Meissner v. United States

ORIGINAL
3Tn tbr Wnitrb $ tatrs (!Court of jfrbrral (!Claims
No. 17-928T
Filed: March 8, 2018
FILED
** ** * ** * * *** *** *** * *
* MAR - 8 2018
GARY D. MEISSNER and * U.S. COURT OF
CONNIE R. MEISSNER, * FEDERAL CLAIMS
Plaintiffs, * Tax; Motion to Dismiss; RCFC
* 12(b)(1)
v. *
*
*
UNITED STATES,
*
*
Defendant. *
*
* * * * ** ********* **** *
Gary D. Meissner and Connie R. Meissner, Avondale, AZ, pro se.
Jason S. Selmont, Court of Federal Claims Section, Tax Division, United States
Department of Justice, Washington, D.C. for the defendant. With him were Mary M.
Abate , Assistant Chief, Court of Federal Claims Section, David I. Pincus, Chief, Court
of Federal Claims Section, and Richard E. Zuckerman, Principal Deputy Assistant
Attorney General, Tax Division, United States Department of Justice.
OPINION
HORN, J.
FINDINGS OF FACT
Plaintiffs, Gary and Connie Meissner, filed a prose complaint in the United States
Court of Federal Claims. Their complaint alleges that the Internal Revenue Service (IRS)
owes them refunds of alleged tax overpayments totaling at least $67,931.00 for the 2014
and 2015 tax years. Plaintiffs allege that the IRS improperly calculated the amount of
federal taxes plaintiffs were required to pay on their joint tax returns for both years.
Plaintiffs also assert that the wages paid to them by their employers during the tax years
in question were not eligible for federal taxation. Before the court is defendant's motion
to dismiss plaintiffs' complaint for lack of subject matter jurisdiction. Defendant argues
that because plaintiffs have failed to plead sufficient facts to establish that they filed a
valid refund claim for either of the tax years for which they now seek a refund, this court
should dismiss the complaint. Plaintiffs filed a response arguing that the tax Forms they
submitted met all requirements in order to constitute valid claims for refund . Defendant's
7016 3010 DODD 4308 4355
reply reiterated its assertions of administrative deficiencies and resulting lack of
jurisdiction.
During the 2014 tax year, Mr. Meissner was employed by Rohr Inc. During that
same 2014 tax year, Mrs. Meissner was employed by Southern California Permanente
Medical Group. For the 2014 tax year, the IRS received W-2s for plaintiffs which indicated
a combined total income of $132,907.00. Plaintiffs represent that they mailed their joint
2014 federal income tax return, a Form 1040, titled "U.S. Individual Income Tax Return,"
on February 5, 2015. On that return, plaintiffs included wages received in the amount of
zero dollars and a total income of zero dollars. Along with their 2014 return, plaintiffs filed
two Forms 4852, titled "Substitute for Form W-2, Wage and Tax Statement, or Form 1099-
R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc.," both of which disputed the income listed in their employers'
W-2 Forms and indicated that plaintiffs both had earned an income of zero dollars. In
responding to question 9 on the Form 4852, which asks: "How did you determine the
amounts on line 7 and 8 [wages and withholdings] above," plaintiffs each responded
"RECORDS PROVIDED BY THE PAYER LISTED ON LINE 5." (capitalization in original).
Additionally, both plaintiffs provided no response to question 1O which asks for
information concerning "efforts to obtain Form W-2, Form 1099-R, or Form W-2c,
Corrected Wage and Tax Statement." On both their Form 1040 and Forms 4852, plaintiffs
enumerated federal income tax, Medicare, and Social Security withholdings by the federal
government in the amount of $26, 176.50, which they now seek be refunded. 1 Additionally,
plaintiffs each attached an identical affidavit to their joint 2014 return, contesting the
constitutionality of withholding federal taxes from their income.
Upon receiving plaintiffs' Forms, the IRS sent plaintiffs a letter on March 18, 2015.
In this letter, the IRS requested plaintiffs provide additional information regarding the
"wage or withholding entry of $26, 176.95" and requested that plaintiffs submit additional
documents supporting this figure. Plaintiffs responded to this letter on March 23, 2015,
stating that they would not submit the additional requested forms because they believed
they contained "erroneous information." Additionally, plaintiffs indicated that they believed
"'taxable income"' does not encompass "'all that comes in."'
On May 11, 2015, the IRS informed plaintiffs in a letter that the IRS had made
changes to their 2014 Form 1040. These changes included subtracting the Social
Security tax and Medicare tax withholdings that plaintiffs had included as part of their
federal withholdings, thereby rendering plaintiffs' federal withholdings to only include
federal income tax withholdings. The IRS then processed plaintiffs' 2014 return using the
reported income of zero dollars. The May 11, 2015 letter stated "[a]s a result, you are due
a refund of $15,623.00." On August 17, 2015, plaintiffs responded to the changes made
1 Plaintiffs also enumerated State income tax withholdings for both the 2014 and 2015 tax
years in the amount of $5, 153.52 and $8,491.63, respectively. Plaintiffs, however, do not
appear to contest that they owed these sums in this court and do not appear to request
the return of their State income tax withholdings for the 2014 and 2015 tax years in the
case currently before the court.
2
by the IRS to their return and reiterated that they had no taxable income and demanded
that the IRS remit their total claimed refund amount of $26, 176.50. Plaintiffs also pointed
out that, even after this recalculation, the IRS has not sent them any funds.
This process repeated with few variations for the 2015 tax year. For that year, the
IRS received W-2s for plaintiffs indicating a combined total income of $216,410.29.
Plaintiffs mailed their joint 2015 federal income tax return on March 16, 2016. On that
return, plaintiffs once again indicated wages in the amount of zero dollars, but reported a
total income of $24.29. 2 As they had done the previous year, plaintiffs each filed a Form
4852 disputing the income provided by their employers' W-2 forms for tax year 2015.
Plaintiffs contended that, instead, they had both earned an income of zero dollars. In
responding to question 9 on his Form 4852, which asks, "How did you determine the
amounts on line 7 and 8 [wages and withholdings] above," Mr. Meissner responded
After a complete review of 26 USC, the IRC [Internal Revenue Code], and
case law, the erroneously allege [sic] "wages" by the payer are clearly not
those described in section 3121 of part 31 of the law, nor am I their
"employee' under 3401(c) of the same. [T]hese earnings are NOT based on
activities of Federal privilege for which the taxes are devised (as upheld by
the Supreme Court).
(emphasis added). Similarly, Mrs. Meissner, in response to the same question on her
Form 4852, stated "Company provided a W-2 which erroneously alleged payments of IRC
sec. 3121 and 3401 wages, hereby disputed."
With respect to question 10 on Form 4852 which, as stated above, asks for
information concerning efforts to obtain documentation that can verify the amounts
reported on the form, Mr. Meissner stated "[a] request for which they scoffed because
they are ignorant of the laws and the IRC about 'wages' and 'income' and 'employee.'
[T]heir position is reinforced by their accounting firm and their fear of the IRS retaliation."
Regarding the same question, Mrs. Meissner stated "none.'' Along with these statements,
plaintiffs reported a combined total of $26,270.73 in federal income, Social Security, and
Medicare tax withholdings for tax year 2015, which they seek to have refunded.
