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Stidham v. United States

United States District Court, W.D. Virginia, Abingdon Division

July 6, 2015

R. VINCE STIDHAM, ET AL., Plaintiffs,
v.
UNITED STATES OF AMERICA, Defendant.

Kenneth R. Russell, Jr., and Mary F. Russell, Hale, Lyle & Russell, Bristol, Tennessee, for Plaintiffs.

Kyle L. Bishop, Trial Attorney, Tax Division, U.S. Department of Justice, Washington, D.C., for Defendant.

OPINION AND ORDER

JAMES P. JONES, District Judge.

In this civil action, the plaintiffs seek reimbursement of amounts paid to the IRS as a result of tax liens on real property owned by them but which taxes they claim were actually owed by their lessee. The plaintiffs do not challenge the underlying tax liability, but only whether it was their responsibility to pay. The United States has moved to dismiss the action on the ground that the court lacks subject-matter jurisdiction. I agree, and will grant the Motion to Dismiss.

I.

The facts as alleged in the Complaint, and which are accepted as true for the purposes of the present motion, are as follows.

The plaintiffs - R. Vince Stidham, his wife Connie A. Stidham, Jeffery A. Stidham, and his wife April L. Stidham - were the owners of real property located at 600 Anderson Street, Bristol, Tennessee (the "Property"). After purchasing the Property, they leased it to Stidham Automotive Services Center Inc. ("Stidham Automotive").[1] The lease was in effect until February 2013, when Stidham Automotive stopped paying rent.

Pricilla Eileen Stidham and Henry Ayers Stidham are the parents of plaintiffs Jeffery A. Stidham and R. Vince Stidham, but they are not parties to this proceeding. The parents are the sole owners of two corporate entities - Stidham Tire Inc. and the previously referenced Stidham Automotive (the "Companies"). At the time the plaintiffs purchased the Property, the Companies owed delinquent taxes to the IRS.

On September 14, 2012, the Internal Revenue Service placed so-called nominee liens against the Property.[2] In short, the plaintiffs contend that the IRS viewed the Companies as the beneficial owners of the Property. The plaintiffs, however, deny any basis for nominee liability regarding the Property.

The plaintiffs contend that they made attempts to have the liens released, but were unsuccessful. Nonetheless, on August 31, 2013, the plaintiffs sold the Property for $400, 000. After settlement of all obligations to superior creditors, the outstanding taxes were paid to the IRS in order to release the tax liens against the Property.

Based on these facts, the plaintiffs seek a "tax refund" in the amount of $74, 169.28 or other alternative relief.[3] The United States has moved to dismiss this proceeding pursuant to Federal Rule of Civil Procedure 12(b)(1), contending that the court lacks subject-matter jurisdiction. Specifically, the United States asserts sovereign immunity based on the plaintiffs' failure to properly comply with statutory mandates governing a third party's challenge of another's tax liability. See 26 U.S.C. §§ 6325(b)(4), 7426(a)(4). The Motion to Dismiss has been fully briefed and is ripe for decision.[4]

II.

A motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure raises the fundamental question of whether the court is competent to hear and adjudicate the claims brought before it. Challenges to jurisdiction under Rule 12(b)(1) may be raised in two distinct ways - facial attacks and factual attacks. See Thigpen v. United States, 800 F.2d 393, 401 n. 15 (4th Cir. 1986). In this case, the United States mounts a facial challenge, arguing that the plaintiffs failed to comply with the relevant statutory framework required to waive sovereign immunity in this context. In analyzing a facial challenge, the court must proceed as it would on a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and accept the allegations in the Complaint as true. See id.

Pursuant to the Complaint, the plaintiffs contend that this court has subject matter jurisdiction over this proceeding under 28 U.S.C. § ...


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