United States v. Flor

Background

The United States sought judicial approval to levy on and seize Rose Ann Flor’s principal residence at 9052 Jackson Avenue, Lexington, Minnesota. The government alleged that Flor falsely reported income, withholding, and tax on her 2014 federal tax return, resulting in an erroneous refund of $54,193.43. By February 2018, the Internal Revenue Service had assessed $92,940.19 in federal income tax, penalties, and interest, with additional interest and statutory additions continuing to accrue.

The IRS had sent Flor a notice of intent to levy and of her right to an administrative hearing. It later filed a federal tax lien and notified Flor of that filing and of her right to appeal collection actions. The opinion states that Flor did not request a hearing or file an appeal. The government asserted that the liability remained unpaid, that it had satisfied applicable legal and administrative requirements, and that no reasonable alternative existed for collecting the debt. Financial information supplied to the IRS indicated that Flor had no other assets of value besides her principal residence.

Flor’s Objections and Motions

A magistrate judge ordered Flor to show that her liabilities had been satisfied, that other assets could satisfy them, or that the IRS had not followed applicable law and procedures. Flor filed an objection and a motion to dismiss for lack of personal jurisdiction. She argued that the IRS levy statute, 26 U.S.C. § 6331, did not apply to her; that she had been taxed twice for 2014; that she had not received proper forms and notices; that the IRS had unlawfully filed a substitute return without her knowledge; and that the district court lacked jurisdiction. She later filed a motion to strike the government’s responses to her pleadings.

The magistrate judge recommended granting the government’s petition and denying Flor’s motion to dismiss and motion to strike. The recommendation found that the government had made an initial showing that the debt remained unpaid, that other assets were unavailable, and that the government had followed the required law and notice procedures. It also concluded that the levy statute applied to Flor, that she could not challenge the merits of her tax liability in this action, that the government had not filed a substitute return for 2014, and that the district court had jurisdiction to approve a levy on a principal residence.

Court’s Analysis

The court reviewed the properly disputed portions of the recommendation independently and reviewed nonspecific repeated objections for clear error. It concluded that Flor’s due process rights were not violated. Under the governing law, the government had to show that the taxpayer had an outstanding liability, that legal and administrative requirements had been met, and that no alternative means of collection existed. The court found that the government’s declarations and notices made that showing.

The court further held that Flor did not raise a genuine dispute about whether the IRS sent the required notices or followed proper procedures. The notices gave her an opportunity for an administrative due-process hearing. The court also held that district courts have exclusive jurisdiction to approve a levy on a principal residence, rejecting Flor’s apparent argument that jurisdiction belonged in the United States Tax Court.

The court found no merit in Flor’s equal-protection argument under 28 U.S.C. § 2072 because she did not explain how that statute applied or identify an equal-protection violation. Her stated intention to pay the debt in full did not affect the case because the liabilities remained outstanding.

Disposition

The court overruled Flor’s objections and adopted the magistrate judge’s report and recommendation. It denied Flor’s objection and motion to dismiss, granted the United States’ petition for judicial approval of a levy upon and seizure of her principal residence, and denied Flor’s motion to strike.