Breland v. United States

• Decision Date: 15 September 2011
• Docket Number: 5:10-CV-0007
• Parties: CHARLENE DAVIS BRELAND, f/k/a Charlene Breland, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.
• Court: U.S. District Court — Northern District of New York

CHARLENE DAVIS BRELAND, f/k/a Charlene Breland, Plaintiff,

v.UNITED STATES OF AMERICA, Defendant.

5:10-CV-0007

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

Dated: September 15, 2011

(GTS/GHL)

APPEARANCES:

SYRACUSE UNIVERSITY COLLEGE OF LAW

Counsel for Plaintiff

U.S. DEPT. OF JUSTICE - TAX DIVISION

Counsel for Defendant

OF COUNSEL:

ROBERT G. NASSAU, ESQ.

WILLIAM C. ELWELL, ESQ.

HON. GLENN T. SUDDABY, United States District Judge

MEMORANDUM-DECISION and ORDER

Currently before the Court, in this tax refund action filed by Charlene Davis Breland ("Plaintiff") against the United States of America ("Defendant"), is Defendant's motion to dismiss Plaintiff's claims against it for lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). (Dkt. No. 5) For the reasons set forth below, Defendant's motion is granted, and Plaintiff's Complaint is dismissed in its entirety with prejudice.

I. RELEVANT BACKGROUND

A. Plaintiff's Claims

Generally, liberally construed, Plaintiff's Complaint, filed on January 4, 2010, claims that Defendant improperly denied her federal income tax refunds for the years 2001, 2002, and 2003. (Dkt. No. 1.)

More specifically, Plaintiff alleges as follows: (1) in 2001, when she filed her federal income tax return, she properly filed as "head of the household," claimed a child tax credit and dependency exemptions with respect to her two birth sons, reported income taxes withheld, and claimed an additional child tax credit and an earned income tax credit with respect to her sons; (2) based on her filings, and claimed credits and exemptions, she properly claimed a refund of $4,706.00; (3) after filing her 2001 Return, she received a Notice of Income Tax Examination Changes (Form 4549) from the Internal Revenue Service ("IRS"), which "proposed to disallow her earned income credit, child tax credits, head of household filing status, and dependency exemptions"; (4) the Notice "also proposed an additional Federal income tax of $1,234.00"; (5) "Plaintiff did not file a Petition with the United States Tax Court contesting the [IRS]'s proposed deficiency"; (6) as a result, "all of the [IRS]'s proposed changes were properly given legal effect"; (7) Defendant failed to issue a formal notice of disallowance of Plaintiff's refund claim with respect to her 2001 Return; (8) in 2002, when she filed her federal income tax return, she properly filed as "head of the household," claimed a child tax credit and dependency exemptions with respect to her sons, reported income taxes withheld, and claimed an additional child tax credit and an earned income tax credit with respect to her sons; (9) based on her filings, and claimed credits and exemptions, she properly claimed a refund of $4,497.00; (10) the IRS"properly applied $357.00 of Plaintiff's claimed refund to a prior Federal income tax liability"; (11) "[s]hortly after filing her 2002 Return, Plaintiff received notice that the [IRS] was disallowing Plaintiff's earned income credit because Schedule EIC was incomplete and not attached to her 2002 Federal income tax return"; (12) "Plaintiff promptly sent to the IRS a completed Schedule EIC and Form 8862"; (13) she never received a refund of the remaining $4,140.00 of earned income credit that she claimed on her 2002 Return; (14) Defendant failed to issue formal a notice of disallowance of Plaintiff's refund claim with respect to her 2002 Return; (15) in 2003, when she filed her federal income tax return, she properly filed as "head of the household," claimed dependency exemptions with respect to her two birth sons, reported income taxes withheld, and claimed an earned income tax credit with respect to her sons; (16) based on her filings, and claimed credits and exemptions, she properly claimed a refund of $4,341.00; (17) the IRS "properly applied $511.00 of Plaintiff's claimed refund to a prior Federal income tax liability"; (18) after filing her 2003 Return, she received a Notice of Income Tax Examination Changes (Form 4549) from the IRS, which "proposed to disallow Plaintiff's earned income credit, head of household filing status, and dependency exemptions"; (19) the Notice "also proposed an additional Federal income tax of $176.00"; (20) "Plaintiff did not file a Petition with the United States Tax Court contesting the [IRS]'s proposed deficiency"; (21) as a result, "all of the [IRS]'s proposed changes were properly given legal effect"; (22) "[a]lthough Plaintiff properly claimed each of her two sons as personal exemptions and properly filed as head of household, Plaintiff is not contesting [the IRS]'s adjustments"; (23) she never received a refund of the remaining $3,830.00 of earned income credit that she claimed on her 2003 Return; and (24) Defendant failed to issue a formal notice of disallowance of Plaintiff's refund claim with respect to her 2003 Return. (Id.)

