Brittani Nicole Williams v. United States

In the United States Court of Federal Claims
No. 12-918T
Filed: July 30, 2013
TO BE PUBLISHED
*************************************
* Full Payment Rule;
* Informal Claim Doctrine;
* IRS Form 1040X (Amended U.S. Individual
* Income Tax Return);
* IRS Form 1099-OID (Original Issue
* Discount);
BRITTANI NICOLE WILLIAMS, * Motion To Dismiss, RCFC 12(b)(1), (6);
* Pro Se;
Plaintiff, pro se, * Tax Refund;
* 26 C.F.R. § 301.6402-2(b)(1) (IRS regulation
v. * requiring that tax refund claims detail
* the supporting grounds and facts);
THE UNITED STATES, * 26 C.F.R. § 301.6402-3(a)(2) (IRS regulation
* requiring that tax refund claims be made
Defendant. * on Form 1040X);
* 26 U.S.C. § 6532(a)(1) (periods of limitation
* on suits);
* 26 U.S.C. § 7304 (fraudulent return penalty);
* 26 U.S.C. § 7422(a) (disallowing suit prior to
* filing claim for refund).
*************************************
Brittani Nicole Williams, Houston, Texas, Plaintiff, pro se.
David Raymond House, United States Department of Justice, Tax Division, Washington, D.C.,
Counsel for the Government.
MEMORANDUM OPINION AND FINAL ORDER
BRADEN, Judge.
I. FACTUAL BACKGROUND.1
A. Plaintiff’s Amended Tax Return.
On October 22, 2012, Brittani Nicole Williams (“Plaintiff”) mailed an amended tax
return for the year 2011 to the Internal Revenue Service (“IRS”). Compl. ¶ 4; Pl. Ex. N
(photocopy of Certified Mail receipts evidencing that the amended 2011 tax return was mailed to
the IRS). The amended tax return included a cover letter, listing various tax forms attached to
Plaintiff’s amended tax return, and a Form 1040X (Amended U.S. Individual Income Tax
Return). Pl. Ex. A (photocopy of the cover letter sent with the amended tax return to the IRS);
Pl. Ex. E (photocopy of Form 1040X, dated October 20, 2012). The October 20, 2012 Form
1040X explains that Plaintiff filed an amended tax return, because she mistakenly filed a Form
1040 (U.S. Individual Income Tax Return) instead of a Form 1040NR (U.S. Nonresident Alien
Income Tax Return). Pl. Ex. E. The Form 1040X also explains that Plaintiff signed the wrong
money orders, leading to incorrect calculations of the tax amount owed for the year 2011. Pl.
Ex. E. Plaintiff left the section “Refund or Amount You Owe” in the Form 1040X blank. Pl.
Ex. E.
To establish that Plaintiff is a nonresident alien and the beneficial owner, grantor, and
executor of the Brittani Nicole Williams Trust (the “Trust”), a nonwithholding foreign grantor
trust, Plaintiff attached to the amended tax return: a Form 1040NR (U.S. Nonresident Alien
Income Tax Return); a Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for
United States Tax Withholding); and a Form W-8IMY (Certificate of Foreign Intermediary,
Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding). Pl.
Ex. B (photocopy of Form W-8BEN, dated October 20, 2012); Pl. Ex. C (photocopy of Form W-
8IMY, dated October 20, 2012); Pl. Ex. F (photocopy of Form 1040NR, dated October 20,
2012). These forms show Plaintiff’s name and address, as well as the Trust’s name, including
the type of organization and Employer Identification Number. Pl. Exs. B, C, F. On the October
20, 2012 Form 1040NR, Plaintiff indicated for the 2011 tax year that: the Trust’s income was $0;
tax and credits were $0; and federal income tax withheld from Forms W-2 and 1099 was
$11,074.87, so that a refund of $11,074.87 was due. Pl. Ex. F. On the Form 1040NR, Plaintiff
indicated that, although she is a citizen and resident of the United States, she is physically not
present in the United States and has no United States immigration status. Pl. Ex. F.2
1
The relevant facts were derived from: the December 28, 2012 Complaint (“Compl.”)
and exhibits attached thereto (“Pl. Ex. A-Q”); and an exhibit attached to the Government’s April
1, 2013 Motion To Dismiss (“Gov’t Mot. Ex. 1”).
2
The seeming contradiction in Plaintiff’s representing herself as a “nonresident alien,”
but a citizen and resident of the United States, may be attributed to a misunderstanding of the
definition of “nonresident alien.” It appears that Plaintiff understands “nonresident alien” to be a
U.S. citizen who does not currently reside in the United States. Pl. Ex. D (birth certificate
showing that Plaintiff was born in Harris County, Texas); see also Pl. Ex. F (Plaintiff’s Form
1040NR, stating “Not present in U.S. - No U.S. immigration status.”).
