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Carol Diane Gray and Strategic Research Consulting, Inc v. United States of America

December 16, 2011


The opinion of the court was delivered by: Judge Sharon Johnson Coleman

Memorandum Opinion and Order

Plaintiff, Carol Diane Gray, filed a three count pro se complaint alleging fraud, error, and illegal assessment by the Internal Revenue Service. On July 18, 2011, the government filed a motion to dismiss for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted [11]. On September 21, 2011, Gray filed a motion for leave to represent the corporate plaintiff, Strategic Research Consulting, Inc., pro se [16]. Also on September 21, 2011, Gray filed a motion for leave to file an amended complaint [17]. All of the pending motions will be addressed in this Order.


During Gray's divorce proceedings in the 1990s, it came to light that her ex-husband allegedly failed to file and pay federal income tax for several years including 1992 through 1995, some of the years at issue in the present litigation. Gray alleges that she paid installments on her tax bill for the years 1992 to 1995 until receiving a letter from the IRS on October 8, 1997, in response to her request for an installment plan. The letter stated that the IRS "can't consider an installment agreement for you because our records show you don't owe anything on this account." (Compl., Ex. A, Dkt. 1.) The letter further states that, due to her ex-husband Steven Gray's bankruptcy proceedings, "[a]ll collection activities are currently suspended." (Id.) Gray believes the letter indicated that her tax arrearages had been dismissed. (Compl. ¶¶59-62.) Gray alleges that she showed the October 8, 1997, letter to IRS agents and that they ignored the letter and thus the process was unfair and lacked impartiality. Gray alleges that she was threatened with perjury for asking to amend her 1992 through 1995 tax returns. Gray alleges that Appeals Officer Zimmerman told her in June 2000, that Gray would receive relief from penalties for 1992 through 1995, but in the Appeals Officer's final decision she was denied relief.

Gray claims that she significantly overpaid her taxes for the years 1996 through 1999 and the IRS owes her a refund. She further explains that she did not file timely returns for 2001, 2002, 2003, and 2004 because she had to pay her son's college tuition and incurred significant failure to file penalties for those years.

Gray alleges that in 2007 Revenue Officer Holcomb promised her that no further lien would be placed on her properties as long as Gray complied with the payment schedule, but a month later five additional liens were placed on Gray's business property. Gray claims that the tax liens have ruined her credit and she has lost, among other things, money, equity in her home, and business opportunities.

In 2009, Gray underwent an audit for the years 1992 through 1995. Gray alleges that significant changes were made to her tax returns for those years, resulting in an increase in liability. Gray requests that the Court enter a judgment against the government finding that it wilfully infringed on Gray's rights under 26 U.S.C. §6501, 18 U.S.C. §1001, and denied her due process.

Legal Standard

Rule 12(b)(1) requires dismissal of claims over which the federal court lacks subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Jurisdiction is the "power to decide" and must be conferred upon the federal court. In re Chicago, Rock Island & Pacific R.R. Co., 794 F.2d 1182, 1188 (7th Cir. 1986). In reviewing a Rule 12(b)(1) motion, the Court may consider additional materials beyond the complaint to determine whether subject matter jurisdiction exists. See United Phosphorus Ltd. v. Angus Chem. Co.., 322 F.3d 942, 946 (7th Cir. 2003) (en banc). A plaintiff faced with a 12(b)(1) motion to dismiss bears the burden of establishing that the jurisdictional requirements have been met. See Western Transp. Co. v. Couzens Warehouse & Distributors, Inc., 695 F.2d 1033, 1038 (7th Cir. 1982).

A motion to dismiss tests the legal sufficiency of the complaint. See Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990) (quoting Triad Assocs., Inc. v. Chicago Hous. Auth., 892 F.2d 583, 586 (7th Cir.1989)). In the context of a motion to dismiss, the Court accepts all well pleaded allegations as true, views them in the light most favorable to the plaintiff, and draws all reasonable inferences in favor of the plaintiff. Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010). Although the bar to survive a motion to dismiss is not high, the complaint must allege sufficient factual matter, accepted as true to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).

Pro se complaints are generously construed and not held to the stringent standards expected of pleadings drafted by attorneys. Haines v. Kerner, 404 U.S. 519, 520-21 (1972); Marshall v. Knight, 445 F.3d 965, 969 (7th Cir. 2006). However, a pro se plaintiff can plead herself out of court by alleging facts that defeat the claim otherwise presented in the complaint. Lekas v. Briley, 405 F.3d 602, 613-14 (7th Cir. 2005).


Initially, the Court notes that Gray improperly named the Commissioner of Internal Revenue as a defendant. A lawsuit against a government official in his official capacity is a suit against the United States. Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 688, 93 L. Ed. 1628, 69 S. Ct. 1457 (1949); Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985). Accordingly, the Commissioner of the Internal Revenue Service is dismissed as a party.

Gray's request to represent the corporate plaintiff, Strategic Research Consulting, Inc. pro se. Gray's request is denied because a corporation cannot appear in federal court unless it is represented by a licensed attorney. Rowland v. California Men's Colony, 506 U.S. 194, 202 (1993). This is not a matter of discretion with this Court and has been well settled law for nearly two centuries. See Osborn v. President of Bank of United States, 22 U.S. 738, 9 Wheat. 738, 829, 6 L. Ed. 204 (1824). Since the filing of the motions now under consideration, Gray has retained ...

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