Gregory Blue v. United States

In the United States Court of Federal Claims
No. 12-191 T
Filed: July 22, 2013
*************************************** Burden of Proof;
* Exclusion Rule, 26 U.S.C. § 72;
* Federal Tax Refund, 26 U.S.C. § 7422(a);
GREGORY BLUE, * Gross Income, 26 U.S.C. § 61(a);
* Qualified Pension, 26 U.S.C. § 401;
Plaintiff, pro se, * Taxability of Employees’ Trust,
* 26 U.S.C. § 402;
v. * Pension Exclusion Ratio;
* Presumption of Correctness;
THE UNITED STATES, * Pro Se;
* RCFC 9(m)(1) (Tax Refund Claim);
Defendant. * RCFC 26(a)(1)(A)(i) (Required Initial
* Disclosure);
* RCFC 56 (Summary Judgment).
***************************************
Gregory Blue, Hempstead, New York, Plaintiff, pro se.
Shelley D. Leonard, United States Department of Justice, Tax Division, Washington, D.C.,
Counsel for the Government.
MEMORANDUM OPINION AND ORDER
BRADEN, Judge.
I. FACTUAL BACKGROUND. 1
From 1973 until 1998, Gregory L. Blue (“Plaintiff”) was employed by King Kullen
Grocery Co., Inc. (the “Employer”) as an Inventory Control Checker. Gov’t S.J. Mot. Ex. 3 at 7.
During his employment, Plaintiff was a member of Local 282 of the International Brotherhood of
Teamsters (“Union”), that administered a Pension Trust Fund (the “Pension Trust Fund”) that
required the Employer to make weekly contributions on behalf of Union employees, including
1
The relevant facts discussed herein were derived from: Plaintiff’s original March 23,
2012 Complaint (“Compl.”); exhibit A attached to Plaintiff’s June 7, 2012 Response To Motion
For More Definite Statement (“6/7/12 Pl. Resp. Ex. A”); exhibits attached to the Government’s
August 7, 2012 Motion To Dismiss (“8/7/12 Gov’t Mot. Ex. 1-8”); exhibits attached to the
Government’s May 6, 2013 Motion For Summary Judgment (“Gov’t S.J. Mot. Ex. 1-24”); and
Plaintiff’s May 13, 2013 Response to the Government’s May 6, 2013 Motion (“Pl. S.J. Resp.”)
and exhibit B attached thereto.
Plaintiff. Gov’t S.J. Mot. Ex. 11 at 20; see also Pl. S.J. Resp. at 1 (“The [P]ension [Trust] [F]und
is funded by employer contribution[.]”). Only the Employer was allowed to contribute to the
Pension Trust Fund. Gov’t S.J. Mot. Ex. 5 ¶ 6. Employer contributions were made according to
a predetermined schedule set forth in Section 32 of the collective bargaining agreement between
the Employer and the Union. Gov’t S.J. Mot. Ex. 11 at 20. 2
Plaintiff’s first 2007 monthly pension payment in the gross amount of $1,613.00 was
dated January 3, 2007 and withheld $68.00 in federal income taxes. Gov’t S.J. Mot. Ex. 1.
On January 11, 2007, Plaintiff filed an Internal Revenue Service (“IRS”) Form W-4P
“Withholding Certificate for Pension or Annuity Payments” with the Union. Gov’t S.J. Mot. Ex.
5. On Line 1, Plaintiff indicated that he did not want any federal income tax withheld from
future pension payments. Gov’t S.J. Mot. Ex. 5. The Pension Trust Fund Manager responded,
by letter, explaining:
If not enough tax is withheld from your benefits, you may have to pay
estimated taxes during the year, or a tax penalty at the end of the year. Of course,
whether you have to pay federal income tax on your benefit payments depends on
the total amount of your taxable income.
Gov’t S.J. Mot. Ex. 14.
Thereafter, from February 2007 through December 2007, the Pension Trust Fund
reported Plaintiff’s federal tax withholding as $0.00 per month. Gov’t S.J. Mot. Ex. 1. At the
conclusion of the 2007 calendar year, however, Plaintiff was provided with IRS Form 1099-R
“Distributions from Pensions, Annuities, etc.,” that reported on Line 1 that a Gross Pension
Distribution was made to Plaintiff in the amount of $19,365.00; specifically, Line 2a stated that
$19,365.00 was taxable income. Gov’t S.J. Mot. Ex. 3.