As relief for Defendant's alleged wrongful withholding of earned income tax credit, Plaintiff requests an award of $12,676.00. (Id.)

B. Defendant's Motion

Generally, in support of its motion to dismiss for lack of subject-matter jurisdiction, Defendant argues that Plaintiff is barred, pursuant to 26 U.S.C. § 6532(a)(1), from obtaining the recovery she seeks because she filed her Complaint more than two years after the IRS mailed her notices of disallowance of each of her refund claims. (See generally Dkt. No. 6, Attach. 1 [Def.'s Memo. of Law].)

Generally, in response to Defendant's motion to dismiss, Plaintiff asserts the following three arguments: (1) the Court should treat Defendant's purported motion to dismiss for lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) as a motion for summary judgment pursuant to Fed. R. Civ. P. 56 because (a) a motion to dismiss based on a statute of limitations is properly treated as a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6), and (b) Defendant relies on record evidence in support of its statute of limitations argument, necessitating the conversion of that motion to dismiss for failure to state a claim into one for summary judgment; (2) the two-year statute of limitations was not triggered for any of the tax years involved in this case because (a) the IRS did not mail any notice of disallowance to Plaintiff for the 2001 tax year, and (b) the notices of disallowance mailed to Plaintiff for the 2002 and 2003 tax years "were not legally sufficient and did not provide Plaintiff with statutorily and constitutionally required notice of her right to contest the adverse determination by bringing suit in a United States District Court or the United State Court of Claims"; and (3) "[a]pplying the statute of limitations would deprive Plaintiff of property in violation of her Fifth Amendment right to due process of the law." (See generally Dkt. No. 8 [Plf.'s Response Memo. of Law].)

Generally, in its reply, Defendant reiterates its argument that Plaintiff's claims are barred by the statute of limitations because the record demonstrates that the IRS provided proper notice of disallowance for the years 2001, 2002, and 2003. (Dkt. No. 9 [Def.'s Reply Memo. of Law].)

II. RELEVANT LEGAL STANDARDS

A. Legal Standard Governing Statute of Limitations Defense Asserted by United States

Ordinarily, a statute of limitations defense asserted as a pre-answer affirmative defense is properly considered as a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). Ghartey v. St. John's Queens Hosp., 869 F.2d 160, 162 (2d Cir. 1989). However, "[w]hen an action is brought against the United States government, compliance with the conditions under which the government has agreed to waive sovereign immunity is necessary for subject matter jurisdiction to exist." Williams v. United States, 947 F.2d 37, 39 (2d Cir. 1991). "Accordingly, the statute of limitations may operate in suits against the United States not only as an affirmative defense, . . . but also may deprive a court of subject matter jurisdiction over an action that is not timely filed." Williams, 947 F.2d at 39; see also John R. Sand & Gravel Co. v. United States, 552 U.S. 130, 133-34 (2008) ("Some statutes of limitations . . . seek not so much to protect a defendant's case-specific interest in timeliness as to achieve a broader system-related goal, such as facilitating the administration of claims, limiting the scope of a governmental waiver of sovereign immunity, or promoting judicial efficiency. . . . As convenient shorthand, the Court has sometimes referred to the time limits in such statutes as 'jurisdictional' . . . and has long interpreted the court of claims limitations statute as setting forth this second, more absolute, kind of limitations period.") [citations omitted].

Here, Congress has placed beyond the subject-matter jurisdiction of a federal court untimely filed tax refund claims,¹ thereby limiting the scope of the Government's waiver of sovereign immunity. As a result, Defendant's statute of limitations defense is properly analyzed under Fed. R. Civ. P. 12(b)(1). Radioshack Corp. v. United States, 566 F.3d 1358, 1359 (Fed. Cir. 2009) (affirming trial court's decision, which held that, because plaintiff's refund claim was filed outside of the time limits imposed by 26 U.S.C. § 6511[a], plaintiff was barred from bringing suit pursuant to 26 U.S.C. § 7422, and which dismissed the untimely filed refund claim for lack of jurisdiction under Fed. R. Civ. P. 12[b][1]).²

B. Legal Standard Governing Motions to Dismiss for Lack of Subject-Matter Jurisdiction

"It is a fundamental precept that federal courts are courts of limited jurisdiction." Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). Under Fed. R. Civ. P. 12(b)(1), a court must grant a motion to dismiss when that court lacks subject-matter jurisdiction. Fed. R.Civ. P. 12(b)(1). "Rule 12(b)(1) challenges to subject matter jurisdiction...