Estate of Kirsch v. United States

• Decision Date: 13 July 2017
• Docket Number: 6:16–CV–06599 EAW
• Citation: 265 F.Supp.3d 315
• Parties: ESTATE OF Florence W. KIRSCH, deceased, Roberta K. Feldman, administrator, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Western District of New York

265 F.Supp.3d 315

ESTATE OF Florence W. KIRSCH, deceased, Roberta K. Feldman, administrator, Plaintiff,

v.UNITED STATES of America, Defendant.

6:16–CV–06599 EAW

United States District Court, W.D. New York.

Signed July 13, 2017

Jonathan E. Strouse, Pro Hac Vice, Harrison & Held, LLP, Chicago, IL, George H. Gray, Gray & Feldman LLP, Rochester, NY, for Plaintiff.

Steven Dean, Michael Patrick Lobie, U.S. Department of Justice, Washington, DC, for Defendant.

DECISION AND ORDER

ELIZABETH A. WOLFORD, United States District Judge

INTRODUCTION

Plaintiff Estate of Florence W. Kirsch ("Plaintiff") brings this action seeking a refund of taxes paid to defendant United States of America ("Defendant"). (See Dkt. 17). Presently before the Court is Defendant's motion to dismiss for lack of jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). (Dkt. 11). Because Defendant has not waived sovereign immunity under the circumstances of this case, this Court lacks subject matter jurisdiction and, therefore, Defendant's motion to dismiss is granted.

FACTUAL BACKGROUND

This case concerns the alleged overpayment of federal taxes by Florence W. Kirsch ("Ms. Kirsch"), who passed away on September 16, 2016. (Dkt. 17). Plaintiff alleges that it is owed $41,535, plus accrued interest, for Ms. Kirsch's overpayment on her 2008 federal tax return. (See id. at 6). In 2008, Ms. Kirsch had $13,001 withheld, and had $14,900 applied to her 2008 tax liability from her 2007 return. (Dkt. 17–1 at 3). Additionally, although Ms. Kirsch's 2008 tax return was due on April 15, 2009, she requested an extension of time to file until October 15, 2009, and with her request for an extension, Ms. Kirsch paid an additional $22,718. (See id. at ¶ 17; Dkt. 17–1 at 3). In total, Plaintiff paid $50,619 in federal taxes in 2008, against a liability of $9,713. (Dkt. 17–1 at 3).

Ms. Kirsch's 2008 tax return was not filed until June 5, 2014. (Dkt. 17 at ¶ 21). Plaintiff asserts that the delay in filing was due to Ms. Kirsh's "financial disability," and because she had not authorized anyone to file a return and refund claim on her behalf until 2013. (Id. at ¶ 21).

In an attempt to remedy the untimely nature of her submission, Ms. Kirsch submitted two key documents to the Internal Revenue Service ("IRS"). (See Dkt. 17–5). The first was a statement from Ms. Kirsch's physician, Dr. Cynthia L. Mazzoni, M.D. ("Dr. Mazzoni"). (Id. at 6). Dr. Mazzoni certified that:

Florence W. Kirsch is a patient known to me.

1. [Ms.] Kirsch has been diagnosed with a cognitive mental impairment

;

2. It is my medical opinion that in addition to issues in remembering to take certain medications, her mental impairment has prevented [Ms.] Kirsch from managing certain aspects of her financial affairs;

3. It is my medical opinion that the mental impairment has lasted for a continuous period of not less than twelve months and will continue to last indefinitely;

4. While first diagnosed on January 3, 2012, [Ms.] Kirsch first began reporting issues with her memory in 2007. Given the progressive nature of cognitive mental impairments, [Ms.] Kirsch would have begun to experience adverse effects of her mental impairment first in 2007 and it became progressively worse.

I hereby certify that, to the best of my knowledge and belief, the above representations are true, correct, and complete[.]

(Id. ).

Harold Kirsch ("Harold"), Ms. Kirsch's son, sent the second statement. (See id. at 7). It states:

I was authorized to act on behalf of [Ms. Kirsch] in financial matters during the period described in Paragraph 4 of the letter from Dr. Mazzoni dated October 22, 2015.... However, the durable power of attorney was only effective after April 1, 2009. I did not exercise such authority during that period described in Paragraph 4, referenced above, because I had no knowledge living on the west coast that my assistance and authority were required. It is only recently, after the taxpayer's symptoms have become more pronounced, that I have begun to contemplate exercising my authority as prescribed in the power of attorney.

(Id. ). The durable power of attorney described in Harold's letter was the second of two executed by Ms. Kirsch. (Dkt. 17 at ¶¶ 14–16). The first, executed on December 26, 2003, appointed Ms. Kirsch's "husband Seymour Kirsch ... as her agent, and her son Kenneth Kirsch ("Ken") ... as her successor agent." (Id. at ¶ 14). Seymour Kirsch passed away on March 28, 2009. (Id. at ¶ 15).

