           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                           FILED
                                                                           July 22, 2008
                                    No. 07-10976
                                  Summary Calendar                    Charles R. Fulbruge III
                                                                              Clerk

RICHARD A WALTERS

                                                  Plaintiff-Appellant

v.

UNITED STATES OF AMERICA; GEORGE VENTURA, Revenue Agent; V
JOSEPH, Revenue Officer; ROBERT LAPISKA, Revenue Officer; JOHN SNOW,
SECRETARY, DEPARTMENT OF TREASURY; COMMISSIONER OF
INTERNAL REVENUE

                                                  Defendants-Appellees


                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:06-CV-427


Before STEWART, OWEN, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       Richard A. Walters appeals the district court’s dismissal of his complaint
which challenged certain tax penalties assessed against him. We affirm.
I.     Background
       Walters worked for Tax Strategies, Inc., in Leheigh Acres, Florida,
between January 1998 and December 31, 2000. During this time, the IRS


       *
        Under 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in that rule.
                                       No. 07-10976

alleges that Walters promoted or sold abusive tax shelters and other abusive tax
schemes in violation of federal law. In a prior action, the IRS and Walters
entered into a Stipulated Judgment and Permanent Injunction which enjoined
Walters from, among other things, continuing to organize and sell these
fraudulent tax arrangements.1             The IRS subsequently investigated and
determined that, prior to entry of the injunction, Walters had sold forty-five
prohibited plans to his clients.
      The IRS assessed a penalty of $45,000 against Walters. This penalty
consisted of $1,000 for each allegedly improper tax arrangement that Walters
sold. The IRS sent Walters a notice of the penalty and a demand for payment
on January 2, 2006. After receiving the notice, Walters sent $100 to the IRS and
filed an administrative claim for refund. After waiting six months and receiving
no response from the IRS, Walters filed this action seeking injunctive and
declaratory relief, a refund of his $100 payment, and unspecified damages. The
Defendants moved to dismiss Walters’s claims. The district court granted the
motion and Walters timely appealed.
II.   Analysis
      The Motion to Dismiss was granted pursuant to Federal Rule of Civil
Procedure 12(b)(1) and 12(b)(6). We review the dismissal de novo. Brown v.
Nationsbank Corp., 188 F.3d 579, 585 (5th Cir. 1999).
      Congress has adopted procedures a taxpayer must follow to challenge
penalties such as these. The statute provides that within thirty days of receiving
notice of the penalty, the taxpayer must pay at least 15% of the amount assessed
and also file a claim seeking a refund of the amounts paid.                    26 U.S.C. §
6703(c)(1). This partial payment operates to stay the collection of the remaining
amounts assessed until the dispute is resolved. Id. If the IRS denies the
taxpayer’s claim, the taxpayer can bring suit in district court within thirty days


      1
          United States v. Anderson, et al., No. 2:04-cv-400 (M.D. Fla. March 7, 2005).

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of the date of denial. 26 U.S.C. § 6703(c)(2). The taxpayer can also bring suit if
the IRS fails to take any action on his validly filed claim for six months. Id.
        In this case Walters paid $100 and filed a claim for refund within the
required thirty days.2 Of course, this $100 payment is less than 15% of both the
entire $45,000 assessment ($6,750) as well as each $1,000 penalty ($150).3
Walters argues that his $100 “partial payment” was sufficient under Section
6703(c)(2) to submit a claim. He argues that when the IRS failed to respond to
his claim for six months, he properly filed this suit.
        As an initial matter, this court has not held that the “partial payment”
language of Section 6703(c)(2) allows a taxpayer to make a payment of less than
15% before challenging the assessment. See Nielsen v. United States, 976 F.2d
951 (5th Cir. 1992) (“The statutory framework provides that after the taxpayer
pays the 15% and the IRS denies a refund” the taxpayer may proceed in district
court). The “any partial payment” language of Section 6703(c)(2) must be read
in conjunction with Section 6703(c)(1), which expressly requires that 15% of the
penalty must be paid. See Noske v. United States, 911 F.2d 133, 136 (8th Cir.
1990) (rejecting argument that “any partial payment” could mean less than
15%).       Walters’s failure to follow the administrative procedure set out by
Congress to challenge the IRS assessment – paying 15% of the assessment and