On April 15, 2008, Plaintiff filed a Form 1040A “2007 U.S. Individual Income Return”
with the IRS. Gov’t S.J. Mot. Ex. 12. On Line 12a, Plaintiff reported $19,365.00 in pension
payments, for which he claimed $0.00 as taxable on Line 12b. Gov’t S.J. Mot. Ex. 12. Plaintiff
also did not list any received pension benefits on Line 15. Gov’t S.J. Mot. Ex. 12.
On July 27, 2009, the IRS issued a Notice of Assessment to Plaintiff in the amount of
$3,049.00 (Gov’t S.J. Mot. Ex. 16 at 1, 5), because Plaintiff’s employer reported that Plaintiff’s
pension was taxable income, contrary to Plaintiff’s reporting on Line 12b on his 2007 federal
income tax return. Compare Gov’t S.J. Mot. Ex. 2 (Form 1099-R Distributions from Pensions,
Annuities, Etc.), with Gov’t S.J. Mot. Ex. 12 (Plaintiff’s Form 1040A).
2
The Pension Trust Fund plan effective at the time of Plaintiff’s filing for pension
benefits in 1998 was the March 1, 1992 restatement. See Gov’t S.J. Mot. Ex 8.
2
Beginning on July 31, 2009, Plaintiff and the IRS exchanged a series of letters regarding
the tax assessment due from Plaintiff’s 2007 pension payments. 3
On March 15, 2010, the IRS sent Plaintiff a Notice Of Deficiency that informed Plaintiff
of $2,847.00 due on his income tax for 2007. 8/7/12 Gov’t. S.J. Mot. Ex. 4. On March 29, 2010,
Plaintiff appealed the March 15, 2010 Notice by filing a Form 12203 (Request For Appeals
Review). 8/7/12 Gov’t. S.J. Mot. Ex. 5. But, on August 16, 2010, Plaintiff paid the assessed
taxes, including interest, in the amount of $3,250.00. Gov’t S.J. Mot. Ex. 17 at 2.
On October 6, 2010, the IRS sent a Form 5260 letter to Plaintiff explaining that
Plaintiff’s pension payments met an early distribution exception exempting him from incurring
additional taxes or penalties; the letter also stated, “However the [pension] income is taxable.”
Pl. S.J. Resp. Ex. B at 1. The IRS also provided Plaintiff a Wage and Income Transcript
showing the IRS’s record of Plaintiff’s 2007 pension payments and withholdings. Pl. S.J. Resp.
Ex. B at 2.
On September 7, 2011, the IRS’s Appeals Team Manager rejected Plaintiff’s March 29,
2010 Request For Appeal, because Plaintiff’s taxable pension income for tax year 2007 was
assessed as $19,356.00, thereby disallowing Plaintiff’s $2,847.00 refund claim with interest.
8/7/12 Gov’t S.J. Mot. Ex. 6. Plaintiff, however, was informed that “the recovery of any tax,
penalties or other moneys for which this disallowance notice is issued,” could be challenged in a
United States District Court with jurisdiction, or in the United States Court of Federal Claims,
within two years. 8/7/12 Gov’t S.J. Mot. Ex. 6.
On October 11, 2011, Plaintiff filed a Petition in the United States Tax Court seeking,
inter alia, a refund of $2,847.00, plus interest paid on the alleged overpayment of his 2007 taxes.
Gov’t S.J. Mot. Ex. 18 at 1-2 (Plaintiff’s Tax Court Petition, Blue v. Comm’r, T.C. No. 23118-
11S). On March 16, 2012, the United States Tax Court dismissed Plaintiff’s October 11, 2011
Petition with respect to the 2007 tax year, because Plaintiff’s October 11, 2011 Petition was filed
575 days after the March 15, 2010 Notice and beyond the 90-day limitations period that expired
on June 4, 2010. Compl. Ex. A at 1-3 (Order, Blue v. Comm’r, T.C. No. 23118-11S (Mar. 16,
2012)).
II. PROCEDURAL HISTORY.
On March 23, 2012, Plaintiff filed a Complaint in the United States Court of Federal
Claims seeking a refund of $2,847.00 plus interest paid for the alleged overpayment of 2007
taxes. Compl. at 1.
