Beatty v. United States

FILED
APR 2 2 2015
0ffi1ffi1,ru&L U.S. COURT OF
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No. 14-11357
(Filed: April 22,2015)
+ * ,r * {. * {. ****** :r {. * ,. *! ** :r {< * * *:i * *. ***** ,r ) Claim fOr refund Of in9ome taXeS; Suit
) precluded by action previously filed in
KENNETH BEATTY JR., ) Tax Court respecting the same taxes;
) I.R.C. $ 6s12(a)
Plaintiff, )
)
)
)
UNITED STATES, )
)
Defendant. )
)
** * * ** * *** * **,i **,t * {.*,* ****** * ** )& **:F
Kenneth E. Beatty, Jt., pro se, Spring Hill, FL.
Matthew D. Lucey, Trial Attomey, Court of Federal Claims Section, Tax Division,
United States Department of Justice, Washington, D.C., for defendant. With him on the briefs
were Caroline D. Ciraolo, Principle Deputy Assistant Attomey General, and David I. Pincus,
Chiel Court of Federal Claims Section, United States Department of Justice, Washington, D.C.
Of counsel was G. Robson Stewart, Assistant Chief, Court of Federal Claims Section, United
States Department of Justice, Washington, D.C.
OPINION AND ORDER
LETTOW, Judge.
in this tax-refund case, plaintiff, Kenneth Beatty, Jr., seeks a refund of $110,955.64 in
income taxes allegedly overpaid for tax years 1999 and 2000. Pending before the court is the
govemment's motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1)
ofthe Rules ofthe Court ofFederal Claims ("RCFC"). For the reasons stated, the court grants
that motion.
BACKGROUND'
In November 2002, the Intemal Revenue Service ("IRS") issued two statutory notices of
deficiency to Mr. Beatty, informing him of "a deficiency (increase) in [his] income tax" for the
years 1999 and 2000. See Mot. of the United States to Dismiss the Compl. ("Def.'s Mot.") Ex. 1
(Notices of Deficiency Qrlov. i3, 2002)).2 Aftet receiving the notices, Mr. Beatty and his wife,
Cheri C.A. Beatty, jointly filed a petition and then an amended petition in Tax Court challenging
the deficiencies. See id. Ex.2 (Pet. (filed Feb. 19, 2003) and Am. Pet. (filed July 2, 2003)). In
their petitions, the Beattys disputed "(a) the entire amount that the Commissioner asserts is a
deficiency in income tax; (b) the entire amount that the Commissioner asserts is an addition to
tax for failure to file a timely retum of income tax; and, (c) the entire amount that the
Commissioner asserts is an addition to tax for failure [to] pay estimated taxes." 1d (Am. Pet. at
I -2). They averred that the purported deficiency determinations were based on an application of
26 C.F.R. $ 301.621i-l(a) that "impermissibly broaden[ed] the scope of the statute, [26 U.S.C.
('l.R.C.')l $ 6211(a)(1)(A), that it purports to implement." Id. (Am. PeI. at2). Additionally,
the Beattys argued that neither ofthem were required to file a federal income tax retum because
in 1999 and 2000 "neither . . . received an amount of income that obligated [either of them] to
fl|.e." Id. (Am. Pet. at 4).
On September 24,2003, the Commissioner moved to dismiss the Beattys' amended
petition for failure to state a ciaim upon which relief can be granted. See Def.'s Mot. Ex. 3 at 1-3
(Beatty v. Commissioner, No. 002839-03, slip. op. (T.C. Nov. 5, 2003)). A hearing to address
the Commissioner's motion was held on October 22,2003 before the Tax Court in Washington,
D.C. See id. at 1 . The attomey for the Commissioner appeared and presented argument;
however, Mr. Beatty was not present at the hearing, "nor did [he] file with the [c]ourt a written
statement." /d. at2. On November 5,2003, the Tax Court issued an order granting the
Commissioner's motion to dismiss. /d The court did not "catalog [the Beattys'] arguments and
painstakingly address them," reasoning that within the petition and amended petition "[t]here is
neither assignment of error nor allegation of fact in support of any justiciable claim." /d. The
Tax Court determined that the Beattys were liable for deficiencies and additions of the following
amounts:
Year Deliciency $ 66s1(a)(1) $ 66s4
addition to tax addition to tax
1999 $31,063.00 s4934.2s $894.28
2000 $21,215.00 $5,303.7s $ 1,1 33.17
lThe recitation that follows does not constitute findings of fact by the court and is
provided solely to establish a context for deciding the currently pending motion.
,Mr. Beatty alleges that the IRS failed to issue a statutory deficiency notice for 1999 and
2000 and maintains that "if [he] had taxable income on which the IRS believed he owed taxes
and had not paid, atax deficiency would have [been] issued." Compl.fl8. The record refutes
this iactual representation, however. ,See Def.'s Mot. Ex. 1 (Notices of Deficiency (lllov. 13,
2002)).