Additionally, Mr. Meissner filed an additional Form 4852 regarding a retirement
distribution of $76,923.00, which Mr. Meissner received in 2015. Instead of submitting the
Form 1099-R issued to him by the administrator of his retirement plan, Mr. Meissner filed
a Form 4852 on behalf of his retirement plan administrator, State Street Retiree Services
for UTC Employee Savings Plan. On the form, Mr. Meissner claimed zero dollars as a
gross distribution, while simultaneously reporting $15,384.62 in federal income tax
withholdings. In responding to question 9 on Form 4852, which asks, "[h]ow did you
determine the amounts on line 7 and 8 [wages and withholdings] above," Mr. Meissner
responded "[m]onies in my savings plan came from my biweekly contributions and has
no federal privileged connection[.] I was provided a 1099R which erroneously alleged
2 Plaintiffs appear to have received taxable interest income in 2015 totaling $24.29.
3
payments of IRC section 3121 and 3401 wages, hereby disputed." With respect to
question 10 on Form 4852 for Mr. Meissner's retirement distribution, which, as stated
above, asks for information concerning efforts to obtain documentation that can verify the
amounts reported on the form, Mr. Meissner stated "I asked the payer not to deduct taxes
from my monies but claimed they had to per IRS instructions." In total, plaintiffs indicate
on their Form 1040 for the 2015 tax year that they are entitled to $41,755.35 3 due to
overpayments made during the 2015 tax year.
Along with their tax Forms for the 2015 tax year, plaintiffs included a letter
indicating that they were rebutting the original W-2s that their employers had provided to
the IRS. Plaintiffs' letter states, "[t]he companies erroneously alleged payments of Internal
Revenue Code (IRC) sections 3121 & 3401 wages that are hereby disputed." Moreover,
plaintiffs described themselves as "private sector citizens (non-federal employees)
employed by private-sector companies (non-federal entity) as defined in 3401(c)(d).
[Plaintiffs] are not employed in a 'Trade or Business' nor are [plaintiffs] 'Officers of a
Corporation'. The amounts listed as withheld on the W2's and the 1099-R are correct."
Included with the letter were identical affidavits signed respectively by Gary D. Meissner
and Connie R. Meissner stating:
TO WHOM IT MAY CONCERN: IN PARTICULAR, TO ANYONE WHO
THINKS THAT HE OR SHE IS REQUIRED TO FILE AN IRS FORM W-2
OR IRS FORM 1099 ABOUT ME BUT WHO HAS NOT PAID TO ME
FEDERALLY-CONNECTED MONEY FOR FEDERALLY-CONNECTED
SERVICE PERFORMED BY ME OR HAS NOT PAID TO ME ANY
FEDERALLY-CONNECTED BENEFIT RECEIVED BY ME.
(emphasis and capitalization in original). Plaintiffs' affidavits regarding their 2015 return
filed with the IRS repeated the contentions plaintiffs' had previously made as to why they
believed that the money paid to them by their employers was exempt from federal
taxation. Plaintiffs stated that they "have never been a resident or citizen of the federal
District of Columbia or of any federal state, enclave or territory." (emphasis in original).
Plaintiffs also list that they "have never been an 'employee' (as defined in 26 U.S.C.
§ 3401 (c)), who earned 'wages' (as defined in 26 U.S.C. § 3401 (a)) that were paid to me
by an 'employer' (as defined in 26 U.S.C. § 3401(d))." Plaintiffs continue by stating they
"have never been in a 'trade or business' (as defined in 26 U.S.C. § 7701(a)(26))," nor
have plaintiffs ever "been an officer or employee of a 'United States Corporation' (as
defined in section 207 of the Public Salary Act)."
The IRS sent plaintiffs a letter on April 15, 2016 requesting more information from
the plaintiffs in order to properly process their 2015 claims. Specifically, the IRS requested
documentation to support the amount of wage withholdings reported by plaintiffs. Plaintiffs
sent a letter responding to this request indicating that they "would be remiss to furnish
3 The court notes that while plaintiffs' Form 1040 indicate withholdings in the amount of
$41,755.35 for the 2015 tax year, the individually enumerated federal withholdings
reported by plaintiffs on their multiple Forms 4852 amount to only$ 41,655.35.
4
[the IRS] with a W-2 which contains erroneous information." Repeating the language
included in their previously provided affidavits, on July 6, 2017, plaintiffs' sent a joint
response letter stating, "[w]e are private sector citizens (non-federal employee) employed
by private sector companies (non-federal entity) as defined in IRC 3401 & 3121. We are
not employed in a 'trade or business' nor are we 'officers of a corporation'."
On April 17, 2017, the IRS informed plaintiffs that the IRS had made changes to
their 2015 tax year Form 1040. These changes included subtracting the Social Security
tax and Medicare tax withholdings that plaintiffs had included as part of their withholdings,
leaving only federal income tax withholdings. The IRS then processed plaintiffs return
using the reported income of zero dollars. This process resulted in the IRS calculating a
refund amount of $31,907. 72. Plaintiffs were informed of these changes and the resulting
remaining, total, withheld amount in a letter. As with the year before, plaintiffs demanded
refund of the monies. Plaintiffs also pointed out that the IRS has not sent them any funds
even after the recalculation. Subsequently, plaintiffs filed their complaint in this court
seeking "at least $67,931.00 plus interest as allowed by law." Defendant filed a motion to
dismiss plaintiffs' complaint for lack of subject matter jurisdiction.
DISCUSSION
The court recognizes that plaintiffs are proceeding pro se. When determining
whether a complaint filed by pro se plaintiffs is sufficient to invoke review by a court, QIQ
se plaintiffs are entitled to a more liberal construction of their pleadings. See Haines v.
Kerner, 404 U.S. 519, 520-21 (1972) (requiring that allegations contained in a pro se
complaint be held to "less stringent standards than formal pleadings drafted by lawyers"),
reh'g denied, 405 U.S. 948 (1972); see also Erickson v. Pardus, 551 U.S. 89, 94 (2007);
Hughes v. Rowe, 449 U.S. 5, 9-10 (1980); Estelle v. Gamble, 429 U.S. 97, 106 (1976),
reh'q denied, 429 U.S. 1066 (1977); Matthews v. United States, 750 F.3d 1320, 1322
(Fed. Cir. 2014); Diamond v. United States, 115 Fed. Cl. 516, 524, aff'd, 603 F. App'x 947
(Fed. Cir.), cert. denied, 135 S. Ct. 1909 (2015). However, "there is no 'duty [on the part]
of the trial court ... to create a claim which [plaintiff] has not spelled out in his [or her]
pleading .... "' Lengen v. United States, 100 Fed. Cl. 317, 328 (2011) (alterations in
original) (quoting Scogin v. United States, 33 Fed. Cl. 285, 293 (1995) (quoting Clark v.
Nat'I Travelers Life Ins. Co., 518 F.2d 1167, 1169 (6th Cir. 1975))); see also Bussie v.
United States, 96 Fed. Cl. 89, 94, aff'd, 443 F. App'x 542 (Fed. Cir. 2011); Minehan v.
United States, 75 Fed. Cl. 249, 253 (2007). "While a pro se plaintiff is held to a less
stringent standard than that of a plaintiff represented by an attorney, the pro se plaintiff,
nevertheless, bears the burden of establishing the Court's jurisdiction by a preponderance
of the evidence." Riles v. United States, 93 Fed. Cl. 163, 165 (2010) (citing Hughes v.