On May 24, 2012, the Government filed a Motion For A More Definite Statement
(“5/24/12 Gov’t Mot.”), asserting that it could not determine whether Plaintiff previously had
filed an administrative claim for a federal tax refund. 5/24/12 Gov’t Mot. at 1-2. Therein, the
Government advised the court that it would move to dismiss the March 23, 2012 Complaint, if
3
A more detailed discussion of the exchange of letters and administrative appeals
between the parties is set forth in Blue v. United States, 108 Fed. Cl. 61 (2012) (denying the
Government’s 8/7/12 Motion To Dismiss).
3
Plaintiff could not produce a formal claim for refund, as required by 26 U.S.C. § 7422(a) 4 and
RCFC 9(m)(1). 5 5/24/12 Gov’t Mot. at 1-2.
On June 7, 2012, Plaintiff filed a Response, stating that he filed a federal tax refund claim
in the form of the March 29, 2010 Request For Appeal to the IRS Appeals Division and
Plaintiff’s October 11, 2011 Petition to the United States Tax Court. 6/7/12 Pl. Resp. at 1. On
June 15, 2012, the Government filed a Reply stating that neither of these filings satisfied the
jurisdictional prerequisite that Plaintiff must file an administrative claim for refund, before the
United States Court of Federal Claims has jurisdiction to adjudicate a tax refund claim.
6/15/2012 Gov’t Reply at 1-2.
On July 6, 2012, Plaintiff filed a Motion For Summary Judgment, contending that the
Government’s Reply is without merit, because Plaintiff filed a timely March 29, 2010 Request
For Appeal with the IRS Appeals Division and a subsequent October 11, 2011 Petition with the
United States Tax Court requesting an adjudication of Plaintiff’s refund claim.
On August 7, 2012, the Government filed a Motion To Dismiss And Opposition To
Plaintiff’s Motion For Summary Judgment (“8/7/12 Gov’t Mot. Dismiss”).
On December 20, 2012, the court issued a Memorandum Opinion And Order: denying
the Government’s Motion For A More Definite Statement; denying the Government’s Motion To
Dismiss; and finding that Plaintiff’s Motion For Summary Judgment was premature. Blue, 108
Fed. Cl. at 70.
On January 3, 2013, the Government filed an Answer to the March 23, 2012 Complaint.
On February 25, 2013, the Government filed a Motion For Leave To File A Preliminary
Status Report. 6
4
Section 7422(a) of the Internal Revenue Code provides:
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).
5
United States Court of Federal Claims Rule 9(m)(1) states:
In pleading a claim for a tax refund, a party must include: (1) a copy of the
claim for refund[.]
RCFC 9(m)(1).
4
On March 11, 2013, the Government served Plaintiff with eight interrogatories and a
Request For The Production Of Documents (“Gov’t Doc. Req.”). On March 14, 2013, Plaintiff
submitted responses to Government Interrogatories (“Pl. Interrog. Resp.”), but did not produce
any documents. On that date, however, Plaintiff filed an Initial Disclosure (“Pl. Discl.”),
pursuant to RCFC 26(a)(1), providing the names of five IRS employees who Plaintiff believes
have relevant information regarding his federal tax account. 7 In addition, Plaintiff advised the
Government that he was considering calling an expert witness at trial regarding his employer’s
contributions. Pl. Discl. at 2.
On May 6, 2013, the Government filed a Motion For Summary Judgment.
On May 13, 2013, Plaintiff filed a Reply that the court deems a Response. Pl. S.J. Resp.
at 1. On May 31, 2013, the Government filed a Reply (“5/31/13 Gov’t Reply”).
III. DISCUSSION.
A. Jurisdiction.
The United States Court of Federal Claims has jurisdiction under the Tucker Act, 28
U.S.C. § 1491, “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, to pursue a substantive right under the Tucker Act, a plaintiff
must identify and plead an independent contractual relationship, Constitutional provision, federal
statute, and/or executive agency regulation that provides a substantive right to money damages.
Todd v. United States, 386 F.3d 1091, 1094 (Fed. Cir. 2004) (“[J]urisdiction under the Tucker
Act requires the litigant to identify a substantive right for money damages against the United
States separate from the Tucker Act[.]”); see also Fisher v. United States, 402 F.3d 1167, 1172
6
On March 4, 2013, Plaintiff attempted to file a Motion In Support of Summary
Judgment, however, that pleading was returned to the Plaintiff for defects and never re-filed with
the court.