Id. at 3.
On January 26, 2004, Mr. Beatty filed a motion in Tax Court to vacate the order o1-
November 2003, dismissing his claims. See Def.'s Mot. Ex. 4 (Docket Entties, Beatty \'.
Commissioner, Docket No. 002839-03 (T. C.)). The Tax Court denied his motion on February
18,2004. Mr. Beatty subsequently appealed from the Tax Court's decisions to the United States
Courl of Appeals for the Ninth Circuit, but his appeal was dismissed for failure to prosecute on
December 14,2004, Id.; see also Def.'s Mot. Ex. 5 (General Docket, Beatty v. Commissioner,
No.04-72741(9th Cir.)). Later, when the Commissioner filed a notice of federal tax lien
seeking collection of Mr. Beatty's tax liability, Mr. Beatty sought and received a Collection Due
Process hearing with the IRS Office of Appeals. See Def.'s Mot. at 5. After the IRS Olfice of
Appeals sustained the commissioner's lien filing, Mr. Beatty filed a petition in the Tax court in
February 2006 seeking review of that decision. 1d The Commissioner moved for summary
judgment, which the Tax Court granted. 1d. Ex. 6. Again, Mr. Beatty appealed the Tax Court's
decision to the United States Court of Appeals for the Ninth Circuit. See Beatty v.
Commissioner,No.07-72873,2009 WL 567870, at *1 (9th Cir. Mar. 6,2009). The Ninth
Circuit affirmed the Tax Court's decision and granted costs to the govemment, noting that
Mr. Beatty "was precluded from challenging the tax liabilities for 1999 and 2000 because he had
disputed his tax liability previously in the tax courl|' Id. (citing LR.C. $ 6330(c)(2)(B)). In due
course, the taxes at issue were paid in full "as a result of [a] tax credit transler from yea,r 1997
and . . . notices oflevy issued to Scottrade Inc. to surrender Beatty's property or rights to
property to the IRS." Compl. 'll 5.
On May 24,2012, Mr. Beatty filed a claim with the IRS for a refund in the amount of
$110,955.64 for years 1999 and 2000. Compl. fl 6. Mr. Beatty identified as the basis for his
claim that "any income [he] received for the years 1999 and 2000 [was] not taxable as
contemplated under. . . [I.R.C. $ 631." Compl. fl 7. According to Mr. Beatty, "[t]he IRS denied
[his] refund claim by failing to respond to it." Compl. fl 9.
complaint in this court seeking a refund on November 21,2014. See
Mr. Beatty filed a
compl. Subsequently, on January 23,2015,the govemment filed its motion to dismiss for lack
of subject matter jurisdiction. See Def.'s Mot.
STANDARDS FOR DECISION
In every instance, before proceeding to the merits, the "court must satisfy itself that it has
jurisdiction to hear and decide a case." Hardie v. (lnited states,367 F.3d1288,1290 (Fed. Cir.
2004) (quoting P IN/NIP, Inc. v. Platte Chem. Co.,304 F.3d 1235, 1241 (Fed. Cir' 2002))
(intemal quotation marks omitted). When considering a motion to dismiss under Rule 12(b)(1)
for lack ofsubject matter jurisdiction, the court will "normally consider the facts alleged in the
complaint to be true and correct." Reynolds v. Army & Air Force Exch. gerv.,846F.2d746,747
(Fed.Cir. 1988)(citingScfteuerv.Rhodes,416U.S.232,236(1974)). Aplaintiffseekingto
establish jurisdiction bears the burden of "alleg[ing] in his pleading the facts essential to show
[subject matter] jurisdiction." McNuft v. General Motors Acceptance Corp. of Ind ' 298U'S'
178, 189 (1936); see also Reynolds,846F.2dar748.
The Tucker Act,28 U.S.C. $ 13a6(a)(1), grants this court jurisdiction to consider federal
tax-refund claims. See Smithv. United States,495Fed. Appx.44,48 (Fed. Cit.2012); Lerlford
\,. United States,297 F.3d 1378, 1382 (Fed. Cir. 2002); McCann v. United States,105 Fed. Cl.
120,122(2012),aff'd,2012WL6839'161(Fed. Cir. 2012);see a/so I.R.C $7422@),o
(referring to the concurrent jurisdiction ofthis court, under the Tucker Act, and the district
courts, under 28 U.S.C. $ 13a6(a)(1), to consider suits for tax refunds). The ta,rpayer, as the
party seeking redress in this court, has the burden ofestablishing that jurisdiction exists by a
preponderance of the evidence. McCann, 105 Fed. Cl. at 122' see also Rocovich v. United
States,933F.2d99I,993 (Fed. Cir. 1991). To maintain a tax-refund suit in this court, the
ta.xpayer must first pay the assessed tax in f:ul|, Ledford,297 F '3d at 13 82, and file an
administrative claim for a tax refund with the IRS that complies with all regulations, see I.R.C.
