Said Hassen v. Government of the Virgin Islan, 861 F.3d 108

The Hassens received a final notice of intent to levy for a 2004 tax debt and the BIR issued an initial levy (Levy 1) in March 2013 and several additional levies thereafter.
The Hassens (through counsel) submitted letters in June and December 2013 requesting an installment agreement and asked the BIR to cease enforced collection while the request was considered; counsel did not submit Form 9465 as the BIR requested.
The Hassens did not file the administrative claim required by 26 U.S.C. § 7433(d) before suing; instead they sued the USVI and the BIR under 26 U.S.C. § 7433(a), alleging wrongful levies that violated § 6331(k)(2) (no levy while a proposed installment agreement is pending).
The USVI and BIR moved to dismiss under Fed. R. Civ. P. 12(b)(1) (lack of jurisdiction for failure to exhaust) and 12(b)(6) (failure to state a claim).
The District Court held exhaustion is not jurisdictional but the Hassens had not exhausted administrative remedies and dismissed under Rule 12(b)(6) because the complaint failed to plead a plausible § 7433(a) violation.
The Third Circuit affirmed: exhaustion under § 7433(d) is a mandatory precondition to recovery but nonjurisdictional, and the complaint was dismissed for failing to plead sufficient facts showing a negligent/reckless/intentional violation of Title 26 or its regulations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 7433(d) exhaustion is jurisdictional	Hassens argued exhaustion was not jurisdictional (or did not prevent suit)	USVI/BIR argued failure to exhaust deprived court of jurisdiction	Court: § 7433(d) exhaustion is nonjurisdictional (a mandatory precondition to damages), so court has jurisdiction though exhaustion is required to obtain relief
Whether the complaint states a § 7433(a) claim	Hassens alleged BIR issued levies while an installment agreement was pending, so BIR violated § 6331(k) and § 7433(a)	USVI/BIR argued pleading was conclusory and failed to allege facts showing a violation or the requisite culpability	Court: Complaint lacked factual allegations (only legal conclusions) to show an officer negligently/recklessly/intentionally disregarded Title 26/regulations; dismissal under Rule 12(b)(6) affirmed

Venen v. United States, 38 F.3d 100 (3d Cir. 1994) (prior Third Circuit characterization of § 7433(d) as jurisdictional)
Arbaugh v. Y & H Corp., 546 U.S. 500 (U.S. 2006) (distinguishing jurisdictional limits from mandatory claim elements)
Hoogerheide v. IRS, 637 F.3d 634 (6th Cir. 2011) (treating § 7433(d) exhaustion as nonjurisdictional)
Gray v. United States, 723 F.3d 795 (7th Cir. 2013) (exhaustion under § 7433(d) is a statutory prerequisite to recovery)
Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (U.S. 2010) (consideration of text, context, and history to determine jurisdictional character)
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (U.S. 1998) (jurisdictional prerequisites must be addressed before merits)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard for factual plausibility)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading rule)
Pension Benefit Guarant. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192 (3d Cir. 1993) (courts may consider complaint exhibits on a motion to dismiss)
Rubel v. Comm’r, 856 F.3d 301 (3d Cir. 2017) (textual inquiry into jurisdictional language)
Kim v. United States, 632 F.3d 713 (D.C. Cir. 2011) (treating § 7433(d) as affirmative defense/nonjurisdictional)