7
RCFC 26(a)(1)(A)(i) provides:
(A) Except as exempted by RCFC 26(a)(1)(B) or as otherwise stipulated or
ordered by the court, a party must, without awaiting a discovery request, provide
to the other parties: (i) the name and, if known, the address and telephone number
of each individual likely to have discoverable information – along with the
subjects of that information – that the disclosing party may use to support its
claims or defenses, unless the use would be solely for impeachment[.]
RCFC 26(a)(1)(A)(i).
5
(Fed. Cir. 2005) (en banc) (“The Tucker Act . . . 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. In the
parlance of Tucker Act cases, that source must be ‘money-mandating.’”).
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). This court determined in its previous opinion
in this case that the United States Court of Federal Claims has jurisdiction to adjudicate the
Plaintiff’s claim for a federal tax refund. See Blue, 108 Fed. Cl. at 70.
B. 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”). 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 v. United States, 60 F.3d 795, 799 (Fed. Cir. 1995).
C. Standard For Decision On A Motion For Summary Judgment.
On a motion for summary judgment, if there is no genuine issue as to any material fact,
the moving party is entitled to judgment as a matter of law. See Moden v. United States, 404
F.3d 1335, 1342 (Fed. Cir. 2005) (“Summary judgment is only appropriate if the record shows
that there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.”); see also RCFC 56(c). Genuine disputes of material facts that
might affect the outcome of the suit will preclude entry of summary judgment. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (“As to materiality, the substantive
law will identify which facts are material. Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the entry of summary judgment.
Factual disputes that are irrelevant or unnecessary will not be counted. . . . That is, while the
materiality determination rests on the substantive law, it is the substantive law’s identification of
which facts are critical and which facts are irrelevant that governs.”). The existence of “some
alleged factual dispute between the parties will not defeat an otherwise properly supported
motion for summary judgment[.]” Id.The moving party bears the burden on a motion for summary judgment of demonstrating
the absence of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317,
325 (1986) (holding that the moving party must meet its burden “by ‘showing’ – that is pointing
out to the [trial court] that there is an absence of evidence to support the nonmoving party’s
6
case.”); see also RCFC 56. Issues of genuine fact, and all reasonable inferences and
presumptions, are to be resolved in favor of the nonmoving party. See Anderson 477 U.S. at
255; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986)
(“Respondents correctly note that ‘[o]n summary judgment the inferences to be drawn from the
underlying facts . . . must be viewed in the light most favorable to the party opposing the
motion.’” (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962))). Thus, to avoid an
entry of summary judgment, the non-moving party must set forth evidence sufficient for a
reasonable fact-finder to return a verdict for that party at trial. See Anderson 477 U.S. at 250.
Evidence that is “merely colorable” or not “significantly probative” may not be sufficient to
defeat summary judgment. Id. at 249. The court must “view the evidence presented through the
prism of the substantive evidentiary burden.” Id. at 254.
In a taxpayer suit for refund, the burden is initially placed on the taxpayer to both prove
that the IRS Commissioner’s assessment was erroneous and to establish the exact amount he is
entitled to recover. Lewis v. Reynolds, 284 U.S. 281, 283 (1932); see also United States v. Janis,
428 U.S. 422, 440 (1976) (“It is not enough . . . to demonstrate that the assessment of the tax for
which refund is sought was erroneous in some respects.”). There is a strong presumption that the
determinations of the IRS Commissioner are valid, and no weight is given in this proceeding to
subsidiary administrative factual findings. Int’l Paper Co. v. United States, 36 Fed. Cl. 313, 322
(1996) (“[A] tax refund suit in the Court of Federal Claims ‘is a de novo proceeding, in which
the plaintiff bears the burden of proof’ with respect to each and every element of his claim.”)
(quoting Sara Lee Corp. v. United States, 29 Fed. Cl. 330, 334 (1993)). To overcome this strong
presumption on summary judgment, the plaintiff must put forth evidence that, when viewed in
the light most favorable to the plaintiff, could persuade a reasonable fact-finder that the IRS
erred in its assessment. Lima Surgical Assocs., Inc., Voluntary Employees’ Beneficiary Ass’n
Plan Trust, Huntington Nat. Bank v. United States, 944 F.2d 885, 888 (Fed. Cir. 1991)
(approving the trial court’s consideration, when granting summary judgment, of the taxpayer’s
burden to overcome the presumption that the determinations of the IRS are correct). In opposing
summary judgment, “more is required than mere assertions of counsel.” See Pure Gold,
Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 626-27 (Fed. Cir. 1984). In this case, therefore,
Plaintiff must offer evidence—not just his own assertions—that he would be able to establish at
trial that the IRS erred.