2
In support of her contention that $11,074.87 in federal income tax is due for a refund,
Plaintiff attached to her amended tax return: four Form 1099-OIDs (Original Issue Discounts),3
and four bills from creditors to Plaintiff, on which Plaintiff had handwritten the words “Money
Order” made payable to the “Department of Treasury, Timothy F. Geithner, Chief Financial
Officer of the IMF.” Pl. Ex. H (photocopy of Form 1099-OIDs); Pl. Exs. J-M (photocopies of
“Money Orders,” dated October 1, 2012). Each of the “Money Order” amounts correspond to
those indicated on the four Form 1099-OIDs, for a total amount of $11,074.87. Pl. Exs. H, J-M.
Also included in the amended tax return was a Form 1096 (Annual Summary and Transmittal of
U.S. Information Returns) indicating that Plaintiff submitted four Form 1099-OIDs and a Form
1040-V (Payment Voucher) indicating that Plaintiff paid $11,074.87 by money order to the Chief
Financial Officer of the International Monetary Fund. Pl. Ex. J; Pl. Ex. G (photocopy of Form
1040-V, dated October 20, 2012); Pl. Ex. I (photocopy of Form 1096, dated October 20, 2012).
B. Frivolous Return Penalty.
On December 10, 2012, the IRS sent Plaintiff a Notice of Penalty Charge, assessing
Plaintiff a $5,000 penalty under Section 6702(a) of the Internal Revenue Code for filing a
frivolous return claim. Pl. Ex. P (photocopy of the Notice of Penalty Charge); Gov’t Mot. Ex. 1
(Form 4340 (Certificate of Assessments, Payments, and Other Specified Matters) for Brittani N.
Williams, dated March 8, 2013).
On February 4, 2013, the IRS sent Plaintiff a Notice of Intent to Levy. Gov’t Mot. Ex. 1.
Defendant (“the Government”) submitted a Form 4340, Certificate of Assessments, Payments,
and Other Specified Matters, for Plaintiff, dated March 8, 2013, as an exhibit to its April 1, 2013
Motion To Dismiss. The March 8, 2013 Form 4340 (Certificate of Assessments, Payments, and
Other Specified Matters) indicates that for the year 2011, Plaintiff’s tax liability is $0, her
frivolous tax return penalty is $5,000, and her remaining balance is $5,000. Gov’t Mot. Ex. 1.
II. PROCEDURAL HISTORY.
On December 28, 2012, Plaintiff filed a pro se Complaint in the United States Court of
Federal Claims against the United States, as the beneficial owner, grantor, and executor of the
Brittani Nicole Williams Trust. Compl. ¶ 1. The December 28, 2012 Complaint alleges that the
IRS did not refund money that Plaintiff overpaid and that the IRS apparently did not properly
record. Compl. ¶ 7. By refusing to acknowledge that Plaintiff had paid the aforesaid tax, the
Government made it look as if it had paid off Plaintiff’s portion of the national debt (i.e.
Plaintiff’s tax debt), rather than Plaintiff. Compl. ¶ 9. Therefore, the Government was claiming
money that belonged to Plaintiff, for which it owed Plaintiff a refund. Compl. ¶ 11.
On April 1, 2013, the Government filed a Motion To Dismiss (“Gov’t Mot.”), pursuant to
Rules 12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims (“RCFC”).
3
Form 1099-OID is intended to record Original Issue Discounts (“OIDs”) “includible in
gross income.” Form 1099-OID, Original Issue Discount, IRS, http://www.irs.gov/uac/Form-
1099-OID,-Original-Issue-Discount.
3
Plaintiff’s Response to the Government’s April 1, 2013 Motion To Dismiss was due on
May 2, 2013. On May 6, 2013, Plaintiff filed a Motion For Extension Of Time Until May 21,
2013 To File Response. The same day, however, Plaintiff also filed an Opposition To
Defendant’s Motion To Dismiss. On May 7, 2013, Plaintiff’s Opposition (“Pl. Opp.”) was
allowed to be filed, although it was untimely, by leave of the court. On May 23, 2013, the
Government filed a Reply (“Gov’t Reply”).
III. DISCUSSION.
A. Jurisdiction.
The jurisdiction of the United States Court of Federal Claims is established by the Tucker
Act. See 28 U.S.C. § 1491 (2006). The Tucker Act authorizes the court “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).
The Tucker Act, however, is “a jurisdictional statute; it does not create any substantive
right enforceable against the United States for money damages . . . . [T]he Act merely confers
jurisdiction upon [the United States Court of Federal Claims] whenever the substantive right
exists.” United States v. Testan, 424 U.S. 392, 398 (1976). Therefore, a plaintiff must identify
and plead an independent contractual relationship, constitutional provision, federal statute, or
executive agency regulation that provides a substantive right to money damages. See
Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc) (“The Tucker Act itself
does not create a substantive cause of action; in 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.”). The burden of establishing jurisdiction falls on the
plaintiff. See FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231 (1990) (holding that the burden is on
the plaintiff to present facts sufficient to establish jurisdiction); see also RCFC 12(b)(1).
