Fakhi v. Dept. of Rev.

DECISION OF DISMISSAL TC-MD 250458R 1
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Income Tax
ABUKAR FAKHI, )
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Plaintiff, TC-MD 250458R
v.
DEPARTMENT OF REVENUE,
State of Oregon,
DECISION OF DISMISSAL	Defendant.
Plaintiff appeals Defendant’s July 3, 2025, Notices of Refund Offset (Notices), for the
2017 and 2019 tax years. Plaintiff challenges the remittance of his refunds by Defendant to the
Internal Revenue Service (IRS) pursuant to a levy under the State Income Tax Levy Program
(SITLP).
Defendant filed a Corrected Motion to Dismiss on August 15, 2025,1 asserting that (1) the
court lacks subject matter jurisdiction to hear Plaintiff’s appeal, and (2) Plaintiff fails to state a
claim upon which relief may be granted. Plaintiff filed responses on August 18, 2025, asserting
that Defendant’s refund offset violated his due process rights.2 The matter is ready for decision.
I. STATEMENT OF FACTS
A. Prior Case History
In two prior cases before this court,3 Plaintiff challenged Defendant’s adjustments to his
state income tax for the 2017 and 2019 tax years, which were based on information from the
1 Defendant originally filed its Motion to Dismiss on August 8, 2025; however, the case name and number
were incorrect.
2 On August 18, 2025, the court on its own motion ordered portions of Plaintiff’s responses to be redacted
due to violations of court rules.
3 TC-MD 230100G and 240577G.

DECISION OF DISMISSAL TC-MD 250458R 2
IRS. (Def’s Corr Mot at 2.) Plaintiff’s challenge resulted in a Stipulation of Judgment, entered
June 16, 2025, in case TC-MD 230100G, in which Defendant abated the state tax adjustments.
(TC-MD 230100G, Stip of Judg at 2.) Following resolution of Plaintiff’s prior Tax Court cases
and before issuing refunds, Defendant received an electronic levy notice from the IRS regarding
Plaintiff’s federal tax debt. (Decl of Miller at 1-2.)
B. State Income Tax Levy Program (SITLP)
The SITLP is an IRS automated levy program that uses state income tax refunds as a levy
source. (Decl of Miller at 1.) A 2013 agreement between Defendant and the IRS establishes
procedures related to the SITLP that Defendant is required to follow. (Id.) For example, when
Defendant receives a levy notice from the IRS, the SITLP requires that Defendant match the
taxpayer to its records, remit the refund to the IRS up to the amount of the levy, and issue a
Notice of Refund Offset to the taxpayer. (Id. at 1-2.) In this case, because of the IRS levy,
Defendant intercepted Plaintiff’s 2017 and 2019 state income tax refunds and remitted them to
the IRS. (Id. at 2.) Defendant sent Plaintiff Notices of Refund Offset dated July 3, 2025. (Id.)
C. IRS Notices to Plaintiff
Plaintiff received from the IRS a “Final Balance Due Reminder – Notice of Intent to
Seize (Levy) Your Property,” dated June 9, 2025. (Ptf’s Resp, Ex 2). The notice states “[y]our
payment must be received within 21 calendar days of the date of this notice[.]” (Id. at 2.) The
notice further states that Plaintiff has the right to request an appeal under the Collection Appeals
Program. (Id. at 3.) Plaintiff signed a Collection Appeal Request on June 17, 2025. (Id. at 6.)
Plaintiff received an IRS letter titled “Notice of seizure of your state tax refund and your right to
a hearing” dated July 28, 2025. (Ptf’s Resp, Ex 3.)
/ / /

