In the
United States Court of Appeals
For the Seventh Circuit
No. 00-2156
Jeffrey N. LaBonte,
Plaintiff-Appellant,
v.
United States of America,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 99 C 1129--Thomas J. Curran, Judge.
Argued October 24, 2000--Decided December 7,
2000
Before Flaum, Chief Judge, and Manion and
Evans, Circuit Judges.
Manion, Circuit Judge. The Internal
Revenue Service levied property owned by
the plaintiff, Jeffrey LaBonte. Twenty
months later, LaBonte filed a wrongful
levy action against the IRS pursuant to
26 U.S.C. sec. 7426(a)(1). The IRS moved
to dismiss LaBonte’s complaint for lack
of subject matter jurisdiction because
LaBonte did not file suit within the
nine-month period required for wrongful
levy actions under 26 U.S.C. sec.
6532(c)(1) and thus the government’s
sovereign immunity had not been waived.
The district court granted the IRS’
motion to dismiss, and LaBonte appeals.
We affirm.
I. Facts
In 1991, Jeffrey LaBonte entered into a
contract to purchase from his mother,
Bernice LaBonte, a one-fifth interest in
land she owned in East Troy, Wisconsin.
In 1996, the IRS assessed LaBonte’s
mother and father for income tax
deficiencies of $1,388,844 for the
taxable years ending in 1981 and 1983.
The IRS took no action against Jeffrey
LaBonte and there is no suggestion that
he had any responsibility for his
parents’ tax deficiency. On October 18,
1996, the IRS filed a Notice of Federal
Tax Lien against LaBonte’s parents
stating that the United States had a lien
on all of their property.
LaBonte, assisting his parents,
contacted the IRS to discuss how to
obtain a discharge of the lien so that
the Wisconsin property could be sold. IRS
Agent Dale Veer instructed him how to do
so, and on August 20, 1997, LaBonte’s
parents executed an Application for
Discharge. Two days later, LaBonte and
his mother sold their interests in the
Wisconsin property for a total price of
$1,275,000.The IRS received $800,000 from
the net proceeds in payment towards the
Federal Tax Lien. Because of his one-
fifth interest in the property, LaBonte
laid claim to 20% of the proceeds of the
sale. The IRS disputed his claim. Thus
the remaining proceeds, $124,878, were
placed in escrow with All American Land
Services, Inc. pending a determination as
to LaBonte’s entitlement thereto. The IRS
then executed a Certificate of Discharge
of Property from Federal Tax Lien
acknowledging receipt of the $800,000 and
discharging the Wisconsin property from
the lien, reserving the lien against all
other property to which the lien had
attached.
On January 20, 1998, the IRS served a
Notice of Levy on All American for the
remaining sale proceeds. On October 2,
1998, LaBonte’s attorney sent a letter to
the IRS, which was addressed to:
VIS [sic] FACSIMILE AND U.S. MAIL
FAX NO. 297-1190
Revenue Officer Dale R. Veer
Special Procedures/Advisory
310 W. Wisconsin Avenue
Milwaukee, WI 53201-2221
The letter also set forth LaBonte’s name
and address, a description of the balance
of the sales proceeds located in escrow,
a description of LaBonte’s claim to a
priority interest in the proceeds and a
request for the "issuance by the District
Director of a Certificate of Discharge
under Sec. 6325 of $100,000 of the
Escrowed Proceeds and the Director’s
authorization for All American Land
Services, Inc. to release such amount to
[LaBonte]."
Negotiations continued between the IRS,
represented by Agent Veer and District
Counsel James Klein, and LaBonte and his
attorneys until September 22, 1999 when
the negotiations failed and LaBonte filed
the present wrongful levy action under
Section 7426(a)(1).
II. Analysis
The United States government may be sued
only where Congress has waived its
sovereign immunity and the existence of
such waiver is a "prerequisite for
jurisdiction." Kuznitsky v. United
States, 17 F.3d 1029, 1031 (7th Cir.
1994) (quoting United States v. Mitchell,
463 U.S. 206, 212 (1983)). The government
may attach conditions to its waiver and
when "waiver legislation contains a
statute of limitations, the limitations
provision constitutes a condition on the
waiver of sovereign immunity." Block v.
North Dakota, 461 U.S. 273, 287 (1983).
When Congress attaches such conditions,
they "must be strictly observed, and
exceptions thereto are not to be lightly
implied." Id. Cf. Bartley v. United
States, 123 F.3d 466, 467-68 (7th Cir.
1997) (unless taxpayer files proper claim
with the IRS, a court lacks subject
matter jurisdiction over a suit for
refund).