The Tucker Act authorizes the United States Court of Federal Claims to adjudicate tax
refund claims if a taxpayer has paid the full assessed federal tax liability and timely filed a
refund claim with the IRS stating the grounds for the claim. See 28 U.S.C. § 1491(a); 26 U.S.C.
§§ 6511(a), 7422(a); see also Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993) (holding
that a tax refund claim must be dismissed if the “principal tax deficiency has not been paid in
full”). If the claim is denied by the IRS and the taxpayer timely files suit, the United States
Court of Federal Claims has jurisdiction to adjudicate the tax refund claim. See 26 U.S.C. §
6532(a); see also 28 U.S.C. § 1346(a)(1). The issue of whether the court has jurisdiction over
Plaintiff’s tax refund claim is discussed more fully below.
4
B. Standards For Decision On Motion To Dismiss.
1. Under RCFC 12(b)(1).
A challenge to the United States Court of Federal Claims’ “general power to adjudicate in
specific areas of substantive law . . . is properly raised by a [Rule] 12(b)(1) motion[.]” Palmer v.
United States, 168 F.3d 1310, 1313 (Fed. Cir. 1999); see also RCFC 12(b)(1) (“Every defense to
a claim for relief in any pleading must be asserted in the responsive pleading . . . . But a party
may assert the following defenses by motion: (1) lack of jurisdiction over the subject matter[.]”).
When considering whether to dismiss an action for lack of subject matter jurisdiction, the court is
“obligated to assume all factual allegations of the complaint to be true and to draw all reasonable
inferences in plaintiff's favor.” Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995).
Nonetheless, the plaintiff bears the burden of establishing jurisdiction by a preponderance
of the evidence. See Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir.
1988) (“[O]nce the [trial] court’s subject matter jurisdiction [is] put in question . . . [the plaintiff]
bears the burden of establishing subject matter jurisdiction by a preponderance of the
evidence.”).
2. Under RCFC 12(b)(6).
A challenge to the United States Court of Federal Claims’ “[ability] to exercise its
general power with regard to the facts peculiar to the specific claim . . . is raised by a [Rule]
12(b)(6) motion[.]” Palmer, 168 F.3d at 1313; see also RCFC 12(b)(6) (“Every defense to a
claim for relief in any pleading must be asserted in the responsive pleading . . . . But a party may
assert the following defenses by motion: . . . (6) failure to state a claim upon which relief can be
granted[.]”).
When considering whether to dismiss an action for failure to state a claim, the court must
assess whether “a claim has been stated adequately” and then whether “it may be supported by
[a] showing [of] any set of facts consistent with the allegations in the complaint.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 563 (2007). The plaintiff’s factual allegations must be
substantial enough to raise the right to relief “above the speculative level,” accepting all factual
allegations in the complaint as true and making all reasonable inferences in favor of the plaintiff.
Id. at 555.
C. Standard Of Review For Pro Se Litigants.
The pleadings of a pro se plaintiff are held to a less stringent standard than those of
litigants represented by counsel. See Haines v. Kerner, 404 U.S. 519, 520 (1972) (holding that
pro se complaints, “however inartfully pleaded,” are held to “less stringent standards than formal
pleadings drafted by lawyers” (citations omitted) (internal quotation marks omitted)). It has been
the tradition of this court to examine the record “to see if [a pro se] plaintiff has a cause of action
somewhere displayed.” Ruderer v. United States, 412 F.2d 1285, 1292 (Ct. Cl. 1969).
Nevertheless, while the court may excuse ambiguities in a pro se plaintiff's complaint, the court
“does not excuse [a complaint’s] failures.” Henke, 60 F.3d at 799.
5
D. Issues Raised By The Government’s April 1, 2013 Motion To Dismiss.
The April 1, 2013 Motion To Dismiss raises five jurisdictional issues: (1) whether the
December 28, 2012 Complaint was filed prematurely; (2) whether Plaintiff’s October 22, 2012
amended tax return constituted a valid claim for refund; (3) whether Plaintiff paid tax and the
assessed penalty due; (4) whether the December 28, 2012 Complaint states a claim on which
relief can be granted; and (5) whether Plaintiff can seek treble damages against the Government
under 26 U.S.C. § 7304. Gov’t Mot. at 2.
1. Whether The December 28, 2012 Complaint Was Filed Prematurely.
a. The Government’s Argument.
The Government argues that Section 6532(a)(1) of the Internal Revenue Code required
Plaintiff to file a tax refund suit at least six months after filing her refund claim with the IRS or
after the IRS acted on this claim. Gov’t Mot. at 10 (citing 26 U.S.C. § 6532(a)(1) (“No suit . . .
shall be begun before the expiration of 6 months from the date of filing the claim . . . unless the
Secretary renders a decision thereon within that time[.]”). Plaintiff, however, filed an amended
tax return on October 22, 2012 and the Complaint in this action on December 28, 2012, less than
six months after filing the return. Gov’t Mot. at 10-11. Furthermore, the December 10, 2012
Notice of Penalty Charge was “not a disallowance of any claim for refund,” and did not
constitute a decision on the claim. Gov’t Mot. at 11. Therefore, Plaintiff’s suit is premature.
b. The Plaintiff’s Response.
