Sanders v. Dept of Veterans Affairs, Debt Management Center

Background

Sharyon M. Sanders, representing himself, alleged that the Treasury Department’s Treasury Offset Program intercepted $1,838.43 in economic-impact payments and sent the money to the Department of Veterans Affairs to satisfy a debt. Sanders alleged that he obtained the payments by filing an Internal Revenue Service tax return after being advised to do so. He argued that the payments were stimulus checks and therefore should not have been used to offset his debt.

Sanders initially asserted claims involving judicial review of the debt offset and due-process violations. His amended complaint appears to have dropped the due-process allegations and instead alleged that the Department of Veterans Affairs was negligent for failing to ask the Treasury Department whether the funds included economic-impact payments that were exempt from interception.

Court’s Analysis

The court applied the standard for a motion to dismiss for failure to state a claim. Under that standard, the court accepted the complaint’s factual allegations as true and viewed them in the light most favorable to Sanders, but required enough factual matter to make the claim legally plausible. The court also noted that complaints filed without a lawyer are read liberally but still must allege sufficient facts to support a claim.

The court held that, under the Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act of 2021, economic-impact payments obtained through a tax return rather than requested as direct payments were not exempt from ordinary federal debt offsets. The court explained that Congress had created different treatment for direct payments and payments claimed through tax returns. Because Sanders sought the payments through a tax return, the court concluded that his claim failed as a matter of law.

The court separately stated that 26 U.S.C. § 6402(g) appeared to deprive federal courts of jurisdiction to review Treasury offset actions when, as the court understood the case, the plaintiff had not challenged the validity of the underlying debt. The court did not decide the Department of Veterans Affairs’ other arguments because its decision on the statutory treatment of the payments was sufficient to resolve the case.

Disposition

Judge Susan Richard Nelson ordered that defendants’ motion to dismiss the amended complaint was GRANTED. The court ordered that defendants’ partial motion to dismiss was DENIED AS MOOT and that Sanders’s motion to transfer venue was DENIED AS MOOT. The court directed that judgment be entered accordingly. The opinion does not state that the dismissal was with or without prejudice.