Rowe, 449 U.S. at 9; and Taylor v. United States, 303 F.3d 1357, 1359 (Fed. Cir.)
("Plaintiff bears the burden of showing jurisdiction by a preponderance of the evidence."),
reh'q and reh'g en bane denied (Fed. Cir. 2002)); see also Shelkofsky v. United States,
119 Fed. Cl. 133, 139 (2014) ("[W]hile the court may excuse ambiguities in a pro se
plaintiff's complaint, the court 'does not excuse [a complaint's] failures."' (quoting Henke
v. United States, 60 F.3d 795, 799 (Fed. Cir. 1995)); Harris v. United States, 113 Fed. Cl.
290, 292 (2013) ("Although plaintiff's pleadings are held to a less stringent standard, such
5
leniency 'with respect to mere formalities does not relieve the burden to meet jurisdictional
requirements."' (quoting Minehan v. United States, 75 Fed. Cl. at 253)).
In this court, the defendant has challenged this court's subject matter jurisdiction
to adjudicate plaintiffs' complaint arguing that not all the administrative requirements have
been met in order to file a tax refund claim in this court. "Subject-matter may be
challenged at any time by the parties or by the court sua sponte." Folden v. United States,
379 F.3d 1344, 1354 (Fed. Cir.), reh'g and reh'g en bane denied (Fed. Cir. 2004), cert.
denied, 545 U.S. 1127 (2005); see also Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006);
Rick's Mushroom Serv .. Inc. v. United States, 521 F.3d 1338, 1346 (Fed. Cir. 2008);
Fanning. Phillips. Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998); Booth v. United
States, 990 F.2d 617, 620 (Fed. Cir.), reh'g denied (Fed. Cir. 1993); United States v.
Newport News Shipbuilding and Drv Dock Co., 933 F.2d 996, 998 n.1 (Fed. Cir. 1991);
Thompson v. United States, 88 Fed. Cl. 263, 266 (2009), aff'd, 480 F. App'x 575 (Fed.
Cir. 2012); N. Star Alaska Hous. Corp. v. United States, 76 Fed. Cl. 158, 185, appeal
dismissed, 226 F. App'x 1004 (Fed. Cir. 2007). "In fact, a court has a duty to inquire into
its jurisdiction to hear and decide a case." Special Devices. Inc. v. OEA, Inc., 269 F.3d
1340, 1342 (Fed. Cir. 2001) (citing Johannsen v. Pay Less Drug Stores N.W., Inc., 918
F.2d 160, 161 (Fed. Cir. 1990)); see also Entegris. Inc. v. Pall Corp., 490 F.3d 1340, 1343
(Fed. Cir. 2007); View Eng'g, Inc. v. Robotic Vision Sys .. Inc., 115 F.3d 962, 963 (Fed.
Cir. 1997) ("[C]ourts must always look to their jurisdiction, whether the parties raise the
issue or not.").
Pursuant to Rule 8(a) of the Rules of the United States Court of Federal Claims
(RCFC) and Rule 8(a) of the Federal Rules of Civil Procedure, a plaintiff need only state
in the complaint "a short and plain statement of the grounds for the court's jurisdiction,"
and "a short and plain statement of the claim showing that the pleader is entitled to relief."
RCFC 8(a)(1), (2) (2017); Fed. R. Civ. P. 8(a)(1), (2) (2017); see Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-78
(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555-57, 570). However,
"[d]etermination of jurisdiction starts with the complaint, which must be well-pleaded in
that it must state the necessary elements of the plaintiff's claim, independent of any
defense that may be interposed." Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir.)
(citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1 (1983)), reh'g
denied (Fed. Cir. 1997); see also Edelmann v. United States, 76 Fed. Cl. 376, 379 (2007).
"Conclusory allegations of law and unwarranted inferences of fact do not suffice to
support a claim." Bradley v. Chiron Corp., 136 F.3d 1317, 1322 (Fed. Cir. 1998); see also
Mczeal v. Sprint Nextel Corp., 501 F.3d 1354, 1363 n.9 (Fed. Cir. 2007) (Dyk, J.,
concurring in part, dissenting in part) (quoting C. Wright and A. Miller, Federal Practice
and Procedure§ 1286 (3d ed. 2004)); Briscoe v. LaHue, 663 F.2d 713, 723 (7th Cir. 1981)
("[C]onclusory allegations unsupported by any factual assertions will not withstand a
motion to dismiss."), aff'd, 460 U.S. 325 (1983). As stated in Ashcroft v. Iqbal, "[a] pleading
that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of
action will not do.' [Bell Atlantic Corp. v. Twombly,] 550 U.S. at 555, 127 S. Ct. 1955. Nor
does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual
6
enhancement."' Ashcroft v. Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly,
550 U.S. at 557).
When deciding a case based on a lack of subject matter jurisdiction, this court must
assume that all undisputed facts alleged in the complaint are true and must draw all
reasonable inferences in the non-movant's favor. See Scheuer v. Rhodes, 416 U.S. 232,
236 (1974); United Pac. Ins. Co. v. United States, 464 F.3d 1325, 1327-28 (Fed. Cir.
2006); Boise Cascade Corp. v. United States, 296 F.3d 1339, 1343 (Fed. Cir.), reh'g and
reh'g en bane denied (Fed. Cir. 2002), cert. denied, 538 U.S. 906 (2003); Pixton v. B & B
Plastics. Inc., 291F.3d1324, 1326 (Fed. Cir. 2002); Commonwealth Edison Co. v. United
States, 271 F.3d 1327, 1338 (Fed. Cir. 2001) (quoting New Valley Corp. v. United States,
119 F.3d 1576, 1580 (Fed. Cir. 1997)), cert. denied, 535 U.S. 1096 (2002); Boyle v. United
States, 200 F.3d 1369, 1372 (Fed. Cir. 2000).
The Tucker Act grants jurisdiction to this court as follows:
The United States Court of Federal Claims shall have jurisdiction 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 damages in cases not sounding in tort.
28 U.S.C. § 1491(a)(1). As interpreted by the United States Supreme Court, this Act
waives sovereign immunity to allow jurisdiction over claims against the United States (1)
founded on an express or implied contract with the United States, (2) seeking a refund
from a prior payment made to the government, or (3) based on Federal constitutional,
statutory, or regulatory law mandating compensation by the federal government for
damages sustained. See United States v. Testan, 424 U.S. 392, 400 (1976); Greenlee
Cty., Ariz. v. United States, 487 F.3d 871, 875 (Fed. Cir.), reh'g and reh'g en bane denied
(Fed. Cir. 2007), cert. denied, 552 U.S. 1142 (2008); Palmer v. United States, 168 F.3d
1310, 1314 (Fed. Cir. 1999); Stinson. Lyons & Bustamante. P.A. v. United States, 33 Fed.
Cl. 474, 478 (1995), aff'd, 79 F.3d 136 (Fed. Cir. 1996).
"Not every claim invoking the Constitution, a federal statute, or a regulation is
cognizable under the Tucker Act. The claim must be one for money damages against the
United States .... " United States v. Mitchell, 463 U.S. 206, 216 (1983); see also United
States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003); RadioShack Corp. v.