D. Issues Raised By The Government’s May 16, 2013 Motion For Summary
Judgment.
1. Whether Plaintiff’s 2007 Pension Income Was Subject To Federal
Income Tax.
a. The Government’s Argument.
The Government argues that Plaintiff’s 2007 pension income is subject to federal income
tax as gross income, unless it previously was taxed. Gov’t S.J. Mot. at 7. The IRS has
recognized that the Pension Trust Fund is a fully qualified employer plan under Section 401(a) of
the Internal Revenue Code. Gov’t S.J. Mot. at 7. Section 402 provides that payments distributed
from a Section 401 qualified employer plan, “shall be taxable to the distributee, in the taxable
year of the distributee in which distributed under section 72.” 26 U.S.C. § 402. Section 72
7
provides that income received as an annuity is taxable, 8 unless that income is a return of capital,
on which federal income taxes previously have been paid. 9 Gov’t S.J. Mot. at 8.
The Government adds that Plaintiff mistakenly maintains that he is entitled to an
exemption under the “General Rule of exclusion income.” Gov’t S.J. Mot. at 12. Under this
General Rule, the employer’s contribution is non-taxable at the time it is made to the Pension
Trust Fund, i.e., the exclusion ratio. Gov’t S.J. Mot. at 12. Since Plaintiff never contributed to
the Fund, the ratio is zero. Gov’t S.J. Mot. at 12. In this case, the Union allowed only employers
to contribute to the Pension Trust Fund, not employees. Gov’t S.J. Mot. at 2-3. Therefore, ipso
facto, Plaintiff’s receipt of 2007 pension income was taxable. 5/31/13 Gov’t Reply at 1.
b. The Plaintiff’s Response.
The March 23, 2012 Complaint alleges that Plaintiff reported pension income of
$19,356.00, on line 12a of 2007 IRS Form 1040A and properly claimed a taxable amount of
$0.00, on line 12b. Compl. at 1. Although Plaintiff recognizes that pension income generally is
taxable, Plaintiff contends that his pension payments qualify for an exclusion under the “401(c)
exclusion rule,” because they are simply periodic monthly payments. Compl. at 1. The
exclusion properly was reported on Line 12b of Plaintiff’s IRS Form 1040a. Compl. at 1; see
also Gov’t. S.J. Mot. Ex. 12 (Plaintiff’s Form 1040a). In addition, as the October 6, 2010 IRS
letter explained: “[The] pension distribution was an early distribution but met an exception which
means you are not subject to the additional tax or penalty.” Pl. S.J. Resp. at 1 (quoting Pl. S.J.
Resp. Ex. B at 1 (IRS Form 5260 Letter to Plaintiff) (emphasis added)). In addition, an October
6, 2010 IRS Wage and Income Transcript for tax year 2007 “verif[ies] the exception rule.” Pl.
S.J. Resp. at 1 (citing Pl. S.J. Resp. Ex. B at 2, indicating “Early Distribution, exception applies
(Under age 59 ½).” In light of the periodic nature of these payments, Plaintiff maintains that the
pre-tax contributions made by the Employer to the Trust Fund satisfies the “exclusion rule” of 26
U.S.C. § 401, exempting such payments from federal income tax. Compl. at 1; see also Pl. S.J.
Resp. at 1.
8
Section 72(a)(1) provides:
(a) Income Inclusion. – (1) Except as otherwise provided in this chapter,
gross income includes any amount received as an annuity (whether for
a period certain or during one or more lives) under an annuity[.]
26 U.S.C. § 72(a)(1).
9
Section 72(b)(1) provides:
(b) Exclusion Ratio. – (1) Gross income does not include that part of any
amount received as an annuity under an annuity . . . which bears the
same ratio to such amount as the investment in the contract (as of the
annuity starting date) bears to the expected return under the contract
(as of such date).
26 U.S.C. § 72(b)(1).
8
c. The Court’s Resolution.
The Pension Trust Fund was qualified as an employer plan under 26 U.S.C. § 401(a).