        2
         On appeal Walters attempts to present additional evidence that he paid more than
$100. Specifically, Walters attempts to attribute amounts subsequently collected by the
Government to satisfy the required 15%. Of course, absent extraordinary circumstances, we
do not consider evidence on appeal that was not first presented to the district court. Benefit
Recovery, Inc. v. Donelson, 521 F.3d 326, 326 (5th Cir. 2008). Even were we to consider
Walters’s evidence, there is no indication that the amounts withheld by the Government were
withheld within thirty days after Walters was given notice of the assessment as required by
Section 6703(c)(1).
        3
           Walters alleges that each $1,000 assessment is divisible, and he was only required
to pay 15% of one assessment (or $150) to challenge the assessment. While it is unclear
whether each sale of an abusive tax scheme constitutes a separate activity for purposes of
filing a claim, we do not have to decide the issue in this case. Walters paid only $100 – or 10%
of one assessment. Thus, even if the assessments are considered divisible, Walters’s payment
falls short of the amount necessary to properly challenge the assessment.

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seeking a refund – means this court does not have jurisdiction to consider his
claim. Gustin v. United States, 876 F.2d 485, 488 (5th Cir. 1989) (taxpayer must
follow procedures and file a valid claim for a refund or federal court is deprived
of subject matter jurisdiction). Therefore, the district court correctly held that
it lacked subject matter jurisdiction over Walters’s challenge to the $45,000 in
penalties assessed by the IRS.
      Walters also challenges Section 6703's requirement that he pay 15% of the
assessment as a prerequisite to challenging the validity of the assessment.
Walters claims that he should be entitled to a hearing to challenge the
assessment before having to pay any amount to the IRS. Walters alleges that
by requiring prepayment the statute violates his constitutional right to due
process. This claim is without merit. The IRS’s assessment and collection
procedures do not violate a taxpayer’s due process rights so long as the taxpayer
is provided post-collection review. Baddour, Inc. v. United States, 802 F.2d 801,
807 (5th Cir. 1986) (collecting cases). Therefore, the district court properly
dismissed Walters’s challenge to the constitutionality of Section 6703.
      Apart from challenging the $45,000 assessment and the constitutionality
of the prepayment requirement, Walters also seeks injunctive and declaratory
relief. Walters argues that by obtaining the prior injunction, the IRS is now
barred – either by res judicata or collateral estoppel – from assessing penalties
for conduct that occurred prior to entry of the injunction.
      With regard to his claim for declaratory relief, the Declaratory Judgment
Act specifically excludes from its scope actions “with respect to Federal taxes.”
28 U.S.C. 2201(a). Therefore, the district court correctly held it did not have
jurisdiction to consider Walters’s claim for declaratory relief, and it was properly
dismissed. McCabe v. Alexander, 526 F.2d 963, 965 (5th Cir. 1976).
      Similarly, with regard to Walters’s claim for injunctive relief, Congress has
enacted the Anti-Injunction Act which denies federal courts jurisdiction over
suits to enjoin assessment or collection of a tax. 26 U.S.C. § 7421(a). The

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Supreme Court has recognized a narrow exception to this prohibition. The
exception applies where the taxpayer can demonstrate that even “under the
most liberal view of the facts and law, the government cannot win,” and the
taxpayer demonstrates that he “will suffer irreparable injury for which no legal
remedy is adequate.” Smith v. Rich, 667 F.2d 1228, 1231-32 (5th Cir. 1982).
      Walters incorrectly argues that his claim fits within this narrow exception.
Walters’s claim that either collateral estoppel or res judicata bars the IRS from
assessing or collecting any penalty against him (and therefore the Government
“cannot win”) is without merit. The purpose of the prior injunction was to
ensure that Walters did not engage in prohibited conduct in the future.
Walters’s liability for past conduct was neither litigated nor decided in that
action. Res judicata and collateral estoppel are inapplicable in this context. See
United States v. Shanbaum, 10 F.3d 305, 310-11 (5th Cir. 1994). Therefore, the
district court properly held that it did not have subject matter jurisdiction to
consider Walters’s claims for injunctive relief. Zernial v. United States, 714 F.2d
431, 433 (5th Cir. 1983).
      Finally, Walters asserts that several individuals involved in the
assessment and attempted collection of the penalties violated his constitutional
rights. The district court correctly concluded that the allegations against these
individuals are for acts performed in their official capacities, and are therefore
properly claims against the United States. Turner v. Houma Mun. Fire and
Police Civil Serv. Bd., 229 F.3d 478, 483 (5th Cir. 2000). Therefore, Walters
failed to state a claim against these individuals and the claims were properly
dismissed. We have already concluded that Walters does not have a valid claim
against the United States. Therefore, the district court properly dismissed the
claims against all Defendants.
      AFFIRMED.




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