United States, 566 F.3d 1358, 1360 (Fed. Cir. 2009); Rick's Mushroom Serv .. Inc. v.
United States, 521 F.3d at 1343 ("[P]laintiff must ... identify a substantive source of law
that creates the right to recovery of money damages against the United States."). In
Ontario Power Generation. Inc. v. United States, 369 F.3d 1298 (Fed. Cir. 2004), the
United States Court of Appeals for the Federal Circuit identified three types of monetary
claims for which jurisdiction is lodged in the United States Court of Federal Claims. The
court wrote:
7
The underlying monetary claims are of three types .... First, claims alleging
the existence of a contract between the plaintiff and the government fall
within the Tucker Act's waiver. . . . Second, the Tucker Act's waiver
encompasses claims where "the plaintiff has paid money over to the
Government, directly or in effect, and seeks return of all or part of that sum."
Eastport S.S. [Corp. v. United States, 178 Ct. Cl. 599,] 372 F.2d [1002,]
1007-08 [(1967)] (describing illegal exaction claims as claims "in which 'the
Government has the citizen's money in its pocket"' (quoting Clapp v. United
States, 127Ct. Cl. 505, 117 F. Supp. 576, 580(1954))) .... Third, the Court
of Federal Claims has jurisdiction over those claims where "money has not
been paid but the plaintiff asserts that he is nevertheless entitled to a
paymentfrom the treasury." Eastport S.S. [Corp. v. United States], 372 F.2d
at 1007. Claims in this third category, where no payment has been made to
the government, either directly or in effect, require that the "particular
provision of law relied upon grants the claimant, expressly or by implication,
a right to be paid a certain sum." .!Q,,; see also [United States v.] Testan, 424
U.S. [392,] 401-02, 96 S. Ct. 948 ("Where the United States is the defendant
and the plaintiff is not suing for money improperly exacted or retained, the
basis of the federal claim-whether it be the Constitution, a statute, or a
regulation-does not create a cause of action for money damages unless, as
the Court of Claims has stated, that basis 'in itself...can fairly be interpreted
as mandating compensation by the Federal Government for the damage
sustained."' (quoting Eastport S.S. [Corp. v. United States], 372 F.2d at
1009)). This category is commonly referred to as claims brought under a
"money-mandating" statute.
Ont. Power Generation, Inc. v. United States, 369 F.3d at 1301.
To prove that a statute or regulation is money mandating, plaintiff must
demonstrate that an independent source of substantive law relied upon "can fairly be
interpreted as mandating compensation by the Federal Government for the damages
sustained." United States v. Mitchell, 463 U.S. at 217 (internal quotation marks and
citations omitted); see also Hamlet v. United States, 63 F.3d 1097, 1107 (Fed. Cir.), reh'g
denied, en bane suggestion declined (Fed. Cir. 1995), cert. denied, 517 U.S. 1155 (1996).
"Additionally, the specific authority granting money relief must be distinct from the Tucker
Act itself." Cottrell v. United States, 42 Fed. Cl. 144, 152 (1998). "If the court's conclusion
is that the source as alleged and pleaded is not money-mandating, the court shall so
declare, and shall dismiss for lack of jurisdiction, a Rule 12(b)(1) dismissal - the absence
of a money-mandating source being fatal to the court's jurisdiction under the Tucker Act."
Fisher v. United States, 402 F.3d 1167, 1173 (Fed. Cir. 2005); see also Doe v. United
States, 74 Fed. Cl. 794, 796 (2006). The United States Court of Federal Claims has
jurisdiction over actions against the United States "for the recovery of internal-revenue
taxes alleged to have been erroneously or illegally assessed or collected, or any penalty
claimed to have been collected without authority or any sum alleged to have been
excessive or in any manner wrongfully collected under the internal-revenue laws." 28
U.S.C. § 1346(a) (2012); lshlerv. United States, 115 Fed. Cl. 530, 534 (2014). "[W]hether
8
sovereign immunity has been waived and the Court of Federal Claims has jurisdiction
over these refund claims depends on whether the taxpayers' submissions to the IRS
constitute a claim for refund." Waltner v. United States, 679 F.3d 1329, 1333 (Fed. Cir.
2012), cert. denied, 568 U.S. 886, reh'g denied, 568 U.S. 1044 (2012). Section 7422(a)
functions as a waiver of the government's sovereign immunity in tax refund suits. Chi.
Milwaukee Corp. v. United States, 40 F.3d 373, 374 (Fed. Cir. 1994); see also Gluck v.
United States, 84 Fed. Cl. 609, 613 (2008). "[S]ection 7422(a) creates a jurisdictional
prerequisite to filing a refund suit." Gluck v. United States, 84 Fed. Cl. at 613 (citing Chi.
Milwaukee Corp. v. United States, 40 F.3d at 374 (citing Burlington N., Inc. v. United
States, 231 Ct. Cl. 222, 684 F.2d 866, 868 (1982))).
The United States Supreme Court has indicated that:
A taxpayer seeking a refund of taxes erroneously or unlawfully assessed or
collected may bring an action against the Government either in United
States district court or in the United States Court of Federal Claims. The
Internal Revenue Code specifies that before doing so, the taxpayer must
comply with the tax refund scheme established in the Code. That scheme
provides that a claim for a refund must be filed with the Internal Revenue
Service (IRS) before suit can be brought, and establishes strict timeframes
for filing such a claim.
United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4 (2008) (citations omitted);
see also RadioShack Corp. v. United States, 566 F.3d at 1360 ("[l]n the context of tax
refund suits, the [Supreme] Court has held that the Court of Federal Claims' Tucker Act
jurisdiction is limited by the Internal Revenue Code, including 26 U.S.C. § 7422(a).").
Once a party has established compliance with 26 U.S.C. § 7422(a), the party may, if
successful, also recover interest for its claim for refund, if successful. See Deutsche Bank
AG v. United States, 95 Fed. Cl. 423, 427 n.3 (2010) ('There is no question, however,
that this court has subject matter jurisdiction under the Tucker Act, 28 U.S.C. § 1491
(2006), over claims, such as the present one, seeking to recover statutory interest on
income tax refunds." (citing Brown & Williamson, Ltd. v. United States, 231 Ct. Cl. 413,
688 F.2d 747, 752 (1982))), aff'd, 742 F.3d 1378 (Fed. Cir. 2014).
For this court to exercise jurisdiction over a plaintiff's federal tax refund claim, a
petitioning party must first satisfy the tax refund schematic detailed in Title 26 of the
Internal Revenue Code, (see,~' 26 U.S.C. § 7422 (2012) and 26 U.S.C. § 6511
(2012)), which establish that a claim for refund must be filed with the IRS before filing suit
in federal court, as well as strict deadlines for filing such claims. See United States v.
Clintwood Elkhorn Mining Co., 553 U.S. at 4; Kiselis v. United States, 131 Fed. Cl. 54, 60
(2017) ('To establish jurisdiction, Plaintiff must establish that he filed an administrative
refund claim with the IRS prior to filing suit in this Court."); Fremuth v. United States, 129
Fed. Cl. 684, 688 (2016) ('This Court's exercise of [tax refund] jurisdiction is subject,
however, to several statutory and jurisprudential prerequisites."); Duman v. United States,
85 Fed. Cl. 425, 428 ("To recover under the Tucker Act, a plaintiff must adhere to the
requirements of 26 U.S.C. § 7422(a), which states that 'no such suit shall be maintained
9
in any court ... until a claim for refund or credit has been duly filed with the Secretary."'