Plaintiff does not explicitly respond to the Government’s argument regarding Section
6532(a)(1). Plaintiff’s May 6, 2013 Opposition, however, presents a different time frame based
on an alleged contractual relationship between Plaintiff and the Government. Pl. Opp. 7-9.
Plaintiff argues that when the IRS imposed the fraudulent tax charge on December 10, 2012, it
was tantamount to an offer to borrow Plaintiff’s money to pay off its tax obligations. Pl. Opp. 7.
Plaintiff accepted this offer by filing the December 28, 2012 Complaint, on the condition that the
Government prove that Plaintiff did not pay tax, did not file a correct tax return, and cannot
claim treble damages under 26 U.S.C. § 7304. Pl. Opp. at 8. Moreover, under §§ 226.15 and
226.23, regulations promulgated under the Truth in Lending Act, the Government had until the
third business day—January 3, 2013—to respond to Plaintiff’s counter-offer. Pl. Opp. at 9; 12
C.F.R. §§ 226.15, 226.23; Truth in Lending Act, § 105, 82 Stat. 146 (1968) (codified as amended
at 15 U.S.C. §§ 1601-1693 (2012)). The Government responded with silence. Pl. Opp. at 9.
Thus, on January 4, 2013, the Government agreed to borrow Plaintiff’s money to offset its own
tax obligations and pay triple the borrowed amount in accordance with 26 U.S.C. § 7304. Pl.
Opp. at 9.
c. The Court’s Resolution.
Section 6532(a)(1) of the Internal Revenue Code states:
6
No suit or proceeding under section 7422(a) for the recovery of any internal
revenue tax, penalty, or other sum, shall be begun before the expiration of 6
months from the date of filing the claim required under such section unless the
Secretary renders a decision thereon within that time, nor after the expiration of 2
years from the date of mailing by certified mail or registered mail by the Secretary
to the taxpayer of a notice of the disallowance of the part of the claim to which
the suit or proceeding relates.
26 U.S.C. § 6532(a)(1) (emphasis added).
Plaintiff filed the December 28, 2012 Complaint less than six months after filing the
October 22, 2012 amended tax return. The only action the IRS took between the time Plaintiff
filed the October 22, 2012 amended tax return and the December 28, 2012 Complaint was
issuing the December 10, 2012 Notice of Penalty Charge. The Government states that the
penalty charge is “not a disallowance of any claim for refund,” and Plaintiff has not contradicted
this statement. Gov’t Mot. at 11. Also, in the court’s judgment, there are other issues with
Plaintiff’s tax filing that may have contributed to the IRS imposing the frivolous return penalty.
For example, Plaintiff represented that she was a “non-resident alien” and filed forms in
accordance with this status, while at the same time representing that she was a United States
citizen. Pl. Ex. E (“I am a nonresident alien not effectively connected with the conduct of a trade
or business in the United States.”); Pl. Ex. F (“Of what country or countries were you a citizen or
national during the tax year? united states of america [sic]”); Pl. Ex. D (Certification of Vital
Record showing that Plaintiff was born in Harris County, Texas). In any event, a penalty is not a
decision on the merits of a tax refund claim, because a “tax penalty is an addition to tax and
should be considered part of the tax liability.” Pac. Gas & Elec. Co. v. United States, 417 F.3d
1375, 1381 (Fed. Cir. 2005) (citing Dysart v. United States, 169 Ct. Cl. 276, 278 n.1 (1965)).
Thus, the IRS did not render a decision within the meaning of Section 6532(a)(1) when it sent
the Notice of Penalty Charge.
Moreover, Plaintiff’s contractual relationship theory is without merit. See, e.g., Brach v.
United States, 443 F. App’x 543, 547 (Fed. Cir. 2011) (dismissing contract theory applied to a
tax refund claim for the purpose of determining subject matter jurisdiction). The IRS’s
imposition of a fraudulent return penalty and Plaintiff’s filing a suit in this court are not an offer
and acceptance in the contractual sense, and no plausible reading supports Plaintiff’s theory in
this regard. Accordingly, the court has determined that it does not have jurisdiction to adjudicate
Plaintiff’s claim when less than six months elapsed between the filing of Plaintiff’s tax refund
claim with the IRS and the filing of the Complaint, and the IRS has not yet acted on the claim.
2. Whether Plaintiff’s October 22, 2012 Amended Tax Return Was A
Valid Refund Claim.
a. The Government’s Argument.
