DOCKET
U.S. District Court
District of Idaho (LIVE Database)Version 3.0 (Boise)
CIVIL DOCKET FOR CASE #: 1:06-cv-00016-MHW
Congressional District Foundations, Inc. v. USA
Assigned to: Honorable Mikel H. Williams
Demand: $276,924,000
Cause: 26:7426 IRS: Wrongful Levy for Taxes
Date Filed: 01/17/2006
Date Terminated: 02/09/2006
Jury Demand: Plaintiff
Nature of Suit: 870 Taxes
Jurisdiction: U.S. Government Defendant
Plaintiff
Congressional District Foundations, Inc.
a Florida non-profit corporation represented by Richard G Smith
HAWLEY TROXELL ENNIS & HAWLEY
PO Box 1617
Boise, ID 83701
(208) 344-6000
Fax: (208) 344-6000
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
V.
Defendant
United States of America
Date Filed
#
Docket Text
01/17/2006 1 COMPLAINT AND DEMAND FOR JURY TRIAL against United States of America ( Filing fee $ 250 receipt number 113051.), filed by Congressional District Foundations, Inc.. (Attachments: # 1 Summons# 2 Cover Sheet)(Smith, Richard)
01/19/2006 Summons Issued as to United States of America. (dkh, )
01/19/2006 2 NOTICE of Assignment to Magistrate Judge and Requirement for Consent sent to counsel for Congressional District Foundations, Inc. re 1 Complaint (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by dkh, )
02/09/2006 3 NOTICE of Voluntary Dismissal by Congressional District Foundations, Inc. (Smith, Richard)
COMPLAINT
Case 1:06-cv-00016-MHW
Document 1-1
Filed 01/17/2006
Richard G Smith
ISB No 2500
John S. McGown, Jr..
ISB 2884
HAWLEY TROXELL ENNIS & HAWLEY LLP
877 Main Street, Suite 1000
P.O.. Box 1617 Boise, ID 83701-1617
Telephone: (208) 344-6000
Facsimile: (208) 342-3829
Email: This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.
MacKenzie Canter, III
Mark J. Diskin
Copilevitz & Canter, L.L.C
1900 L Street,NW, Suite 215 Washington, DC 20036
Telephone: (202) 861-0740
Facsimile: (202)331-9841
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
This email address is being protected from spambots. You need JavaScript enabled to view it.
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
CONGRESSIONAL DISTRICT FOUNDATIONS, INC.,
a Florida non-profit corporation,
Plaintiff,
vs.
UNITED STATES OF AMERICA,
Defendant
Plaintiff, by undersigned counsel, respectfully presents this complaint for wrongful levy of plaintiff's funds in connection with an Internal Revenue Service audit of and assessment of tax liability against Dr Maty R Swope. Specifically, as set forth in the averments below, defendant acted wrongfully and without authority when it issued levies to AIM USA, Inc. beginning in July, 2004, in regard to funds owed Plaintiff
PARTIES
- Plaintiff Congressional District Foundations, Inc. ("CDF") is a Florida non-profit corporation CDF's principal office is located at 6201 Leesburg Pike, Suite 405, Falls Church, Virginia, 22044 CDF is a non-profit corporation and has received a determination letter from the Internal Revenue Service ("IRS") recognizing CDF as a tax-exempt entity pursuant to Section 501(c)(3) of the Internal Revenue Code (the "Code")
- CDF supports and makes giants to charitable organizations in the United States Interested persons may establish charitable projects or "foundations" with CDF by setting forth in an application a description of the proposed charitable or related activity the persons request CDF to support. Donors who establish "foundations" at CDF may request that disbursements by CDF be made for1 charitable and related tax-exempt purposes CDF is not obligated to use the funds in the manner requested Such requests must be approved by CDF's board of directors and are subject to CDF's sole and exclusive discretion
- The Defendant is the United States of America.
- This couit has jurisdiction over this wrongful levy action pursuant to 28 US C. §1346 (e) (United States as defendant) and 26 US C. § 7426 (wrongful levy action against United States).