DECISION OF DISMISSAL TC-MD 250458R 3
In his Collection Appeal Request and in his response to Defendant’s Motion to Dismiss,
Plaintiff alleges that the federal tax debt arose due to identity theft that the IRS has been
investigating. (Id. at 1; Ex 4.)
II. ANALYSIS
In considering a motion to dismiss for lack of subject matter jurisdiction, the court
accepts the facts alleged in the complaint as true. Perkins v. Dept. of Rev., 22 OTR 370, 371
(2017). The court begins by examining its jurisdiction before turning to the nature of Plaintiff’s
claim.
The issue is whether this court has jurisdiction to hear an appeal of a federal levy
executed under the SITLP. Plaintiff alleges that the underlying federal tax debt resulted from
identity theft and that he is entitled to a hearing before the government seizes his property.
Defendant argues that the court lacks jurisdiction because Plaintiff’s claim arises from federal
collection activity, not from the administration of Oregon tax law. Defendant further asserts that
Plaintiff’s due process rights lie exclusively with procedures established by the IRS.
This court’s core jurisdictional authority extends over matters “arising under the tax laws
of this state.” ORS 305.410(1).4 The Oregon Supreme Court has held that the Tax Court’s
jurisdiction exists only where a claim bears on the determination of state tax lability, not to
matters collateral to that liability. Sanok v. Grimes, 294 Or 697, 662 P2d 693 (1983).
/ / /
/ / /
4 Cf. ORS 305.410(3) and 305.410(4) (establishing the court’s jurisdiction over local income tax appeals
and determination of law and fact concerning the authorized uses of the proceeds of bonded indebtedness described
in Article XI, section 11 (11)(d), of the Oregon Constitution). References to the Oregon Revised Statutes (ORS) are
to the 2023 edition.

DECISION OF DISMISSAL TC-MD 250458R 4
Additionally, if the legislature located jurisdiction over that claim elsewhere, then that
bears against jurisdiction in this court. Sanok, 294 Or at 692; Perkins, 22 OTR at 375. The
Perkins case clarified that jurisdiction depends on the nature of the relief sought.
Here, Plaintiff seeks the return of his Oregon income tax refunds for the 2017 and 2019
tax years, which were intercepted and remitted to the IRS pursuant to a federal levy under the
SITLP. Although refund claims may be brought to this court under ORS 314.415, ORS 305.612
modifies ORS 314.415 and authorizes Defendant to enter into agreements with the IRS for the
offset of liquidated debt. Using that authority, Defendant entered into an agreement with the IRS
to participate in the SITLP.
Plaintiff challenges the underlying federal debt due to allegedly being the victim of
identity theft, and he challenges the process afforded to him to dispute the levy. However,
Plaintiff does not allege that Defendant failed to adhere to ORS 305.612. In other words,
Plaintiff does not claim that Defendant misapplied Oregon tax law or failed to follow the
procedures outlined in ORS 305.612. Instead, he essentially contests that the IRS’s Collection
Appeal Program has not afforded him due process. These are matters governed by federal law
and subject to federal administrative remedies. Under Sanok, this court lacks jurisdiction over
claims that do not affect Oregon tax liability.
This court’s conclusion is consistent with the Regular Division’s recent decision
in Hefflinger v. Dept. of Rev., TC 5466, 2025 WL 2886054 (Or Tax, Oct 9, 2025), which held
that the Tax Court lacks jurisdiction over refund offsets executed under ORS 293.250 because
such actions do not arise under the tax laws of this state. Although this case involves a federal
levy under ORS 305.612, the jurisdictional principle is the same: where the taxpayer does not
challenge the application of Oregon tax law, but rather the validity or fairness of a debt or

DECISION OF DISMISSAL TC-MD 250458R 5
collection process governed by another body of law, this court lacks jurisdiction under ORS
305.410. Accordingly, the court concludes that it lacks subject matter jurisdiction over
Plaintiff’s claim.
III. CONCLUSION
Because Plaintiff’s Oregon income tax refund was offset pursuant to a federal levy based
on federal tax liability, this court lacks jurisdiction to review the act. The appeal must be
dismissed. Now, therefore,
IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal be dismissed.
RICHARD D. DAVIS
MAGISTRATE
If you want to appeal this Decision, file a complaint in the Regular Division of
the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563;
or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR.
Your complaint must be submitted within 60 days after the date of this Decision
or this Decision cannot be changed. TCR-MD 19 B.
This document was signed by Magistrate Richard D. Davis and entered on
November 28, 2025.