Gov’t S.J. Mot. Ex. 6 at 1-2 (1995 IRS Letter to Trust Fund Re: Qualified Plan Determination).
As such, all income received by an employee-taxpayer under the Pension Trust Fund, either as a
pension or annuity, is included in the beneficiary’s gross income and subject to ordinary federal
income tax, unless that income previously was taxed or otherwise is exempt. See 26 U.S.C. §
61(a)(9), (11). 10 The amount that may be excluded from reporting gross pension or annuity
income is calculated using the “exclusion ratio,” as set forth in 26 U.S.C. § 72(b). 11
The “exclusion ratio” is the amount that a taxpayer has invested in a pension or annuity.
But in this case, Plaintiff invested nothing. Gov’t S.J. Mot. Ex. 9 at 1 (2012 Restatement of
Trust Fund Description) (“The Plan is completely financed by contributions from Contributing
Employers and investment income. You [the employee] pay nothing.”); see also Pl. Interrog.
Resp. at 1 ¶ 6 (“I never made pension payments[.]”). Plaintiff elected, on the January 11, 2007
Form W-4P, to opt out of withholding federal taxes from his monthly payments, but that only
affected his monthly withholding, not the federal income tax due. See Church v. Comm’r, 810
F.2d 19, 20 (2d Cir. 1987) (finding a failure of an employer to withhold taxes does not lessen the
obligation of the employee to pay the income tax); see also Gov’t S.J. Mot. Ex. 14 (Trust Fund
Manager Letter to Plaintiff) (“Withholding is one way for you to pay a portion of your income
10
Section 61(a)(9), (11) provides:
(c) General Definition. – Except as otherwise provided in this subtitle,
gross income means all income from whatever source derived,
including (but not limited to) the following items:
...
(9) Annuities;
...
(11) Pensions[.]
26 U.S.C. § 61(a)(9), (11).
11
Section 72(b) provides:
Gross income does not include that part of any amount received as an
annuity under an annuity, endowment, or life insurance contract which bears the
same ratio to such amount as the investment in the contract (as of the annuity
starting date) bears to the expected return under the contract (as of such date).
26 U.S.C. §72(b).
9
tax[.] [W]hether you have to pay federal income tax on your benefit payments depends on the
total amount of your taxable income.”).
Unfortunately, Plaintiff mistakenly believes that several IRS documents support the
assertion that he qualifies for an exception from paying federal tax on his pension receipts. For
example, Plaintiff cites the October 6, 2010 letter IRS Form 5260, which states that, “The 1099-
R shows the distribution was an early distribution but met an exception which means you are not
subject to the additional tax or penalty.” Pl. S.J. Resp. Ex. B at 1 (emphasis added). The issue
here, however, is not “additional tax” but basic income tax. As such, the next sentence reads,
“However the income is taxable.” Pl. S.J. Resp. Ex. B at 1 (emphasis added). The document
properly advises that Plaintiff’s early distribution would not be subject to taxation in excess of
the federal income tax; it does not indicate that the early distribution was tax-free. Likewise,
Plaintiff attached an October 6, 2010 IRS Wage and Income Transcript that indicates “Early
Distribution, exception applies.” Pl. S.J. Resp. Ex. B at 2. Again, this text must be read in light
of the critical phrase that follows—“Under age 59 ½.” Pl. S.J. Resp. Ex. B at 2. The Pension
Trust Fund allows for early distribution where the participant is 52 years of age and has at least
ten years of pension credit. Gov’t S.J. Mot. Ex. 8 at 15 § 3.07. The IRS defines the “Early
Distribution, exception applies” on page R-11 of the 2007 IRS “Instructions for Forms 1099-R
and 5498,” but makes no provision for tax exemptions for periodic payments made under a “401
exclusion rule.” Gov’t S.J. Mot. Ex. 13 at 11.
The court is mindful that Plaintiff asserts that testimony from five IRS employees may
reveal information favorable to his case. Pl. S.J. Resp. Ex. D at 1. As a matter of law, however,
this court is required to review Plaintiff’s tax liability de novo. See Cook v. United States, 46
Fed. Cl. 110, 113 (2000) (“In tax refund suits, factual issues are tried de novo in this court, with
no weight given to subsidiary factual findings made by the [IRS] in its internal administrative
proceedings.”); see also Flamingo Fishing Corp. v. United States, 31 Fed. Cl. 655, 658 (1994)
(“The opinions, conclusions and reasoning of government officials are not subject to discovery.”