- Venue is proper in this court pursuant to 28 US C § 1402 (c) because this action is filed in the United Stated District Court for the District of Idaho where the property, subject to the levies described below, was situated at the time of the levies
- The levies of funds that are at issue in this case relate to funds that, prior to October 2002, were payable by the AIM Companies ("AIM") to Avodah Financial, LLC ("Avodah"). AIM is a multilevel marketing company located at .3923 East Flamingo Avenue, Nampa, Idaho. Avodah is a limited liability company which owned a "down-line interest" in a multilevel marketing plan operated by AIM, A down-line interest represents an entitlement to a certain portion of commissions or revenue generated by other marketing agents who were recruited by or are subordinate to the owner of the down-line interest 7. On information and belief', Dr. Mary Swope is the managing member of Avodah.
- In October 2002, Avodah donated its down-line interest in AIM to CDF. A true and correct copy of the form by which this transfer occurred is attached hereto as Exhibit 1 (hereinafter the "Form"). The Form states: "I, Avodah Financial [LLC] hereby consent to the transfer of my [its] AIM Membership and relinquish all rights and privileges under1 AIM Member Agreement to Congressional District Foundation, [EIN] 65-097-0090, 6201 Leesburg Pike, Suite 405, Falls Church, Virginia 22044." Neither the Company nor Dr Swope retained any rights to or control over the revenue generated by the down-line interest which was irrevocably transferred to CDF
- Immediately following AIM's receipt of the Form, AIM began to send CDF the revenues owed in connection with the down-line interest.
- On information and belief, the IRS audited Dr. Swope's individual income tax returns for the years 1997-2001 and determined that Dr.. Swope owed additional income taxes. In connection with its audit of Dr. Swope, the IRS issued a levy, dated July 12, 2004 ("Levy"), to AIM, attaching the funds payable to CDF in connection with the down-line interest transferred to CDF in October 2002. A true and correct copy of the Levy is attached hereto as Exhibit 2.
- On August 3, 2004, following notification from AIM of its receipt of the Levy, Dr. Swope and CDF jointly filed a Collection Due Process Hearing Request ("Request") with the IRS office located in Longview, Texas The Request detailed why the IRS wrongfully levied on CDF's account with AIM and requested an immediate hearing to remove the Levy forthwith and return the improperly seized funds to CDF with interest. (A copy of the request is attached as Exhibit F to the administrative refund claim referenced in paragraph 14 of this Complaint.) The IRS ignored this request.
- The IRS does not now nor has it ever alleged that CDF owes any tax.
- Since July, 2004, the IRS has submitted monthly Levies ("Levies") to AIM in connection with CDF's ownership of the down-line interest and AIM has complied with the Levies, forwarding to the TRS the following amounts in connection with the following dates of the Levies:
- On April 8, 2005, CDF filed with the IRS an administrative refund claim pursuant to Code §§ 6343(b) and 6532(c) seeking the recovery of the funds upon which the IRS wrongfully levied ("Claim") (See Exhibit 3 attached hereto.) The Claim pertained to the Levies dated July 12, 2004 through and including March 18, 2005 Pursuant to a letter dated November 3, 2005, a copy of which was delivered to counsel for CDF on December 19, 2005 via fax, not by registered or certified mail as required by Code §6532(c), the IRS denied the Claim. A copy of that letter is attached hereto as Exhibit 4
- This complaint pertains to the Levies dated .July 12, 2004 through and including March 18, 2005 (included in the Claim) and the Levies dated Apiil 18, 2005 through and including September 7, 2005 Pursuant to Code §6532(c)(2), this Complaint is timely because with regard to the Levies dated July 12, 2004 through and including March 18, 2005, it is filed within twelve (12) months of the filing of the Claim Pursuant to Code §6532(c)(l), this Complaint is timely with regard to Levies dated April 18, 2005 through and including September 7, 2005, because this action is filed before the expiration of nine (9) months from the date of these Levies.
- The denial of CDF's Claim has triggered its rights to file this action, pursuant to Code § 6343.,
- CDF realleges the allegations contained in Paragraphs 1 through 16 hereof
- A levy is a seizure of a taxpayer's property to satisfy the taxpayer's liability Code § 63.31, A levy may only be issued against a delinquent taxpayer's property held by the taxpayer or a third party. Id. The Levies at issue in this case, however, relate to funds belonging to CDF, a third party, not property owned by Dr Swope.