(quoting 26 U.S.C. § 7422(a)) aff'd, 345 F. App'x 586 (Fed. Cir. 2009); see also United
States v. Dalm, 494 U.S. 596, 609-10, reh'g denied, 495 U.S. 941 (1990); Smith v. United
States, 111 Fed. Cl. 740, 443 (2013) (noting that Congress intended for 26 U.S.C.
§ 7422(a) to apply broadly); Buser v. United States, 85 Fed. Cl. 248, 256 (2009).
Moreover, for a refund claim, the court only may hear claims for which the
petitioning taxpayer has fulfilled all of his or her tax liabilities for the tax year in question
before the refund claim is heard. Flora v. United States, 357 U.S. 63, 72-73 (1958) (Flora
l), aff'd on reh'g, 362 U.S. 145 (Flora II), reh'g denied, 362 U.S. 972 (1960). In Flora II,
the United States Supreme Court stated that 28 U.S.C. § 1346(a)(1) requires "payment
of the full tax before suit .... "4 Flora II, 362 U.S. 145, 150-151, reh'g denied, 362 U.S.
972 (1960); see also Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993) ("The
full payment requirement of Section 1346(a)(1) and Flora applies equally to tax refund
suits brought in the Court of Federal Claims .... ")(citing Tonasket v. United States, 218
Ct. Cl. 709, 711-12, 590 F.2d 343 (1978)).
As noted above, before filing a tax refund claim in federal court, a plaintiff is
required to file a claim with the IRS for the amount of the alleged refund, pursuant to 26
U.S.C. § 7422(a), which states:
No suit or proceeding shall be maintained in any court for the recovery of
any internal revenue tax alleged to have been erroneously or illegally
assessed or collected, or of any penalty claimed to have been collected
without authority, or of any sum alleged to have been excessive or in any
manner wrongfully collected, until a claim for refund or credit has been duly
filed with the Secretary, according to the provisions of law in that regard,
and the regulations of the Secretary established in pursuance thereof.
26 U.S.C. § 7422(a); see also Computervision Corp. v. United States, 445 F.3d 1355,
1363 (Fed. Cir.), reh'g and reh'g en bane denied, 467 F.3d 1322 (Fed. Cir. 2006), cert.
denied, 549 U.S. 1338 (2007); Cooper v. United States, 123 Fed. Cl. 226, 232 (2015)
4 Section 1346(a) reads, in part:
The district courts shall have original jurisdiction, concurrent with the United
States Court of Federal Claims, of:
(1) Any civil action against the United States for the recovery of any internal-
revenue tax alleged to have been erroneously or illegally assessed or
collected, or any penalty claimed to have been collected without authority
or any sum alleged to have been excessive or in any manner wrongfully
collected under the internal-revenue laws ....
28 U.S.C. § 1346(a)(1 ).
10
(holding that because plaintiff's tax forms did not comply with the requirements of 26
U.S.C. § 7422, the returns could not constitute duly filed refund claims).
Plaintiffs' complaint claims that, to date, defendant owes them "at least
$67,931.00," plus interest, for alleged tax overpayments in tax years 2014 and 2015. 5
Plaintiffs allege that their returns for the 2014 and 2015 tax years indicate zero dollar tax
liability, and that the amounts withheld were deducted from "non-wage amounts." Further,
plaintiffs argue that the IRS lacked the authority to amend their tax forms which resulted
in the lower refund amounts and that they have met the requirements to file their refund
claims in this court. Arguing that plaintiffs have failed to allege that they filed valid claims
for refund according to Treasury Regulations, specifically, 26 C.F.R. §§ 301.5402-2(c),
301.6402-3(a)(1), (a)(5), defendant asserts that this court lacks subject matter jurisdiction
to adjudicate plaintiffs' claims pursuant to RCFC 12(b)(1). Defendant contends that
plaintiffs did not first file proper administrative claims for refund pursuant to 26 U.S.C.
§ 7422(a), and that the government, therefore, has not waived its sovereign immunity.
Although defendant agrees that plaintiffs filed timely tax returns for both the 2014 and
2015 tax years, defendant asserts that plaintiffs' tax forms were not "'properly executed"'
and, thus, plaintiffs have not satisfied the requirements of first filing with the IRS timely
and sufficiently informative, valid claims for refund or credit of the taxes prior to bringing
their case to this court.
According to defendant, there is a generally agreed upon four-part test for
determining whether a defective or incomplete document is a valid return.
"First, there must be sufficient data to calculate tax liability; second, the
document must purport to be a return; third, there must be an honest and
reasonable attempt to satisfy the requirements of the tax law; and fourth the
taxpayer must execute the return by signing it under penalty of perjury."
Diamond v. United States, 107 Fed. Cl. 702, 705 (2012) (quoting Beard v. Commissioner,
82 T.C. 766, 777 (1984), aff'd, 793 F.2d 139 (6th. Cir. 1986)), aff'd, 530 F. App'x 943
(Fed. Cir. 2013), cert. denied, 134 S. Ct. 1344 (2014); see also Kiselis v. United States,
131 Fed. Cl. at 60. "A purported return that does not satisfy all four conditions does not
play the role that a tax return is intended to play in a system, which is our federal tax
system, of self-assessment." In re Payne, 431 F.3d 1055, 1057 (7th Cir. 2005); see also
Stelco Holding Co. v. United States, 42 Fed. Cl. 101, 104 ("It is firmly settled that a
properly filed administrative claim for refund is the indispensable prerequisite to this
court's exercise of jurisdiction over a taxpayer's suit for refund." (citations omitted)),
recons. denied, 42 Fed. Cl. 156 (1998).
5 In their complaint, plaintiffs ask for "at least $67,931.00 plus interest as allowed by law."
In their Form 1040 for tax year 2014, plaintiffs indicate they are seeking a refund of
$26,176.95. In their Form 1040 for tax year 2015, plaintiffs indicate they are seeking a
refund of $41, 755.35. Added together, the total refund of plaintiffs' claim for tax years
2014 and 2015 appears to be $67,932.30.
11
In the motion to dismiss, defendant asserts that plaintiffs' returns as filed for the
2014 and 2015 tax years clearly violate two of these four prongs: (1) there is insufficient
data filled in on the Forms to calculate the plaintiffs' liability; and (3) plaintiffs did not make
an honest and reasonable attempt to satisfy the requirements of the tax law. In its filings
in this court, defendant, however, does not dispute plaintiffs' compliance with prongs two
and four as described above. Regarding prong one, defendant argues that, by reporting
zero dollars in wage income on their Forms 1040 and 4852, and a zero dollar gross
distribution from Mr. Meissner's retirement plan on the filed Form 4852, plaintiffs "failed
to include sufficient data on their return to permit the IRS to calculate their tax liability."
The crux of defendant's argument is that tax returns reporting zero income, while still
reporting federal withholdings, cannot constitute valid returns because they lack sufficient
financial information necessary for the IRS to process the submitted tax returns.
