May 2, 2017
from the District Court of the Virgin Islands (D.C. No.
3-15-cv-00038) District Judge: Hon. Curtis V. Gómez
Alexander Golubitsky, Esq. [ARGUED] Marjorie Rawls Roberts,
P.C. Counsel for Appellants
Earl Walker, Esq. Pamela R. Tepper, Esq. Su-Layne U. Walker,
Esq. [ARGUED] Office of Attorney General of Virgin Islands
Department of Justice Counsel for Appellees
Before: GREENAWAY, JR., SHWARTZ, and FUENTES, Circuit Judges.
SHWARTZ, Circuit Judge.
and Karen Hassen ("the Hassens") appeal the
District Court's order dismissing their claim against the
Government of the United States Virgin Islands
("USVI") and the Bureau of Internal Revenue
("BIR") for imposing allegedly wrongful levies on
their property in violation of 26 U.S.C. § 7433(a). To
bring a claim under § 7433(a), a taxpayer must exhaust
the administrative remedies set forth in § 7433(d).
While such exhaustion is not a jurisdictional requirement, it
is mandatory. Here, we need not decide whether the Hassens
fulfilled this requirement because their complaint fails to
plead a violation of § 7433(a). Thus, we will affirm the
District Court's order dismissing their complaint.
sent the Hassens a final notice of intent to levy their
property to satisfy an outstanding tax debt of $5, 778.32 for
the 2004 tax year. Subsequently, on March 8, 2013, the BIR
issued a levy against the Hassens' property at First Bank
Virgin Islands ("Levy 1").
11, 2013 and December 26, 2013, the Hassens
submitted letters requesting an installment agreement to
satisfy their 2004 tax debt. The December 2013 letter reflects
that the Hassens and the BIR engaged in discussions
concerning their request and outstanding tax liability, and
that the BIR directed the Hassens to submit an IRS Form 9465
to request an installment agreement. The Hassens failed to do
so but nevertheless allege that the BIR has never accepted or
rejected their proposed installment agreement. Thereafter,
the BIR issued four additional levies against the
than file an administrative claim as required by 26 U.S.C.
§ 7433(d) and 26 C.F.R. § 301.7433-1, the Hassens
filed a complaint against the USVI and BIR for imposing
allegedly wrongful levies on their property in violation of
26 U.S.C. § 7433(a) on the theory that the additional
levies violated 26 U.S.C. § 6331(k)(2), which prohibits
the issuance of any levy while a proposed installment
agreement is pending.
USVI and BIR moved to dismiss the Hassens' complaint
pursuant to Federal Rules of Civil Procedure 12(b)(1) and
(b)(6). With respect to their motion under Rule 12(b)(1), the
USVI and BIR argued that the District Court lacked subject
matter jurisdiction because the Hassens failed to exhaust
their administrative remedies. The USVI and BIR also sought
dismissal under Rule 12(b)(6), arguing that the complaint
fails to state a claim upon which relief can be granted. The
District Court determined that exhaustion was not a
jurisdictional prerequisite and that dismissal under Rule
12(b)(1) was therefore not warranted, but found that the
Hassens did not exhaust their administrative remedies, which
is a condition to obtain relief, and, as a result, dismissed
their complaint pursuant to Rule 12(b)(6). The Hassens
we must ensure that the District Court and our Court have
jurisdiction over a case before addressing the merits,
see Steel Co. v. Citizens for a Better Env't,
523 U.S. 83, 94-95 (1998), we first review the District
Court's conclusion that exhaustion of administrative
remedies is not a jurisdictional prerequisite to bringing a
claim under 26 U.S.C. § 7433. Section 7433(a) allows a
taxpayer to "bring a civil action for damages"
where an "officer or employee of the Internal Revenue
Service recklessly or intentionally, or by reason of
negligence, disregards any provision of" Title 26 or its
regulations. 26 U.S.C. § 7433(a). Section 7433(d)(1)
provides that a "judgment for damages shall not be
awarded . . . unless the court determines that plaintiff has
exhausted the administrative remedies available to such
plaintiff within the Internal Revenue Service."
than two decades ago, in Venen v. United States, 38
F.3d 100, 103 (3d Cir. 1994), we characterized this
exhaustion requirement as jurisdictional. Since then, as one
court put it, the United States Supreme Court has cautioned
against confusing "mandatory requirements of a cause of
action" with a jurisdictional prerequisite "over
that cause of action." Hoogerheide v. IRS, 637
F.3d 634, 636 (6th Cir. 2011) (citing Arbaugh v. Y&H
Corp., 546 U.S. 500, 516 (2006)). To avoid this
confusion, the Court established the ...