty-based “revenue claim” as an assessment that the United States must treat as a tax under U.S. law and concluded the AIA and DJA bar pre-enforcement injunctive and declaratory relief.
Because the court found no subject-matter jurisdiction, it granted the motion to dismiss and did not reach the Rule 12(b)(6) arguments.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Court has jurisdiction to enjoin IRS collection of a Canadian revenue claim accepted under Article 26A	Article 26A collection is a foreign revenue claim, not a U.S. "tax," so AIA/DJA do not bar relief	Treaty requires U.S. to treat an accepted revenue claim as an assessment under U.S. law; thus it is a federal tax subject to AIA/DJA	Court held the accepted revenue claim is treated as a U.S. tax/assessment and AIA/DJA preclude jurisdiction to grant injunction or declaratory relief
Whether NFIB changes the AIA analysis here	NFIB limits what counts as a "tax"; plaintiff argues "assessment" under treaty is not a tax for AIA purposes	The treaty defines "revenue claim" as a tax and requires treatment as an assessment under U.S. law; NFIB does not make assessments categorically outside AIA	Court held NFIB does not help plaintiff; treaty and IRC treatment control, so AIA applies
Whether constitutional claims permit injunctive relief despite AIA	Plaintiff asserts constitutional rights require pre-enforcement judicial review	Defendant: constitutional claims must be raised in post-payment refund suit; AIA still bars pre-enforcement relief	Court held constitutional claims do not create an exception; plaintiff may pursue refund suit after payment
Whether treaty’s "comparable assistance" language creates jurisdiction or compels review	Plaintiff claims Treaty policy implies courts must review to ensure comparable assistance	Defendant: treaty language does not confer jurisdiction or require U.S. courts to provide identical judicial access	Court held treaty provision does not supply subject-matter jurisdiction or overcome AIA/DJA bar

Key Cases Cited

United States v. Sherwood, 312 U.S. 584 (sovereign immunity: consent to suit defines jurisdiction)
United States v. Mitchell, 463 U.S. 206 (United States cannot be sued without consent)
Alexander v. Americans United Inc., 416 U.S. 752 (AIA bars suits to restrain tax collection even when constitutional claims asserted)
Bob Jones Univ. v. Simon, 416 U.S. 725 (refund suit provides adequate post-payment remedy; AIA purpose)
National Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (AIA’s scope depends on whether an exaction is treated as a tax by Congress)
United States v. Galletti, 541 U.S. 114 (an "assessment" records/constitutes tax liability for enforcement)
Enochs v. Williams Packing & Nav. Co., 370 U.S. 1 (refund suit as exclusive remedy to challenge tax collection)
Pittston Co. v. United States, 199 F.3d 694 (definition of "tax" for AIA/refund-action contexts)
Judicial Watch, Inc. v. Rossotti, 317 F.3d 401 (courts lack jurisdiction to enjoin tax assessment or collection)
Dileng v. Comm’r, 157 F. Supp. 3d 1336 (treaty mutual-collection claim treated as U.S. assessment subject to AIA/DJA)