In their response to defendant's motion to dismiss, plaintiffs state "[they] truthfully
and lawfully know they have no 'income' beyond the exemption amount as reported on
their 1040's. [T]he term 'income' is defined in the U.S. Constitution, the 1862 Revenue Act
and in several U.S. Supreme Court rulings and has a very limited reach to whom it applies."
Plaintiffs further allege that all the requirements in order for their tax returns to allow
consideration of their claims for refund in this court have been met. Moreover, plaintiffs
argue that:
no properly-completed sworn return declaring contrary numbers, calculating
an alleged tax liability, and therefore resulting in a competing government
claim to [plaintiffs'] property has been made-as is required by law before the
government can assess a tax (or assert ownership of the property for any
other reason); therefore, no material facts are in dispute and as a matter of
law (or of equity) the refund must be issued.
Plaintiffs contend that "if the court rules in favor of defendant and plaintiffs are forced to
file according to the governments liken [sic], then [plaintiffs] will have to commit perjury,
which plaintiffs cannot and will not do."
As discussed above, plaintiffs entered a value of zero dollars on both their 2014
and 2015 tax returns for those lines of the Forms concerning their income. In Waltner v.
United States, the United States Court of Appeals for the Federal Circuit affirmed a case
in which one of the plaintiffs had submitted a Form 4852 for the Form W-2, on which
plaintiffs reported that wages were zero and alleged that the employer had "erroneously
alleged payments of IRC section 3401 (a) and 3121 (a) wages." Waltner v. United States,
679 F.3d at 1330-31.6 "In response to the Form's inquiry regarding efforts to obtain a
Form W-2c, Corrected Wage and Tax Statement, Mr. Waltner stated 'none, since most
6 Since the Federal Circuit issued its decision in Waltner, three other Federal Circuit
cases, currently unreported, have cited Waltner and relied on the same reasoning. See
Diamond v. United States, 603 F. App'x 947 (Fed. Cir. 2015); Williams v. United States,
548 F. App'x 618 (Fed. Cir. 2013), reh'g en bane denied (Fed. Cir. 2014); Diamond v.
United States, 530 F. App'x 943 (Fed. Cir. 2013).
12
companies refuse to issue forms correctly listing payments of "'wages"'"' as defined in
3401(a) and 3121(a)."' & The Federal Circuit found that "a form that contains zeros in
place of any reportable income does not constitute a valid tax return; it is not 'properly
executed' for purposes of §301.6402-3(a)(5) and does not meet the specificity
requirements imposed by §301.6402-2(b)(1 )."Waltner v. United States, 679 F.3d at 1334.
Similarly, in Gregoline v. United States, a judge of this court was tasked with
assessing the sufficiency of a plaintiff's tax return in which the plaintiff "reported a zero in
every space on the form to show income." Gregoline v. United States, 99 Fed. Cl. 161,
167 (2011 ). The Gregoline court concluded that these Forms lacked essential financial
information and that "[b]y submitting these invalid tax returns, [plaintiff] has not fulfilled
the requirement of 26 U.S.C. § 7422(a)." The Gregoline court surveyed a number of
earlier decisions and wrote:
Tax returns that are filled out only with zeros do not contain sufficient
financial information to be considered properly executed tax returns and
cannot serve as a claim for a refund with the IRS. See, lUJ.,, Waltner v.
United States, 98 Fed. Cl. 737, 760-61 (2011) (holding that the returns in
which plaintiffs allege that no wages were received did not provide the IRS
with sufficient information for the IRS to calculate tax liability and therefore
were not proper claims for a refund); Kehmeier v. United States, 95 Fed. Cl.
442, 445 (2010) (holding that this Court lacks jurisdiction over a plaintiff's
refund claim because the plaintiff's zero tax return did not contain
information sufficient to constitute a valid tax return); Hamzik[ v. United
States], 64 Fed. Cl. [766,] 768 [(2005)]; (holding that plaintiff's tax return,
which was replete with zeros, could not form the basis of a refund claim);
Ulloa v. United States, No 1:06-CV-445 (NAM/RFT), 2008 WL 4186328, at
*6 (N.D.N.Y. Sept. 9, 2008) (plaintiff did not have a valid refund claim when
the tax return reported zero income and wages even though the plaintiff
earned more than $100,000); Deyo v. Internal Revenue Service, No. Civ.
3:02CV 85(AVC), 2004 WL 2051217, at *3-4 (D. Conn. Aug. 2, 2004)
(holding that tax return reporting zeros instead of income was not a valid
tax return and could not serve as the jurisdictional prerequisite for a tax
refund claim), aff'd, 134 F. App'x 475 (2d Cir. 2005); Taylor v. United States,
No. Civ. 00-823 (TPJ), 2001 WL 721850, at *1-2 (D.D.C. Mar. 5, 2001)
(holding that a return containing only zeros was not a valid income tax return
and therefore the plaintiff did not have a valid refund claim); Maruska v.
United States, 77 F. Supp. 2d 1035, 1039 (D. Minn. 1999) (finding that a
claim replete with zeros in response to all inquiries 'was a nullity and, with
no properly executed tax return filed, [plaintiff's] ostensible refund claim is
rendered inoperative as well.').
Gregoline v. United States, 99 Fed. Cl. at 166-67 (last alteration in original).
In Hamzik v. United States, another decision by a judge of this court, cited by the
Gregoline court, the plaintiff filed a Form 1040 return for the 2000 tax year on February
13
20, 2004, and listed "zeroes for all forms of income and adjusted gross income, claimed
various dependency exemptions, and listed $23,420.55 in line 58 [on Form 1040] for
'federal income tax withheld from Forms W-2 and 1099."' Hamzik v. United States, 64
Fed. Cl. at 766-67. In Hamzik, the judge wrote, "Section 7422(a) of the Code provides
that a refund suit may not be filed 'until a claim for refund or credit has been duly filed with
the Secretary, according to the provisions of law in that regard, and the regulations of the
Secretary established in pursuance thereof."' 7 !Q,, at 766. The Hamzik court also stated:
A broad constellation of cases has held that a return which lacks essential
financial information and, in particular, contains no recitation of taxpayer's
income, is not a properly executed return for purposes of the tax laws. See,
~.United States v. Goetz, 746 F.2d 705, 707 (11th Cir. 1984) ("alleged
tax returns which do not contain any financial information are not 'returns"');
United States v. Mosel, 738 F.2d 157 (6th Cir. 1984) ("[l]t is not enough for
a form to contain some information; there must also be an honest and
reasonable intent to supply the information required by the tax code.");
United States v. Rickman, 638 F.2d 182, 184 (10th Cir.1980) (the "return
did not reflect his income" and therefore did not constitute a proper return);
United States v. Moore, 627 F.2d 830, 835 (7th Cir. 1980), cert. denied, 450
U.S. 916, 101 S. Ct. 1360, 67 L. Ed. 2d 342 (1981) (incomplete and
inaccurate information on income does not make it a valid return when
"there is no real attempt to comply with the requirements of filing a return.");
United States v. Smith, 618 F.2d 280, 281 (5th Cir. 1980), cert. denied, 449
U.S. 868, 101 S. Ct. 203, 66 L. Ed. 2d 87 (1980) ("'returns' which contained
nothing but zeros and constitutional objections, plainly did not even purport
to disclose the required information").