The Government argues that, because Plaintiff did not file a valid claim for refund, this
court does not have jurisdiction to adjudicate the tax refund claim alleged in the December 28,
2012 Complaint. Gov’t Mot. at 6. An individual cannot file a tax refund suit against the
7
Government unless a tax refund claim previously has been filed with the Secretary in accordance
with “the provisions of law in that regard, and the regulations of the Secretary established in
pursuance thereof.” 26 U.S.C. § 7422(a); see Chi. Milwaukee Corp. v. United States, 40 F.3d
373, 374 (Fed. Cir. 1994) (requiring refund claims to comply with IRS regulations as a
jurisdictional prerequisite). In addition, IRS regulations require that a tax refund claim detail the
grounds and facts that support the claim. See 26 C.F.R. § 301.6402-2(b)(1) (“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.”).
On the October 20, 2012 Form 1040NR, Plaintiff designated $0 for most blanks except
where she indicated that she had paid $11,074.87 in tax. Gov’t Mot. at 7-8 (citing
Hamzik v. United States, 64 Fed. Cl. 766, 767 (2005) (filing a zero position return was
insufficient to support a refund suit)). As proof of tax payment, Plaintiff submitted four bills
addressed to Plaintiff by various creditors, hand-marked as “money orders.” Gov’t Mot. at 7.
These documents, however, do not “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,” and
therefore “will not be considered for any purpose as a claim for refund or credit.” 26 C.F.R. §
301.6402-2(b)(1).
b. The Plaintiff’s Response.
Plaintiff responds by stating that the “argument[] go[es] to the merits,” which were
“addressed . . . at length in [the] original Complaint.” Pl. Opp. at 3. The December 28, 2012
Complaint explains why the Plaintiff’s claim for refund is valid. The Complaint alleges that
Plaintiff sent the IRS Form 1099-OIDs and the money orders to evidence payment. Pl. Exs. H,
J-M. These documents establish that Plaintiff paid her portion of the United States’ debt, which
is synonymous to “public tax debt.” Compl. ¶ 9. Since Plaintiff’s tax payment was not recorded
by the IRS, she is entitled to have the amount of the payment returned in a “tax refund.” Compl.
¶¶ 7, 11.
c. The Court’s Resolution.
i. Providing Grounds And Facts Sufficient To Support
A Tax Refund Claim.
A valid claim for a tax refund must be filed in accordance with IRS regulations. See 26
U.S.C. § 7422(a). One such regulation requires that a tax refund claim be filed with grounds and
facts sufficient to support the claim. See 26 C.F.R. § 301.6402-2(b)(1). The facts needed to
determine whether a claim is valid include the amount of tax liability and all tax payments made,
since a tax refund, by definition, is the amount paid in excess of tax liability. See Pac. Gas &
Elec., 417 F.3d at 1381 (“[T]he refund statute requires that there be an actual overpayment of tax
to support a refund.”). The December 28, 2012 Complaint, however, did not provide sufficient
information of tax liability or tax payments.
In this case, the December 28, 2012 Complaint states that tax debt or tax liability, is “any
obligation, debt[,] or bill” of the institution that contributes to the “public debt of the UNITED
8
STATES.” Compl. ¶ 9. As a matter of law, however, tax liability is calculated from taxable
income using a complex algorithm laid out in statutes and regulations. 26 U.S.C. § 1-1564(establishing procedures for assessing and collecting income tax); 26 C.F.R. §§ 1.0-1 to 19.3-1
(same). Plaintiff’s gross income is not clearly stated, since the October 20, 2012 Form 1040NR
reported her income as $0. Pl. Ex. E; see Hamzik, 64 Fed. Cl. at 767 (finding from a review of
5th, 6th, 7th, 10th, and 11th Circuit cases 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,” and concluding that plaintiff did not file a properly
executed return because his Form 1040 was “replete with zeroes” and thus “failed to include any
reliable information upon which the IRS could accurately calculate his taxes”).
As to tax payments, the December 28, 2012 Complaint alleges that Plaintiff paid tax in
the amount of $11,074.87. Pl. Ex. E. As proof of tax payment, Plaintiff attached four Form
1099-OIDs and corresponding “money orders” to the Complaint. Pl. Exs. H, J-M. The alleged
money orders were not legitimate proof of payment as they could not have functioned as
payment. See Pl. Exs. H, J-M (showing that the word, “Money Order” was handwritten); cf.
Morey v. Doud, 354 U.S. 457, 460 (discussing Illinois’ requirements for issuing money orders).
In any event, the amounts indicated on the alleged money orders were not the amount of tax due,
but the amount that was charged to Plaintiff by various creditors in the year 2011. Pl. Exs. J-M.
Finally, Form 1099-OIDs cannot be evidence of tax payment. See United States v. McIntyre,
715 F. Supp. 2d 1003, 1006 (C.D. Cal. 2010) (describing Form 1099-OIDs as reporting OID
income, which in itself cannot prove tax payment).