(quoting ISI Corp. v. United States, 503 F.2d 558, 559 (9th Cir. 1974))).
In this case, Plaintiff has not offered any evidence that could be construed by a
reasonable fact-finder as supporting the position that he is exempt from federal income tax on his
pension payments. For this reason, the court has determined, as it must, that Plaintiff has not
established that any genuine issue of fact exists as to whether he was subject to federal income
tax on payments received from the Pension Trust Fund.
2. Whether Plaintiff Or His Employer Contributed After-Tax Income
To The Trust Fund.
a. The Government’s Argument.
The Government also argues that Plaintiff never made after-tax payments to the Trust
Fund. Gov’t S.J. Mot. at 3; see Gov’t S.J. Mot. Ex. 3 at 7 ¶ 6 (“Pl. Interrog. Resp.”) (Plaintiff
stating, “I never made pension payments[.]”); Gov’t S.J. Mot. Ex. 21 at 8 ¶ 6 (“Gov’t Doc.
Req.”) (Plaintiff again stating, “I was an employee of King Kullen Food Company; I never made
pension payments.”). In this case, the Employer did not allow employees, including Plaintiff, to
make contributions to the Pension Trust Fund. Gov’t S.J. Mot. at 11; see also Gov’t S.J. Mot.
10
Ex. 5 at 7 ¶¶ 5, 6 (Assistant Fund Administrator stating, “Mr. Gregory L. Blue never made any
contributions to the Local 282 Pension Trust Fund. The Local 282 Trust Fund is funded
exclusively through employer contributions.”).
The Employer made contributions to the Trust Fund on behalf of Union employees,
including Plaintiff. Gov’t S.J. Mot. at 11. The Employer’s contributions were not paid out of the
gross earnings of employees, unlike the payment of Union dues. Gov’t S.J. Mot. at 11; compare
Gov’t S.J. Mot. Ex. 5 at 2 ¶ 7 (Assistant Fund Administrator stating, “Employers do not fund
their contributions to the Local 282 Pension Trust Fund through salary reductions of their
employees.”), and Gov’t S.J. Mot. Ex. 11 at 20 ¶ 32 (Union agreement providing, “[T]he
company shall contribute ten cents ($.10) per hour to the Local 282 Annuity Trust Fund[.]”
(emphasis added)), with Gov’t S.J. Mot. Ex. 11 at 19 ¶ 28 (Union agreement providing, “The
Employer agrees to deduct from the wage rate of each employee . . . the sum of $0.20 for each
hour worked. Said sum shall constitute . . . Union dues.” (emphasis added)). Plaintiff insists that
his “pension contribution[s] where pre-tax on a weekly basis [sic].” 6/7/12 Pl. Resp. at 1; see
also Gov’t S.J. Mot. Ex. 10 at 1 (Plaintiff’s defective 3/4/13 “Motion In Support Of Summary
Judgment,” stating, “[T]he taxable amount of defined benefit and annuity plan was pre-tax and
paid to Local 282 Pension Trust Fund on a weekly time frame.”). But, when Plaintiff was asked
if the Employer’s contributions to the Pension Trust Fund were included in his personal taxable
income, Plaintiff did not reply affirmatively. Gov’t S.J. Mot. at 10; see Gov’t Interrog. at 4 ¶ 7
(“State whether any part of your employer’s contributions to the Local 282 pension trust fund
were ever included in your personal taxable income[.]”; Pl. Interrog. Resp. at 1 ¶ 7 (“I received a
W-2 . . . and file[d] my personal tax with that W-2 from the employer King Kullen Food
Company.”). Plaintiff was unable to proffer any other evidence when asked to produce
documents or communications that show the Employer’s contributions were included in his
personal taxable income. Gov’t S.J. Mot. at 10; see Gov’t Doc. Req. at 5 ¶ 7; Gov’t S.J. Mot.
Ex. 21 at 8 ¶ 7 (“Not within my knowledge or source[.]”).
Since Plaintiff bears the burden of proof and has been unable to demonstrate that his
pension payments are not taxable, the court is required to enter summary judgment in favor of
the Government. See Shimota v. United States, 21 Cl. Ct. 510, 526-27 (1990) (holding that
plaintiffs asserting that retirement fund distribution was not taxable bore burden on summary
judgment), aff’d, 943 F.2d 1312 (Fed. Cir. 1991).
b. The Plaintiff’s Response.
