Ward Franklin Dean v. United States
20-14421
| 11th Cir. | Jun 30, 2021Background:
- In 2007 the IRS assessed Dean for tax years 1997–2005 and, after unpaid balances, served a notice of levy on his Social Security benefits in June 2013; SSA began sending monthly benefits to the IRS starting July 2013.
- The ten-year statutory collection period for the 2007 assessments expired in September 2017; shortly before expiration the IRS filed a certificate releasing its federal tax liens on Dean’s property.
- Dean claimed the lien release extinguished the assessments and that the IRS’s continued acceptance of his monthly Social Security payments after 2017 constituted unlawful seizures in violation of 26 U.S.C. § 7433; he sought damages equal to the post-expiration payments.
- District court granted the IRS’s motion to dismiss for failure to state a claim and denied Dean’s motions to amend as futile; Dean appealed pro se.
- The Eleventh Circuit held the 2013 levy had seized Dean’s fixed and determinable right to future Social Security payments before the limitations period expired, so continued receipt of monthly payments was lawful; bookkeeping entries attributing payments to interest did not constitute actionable collection activity under § 7433.
- The court also held Dean’s proposed refund claim under 26 U.S.C. § 7422 would lack jurisdiction because he had not alleged full payment of the assessed tax, so amendment was futile.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether continued receipt of monthly Social Security payments after the 10-year collection period violated § 7433 | Dean: IRS unlawfully "maintained" the 2013 levy and seized benefits after the collection period expired | IRS: Levy seized a fixed, determinable right in 2013 before expiration; continued receipt was lawful | Court: Held for IRS — levy valid; continued receipt not wrongful |
| Whether bookkeeping entries (monthly "interest" postings) constituted unlawful collection under § 7433 | Dean: IRS "created" new charges equal to each benefit and collected them, showing unlawful collection | IRS: Postings are internal accounting; absent unlawful levy or collection action, § 7433 does not apply | Court: Held for IRS — bookkeeping alone is not actionable under § 7433 |
| Whether district court abused discretion by denying leave to amend the complaint | Dean: Proposed amendments supply facts showing continued unlawful collection and newly created charges | IRS: Amendments would be futile because allegations still do not plead an actionable § 7433 claim and refund claim lacks jurisdiction | Court: Denial was not an abuse — amendments would be futile |
| Whether Dean could bring a refund/overpayment claim under § 7422 without paying the full assessed tax | Dean: Seized payments after expiration produced an overpayment subject to refund | IRS: Jurisdiction for refund actions requires full payment of the assessed tax before suit | Court: Held for IRS — refund claim would lack jurisdiction absent full payment |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (establishes pleading plausibility standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (applies pleading standard; distinguishes factual allegations from legal conclusions)
- Phelps v. United States, 421 U.S. 330 (1975) (levy gives the government constructive possession of seized property, including fixed rights to future payments)
- Flora v. United States, 362 U.S. 145 (1960) (tax refund jurisdiction requires full payment of assessed tax before suit)
- Miller v. United States, 66 F.3d 220 (9th Cir. 1995) (improper assessment not actionable under § 7433)
- Shaw v. United States, 20 F.3d 182 (5th Cir. 1994) (same)
- Gonsalves v. IRS, 975 F.2d 13 (1st Cir. 1992) (same)
- Cockrell v. Sparks, 510 F.3d 1307 (11th Cir. 2007) (amendment is futile if proposed complaint would be subject to immediate dismissal)
- Day v. Taylor, 400 F.3d 1272 (11th Cir. 2005) (documents central to claims may be considered on a motion to dismiss)