Taxpayer Argues that IRS Is Subject to Fair Debt Collection Practices Act (FDCPA)
Background
Edward T. Kennedy (2018-1 U.S.T.C. ¶50,290) claimed that the IRS’s conduct when it assessed him for unpaid taxes violated federal consumer protection law and requested that the IRS accept his request for audit reconsideration. In addition to suing the IRS, Kennedy suit included the Commissioner of the Department of Treasury, “John Doe” an unnamed employee of the IRS, Equifax, and the CEO of Equifax.
Kennedy also sought damages for the intentional infliction of emotional distress and loss of reputation with respect to the collection of his federal income tax liability. The individual claimed that he suffered intentional emotional distress because he received a letter from the IRS informing him that he owed $75,957.35 in unpaid taxes and that the IRS threatened to levy against his social security benefits to collect the unpaid taxes.
Court Findings
The court found that the FDCPA expressly excludes and does not apply to an IRS officer performing his official duties. Moreover, the federal tax obligations were not considered “debts” under FDCPA because they do not arise out of a consumer transaction. Additionally, the taxpayer’s argument that the IRS was not licensed to collect debts in the state of Pennsylvania was considered frivolous.
The court dismissed the claims against Equifax and its CEO because the claims against those parties had been dismissed in another lawsuit that Kennedy had previously filed. Thus, the court had only to be concerned about the claims against the IRS and the unnamed IRS employee.
When a taxpayer sues an IRS employee acting in his official capacity, it has been long established that he is suing the U.S. Government. The individual clearly sought damages for the IRS’s collection activities and while the Federal Tort Claims Act (FATCA) waives immunity for many governmental acts, it expressly maintains immunity for cases arising from the assessment or collection of taxes. The court found that the government had not waived its immunity from tort suits and that no taxpayer may sue the U.S. with respect to the assessment or collection of any tax. Thus, that part of Kennedy’s suit was dismissed.
With respect to the emotional distress argument, the court dismissed it because as discussed above, the government did not waive its immunity from suit.
The court agreed with the IRS that it did not have to accept the taxpayer’s request for audit reconsideration because the taxpayer failed to provide evidence of an intervening change in the law, new evidence or a clear error of law.
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About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.
A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.