In sum, the court has determined that Plaintiff failed to provide evidence of income or the
amount of tax paid, did not comply with IRS regulations, and therefore did not file a valid claim
for refund.
ii. Filing A Formal Claim.
Another regulation governing the validity of a refund claim requires that, “[i]n the case of
an overpayment of income taxes for a taxable year of an individual for which a Form 1040 or
1040A has been filed, a claim for refund shall be made on Form 1040X.” 26 C.F.R. § 301.6402-
3(a)(2). Although Plaintiff filed a Form 1040X, she did not fill out the “Refund or Amount You
Owe” section. Pl. Ex. E. Thus, Plaintiff did not follow the formal procedures required to make a
refund claim to the IRS. There are, however, four recognized exceptions to the formal claim
requirement, only one of which, the informal claim doctrine, is even plausible in this case.4 The
4
The other exceptions are: the waiver doctrine, the general claim doctrine, and the
germaneness doctrine. Computervision Corp. v. United States, 445 F.3d 1355, 1364-70 (Fed.
Cir. 2006). The waiver doctrine applies if “the IRS considers th[e] specific claim within the
limitations period.” Id. at 1365. The general claim doctrine applies where “(1) the taxpayer has
filed a formal general claim within the limitations period; and (2) an amendment is filed outside
the limitations period that makes the general claim more specific.” Id. at 1368. The
germaneness doctrine only applies where the taxpayer “(1) files a formal claim within the
limitations period making a specific claim;” and “(2) after the limitations period but, while the
IRS still has jurisdiction over the claim, files a formal amendment raising a new legal theory—
9
October 20, 2012 Form 1040NR states that Plaintiff should be refunded $11,074.87, which
provided the IRS with notice that Plaintiff was seeking a refund. Pl. Ex. F. But the informal
claim doctrine requires that the refund claim “fairly apprise[] the IRS of the basis for the claim
within the limitations period.” Computervision Corp., 445 F.3d at 1364. Here, Plaintiff’s refund
claim was insufficient, as it provided no “basis” for the refund claim. For this additional reason,
the court has determined that Plaintiff’s claim for refund was not valid.
3. Whether Plaintiff Paid The Tax And/Or The Frivolous Return
Penalty.
a. The Government’s Argument.
Next, the Government argues that even if Plaintiff’s refund claim were valid, the court
does not have jurisdiction to adjudicate Plaintiff’s claim, because there is no evidence that she
paid any tax or the frivolous return penalty. Gov’t Mot. at 8-9. Plaintiff submitted Form 1099-
OIDs to evidence payment of federal income taxes, but this form is used “to report OID income
and any federal income tax withheld from that income,” not to establish payment of taxes due.
Gov’t Mot. at 7 n.2 (quoting McIntyre, 715 F. Supp. 2d at 1006). Therefore, Plaintiff has not
proffered any evidence to show that she has paid her income tax for the year 2011. Gov’t Mot.
at 9. As such, the court does not have jurisdiction to adjudicate Plaintiff’s claims regarding the
frivolous return penalty. Gov’t Mot. at 9; see Shore, 9 F.3d at 1526 (holding that full payment of
underlying tax was required to supply the court with jurisdiction over claims regarding interest
and penalties resulting from that liability). Even assuming that Plaintiff did pay the underlying
tax, she would have to pay the frivolous return penalty since she “has affirmatively put the
frivolous return penalty before the [c]ourt.” Gov’t Mot. at 10.
b. The Plaintiff’s Response.
Plaintiff responds by stating that the “argument[] go[es] to the merits,” which were
“addressed . . . at length in [the] original Complaint.” Pl. Opp. at 3. The December 28, 2012
Complaint explains why Plaintiff believes that she paid the underlying tax and should not have to
pay the frivolous return penalty. The Complaint alleges that the Form 1099-OIDs and the money
orders prove that Plaintiff paid tax. Pl. Exs. H, J-M. By not recording these documents in its
bookkeeping, and claiming that Plaintiff did not pay any tax, the IRS is committing fraud.
Compl. ¶¶ 7, 11. In addition, Plaintiff should not have to pay the frivolous return penalty since
the charge “is a failure of the [Government] to pay Plaintiff-Claimant’s tax obligations” rather
than an indication of Plaintiff’s faults. Compl. ¶ 9. “There was never a frivolous tax return.”
Compl. ¶ 9.
not specifically raised in the original claim—that is ‘germane’ to the original claim, that is, it
depends upon facts that the IRS examined or should have examined within the statutory period
while determining the merits of the original claim.” Id. at 1370. The court has determined that
none of these exceptions applies in this case.
10
c. The Court’s Resolution.
The full payment rule, adopted by our appellate court, “requires full payment of the
assessment before an income tax refund suit can be maintained.” Shore, 9 F.3d at 1526 (quoting
Flora, 357 U.S. at 177). “[A]ssessment” has been understood as the amount of tax principle,
notwithstanding the interest and penalties. Id. at 1527. Plaintiff’s Form 4340 indicates that
Plaintiff’s tax liability for the year 2011 is $0 and that Plaintiff has not paid any amount of tax.