Congress has provided for a waiver of
sovereign immunity in cases where a
claimant seeks the return of property
seized to satisfy the tax liability of
another. 26 U.S.C. sec. 7426(a)(1). One
of the conditions Congress specified in
waiving its immunity is that the claimant
must file his wrongful levy action within
nine months from the date of levy. 26
U.S.C. sec. 6532(c)(1). However, Congress
also included an exception to this nine-
month period: if the claimant properly
files a written request for the return of
levied property with the IRS, then the
period for filing is extended to the
shorter of twelve months from the date of
filing the administrative request or six
months from the date the IRS mails a
notice of disallowance. 26 U.S.C. sec.
6532(c)(2).
There is no dispute that LaBonte did not
file suit within nine months of the date
of levy, as the property was levied on
January 20, 1998 and he did not file suit
until September 22, 1999. However, he
claims that he is entitled to the time
extension authorized by Section
6532(c)(2), arguing that his October 2,
1998 letter mailed to the IRS constituted
a proper request for return of property.
The district court did not agree with
LaBonte’s argument. Accordingly, since
the conditions for waiver of sovereign
immunity had not been fulfilled, the
district court concluded that it lacked
subject matter jurisdiction over the
case. We review the district court’s
dismissal of a complaint for lack of
subject matter jurisdiction de novo. Maas
v. United States, 94 F.3d 291, 294 (7th
Cir. 1996).
In order to qualify for the exception
under Section 6532(c) (2), the claimant
must satisfy the specific requirements
for a proper written request as set forth
by 26 C.F.R. sec. 301.6343-2. The request
must be "addressed to the district
director (marked for the attention of the
Chief, Special Procedures Staff) for the
Internal Revenue district in which the
levy was made." 26 C.F.R. sec. 301.6343-
2(b). The request must also contain
certain specific information, including
(1) the name and address of the person
submitting the request; (2) a detailed
description of the property levied upon;
(3) a description of the claimant’s basis
for claiming an interest in the property
levied upon; (4) the name and address of
the taxpayer, the originating Internal
Revenue district and the date of the
levy. See 26 C.F.R. sec. 301.6343-
2(b)(1)-(4). If the written request does
not contain the proper information, it
will still be considered an adequate
written request "unless a notification is
mailed by the director to the claimant
within 30 days of receipt of the request
to inform the claimant of the
inadequacies . . . ." 26 C.F.R. sec.
301.6343-2(c).
In this case, LaBonte addressed his
October 2, 1998 letter to Revenue Officer
Dale R. Veer, Special
Procedures/Advisory. Thus, he failed to
conform with Section 301.6343-2(b) which
clearly requires that the request be
"addressed to the district director
(marked for the attention of the Chief,
Special Procedures Staff)." If the
claimant fails to address his request to
the district director as required by the
regulations, he may not take advantage of
the twelve-month extension. See Amwest
Surety Insurance Co. v. United States, 28
F.3d 690, 697 (7th Cir. 1994). In Amwest,
a claimant addressed its written request
to the revenue officer in charge of the
case. The claimant and the IRS then
engaged in some limited discussion
regarding the levied property before the
claimant filed its lawsuit. Because the
lawsuit was not filed within nine months
of the levy, the claimant sought an
extension. We concluded that Amwest did
not qualify for the extension, and
therefore the district court lacked
subject matter jurisdiction, because the
regulations clearly require that the
request be sent to the district director
and Amwest’s "letters were not sent to
the proper party and consequently did not
constitute a ’written request for the
return of property’ pursuant to sec.
6532(c)(2)." Amwest, 28 F.3d at 696.
LaBonte argues that, unlike the request
in Amwest, he did not address his letter
to a revenue agent but rather to an agent
of the Special Advisory Procedures Staff,
thereby complying with the regulations
which require the request to be addressed
"marked for the attention of the Chief,
Special Procedures Staff." In addition,
LaBonte points out that his letter was
sent to the exact same address and fax
number as the district director, and that
it contained a specific request that the
"district director" grant him a discharge
of the escrowed proceeds. LaBonte may
have had good reason to hope that his
plea would eventually reach the attention
of the district director. Nevertheless,
LaBonte did not address his letter to the
district director, marked to the
attention of the Chief of the Special
Procedures Staff, as specifically
required by the plain language of Section
301.6343-2(b). We recognize, as we did in
Amwest, that this strict application of
the regulations seems harsh and we can
"think of no legitimate reason . . . why
[the IRS] would continue negotiating with
[LaBonte] without at least telling [him]
that [his] request should be directed to
the district director." Amwest, 28 F.3d
at 698. As the district court noted
during its hearing, we are especially
hard-pressed to explain the IRS’ behavior
in light of its recent efforts to improve
its image in the eyes of a skeptical
public. However, the conditions waiving
sovereign immunity "must be strictly
observed." Block, 461 U.S. at 287.