5 7422(a); see also Duffy v. United States, Fed. Cl. WL 648411, aI*4 (2015)'
- -, -,2015
"[A] regulation requires the refund claim to 'detail each claimed ground for a refund, and
provide sufficient facts to apprise the IRS of its basis."' Cearley v. United States, 1 19 Fed. Cl.
340,344 (2014) (quoting Chicago Milwaukee Corp. v. United States,40 F.3d 373,37 5 (Fed. Cir.
1994) (in tum citing Treas. Reg. $ 301.6402-2(bX1)). If the IRS denies the claim, generally the
taxpayer must file suit in this court within two years after the denial, see I'R.C. $ 6532(aX1)' and
then may only raise arguments that were previously presented to the IRS in the administrative
claim, Lockheed Martin Corp. v. United States,210 F.3d 1366, 1371(Fed. Cir. 2000); see also
Ottawa Silica Co. v. United States, 699 F.2d 1124, Il38 (Fed. Cir. 1983) ("Together, [I.R.C'
$ 7 a22@)l and [Treas. Reg. $ 301 .6402-2(b)( 1)] preclude a taxpayer-plaintiff
from substantially
varying at trial the factual bases of its arguments from those raised in the refund claims it
presented to the IRS.").
ANALYSIS
This court's jurisdiction to adjudicate Mr. Beatty's claims is subject to I.R'C' $ 6512'
Titled ,,Limitations in case of petition to Tax court," I.R.C. S 6512 provides, in pertinent part:
(a) Effect ofpetition to Tax Court.-If the Secretary has mailed to the taxpayer a
notice ofdeficiency under section 6212(a) (relating to deficiencies of income,
estate, gift, and certain excise taxes) and if the taxpayer files a petition with the
Tax Court . . . no credit or refund of income tax for the same taxable year . , ' in
respect of which the Secretary has determined the deficiency shall be allowed or
maile and no suil by the taxpayer for the recovery of any part of the tax shall be
instituted in qny court . . .
LR.C. $ 6512ia.1 lemphasis added).r
All of the applicable circumstances listed in I.R.C. $ 6512(a) are present in this instance.
First, the IRS mailed notices of deficiency for 1999 and 2000 to Mr. Beatty. See Def.'s Mot. Ex.
of Deficiency (Nov. 13, 2002)). Second, Mr. Beatty previously filed a petition in the
1 (Notices
Tax Court for those years. see Def.'s Mot. Ex. 2 (Pet. (filed Feb. 19, 2003) and Am. Pet. (filed
3None of the six exceptions listed in I.R.C. 6512(aX1)-(6) to this preclusive limitation
$
apply to Mr. Beatty's circumstances.
July 2, 2003)). Finally, Mr. Beatty's complaint in this court requests a tax refund for 1999 and
2000, the same years at issue in the Tax Court proceeding. See Compl.
Because I.R.C. $ 6512(a) mandates that for claims previously filed in Tax Court, "no suit
by the taxpayer for the recovery ofany part ofthe tax [for the same taxable year] shall be
instituted in any court," this court is precluded from hearing Mr. Beatty's tax claims. See Wong
v. (lnited States,49 Fed. Cl. 553, 554-55 (2001) (holding that suit in Cou( of Federal Claims
was barred because plaintiffs had previously filed a petition in Tax Court relating to the same
taxes). Mr. Beatty previously filed petitions in the Tax Court contesting deficiencies for the
years 1999 and 2000, and he subsequently challenged the Commissioner's notice of lien in the
Tax Court. On both occasions, after receiving an unfavorable decision, he appealed to the
United States Court ofAppeals for the Ninth Circuit; in both instances, the Court ofAppeals
upheld the Ta"x Court's decision.a Accordingly, I.R.C. $ 6512(a) bars this court from having
juridical power to adjudicate Mr. Beatty's tax-refund claims.
CONCLUSION
For the reasons stated, the government's motion to dismiss is GRANTED, and
Mr. Beatty's complaint is dismissed pursuant to RCFC 12(bX1) for lack of subject matter
jurisdiction. The clerk shall enter judgment in accord with this disposition.
No costs.
It is so ORDERED.
Judge
4See26l.R.C. ("The United States Courts of Appeals (other than the United
$ 7a82(a)(1)
States Court ofAppeals for the Federal Circuit) shall have exclusive jurisdiction to review the
decisions ofthe Tax Court.").