McNaughton v. United States

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
CHRISTOPHER J. MCNAUGHTON,
JUDITH I. MCNAUGHTON,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2015-5024
______________________
Appeal from the United States Court of Federal
Claims in No. 1:13-cv-00288-NBF, Judge Nancy B. Fire-
stone.
______________________
Decided: May 13, 2015
______________________
CHRISTOPHER J. MCNAUGHTON, Scottsdale, AZ, pro se.
JUDITH I. MCNAUGHTON, Scottsdale, AZ, pro se.
JOHN A. NOLET, Tax Division, United States Depart-
ment of Justice, Washington, DC, for defendant-appellee.
2 MCNAUGHTON v. US
Also represented by RICHARD FARBER, CAROLINE D.
CIRAOLO.
______________________
Before PROST, Chief Judge, BRYSON, and DYK, Circuit
Judges.
DYK, Circuit Judge.
Judith I. and Christopher J. McNaughton (collective-
ly, “the McNaughtons”) appeal from a decision by the
Court of Federal Claims (the “Claims Court”) dismissing
their request for a partial refund of taxes they paid in
2005 as untimely and dismissing their request for “penal-
ties” because they failed to identify any money-mandating
source of law to support that claim. We affirm.
BACKGROUND
On May 1, 2006, the McNaughtons (husband and
wife) filed their joint federal tax return for 2005 and
reported a tax liability of approximately $184,000. They
had already made tax payments totaling $281,000, so the
Internal Revenue Service (“IRS”) issued a $97,000 refund.
On January 7, 2010, the McNaughtons filed an amended
2005 return and sought an additional $96,300 refund. In
a statement attached to their amended return, they
asserted that their tax preparation software, TurboTax,
failed to track and apply passive losses from 2004 and
2005 to their 2005 tax return. These passive losses re-
sulted from losses by publicly traded partnerships that
were reflected in partnership returns in 2004 and 2005.
Applying these passive losses to their 2005 return, they
claimed, would have decreased their tax liability by
$96,300.
On April 28, 2011, the IRS denied the McNaughtons’
refund claim. The IRS noted that Internal Revenue Code
(“I.R.C.”) § 6511(a) required that claims for refunds must
MCNAUGHTON v. US 3
typically be filed within three years of the date of the
original return, and that the McNaughtons filed their
refund claim after that three-year cut-off. Thus, the IRS
explained, the refund claim was time-barred.
On June 13, 2013, the McNaughtons filed a complaint
in the Claims Court, seeking the claimed $96,300 refund
and “penalties,” alleging that the IRS’s “substantive and
procedural conduct has been persistently and systemati-
cally violative of Taxpayers’ rights.” Supp. App. 14. On
August 22, 2013, the government filed a motion to dis-
miss, arguing that the amended 2005 return was time-
barred and that the McNaughtons failed to identify any
money-mandating source of law to support the claim for
penalties. On August 5, 2014, the Claims Court granted
the motion to dismiss with respect to both the refund
claim and the penalty claim.
The McNaughtons appealed to this court. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
DISCUSSION
We first address whether the McNaughtons’ amended
claim is time-barred. We conclude that it is.
The general provision governing the period of limita-
tion for refund claims is found at IRC § 6511(a), which
provides in part:
Claim for credit or refund of an overpayment of
any tax imposed by this title in respect of which
tax the taxpayer is required to file a return shall
be filed by the taxpayer within 3 years from the
time the return was filed or 2 years from the time
the tax was paid, whichever of such periods ex-
pires the later, or if no return was filed by the
taxpayer, within 2 years from the time the tax
was paid.
4 MCNAUGHTON v. US
If § 6511(a) applies, it bars the McNaughtons’ claim: their
amended return and refund request was filed more than
three years after they filed their original return in May,
2006, and more than two years after they originally paid
their 2005 tax.
The McNaughtons argue that § 6511(a) is inapplicable
and that a four-year period of limitation applies to this
refund claim, relying on Treasury Regulation
§ 301.6511(g)-1. That Treasury regulation, which is a
“[s]pecial rule for partnership items of federally registered
partnerships,” provides a four-year period of limitation in
limited circumstances:
In the case of any tax imposed by subtitle A with
respect to any person, the period for filing a claim
for credit or refund of any overpayment attributa-
ble to any partnership item of a federally regis-
tered partnership shall not expire before . . . [t]he
date which is 4 years after the date prescribed by
law (including extensions thereof) for filing the
partnership return for the partnership taxable
year in which the item arose . . . .
Treas. Reg. § 301.6511(g)-1(a). The 2005 partnership
returns were due by April 15, 2006. According to the
McNaughtons, their claim for refund was timely pursuant
to § 301.6511(g)-1(a): they needed to have filed their
amended return by April 15, 2010 (four years after the
partnership returns were due on April 15, 2006), and they
met that deadline by filing in January 2010.
Even assuming the losses the McNaughtons claim fall
within the meaning of “partnership items” under
§ 301.6511(g)-1(a), § 301.6511(g)-1 is, by its own terms,
inapplicable here. Subsection (e) provides: “The provi-
sions of this section are effective generally for partnership
items arising in partnership taxable years beginning after
MCNAUGHTON v. US 5
December 31, 1978 and before September 4, 1982.” Treas.
Reg. § 301.6511(g)-1(e). The passive losses at issue here
resulted from the sale of publicly traded partnerships in
2004 and 2005. Because these (purported) partnership
items did not “aris[e]” between December 31, 1978, and
September 4, 1982, they are not subject to the four-year
period of limitation set forth in § 301.6511(g)-1(a).
The McNaughtons argue that § 301.6511(g)-1 was in-
tended to have prospective effect, citing the Tax Equity
and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248
§ 407, 96 Stat. 324, 670 (1982). Section 407 of that Act
provides: “the amendments made by sections 402, 403,
and 404 shall apply to partnership taxable years begin-
ning after the date of the enactment of this Act.” Pub. L.
No. 97-248 § 407. But Treas. Reg. § 301.6511(g)-1 is not
codified by sections 402, 403, or 404. Section 407’s pro-
spective language thus has no effect on Treas. Reg.
§ 301.6511(g)-1. Treas. Reg. § 301.6511(g)-1(a) does not
apply, and the McNaughtons can point to no other statu-
tory provision providing for a period of limitation longer
than three years.
We next turn to the McNaughtons’ claim for penalties.
The Tucker Act grants jurisdiction to the Claims Court
only “to render judgment upon any claim against the
United States founded either upon the Constitution, or
any Act of Congress or any regulation of an executive
department, or upon any express or implied contract with
the United States, or for liquidated or unliquidated dam-
ages in cases not sounding in tort.” 28 U.S.C. § 1491(a).
It does not itself create a substantive cause of action.
“[I]n order to come within the jurisdictional reach and the
waiver of the Tucker Act, a plaintiff must identify a
separate source of substantive law that creates the right
to money damages.” Fisher v. United States, 402 F.3d
1167, 1172 (Fed. Cir. 2005). In their briefing, the
6 MCNAUGHTON v. US
McNaughtons point to no such substantive law creating a
right to money damages. Absent an affirmative money-
mandating statute, the Claims Court did not have juris-
diction to adjudicate the damages claim.
We have considered the McNaughtons’ other argu-
ments and find them to be without merit.
AFFIRMED