Accordingly, because LaBonte’s letter was
addressed to the wrong party, it does not
constitute a proper request under Section
6532(c)(2) and his untimely suit was
properly dismissed for lack of subject
matter jurisdiction./1
LaBonte argues that the IRS should be
equitably estopped from claiming that he
did not meet all the conditions for a
waiver of sovereign immunity. He argues
that the IRS representatives’ prolonged
negotiations with him, including their
apparent authority to conduct settlement
discussions, and the fact that they never
advised him that he had filed an improper
written request led him to believe that
he had filed a proper request and that
the proper officials at the IRS had
assumed control of the matter. In
response, the government argues that,
because the statute of limitations is a
jurisdictional bar rather than an
affirmative defense, equitable estoppel
is not allowed in wrongful levy actions.
See, e.g., Becton Dickinson & Co. v.
Wolckenhauer, 215 F.3d 340, 348-54 (3d
Cir. 2000) (barring application of
equitable tolling in wrongful levy
action).
The Seventh Circuit has not yet decided
whether the doctrine of equitable
estoppel may ever be invoked in wrongful
levy actions. Cf. Flight Attendants
Against UAL Offset (FAAUO) v.
Commissioner, 165 F.3d 572, 577 (7th Cir.
1999) (declining to decide whether the
doctrine of equitable tolling could be
invoked in a tax case). Likewise, we need
not do so today because LaBonte fails to
establish the elements of equitable
estoppel, particularly affirmative
misconduct by the government.
Equitable estoppel "allows delay in
suing when the defendant, in this case
the IRS, has taken steps to prevent the
plaintiff from suing in time." Id. at
575. Typically, the traditional elements
of equitable estoppel are: (1)
misrepresentation by the party against
whom estoppel is asserted; (2) reasonable
reliance on that misrepresentation by the
party asserting estoppel; and (3)
detriment to the party asserting
estoppel. Kennedy v. United States, 965
F.2d 413, 417 (7th Cir. 1992). However,
in suits against the government, one must
also establish affirmative misconduct on
the part of the government. Id.; Gibson
v. West, 201 F.3d 990, 994 (7th Cir.
2000). Affirmative misconduct is "more
than mere negligence. . . . It requires
an affirmative act to misrepresent or
mislead." Gibson, 201 F.3d at 994
(internal citations omitted).
Here, the IRS levied on the property on
January 20, 1998. In order to satisfy the
conditions for a waiver of sovereign
immunity, LaBonte needed to file his
wrongful levy action or submit a proper
written request to the IRS before October
20, 1998. Almost the full nine-month
period of limitations had passed before
LaBonte sent his inadequate letter on
October 2, 1998. Thereafter, negotiations
began and the statute of limitations ran
a mere twenty days later. There is no
allegation that the IRS representatives
affirmatively misled LaBonte by telling
him that he had filed a proper written
request under Section 6532(c)(2). Given
the short time period between the receipt
of the letter and the expiration of the
nine-month time period, we do not believe
that Agent Veer and District Counsel
Klein committed affirmative misconduct by
their failure to advise LaBonte that he
was about to miss the filing deadline. In
fact there is no indication in the
October 2, 1998 letter that it was
intended to do anything more than
negotiate a settlement. The letter makes
no reference to the statute or to the
regulations governing wrongful levies.
Even if the letter arguably met minimal
standards, the government’s failure to
advise LaBonte of the statute of
limitations "is an omission that at most
amounts to ordinary negligence. . . .
Indeed, . . . a government’s failure to
discharge an affirmative obligation is
not the same as engaging in affirmative
misconduct." Id. (internal quotations
omitted). After October 20, 1998, the
IRS’ continued participation in
negotiations could not have prevented
LaBonte from filing a timely lawsuit
because the nine-month period had
expired. Thus, those negotiations cannot
be the basis of equitable estoppel.
III. Conclusion
In sum, Congress has waived the
government’s sovereign immunity in
wrongful levy actions if a claimant files
suit within nine months from the date of
levy. See 26 U.S.C. sec. 6532(c)(1).
Because LaBonte did not file his action
until twenty months after the date of
levy, his action is time- barred. LaBonte
may not take advantage of the statutory
exception which extends the statute of
limitations because he did not file a
proper written request for the return of
property pursuant to 26 C.F.R. sec.
301.6343-2(b). Lastly, LaBonte cannot
establish all the elements of equitable
estoppel. Accordingly, we affirm the
judgment of the district court.
/1 The IRS also argues that LaBonte’s October 2,
1998 letter was not a proper request for the
return of property because it did not contain all
of the information required under Section 301.6-
343-2(b)(1)-(4). LaBonte responds that the regu-
lations required the district director to inform
the claimant of the inadequacies, which it failed
to do. See 26 C.F.R. sec. 301.6343-2(c). However,
because the written request was improperly ad-
dressed, we need not decide if it was also
inadequate. See Amwest, 28 F.3d at 697 (stating
"before the district director can notify the
claimant of any inadequacies, it is first neces-
sary that the district director actually received
the request.").