Gov’t Mot. Ex. 1. Since Plaintiff is claiming that she is owed $11,074.87 in tax refund, the
burden is on Plaintiff to show that she has paid that tax. See Union Pac. R.R. Co., Inc. v. United
States, 208 Ct. Cl. 1, 46 (1975) (“Plaintiff has the burden of proof when it undertakes to show
otherwise than is said in its books.”).
Although Plaintiff proffered Form 1099-OIDs and the alleged money orders, these
documents do not provide sufficient evidence of payment. A Form 1099-OID cannot be used to
establish tax payment, as that form is used solely to report original issue discount income and
related withholding. See McIntyre, 715 F. Supp. 2d at 1007 (“[Form 1099-OIDs are used] to
report OID income and any federal income tax withheld from that income.”). Likewise, the
alleged money orders that Plaintiff submitted with the Form 1099-OIDs do not establish payment,
since money orders must be issued by certified institutions, such as the Postal Service. Personal,
hand-written notes promising to pay off debt are not valid money orders.
As for the frivolous return penalty, the United States Court of Appeals for the Federal
Circuit has held that “[o]nly if the taxpayers assert a claim over assessed interest or penalties on
grounds not fully determined by the claim for recovery of principal must they prepay such
interest and penalties as well as the assessed tax principal.” Shore, 9 F.3d at 1527-28 (emphasis
included). The December 28, 2012 Complaint alleges a claim over the penalty that is “not fully
determined” by the refund claim since the claim regarding the penalty is based on the
Government’s “willful and malicious intent to evict and penalize” for filing a frivolous tax return
while the refund claim is based on a showing of tax payment in excess of tax liability. Compl. ¶¶
8, 10. Even if the claim over the penalty were “fully determined” by the claim for recovery of
tax principal, the court must have jurisdiction to adjudicate the underlying tax refund claim, as a
prerequisite for adjudicating the claim over the penalty. Since Plaintiff did not pay the
underlying tax, the court does not have jurisdiction to adjudicate the penalty claim.
For these reasons, the court has determined that it does not have jurisdiction to adjudicate
either the tax refund or the penalty claim alleged in the December 28, 2012 Complaint.
4. Whether Plaintiff Has Stated A Claim Upon Which Relief Can Be
Granted.
a. The Government’s Argument.
The Government argues, in the alternative, that Plaintiff has not stated a claim upon
which relief can be granted. Gov’t Mot. at 11 (citing RCFC 12(b)(6)). To survive a Motion To
Dismiss, a Complaint must include enough facts to “state a claim to relief that is plausible on its
face.” United Surety & Indem. Co. v. United States, 87 Fed. Cl. 580, 587 (2007) (citing
Twombly, 550 U.S. at 570). If pleadings are “no more than conclusions, [they] are not entitled to
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the assumption of truth.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). Not only did Plaintiff
indicate a zero return position on her amended tax return, but she claimed a tax refund for
payments she had allegedly made to the Chief Financial Officer of the International Monetary
Fund. Gov’t Mot. at 12. Plaintiff has “failed to set forth any facts that show that relief can be
granted.” Gov’t Reply at 4. Furthermore, Plaintiff’s “complaint and opposition are full of
bizarre references to [an alleged contractual relationship with the IRS]” and “it is impossible to
determine just what [P]laintiff is contending.” Gov’t Reply at 4; Gov’t Mot. at 12 n.5.
b. The Plaintiff’s Response.
In response, Plaintiff asserts that to succeed on a Motion To Dismiss, the Government
must demonstrate “beyond doubt that the Plaintiffs can prove no set of facts in support of their
claim that would entitle them to relief.” Pl. Opp. at 5 (quoting Flood v. New Hanover Country,
125 F.3d 249, 251 (4th Cir. 1997)). The court must “accept the factual allegations in the
Plaintiff’s complaint and must construe those facts in the light most favorable to the Plaintiffs.”
Pl. Opp. at 5 (quoting Flood, 125 F.3d at 251).
c. The Court’s Resolution.
In applying both RCFC 12(b)(1) and 12(b)(6), the court must “assume all factual
allegations of the complaint to be true and . . . draw all reasonable inferences in plaintiff's favor.”
Henke, 60 F.3d at 797. Even if the court assumes that Plaintiff’s factual submissions regarding
her Form 1099-OIDs and money orders are true, however, Plaintiff still has not pled sufficient
facts to support a reasonable inference that she is owed a tax refund.
The Government has directed the court’s attention to Plaintiff’s October 20, 2012 Form
1040NR, which indicates that Plaintiff’s income for the year 2011 was $0, and to her Form 4330,
which indicates that Plaintiff’s tax balance for the year 2011 is $5,000 in penalties. See Pl. Ex. E;
Gov’t Mot. Ex. 1. These two facts create a presumption that Plaintiff has not paid tax in excess
of her tax liability, if she has paid at all, making her ineligible to claim a tax refund. Plaintiff has
not overcome this presumption. See Jibilian v. United States, 174 F. App’x. 576, 578 (Fed. Cir.
