United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Robert Blakey, United States District Judge.
Bettye Garlovsky (“Plaintiff”) made a partial
payment to the Internal Revenue Service pursuant to a tax
penalty assessed against her late husband, Hillard Garlovsky
(“Hillard”). Plaintiff contemporaneously
requested a refund of her partial payment. Plaintiff's
refund request was denied, and she filed suit. Pursuant to
her Amended Complaint , Plaintiff seeks: (1) damages
pursuant to 26 U.S.C. § 7433; (2) a refund of taxes
erroneously paid pursuant to 26 U.S.C. § 7422; (3) a
declaratory judgment; and (4) costs and expenses pursuant to
26 U.S.C. § 7430. Defendant moved to dismiss all counts
for lack of jurisdiction under Rule 12(b)(1) . That
motion is granted in part and denied in part.
U.S.C. § 6672(a) authorizes the Internal Revenue Service
(“IRS”) to collect a penalty from a
“person” who acted “willfully” in
causing a controlled company to fail to pay certain taxes.
Pursuant to that provision, the IRS began an effort to
collect a Trust Fund Recovery Penalty on February 21, 2014,
by sending a letter to Hillard, Plaintiff's deceased
husband. Am. Compl.  ¶ 11. Specifically, the IRS
asserted that Hillard was responsible for the penalty arising
from Lakeview Nursing and Rehabilitation's
(“Lakeview”) failure to pay withheld employment
taxes for June 30, 2010, September 30, 2010, December 31,
2010, and March 31, 2011. Id. ¶ 2.
submitted a protest letter accompanied by a memorandum of law
to the IRS on April 21, 2014, arguing Hillard was neither a
responsible person nor a willful actor under 26 U.S.C. §
6672. Id. ¶12. According to Plaintiff, an IRS
agent then demanded that Plaintiff complete a Form 56,
“Notice Concerning Fiduciary Relationship, ”
which requires the putative fiduciary to state the nature of
their relationship to the assessed party. Id.
¶¶ 13-15. Plaintiff initially informed the IRS
agent she was not a fiduciary to Hillard; however, she
eventually reported that she was in receipt of Hillard's
property and submitted a Form 56 to the IRS. Id.
February and November of 2014, the IRS sent collection
letters to Hillard, “in care of” Plaintiff. 
Ex. 1A, 1B. The letters sent to Plaintiff's residence
identified Hillard, not Plaintiff, as the assessed taxpayer.
 at 1-3. On December 19, 2014, Plaintiff partially paid
the penalty assessed against Hillard by submitting a check in
the amount of $1, 000 to the IRS, and concurrently filed a
request to have that amount refunded. Am. Compl.  ¶
18. On May 26, 2015, the IRS denied Plaintiff's request
for a refund. Id. ¶ 19.
filed her Amended Complaint in this matter on April 4, 2016.
Plaintiff states that IRS agents ignored her attempt to
explain that she was not Hillard's fiduciary and
continued to demand payment from her. Id.
¶¶ 46-47. Plaintiff, in Count I, asserts that the
IRS agents' conduct was reckless, such that she is
entitled to damages pursuant to 26 U.S.C. § 7433, which
creates a civil action against the United States when any
officer or employee of the IRS negligently, recklessly, or
intentionally disregards any provision of the Internal
Revenue Code (“IRC”). Id. ¶¶
II of Plaintiff's Amended Complaint alleges that the
collection of $1, 000 by the IRS was erroneous and illegal,
such that Plaintiff's partial payment should be refunded
pursuant to 26 U.S.C. § 7422. Id. ¶ 58.
Additionally, Plaintiff asserts that Hillard was not a
responsible person within the meaning of 26 U.S.C. §
6672 and is accordingly not liable for Lakeview's
withholding taxes during the Penalty Period. Id.
third cause of action requests a declaratory judgment.
According to Plaintiff, the IRS indicated in February of 2014
that Lakeview owed an additional $918, 677.23 and refused to
release Plaintiff from any future obligation to pay the
remainder of the outstanding taxes. Id. ¶¶
60-61. Plaintiff claims any assessment of the penalty against
her for any part of the additional $918, 677.23 would be
erroneous and illegal. Id. ¶ 62.
Count IV, Plaintiff alleges that she is entitled to
reasonable litigation costs and attorneys' fees, pursuant
to 26 U.S.C. § 7430. Id. ¶ 66. Plaintiff
reasons that the assessment of penalties under 26 U.S.C.
§ 6672 was not substantially justified since Plaintiff
produced to the IRS factual and legal support for her
position that Hillard did not willfully cause Lakeview's
failure to pay withholding taxes for the penalty period.
Id. ¶ 65.
now seeks to dismiss all four counts for lack of subject
matter jurisdiction. As explained below, that motion is
granted in part and denied in part.
reviewing a motion to dismiss for lack of subject matter
jurisdiction, the Court must construe the Complaint in the
light most favorable to Plaintiff, accept as true all
well-pleaded facts and draw all reasonable inferences in her
favor. Long v. Shorebank Dev't Corp., 182 F.3d
548, 554 (7th Cir. 1999).
bears the burden of establishing that the Court's
jurisdictional requirements have been met. Ctr. for
Dermatology & Skin Cancer, Ltd. v. Burwell, 770 F.3d
586, 589 (7th Cir. 2014). Once her jurisdictional allegations
are challenged, Plaintiff must support those allegations by
competent proof. Thomson v. Gaskill, 315 U.S. 442,
446 (1942). For a Rule 12(b)(1) motion, the court “may
properly look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on
the issue to determine whether in fact subject matter
jurisdiction exists.” Apex Digital, Inc. v. Sears,
Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009)
(internal quotation omitted).
motion to dismiss is grounded in the general proposition that
the United States may not be sued without its consent,
pursuant to the doctrine of sovereign immunity. U.S.
Dept. of Energy v. Ohio, 503 U.S. 607, 615 (1992). The
government may waive its sovereign immunity, but such waiver
must be unequivocally expressed. Kuznitsky v. United
States, 17 F.3d 1029, 1031 (7th Cir. 1994). In addition,
the government has the power to attach conditions to its
consent to be sued. Id. The Court will consider each
of Plaintiff's claims in light of these general
Count I - Damages
order to sue the United States for damages, Plaintiff must
demonstrate that her claim falls within an operative waiver
of sovereign immunity and that she has exhausted her
administrative remedies. Plaintiff's damages claim fails,
as explained below.
Plaintiff Is Ostensibly Outside The Purview Of §
mentioned supra, Plaintiff's damages claim is
governed by 26 U.S.C. § 7433(a), which provides:
If, in connection with any collection of Federal tax with
respect to a taxpayer, any officer or employee of the
Internal Revenue Service recklessly or intentionally, or by
reason of negligence, disregards any provision of this title,
or any regulation promulgated under this title, such
taxpayer may bring a civil action ...