Jordan-Rowell v. IRS

Background

Janessa Jordan-Rowell, proceeding without a lawyer, sued the Internal Revenue Service after receiving a May 26, 2022 letter stating that the IRS considered one or more positions in her purported 2020 tax return frivolous. The letter warned that she could face a $5,000 penalty and possible criminal prosecution if she did not correct the return. Jordan-Rowell sought damages and payment of claimed refunds exceeding $30 million.

Her filings included documents reporting large amounts of wages, compensation, and federal tax withholding, including a tax return declaring $50 million in gross income and seeking a refund of approximately $30 million. She also attached a request for IRS appeals review signed two days before she filed the lawsuit.

Court’s analysis

The court explained that a lawsuit against a federal agency is generally treated as a lawsuit against the United States. Sovereign immunity—the rule that the United States cannot be sued unless it has agreed to the lawsuit—therefore barred Jordan-Rowell’s claims unless she showed that Congress had waived that immunity.

For the tax-refund claim, the court stated that a taxpayer may challenge a tax determination by petitioning the Tax Court or, after paying the assessed tax and pursuing an administrative refund claim, suing for a refund in federal district court. The court found that Jordan-Rowell’s allegations did not show that she had received a final decision from the IRS Appeals Office. They also did not show that she had paid an assessed tax. She therefore had not shown that she satisfied the requirements for a federal tax-refund lawsuit or that sovereign immunity had been waived.

For the damages claim, the court found that Jordan-Rowell did not identify a statute waiving sovereign immunity. The Federal Tort Claims Act did not provide a waiver for claims arising from tax assessment or collection. A provision of the Internal Revenue Code can allow damages for certain wrongful tax-collection conduct, but the court found that Jordan-Rowell did not allege a levy or other collection effort and did not allege exhaustion of the administrative process for such a claim.

Disposition

The court dismissed the complaint for lack of subject-matter jurisdiction because Jordan-Rowell had not shown a basis for waiving sovereign immunity. It held the matter open for 30 days without entering judgment so she could file an amended complaint alleging facts showing that she had satisfied the requirements for suit, including paying assessments owed and having a basis to challenge final IRS administrative decisions. If she did not amend, or if the amendment did not show that she satisfied those requirements, the court stated that it would enter judgment dismissing the matter for lack of subject-matter jurisdiction.

Judge Laura Taylor Swain also certified that any appeal would not be taken in good faith and denied permission to appeal without prepaying filing fees.