Plaintiff responds that the Employer contributed to the Pension Trust Fund through
deductions from Plaintiff’s hourly wages. Pl. S.J. Resp. at 1 (“The Pension Fund is funded by
employer contribution deducted on an hourly rate from employee in this case[.]”). Section 32 of
the Agreement between the Employer and the Union shows that the Employer deducted money
from Plaintiff’s pay. 12 Pl. S.J. Resp. at 1; see also Gov’t S.J. Mot. Ex. 11 at 20 ¶ 32 (“[T]he
company shall contribute ten cents ($.10) per hour to the Local 282 Annuity Trust Fund for
12
Plaintiff’s response referred to “Section 20” but placed an asterisk next to Section 32 of
page 20 of the agreement. The court believes Plaintiff intended to reference Section 32.
11
every bargaining unit employee for every hour worked.”). Even if Pension payments are taxable,
Plaintiff argues he has already paid the tax. Pl. S.J. Resp. at 1.
Plaintiff concludes that under the facts of this case he is entitled to a trial where he may
call expert witnesses to testify about the weekly deductions from his paycheck. Pl. S.J. Resp. at
2.
c. The Court’s Resolution.
The parties agree that Plaintiff never made a contribution to the Pension Trust Fund on
his own behalf. Pl. S.J. Resp. at 1. Instead, the Employer made weekly pension contributions on
behalf of its employees, including Plaintiff, pursuant to the Union Agreement. Pl. S.J. Resp. at 1.
The only evidence in the record that Plaintiff cites as support is Section 32 of the Union
Agreement, which provides that the Employer shall contribute to the trust fund on an hourly
basis. As the Government correctly points out, the Trust Fund used the word “contribute,” as
opposed to “deduct,” when referring to employee pension compensation. 5/31/13 Gov’t Reply at
2. To “contribute” is to “give (money or other aid) for a specified object.” WEBSTER’S THIRD
NEW INTERNATIONAL DICTIONARY 496 (Phillip Babcock Grove, et al. eds., 2002). Plaintiff’s
pension was monetary compensation made in addition to hourly wages and annuity contributions
as part of Plaintiff’s total compensation. While federal income taxes are regularly withheld from
hourly wages, pension contributions were not included in calculations of Plaintiff’s annual
taxable income. Gov’t S.J. Mot. Ex. 5 ¶ 8 (Trust Fund Manager stating that employers do not
fund their pension contributions through employee salary deductions). Plaintiff has the burden
of proof at trial, but is unable to produce any documents that support his position that taxes were
previously paid on the pension payments made on his behalf.
As a matter of law, an entry of summary judgment is required under Rule 56 when, upon
adequate discovery and motion, the party that bears the burden of proof at trial “fails to make a
showing sufficient to establish the existence of an element essential to that party’s case.”
Celotex, 477 U.S. at 322; see also Imperial Tobacco Ltd. v. Phillip Morris, Inc., 899 F.2d 1575,
1581 (Fed. Cir. 1990) (“A conclusory statement on the ultimate issue does not create a genuine
issue of fact.”). When the non-movant will bear the burden at trial, he must provide something
more than just a mere assertion to defeat summary judgment. See Pure Gold, 739 F.2d at 626-27(“The non-movant may not rest on its conclusory pleadings but under Rule 56, must set
out . . . what specific evidence could be offered at trial.”). Plaintiff has been afforded numerous
opportunities by this court and the Government to produce documents that could justify his
allegations. An essential element of Plaintiff’s case is showing that he paid income tax on the
amount his employer contributed to the Pension Trust Fund, but Plaintiff has not proffered
evidence sufficient to establish the presence of a genuine issue of fact as to whether he made
such a payment. Plaintiff either paid the income tax due, or he did not, but he has proffered no
evidence that he did. Therefore, as a matter of law, the court must grant the Government’s
motion for summary judgment. See Moden, 404 F.3d at 1342.
12
IV. CONCLUSION.
For the foregoing reasons, the Government’s May 6, 2013 Motion For Summary
Judgment is granted. The clerk of court is directed to dismiss the March 23, 2012 Complaint.
IT IS SO ORDERED.
s/Susan G. Braden___
SUSAN G. BRADEN
Judge
13