Hamzik v. United States, 64 Fed. Cl. at 767 (alteration in original). In a footnote, the
Hamzik court wrote:
As explained by the Seventh Circuit in Moore:
"[l]t is not enough for a form to contain some income information; there must
also be an honest and reasonable intent to supply the information required
7The court in Hamzik cited to Treasury Regulation § 301.6402-2, the current version of
which states, in part:
No refund or credit will be allowed after the expiration of the statutory period
of limitation applicable to the filing of a claim therefor except upon one or
more of the grounds set forth in a claim filed before the expiration of such
period. The claim must set forth in detail each ground upon which a credit
or refund is claimed and facts sufficient to apprise the Commissioner of the
exact basis thereof.
Treas. Reg.§ 301.6402-2(b)(1) (2017).
14
by the tax code .... In our self-reporting tax system the government should
not be forced to accept as a return a document which plainly is not intended
to give the required information."
Hamzik v. United States, 64 Fed. Cl. at 767 n.4 (alteration in original) (quoting United
States v. Moore, 627 F.2d at 835).
Likewise, in Kehmeier v. United States, the plaintiff filed a Form 1040 return and a
Form 4852 for Form W-2 for the 2008 tax year. On the Form 1040 line, "Wages, salaries,
tips, etc.," plaintiff entered a zero and claimed as the total federal income tax withheld
$42,251.00. Kehmeier v. United States, 95 Fed. Cl. at 443. The plaintiff in Kehmeier then
sought a refund of $42,251.00. lft at 444-45. The court in Kehmeier, indicated that among
other declarations, "plaintiff submitted a corrected form 1099-B from Monex Credit
Company showing $0 in proceeds from the sale of '5 Silver Ingots, 100 oz. ea.' In contrast,
defendant states that Monex Credit Company reported to the IRS that plaintiff earned
$6,650 in gross proceeds from the sale of these silver ingots." lft at 444 n.1. The
Kehmeier court stated that "[m]ost cases have concluded that tax returns reporting zero
wages cannot serve as claims for refund because they fail to include information upon
which a tax could be calculated." lft at 445 (citing Hamzik v. United States, 64 Fed. Cl. at
767). The Kehmeier court concluded that plaintiff had not complied with the requirements
of a properly executed return and that the plaintiff "could not reasonably have believed
that his return contained information sufficient for it to be considered a valid tax return."
lft
Similar to the plaintiffs in Waltner, Gregoline, Hamzik, and Kehmeier, the plaintiffs
in the case currently before this court did not submit sufficient information for tax year
2014 or tax year 2015 for either of the plaintiffs' returns, as filed, to be considered valid
tax returns. For each of the tax years, the plaintiffs claimed they have a tax liability of zero
dollars, allege that no wages were received by plaintiffs, but report various amounts in
federal withholdings. Plaintiffs further alleged that income forms provided by their
employers contain "erroneous information" and refused to supply them, even when
specifically requested to do so by the IRS. In sum, plaintiffs did not provide the IRS with
sufficient information for either the 2014 and 2015 tax years, so that the IRS could
calculate their tax liability for either year. Therefore, the returns filed by the plaintiffs were
neither proper returns, nor can they form the basis for valid refund claims in this court.
Plaintiffs attached Memorandum 2000127045 issued by the Office of Chief
Counsel (OCC) for the Department of Treasury (OCC Memorandum) as an attachment
to their response to defendant's motion to dismiss. The OCC Memorandum addressed
[w]hether a Form 1040, on which the taxpayer enters the number 0 for every
line of the return except the amount of tax withheld, the amount of the
overpayment and the amount to be refunded, and includes attachments
which protest the Constitutionality of the requirement that he pay federal
income tax, constitutes a valid income tax return.
15
Although plaintiffs argue that the OCC Memorandum "says the plaintiff's [sic] claims are
valid," a plain reading of the OCC Memorandum's guidance is to the contrary. The OCC
Memorandum concluded:
In the case of an official Form 1040 on which the taxpayer enters the
number O for every line of the return except the amount of tax withheld, the
amount of overpayment and the amount to be refunded, and has included
attachments to the Form 1040 which protest the Constitutionality of the
requirement that he pay federal income tax, the Internal Revenue Service
('Service') may treat the Form 1040 as a nullity provided there is sufficient
evidence on or attached to the Form 1040 indicating a lack of honest and
reasonable attempt on the part of the taxpayer to comply with the tax laws.
The court agrees with the reasoning in the OCC Memorandum, and the cases cited
above, and finds that because for both the 2014 and 2015 tax years plaintiffs reported
zero dollars for nearly every number, except for reporting the amount of tax withheld, the
amount of the alleged overpayment, and the amounts plaintiffs claim should be refunded,
their claims have not met the administrative requirements to be considered valid claims.
Therefore, this court is without jurisdiction to adjudicate their claims. Although the plaintiffs
attached to their tax Forms a series of letters and affidavits contesting the constitutionality
of imposing federal taxes on the sums paid to them by their employers, they failed to
provide sufficient information to the IRS on their filed tax returns or when responding to
the questions sent to them by the IRS regarding both the 2014 and 2015 tax years. When
the IRS twice requested additional information from plaintiffs, they twice declined to
supply the IRS with the requested, additional information.
Defendant also argues that plaintiffs' unwillingness to file with their tax returns the
W-2s provided by their employers or the 1099-R Mr. Meissner received for the distribution
from his retirement account, combined with the plaintiffs' refusal to properly respond to
the IRS information request letters, does not constitute an honest and reasonable attempt
to comply with the tax laws. Defendant characterizes the plaintiffs' actions and reasons
for not providing their W-2s as "tax defier" arguments. Defendant concludes that plaintiffs'
actions "make it impossible to calculate plaintiffs' actual tax liability from their return."
Plaintiffs have persisted to respond that they "are not tax protestors but are tax honesty
citizens" and have filed their Forms in a manner consistent with the applicable laws. As
noted above, plaintiffs assert that they declined to provide the tax Forms completed by
their employers because they believed that the Forms contained "erroneous information."
Plaintiffs argue that in completing their tax Forms, they "only relied on the history of the
Rule of Law, the U.S. Constitution is very clear without ambiguity concerning direct taxes
and indirect taxes as well as Supreme Court rulings on the subject matter .... " Plaintiffs
assert that the zero wage sums reported on their tax Forms are accurate, and that the
information reported by their employers is false because these sums fall outside the
definition of "wages" and, therefore, are exempt from federal taxation. Accordingly,
plaintiffs argue their returns were valid as filed and contain no omissions or inaccurate
information.