Ken discovered that he was appointed as the successor agent on the first durable power of attorney in December 2012. (Id. at ¶ 19). Ken began assisting Ms. Kirsch with her financial matters in early 2013. (Id. ).

PROCEDURAL BACKGROUND

Plaintiff filed this action on August 29, 2016. (Dkt. 1). Plaintiff filed an amended complaint on November 16, 2016. (Dkt. 10). On December 22, 2016, Defendant moved to dismiss the amended complaint for lack of jurisdiction. (Dkt. 11). Plaintiff then filed a second amended complaint. (Dkt. 17). Defendant advised the Court of its position that the second amended complaint did not moot its motion to dismiss. (See Dkt. 20). Defendant submitted an updated memorandum in support of its motion, (Dkt. 21), to which Plaintiff responded. (Dkt. 24). Defendant replied to Plaintiff's response. (Dkt. 25). Oral argument was held before the undersigned on June 28, 2017, and this Court reserved decision. (See Dkt. 32).

DISCUSSION

I. Standard of Review

"A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000). "When considering a motion to dismiss for lack of subject matter jurisdiction ..., a court must accept as true all material factual allegations in the complaint." Shipping Fin. Servs. Corp. v. Drakos , 140 F.3d 129, 131 (2d Cir. 1998). However, "jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Morrison v. Nat'l Austl. Bank Ltd. , 547 F.3d 167, 170 (2d Cir. 2008) (citation omitted). "Indeed, a challenge to the jurisdictional elements of a plaintiff's claim allows the [c]ourt ‘to weigh the evidence and satisfy itself as to the existence of its power to hear the case.’ " Celestine v. Mt. Vernon Neighborhood Health Ctr. , 289 F.Supp.2d 392, 399 (S.D.N.Y. 2003) (citation omitted), aff'd , 403 F.3d 76 (2d Cir. 2005). "The court may consider affidavits and other materials beyond the pleadings but cannot ‘rely on conclusory or hearsay statements contained in the affidavits.’ " Young v. United States , No. 12-CV-2342 (ARR)(SG), 2014 WL 1153911, at *6 (E.D.N.Y. Mar. 20, 2014) (quoting J.S. ex rel. N.S. v. Attica Cent. Sch. , 386 F.3d 107, 110 (2d Cir. 2004) ); see, e.g., Luckett v. Bure , 290 F.3d 493, 497 (2d Cir. 2002) ("[T]he district court can refer to evidence outside the pleadings and the plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.").

II. This Court Lacks Subject Matter Jurisdiction to Hear this Case

Defendant argues that it has not waived sovereign immunity, and, therefore, this Court lacks subject matter jurisdiction. (Dkt. 21 at 7–20). Specifically, Defendant argues that Plaintiff failed to present sufficient documentation to the IRS such that any tolling of the statute of limitations—which is jurisdictional in nature—applies. (Id. ).

A. The United States' Waiver of Sovereign Immunity

The "United States, as sovereign, is immune from suit save as it consents to be sued ..., and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit." United States v. Mitchell , 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980) (citation omitted). A waiver of sovereign immunity "cannot be implied but must be unequivocally expressed." United States v. King , 395 U.S. 1, 4, 89 S.Ct. 1501, 23 L.Ed.2d 52 (1969). In the absence of clear congressional consent, "there is no jurisdiction ... to entertain suits against the United States." United States v. Sherwood , 312 U.S. 584, 587–88, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). "[T]he plaintiff bears the burden of establishing that her claims fall within an applicable waiver [of sovereign immunity]." Makarova , 201 F.3d at 113.

Congress has waived sovereign immunity to suit for the recovery of erroneously paid taxes, however

[n]o 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 ... until a claim for refund or credit has been duly filed with the [Treasury] 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) (emphasis added). Absent compliance with the regulations put forth by the Secretary, there is no waiver of sovereign immunity, and, therefore, no subject matter jurisdiction. Kirsh v. United States , 258 F.3d 131, 132 (2d Cir. 2001) ; see, e.g. , Donnelly v. United States , 550 Fed.Appx. 54, 54 (2d Cir. 2014) (citing United States v. Dalm , 494 U.S. 596, 608–10, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990) ); see also United States v. Felt & Tarrant Mfg. Co. , 283 U.S. 269, 272, 51 S.Ct. 376, 75 L.Ed. 1025 (1931) ("The filing of a claim or demand as a prerequisite to a suit to recover taxes paid is a familiar provision of the revenue laws, compliance with which may be insisted upon....").

" ‘Duly filed’ has been defined as filing a claim within the statute of limitations." Kirsh v. United States , 131 F.Supp.2d 389, 391 (S.D.N.Y. 2000), aff'd 258 F.3d 131 (2d Cir. 2001). The statute of limitations for filing a claim for a refund of an overpayment of tax is "3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later." 26 U.S.C. § 6511(a) ; see, e.g. , AmBase Corp. v. United...