Koopmann v. United States

• Decision Date: 30 September 2020
• Docket Number: No. 09-cv-333 T,09-cv-333 T
• Parties: WILLIAM KOOPMANN, et al., Plaintiffs, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

WILLIAM KOOPMANN, et al., Plaintiffs, v. THE UNITED STATES, Defendant.

No. 09-cv-333 T

United States Court of Federal Claims

September 30, 2020

William Koopmann, Lovettsville, Virginia, Plaintiff pro se

Jason Bergmann, U.S. Department of Justice, Tax Division, Court of Federal Claims Section, Washington, D.C., for the Defendant.

MEMORANDUM AND ORDER

Plaintiff pro se, William Koopmann, seeks a tax refund in the amount of $2,416 which he claims he overpaid as a result of the Internal Revenue Service's (IRS) application of a special timing rule under Internal Revenue Code (I.R.C.) § 3121(v)(2)(A) to the taxation of non-qualified deferred compensation he received after he retired from United Airlines. See Complaint (ECF No. 1) (Compl.); Koopmann "Plaintiff Information Sheet" (ECF No. 61) (Pl. Info. Sheet) at 2; Defendant's Motion to Dismiss for lack of Subject Matter Jurisdiction with Respect to Plaintiff Koopmann (Def. Mot.) Exhibit A (ECF No. 248-2) at 3; Plaintiff's Response to Defendant's Motion to Dismiss Koopmann Dkt 248 (ECF No. 308) (Pl. Resp.) at 3-4. Mr. Koopmann's claim is nearly identical to that of other plaintiffs in the above-referenced case and a related case, Sofman v. United States, No. 10-157, including that of co-plaintiff William C. Brashear, Jr., whose claim was dismissed on September 30, 2020. See ECF No. 362.

Defendant moved to dismiss Plaintiff's complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of Rules of the United States Court of Federal Claims (Rule(s)). See generally Def. Mot.; Defendant's Reply in Support of Motion to Dismiss Claims by William Koopmann for Lack of Subject Matter Jurisdiction (Def. Reply) (ECF No. 321). Defendant argues that Mr. Koopmann's tax-refund claim is time-barred under I.R.C. § 6511, because Mr. Koopmann did not file an administrative claim for tax refund either within three years of filing of the applicable tax return or within two years of payment of the tax. Def. Mot. at 3-6.

Mr. Koopmann argues that it is violative of the Due Process Clause of the Fifth Amendment to apply a statute of limitations to bar a refund request when the event that triggered the purported eligibility for that refund --- the discharge of United Airlines' obligation to make payments towards his non-qualified retirement benefits --- did not occur until long after the statute of limitations had run. See generally Pl. Resp. at 3-4. Additionally, Mr. Koopmann continues to argue, despite the Federal Circuit's Balestra decision to the contrary, that the Treasury Department's application of the special timing rule, which does not does not allow for the contingency that if the employer became bankrupt, an adjustment in the employee's tax would be made, violates Congress' directive as well as the Fifth Amendment's Due Process Clause. See Pl. Resp. 3-6; but see Balestra v. United States, 803 F.3d 1363, 1369-74 (Fed. Cir. 2015).

This case was transferred to the undersigned judge on April 10, 2020. See ECF No. 135.¹ This Court has considered each of the parties' filings and arguments in ruling on Defendant's Motion. For the reasons set forth below, this Court GRANTS Defendant's Motion to Dismiss.

BACKGROUND

The Federal Insurance Contributions Act (FICA), I.R.C. §§ 3101-3128, establishes a tax that is assessed by the Government based on wages paid to workers, and the money collected from the FICA tax is used to fund the Social Security and Hospital Insurance (HI). Generally, wages are received when they are paid by the employer to the employee, and wages are paid by the employer when they are actually or constructively paid. See 26 C.F.R. § 31.3121(a)-2. The same rule is generally true for FICA tax purposes. See Balestra v. United States, 803 F.3d 1363, 1366 (Fed. Cir. 2015) (citing 26 C.F.R. § 31.3121(v)(2)-1(a)(1) (the "special timing rule")). However, some wages are treated differently under the "special timing rule" for FICA tax purposes. Id. The special timing rule applies to wages received from a non-qualified deferred compensation plan, such as the plan at issue in the present action. See Balestra, 803 F.3d at 1366 (internal citations and quotations omitted).² Under the "special timing rule" FICA tax is assessed only once, at the later of either: (A) the date services are performed or (B) the date when there is no substantial risk of forfeiture of the rights to such amount. See 26 C.F.R. § 31.3121(v)(2)-1(a)(1) (tracking I.R.C. § 3121(v)(2)(A)). There is "no substantial risk of forfeiture," if

an amount deferred is considered reasonably ascertainable on the first date on which the amount, form, and commencement date of the benefit payments attributable to the amount deferred are known, and the only actuarial or other assumptions regarding future events or circumstances needed to determine the amount deferred are interest and mortality.