16
Plaintiffs' assertions that their wages were exempt from federal withholdings
because they are not federal employees and do not reside in this District of Columbia
have been widely discredited. As summarized in Buser v. United States:
[A]lthough plaintiff maintains that "I am not a person," the IRC defines a
"person" to include "an individual, a trust, estate, partnership, association,
company or corporation," 26 U.S.C. § 7701 (a)(1) (emphasis added}. Along
these same lines, plaintiff asserts that he is not a "taxpayer." The IRC
defines a "taxpayer" as "any person subject to any internal revenue tax." 26
U.S.C. § 7701 (a)(14). Courts have previously deemed similar arguments to
those raised by plaintiff here as frivolous. See,~. United States v. Sloan,
939 F.2d 499, 500-01 (7th Cir.1991) (rejecting similar arguments, which the
court characterized as "strange"); Stoecklin v. Comm'r, 865 F.2d 1221, 1224
(11th Cir.1989) (characterizing arguments that appellant "is not subject to
the income tax laws" as "frivolous"); Stubbs v. Comm'r, 797 F.2d 936, 938
(11th Cir.1986) (per curiam) (characterizing arguments that appellant was
not a person required to file a tax return as "patently frivolous"); United
States v. Studley. 783 F.2d 934, 937 & n. 3 (9th Cir.1986) ("[Appellant]
contends that she is not a 'taxpayer' because she is an absolute, freeborn
and natural individual. This argument is frivolous. And individual is a
'person' under the [IRC] .... ");Guthrie v. Comm'r, No. 14009-04, 2006 WL
1027727, at *1 (U.S. Tax Ct. Apr. 19, 2006) (characterizing petitioner's
arguments that he "is not subject to Federal income tax," that "requiring him
to pay income tax violates the U.S. Constitution," and that "he is not liable
for income tax because he is Catholic" as frivolous).
In short, "[t]axes are what we pay for civilized society," Compania General
de Tabacos de Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 100,
48 S. Ct. 100, 72 L. Ed. 177 (1927) (Holmes, J., dissenting), and "[a]ll
individuals, natural or unnatural, must pay federal income tax on their
wages," Lovell v. United States, 755 F.2d 517, 519 (7th Cir.1984). Plaintiff's
arguments are frivolous and, in fact, confirm that the court lacks jurisdiction
over the complaint.
Buser v. United States, 85 Fed. Cl. at 263-64 (emphasis and alterations in original}
(internal references and footnote omitted); see also Ledford v. United States, 297 F.3d
1378, 1381 (Fed. Cir. 2002) ("[A] review of the pleadings indicates that Mr. Ledford bases
his entitlement to this relief on his view that the federal tax code does not tax
compensation received for personal labor. Mr. Ledford's view of the tax law is mistaken,
as the tax code quite plainly defines income to include amounts received in compensation
for services rendered."); Betz v. United States, 40 Fed. Cl. 286, 295 ("The l.R.C. applies
to 'United States persons,' defined as 'citizen[s] or resident[s] of the United States.' 26
U.S.C. § 7701(a)(30)(A) (1994). In addition, the l.R.C.'s definition of 'United States'
includes 'the States and the District of Columbia.' 26 U.S.C. § 7701(a)(9) (1994)."
(alterations in original)), appeal dismissed, 155 F.3d 568 (Fed. Cir. 1998); Brown v. United
States, 35 Fed Cl. 258, 269 (1996).
17
The OCC Memorandum provided by plaintiffs also provides instruction, as follows:
In the "tax protestor" cases, the courts generally conclude that ... the extent
of the tax protestor arguments indicates a lack of an honest and reasonable
attempt to comply with the law. U.S. v. Porth, 426 F.2d 519 (101h Cir. 1970)
(no valid return where taxpayer's Form 1040 was devoid of income
information and contained cites to the Constitution purportedly supporting
taxpayer's refusal to complete the form ....
Similarly, in Diamond v. United States, a judge of this court found that submitting a tax
return with zero dollars in reported wages, that conceals a portion of the actual wages
received, and which does not allow the IRS to properly calculate tax liability, cannot be
found to be reasonable. Diamond v. United States, 107 Fed. Cl. at 706. The court in
Diamond v. United States reasoned that:
When plaintiffs withheld information regarding wage and foreign income,
they could not have reasonably believed that the requirements of filing a tax
return had been fulfilled. United States v. Moore, 627 F.2d 830, 835 (7th
Cir. 1980) ("[l]t is not enough for a form to contain some income information;
there must also be an honest and reasonable intent to supply the
information required by the tax code .... [T]he government should not be
forced to accept as a return a document which plainly is not intended to give
the required information."). Plaintiffs' failure to provide information regarding
wage and foreign source income was plainly unreasonable.
Diamond v. United States, 107 Fed. Cl. at 706 (alterations in original); see also Moore v.
United States, 627 F.2d at 835. Likewise, in Kiselis v. United States, the court determined
that the plaintiff's tax return did not meet the honest and reasonable prong because the
plaintiff sent the IRS information regarding his income that was contradicted by
information it had received from other institutions, but failed to account for this
discrepancy. Kiselis v. United States, 131 Fed. Cl. at 61; see also Cooper v. United
States, 123 Fed. Cl. 226, 232 (2015). The Kiselis court found that "[p]laintiffwas aware of
the tax liability the IRS had assessed based on distributions reported by third-party
financial institutions, but failed to report this on his Form 1040. As such, Plaintiff failed to
exhibit an honest and reasonable intent to provide the requisite information." Kiselis v.
United States, 131 Fed. Cl. at 61.
Finally, this court finds instructive the United States Tax Court's jurisprudence on
the dictates of the "honest and reasonable" standard. The Tax Court also has consistently
found that tax forms saturated with entries of zero regarding income cannot be found to
satisfy the "honest and reasonable" prong. See, !Lll,., Oman v. Comm'r, T.C. Memo 2010-
276, 100 T.C.M (CCH) 548 (2010) ("A Form 1040 on which a taxpayer fails to make an
honest and reasonable attempt to comply with the tax law, such as the claiming of
withholding without any reported wages or taxable distributions, is not a document that is
worthy of being processed as a return .... "); Turner v. Comm'r, T.C. Memo 2004-251,
18
88 T.C.M. 412 (2004) (finding plaintiff's tax return to be invalid because plaintiff's
"Form 1040 contained zero entries for every line regarding his 1999 income" and because
plaintiff "attached to his Form 1040 documents containing tax-protester rhetoric"); Cabirac
v. Comm'r, 120 T.C. 163, 169 (2003) ('The Forms 1040 and 1040A that petitioner
submitted contain only zero entries, and it is clear from the attachments to those returns
that petitioner did not make an honest and reasonable attempt to supply the information
required by the Internal Revenue Code."), aff'd, No. 03-3157, 2004 WL 7318960 (3d Cir.
Feb. 10, 2004).
In the plaintiffs' case presently before this court, plaintiffs entered zero for income
on their 2014 and 2015 tax year returns filed with the IRS. The income reported by
plaintiffs on their tax returns was contradicted by the income reported to the IRS by their
employers and retirement account manager. Furthermore, plaintiffs failed to provide
additional information when requested to do so by the IRS, and in effect, concealed their
true earnings from the IRS. The nonresponsive material including an inapplicable and
irrelevant patchwork of legal and other authorities did not show a willingness to respond
to the IRS inquires. This court finds that plaintiffs' behavior failed to meet the "honest and
reasonable" efforts prong of the test set forth in Diamond v. United States, 107 Fed. Cl.
at 705, and the other cases cited above.
CONCLUSION
As the plaintiffs have failed to properly complete and submit valid tax returns to the
IRS containing sufficient data for either the 2014 or 2015 tax years and have failed to
provide additional information when requested to do so by the IRS, the court lacks
jurisdiction to consider the plaintiffs' claims for refunds for the 2014 and 2015 tax years.
Therefore, the defendant's motion to dismiss plaintiffs' complaint for lack of subject matter
jurisdiction is GRANTED. Plaintiffs' complaint is hereby DISMISSED. The Clerk of the
Court shall enter JUDGMENT consistent with this opinion.
IT IS SO ORDERED.
19