- In the Levies, the IRS refers to CDF as the taxpayer and "as nominee, transferee, and/or holder of a beneficial interest of Mary Ruth Swope. in funds paid directly from AIM to Congressional District Foundation " However, the transfer' of the down-line interest from Avodah to CDF clearly transferred all of Avodah's right, title and interest in the down-line interest to CDF The transfer Form (Exhibit 1) states that Avodah "relinquishes all rights and privileges under the AIM Member Agreement"
- The transfer from Avodah to CDF is an effective gift because (a) the gift was delivered or transferred to the donee (CDF); (b) the gift was unconditional; and (c) the donor no longer retains dominion or control over the transferred property, All of the requirements for a completed gift have been satisfied in this case by the gift from Avodah to CDF.
- CDF is not the nominee of Dr Swope, as alleged by the IRS in its Levies. CDF is an independent Florida nonprofit corporation. Dr. Swope is neither an officer, director nor an employee of CDF. She has neither an interest in nor control over CDF Avodah, not Dr Swope, transferred the down-line interest to CDF and relinquished all of its rights and privileges thereto AIM acknowledged this transfer because all revenues from the down-line interest were transferred to CDF immediately following AM's receipt of the transfer document
- The actions of the IRS, in levying upon property owned by CDF, constitute a wrongful levy, should be declared void as a matter of law, and all funds levied should be returned to CDF, with interest
- CDF realleges the allegations contained in Paragraphs 1 through 22 hereof
- Code § 6330(a) states that the IRS may not levy on property allegedly belonging to the taxpayer unless the IRS provides notice in writing of the taxpayer's right to and opportunity for a pre-levy hearing. The notice must be delivered in person, left at the dwelling or usual place of business of the taxpayer or sent by certified or' registered mail to the taxpayer's last known address at least thirty (30) days before the date of the first levy,
- On information and belief, Dr Swope did not receive the notice and neither did CDF.
- Code § 6330(e) states that after a hearing is requested, "the levy actions which are the subject of the requested heating, shall be suspended for the period during which such healing, .are pending." Following receipt of the request for hearing, the IRS did not suspend the levy actions in violation of the law,
- As a result of the IRS's failure to follow the procedures required by Code § 6330(e), the Levies are void as a matter of law
- CDF realleges Paragraphs 1 through 27 above
- Code § 63.31 (d) requires that the taxpayer, whose property is the subject of the levy, be given thirty (30) days' advance written notice except where collection is in jeopardy On information and belief, there is no evidence at the time of the Levy that collection of the income tax Dr Swope allegedly owed was in jeopardy, The IRS has never alleged that CDF owes tax.
- On information and belief, the required notice was not provided to Dr Swope and no advance written notice of the Levy was provided to CDF
- The IRS, therefore, did not comply with Code §6331, and the Levies are void as a matter of law as a result of such noncompliance
JURISDICTION AND VENUE
BACKGROUND FACTS
Date of Levy Amount Sent to The IRS
July 12, 2004 $19,731.25
August 18,2004 $20,077 42
Septembei 23, 2004 $18,717 95
October 21, 2004 $19,679 20
December 1,2004 $18,49927
January 12, 2005 $17,16146
January 20, 2005 $21,038.36
Match 1, 2005 $19,611..42
March 18,2005 $20,814.63
April 18, 2005 $19,551.65
June 16, 2005 $20,440.55
July 7, 2005 $20,236 57
August 3, 2005 $20,389 98
September 7, 2005 $20,974.37
The total amount the IRS has received, thus far, in connection with the Levies is $276,924.08.
FIRST CLAIM FOR RELIEF
SECOND CLAIM FOR RELIEF
THIRD CLAIM FOR RELIEF
PRAYER FOR RELIEF
WHEREFORE, CDF prays that the Court enter judgment as follows:
- Declaring all Levies void, ab initio.
- Ordering the return of all funds levied that should have been paid to CDF as alleged herein, including the sum of $276,924 08, representing the levied funds from July 12, 2004 through and including September 30, 2005
- Ordering the payment of interest on the levied funds, from and after the date they should have been paid to CDF, as provided in Code § 7426(g)
- Ordering payment of such monetary amount as may reimburse Plaintiff for the legal fees and costs incurred by Plaintiff as a result of Defendant's actions and omissions, including Defendant's arbitrary and unreasonable denial of the Claim, as set forth herein;
- For an order compelling Defendant to cease all future Levies of funds due Plaintiff from AIM; and
- For such other and further relief as the Court shall deem just.
DATED THIS 17th day of January, 2006
HAWLEY TROXELL ENNIS & HAWLEY LLP
By Richard G. Smith ISB No. 2500
Attorneys for Plaintiff