26 C.F.R. § 31.3121(v)(2)-1(e)(4)(i)(B). The deferred benefits are taxed at their "present value," which is computed with reference to actuarial projections concerning life expectancy and a discount rate which accounts for the time value of money but does not account for the risk of employer default. See 26 C.F.R. § 31.3121(v)(2)-1(c)(2)(ii); Balestra, 803 F.3d at 1371.

The underlying facts of this case are undisputed. In 2001, Mr. Koopmann retired from United Airlines, and was covered by United Airlines' non-qualified deferred compensation plan. Def. Mot. Ex. A at 3-4. Pursuant to the special timing rule, Mr. Koopmann paid the present value of his FICA taxes the year in which he retired. Def. Mot. Ex. A at 3-4. Mr. Koopmann received benefits under United Airlines' non-qualified deferred compensation plan from 2001 through 2006. Def. Mot. Ex. A at 3. The hospital insurance tax was 1.45% of an individual's "wages" received with respect to employment. Def. Mot. Ex. A at 4.

On December 9, 2002, two years after Plaintiff's retirement, United Airlines filed a Chapter 11 bankruptcy petition. Def. Ans. ¶ 13. In 2006, the Seventh Circuit Court of Appeals approved United Airlines' reorganization plan. Def. Ans. ¶ 13; see also In re UAL Corp., 468 F.3d 444 (7th Cir. 2006). As a result of these proceedings, United Airlines' obligation to pay Plaintiff's deferred compensation was discharged, with a portion of Mr. Koopmann's benefits never having been paid. See Def. Ex. A at 3; Pl. Resp. at 4, 5-6. Specifically, Mr. Koopmann paid tax on $415,025.91 worth of non-qualified deferred compensation, of which he received only $248,293. Def. Ex. A at 3. He paid $6,017.88 of FICA tax on these benefits, which reflects the 1.45% HI tax rate applied to the $415,025.91 present value of the benefits. Def. Mot. Ex. A at 3.

As partial compensation for the bankruptcy discharge of Mr. Koopman's retirement benefits, United issued common stock to Mr. Koopmann, with the last issuance taking place on April 24, 2007. Pl. Resp. at 4. Sometime thereafter, Mr. Koopmann filed an administrative claim for refund, on IRS Form 843, which he signed on August 5, 2007. See Def. Mot. Ex. A at 2; Pl. Resp. at 4. Mr. Koopmann's refund claim purported to relate to the tax period from "1/1/06 to 12/31/06." Def. Mot. Ex. A at 2. However, attachments to the refund claim indicate that Koopmann was seeking a refund of "withheld Medicare taxes on the entire amount in the [non-qualified deferred compensation] plan in 2001." Def. Mot. Ex. A at 3.

On May 26, 2009, Mr. Koopmann filed a lawsuit in the United States Court of Federal Claims against the United States seeking, inter alia, a refund of the FICA taxes paid by United relating to his retirement. See generally Compl. The gravamen of Mr. Koopmann's claim is that because United Airlines withheld FICA tax from Mr. Koopmann based on a present value calculation of his retirement benefits at the time of his retirement, Mr. Koopmann effectively paid HI wage tax on wages he will never receive. See id.; Pl. Resp. at 3-4. Specifically, Mr. Koopmann states that he should have paid the 1.45% HI tax on the present value of $248,393 (the amount he received), which he alleges would entitle him to a $2,416 tax refund. See Pl. Info. Sheet at 2; Def. Mot. Ex. A at 3.

DISCUSSION

Pursuant to Rules 12(b)(1) and 12(h)(3), this Court must dismiss claims that do not fall within its subject-matter jurisdiction. When considering a motion to dismiss based on lack of subject-matter jurisdiction, this Court accepts as true all uncontroverted factual allegations made by the non-movant and draws all reasonable inferences in the light most favorable to that party. See Estes Express Lines v. United States, 739 F.3d 689, 692 (Fed. Cir. 2014); Pixton v. B&B Plastics, Inc., 291 F.3d 1324, 1326 (Fed. Cir. 2002). If a motion to dismiss for lack of subject-matter jurisdiction challenges the truth of the jurisdictional facts alleged, the Court may consider relevant evidence outside the complaint in resolving the dispute. See Reynolds v. Army & Airforce Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988) (citations omitted); Banks v. United States, 741 F.3d 1268, 1277 (Fed. Cir. 2014). This Court must liberally construe the filings of pro se plaintiffs. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, a pro se plaintiff still has the burden of establishing this Court's jurisdiction by a preponderance of the evidence. Reynolds, 846 F.2d at 748; Curry v. United States, 787 F. App'x 720, 722 (2019) (citing Kelly v. Sec'y U.S. Dep't of Labor, 812 F.2d 1378, 1380 (Fed. Cir. 1987)). As with all other litigants, this Court must have jurisdiction over claims brought by pro se litigants. See Reynolds, 846 F.2d at 748.

In order to fall within the Tucker Act's waiver of sovereign immunity, a plaintiff's claim for money damages against the United States must be based upon an express or implied contract, or a money-mandating constitutional provision, statute, or regulation. See 28 U.S.C. §1491(a); Mitchell, 463 U.S. at 216-18. In the...