2006) (finding that the plaintiff did not state a claim upon which relief could be granted since the
plaintiff was not able to overcome the presumption that the IRS complied with 26 U.S.C. § 6203).
Since Plaintiff fails to set forth any facts entitling her to relief, the court has determined
that Plaintiff has not stated a claim upon which relief can be granted.
5. Whether Plaintiff Can Seek Treble Damages Under 26 U.S.C. § 7304.
a. The Government’s Argument.
The Government argues that Plaintiff cannot seek treble damages pursuant to 26
U.S.C. § 7304. Gov’t Mot. at 5. Section 7304 causes “any person fraudulently claim[ing]” a
refund to “forfeit triple the amount wrongfully or fraudulently claimed . . . at the election of the
Secretary [of the Treasury].” 26 U.S.C. § 7304. Thus, the Section allows for the Secretary to
assert treble damages against individual claimants, not for individuals to assert treble damages
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against the Government. Gov’t Mot. at 6; Gov’t Reply at 3. The court does not have jurisdiction
over Plaintiff’s suit for treble damages against the Government under 26 U.S.C. § 7304. Gov’t
Mot. at 6.
b. The Plaintiff’s Response.
Plaintiff responds that 26 U.S.C. § 7304 does cover individuals’ suits against the
Government. Pl. Opp. at 7. The provision reads that “any person fraudulently claim[ing] [a
refund] shall forfeit triple the amount[.]” Pl. Opp. at 7 (quoting 26 U.S.C. § 7304). The
Government, in its capacity as a taxpayer, has fraudulently claimed that it has paid Plaintiff’s tax
obligations, when Plaintiff has already sent to the IRS proof that she has paid tax. Pl. Opp. at 8.
The IRS has not recorded in its bookkeeping Plaintiff’s Form 1099-OIDs and money orders
proving that Plaintiff has paid her debt, and thus her tax debt. Compl. ¶ 9. By concealing receipt
of such proof, the Government effectively “wrongfully and fraudulently claimed” Plaintiff’s tax
payment. Compl. ¶ 15. Thus, the Government is an entity whose actions are subject to treble
damages under 26 U.S.C. § 7304. See Pl. Opp. at 7.
c. The Court’s Resolution.
To the extent that the court reads the December 28, 2012 Complaint as asserting a
separate treble damages claim based on the Government’s actions in “wrongfully and
fraudulently claim[ing]” Plaintiff’s tax payment amount, the court finds it does not have
jurisdiction over this claim. Compl. ¶ 15 (emphasis added); see 28 U.S.C. § 1491(a)(1) (“The
United States Court of Federal Claims shall have jurisdiction . . . in cases not sounding in tort.”);
Aetna Cas. & Sur. Co. v. United States, 655 F.2d 1047, 1059 (Ct. Cl. 1981) (“Tort claims, of
course, are expressly beyond our Tucker Act jurisdiction.”).
Furthermore, the court finds that it does not have jurisdiction over Plaintiff’s treble
damages claim insofar as it relates to the underlying refund claim. Section 7304 of the Internal
Revenue Code states:
Whenever any person fraudulently claims or seeks to obtain an allowance of
drawback on goods, wares, or merchandise on which no internal tax shall have
been paid, or fraudulently claims any greater allowance of drawback than the tax
actually paid, he shall forfeit triple the amount wrongfully or fraudulently claimed
or sought to be obtained, or the sum of $500, at the election of the Secretary.
26 U.S.C. § 7304 (emphasis added).
“[A]ny person” in this provision does not refer to the United States Government since
“tax” is, by definition, money that a non-governmental entity forfeits to the Government. See 26
U.S.C. § 7701(a)(1) (“The term ‘person’ shall be construed to mean and include an individual, a
trust, estate, partnership, association, company or corporation.”). The Government can only be
on the receiving end in taxation. See id. Since the Government can never be required to pay
taxes, it can never fraudulently seek a drawback, the action that would cause a person to forfeit
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triple the drawback amount. Therefore, Plaintiff cannot assert treble damages against the
Government pursuant to 26 U.S.C. § 7304 in relation to her tax refund claim.
For these reasons, the court has determined that it does not have jurisdiction to adjudicate
Plaintiff’s treble damages claim against the Government under 26 U.S.C. § 7304.
IV. CONCLUSION.
For the reasons discussed herein, the Government’s April 1, 2013 Motion To Dismiss is
granted. See RCFC 12(b)(1) and (6). Accordingly, the Clerk of the Court is directed to dismiss
Plaintiff’s December 28, 2012 Complaint.
IT IS SO ORDERED.
__________________
SUSAN G. BRADEN
Judge
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