Murdock v. United States
| Decision Date | 09 February 2012 |
| Docket Number | No. 11-326T,11-326T |
| Parties | VICTORIA LYNN MURDOCK, trustee of the John S. Murdock Inter Vivos Trust, Plaintiff, v. UNITED STATES, Defendant. |
| Court | Court of Federal Claims |
Motion to dismiss tax-refund suit as untimely under I.R.C. § 6511(b)(2)(A); limitations on filing a claim stated in I.R.C. §§ 6511(a) and 6511(b)(1); limitations on availability of a refund stated in I.R.C. § 6511(b)(2); tolling due to financial disability under I.R.C. § 6511(h)
Victoria Lynn Murdock, pro se, Eagle Rock, California.
Mark A. Ryan, Attorney, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C., for defendant. With him on the briefs were John A. DiCicco, Principal Deputy Assistant Attorney General, Tax Division, and Mary M. Abate, Acting Chief, and G. Robson Stewart, Assistant Chief, Court of Federal Claims Section, United States Department of Justice, Washington, D.C.
Plaintiff Victoria Lynn Murdock, trustee of the John S. Murdock Inter Vivos Trust, seeks the refund of $3,973 in taxes allegedly overpaid by Mr. Murdock for tax years 2001 through 2004. The United States ("the government") has moved to dismiss the complaint as untimely, contending that 26 U.S.C. ("I.R.C.") § 6511(b)(2) precludes any recovery. Ms. Murdock responds that the tolling provision of I.R.C. § 6511(h) applies, preserving the viability of her suit. After briefing and a hearing, the government's motion is ready for disposition.
John S. Murdock died on May 4, 2006 at the age of 90. Compl. ¶ 4. His daughter, Victoria Lynn Murdock, was appointed trustee of the "John S. Murdock Inter[ V]ivos Trust" by the Los Angeles Superior Court on December 30, 2008. Def.'s Mot. to Dismiss ("Def.'s Mot.")Ex. 1. Soon after, in January 2009, Ms. Murdock discovered that her father had failed to file returns for tax years 2001 through 2006. Compl. ¶¶ 17, 35, 38. The Internal Revenue Service ("IRS") had withheld income tax from Mr. Murdock's pension disbursements for each of those years. See Hr'g Tr. 33:2-13 (Jan. 24, 2012);1 see, e.g., Def.'s Mot. Ex. 2, at A4. Ms. Murdock alleges that her father's failure to file returns was attributable to his advanced age, medical ailments, and alcoholism. Compl. ¶¶ 14, 21.2 Thereafter, in September 2009, Ms. Murdock filed returns on behalf of her father for the pertinent years. Compl. ¶ 18. The returns for tax years 2001 through 2004 requested refunds totaling $3,973. Compl. ¶ 38.
The IRS denied the refunds and thereafter also denied an appeal on the ground that the refund request was untimely under I.R.C. § 6511. Compl. ¶ 39. On May 20, 2011, Ms. Murdock brought suit in this court. Ms. Murdock contends that that her refund requests are timely because her father's disabilities served to toll the time limitations on returns and refund requests set out in I.R.C. § 6511. See Compl. ¶ 40; Compl. Prayer for Relief ¶¶ 1-3. The government disagrees and has moved under Rules 12(b)(1) and 12(b)(6) of the Rules of the U.S. Court of Federal Claims ("RCFC") to dismiss Ms. Murdock's complaint as untimely.
The provisions governing the jurisdiction and timing of tax-refund suits are "not simple." United States v. Brockamp, 519 U.S. 347, 350 (1997), superseded in part by statute, i.e., the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, § 3202, 112 Stat. 685, 740-41, as recognized in Brosi v. Commissioner, 120 T.C. 5, 12 n.6 (2003). The Tucker Act, 28 U.S.C. § 1491(a)(1), grants this court jurisdiction over tax-refund claims. See, e.g., Ledford v. United States, 297 F.3d 1378, 1382 (Fed. Cir. 2002). However, any request for a refund must first be filed with the IRS, see I.R.C. § 7422(a), and, if the requested refund is denied, a suit for the refund must be brought within two years after the denial under I.R.C. § 6532(a)(1).3
In addition, the court's ability to award relief is limited by I.R.C. § 6511. See United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 7-8 (2008) (). Section 6511 contains two sets of provisions related to timeliness. First, the Section contains a filing deadline specifying that unless a "[c]laim . . . [is] filed by the taxpayer within 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," I.R.C. § 6511(a), "[n]o credit or refund [of an overpayment of any tax] shall be allowed," I.R.C. § 6511(b)(1). Second, the Section contains two "look-back periods" which limit recovery. If a claim is filed within 3 years from the time the return was filed, "the amount of the credit or refund shall not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years." I.R.C. § 6511(b)(2)(A). If a claim is not filed within that 3-year period, "the amount of the credit or refund shall not exceed the portion of the tax paid during the 2 years immediately preceding the filing of the claim." I.R.C. § 6511(b)(2)(B); see also Commissioner v. Lundy, 516 U.S. 235, 240 (1996), superseded by statute on other grounds as recognized in Healer v. Commissioner, 115 T.C. 316, 320 (2000).
The two timing components of Section 6511 work together. I.R.C. §§ 6511(a) and 6511(b)(1) require only that a taxpayer bring a claim within three years of filing a return or two years of paying the tax, regardless of the return's actual due date. See VanCanagan v. United States, 231 F.3d 1349, 1351 (Fed. Cir. 2000); Wertz v. United States, 51 Fed. Cl. 443, 446 (2002) (citing McGregor v. United States, 225 Ct. Cl. 566 (1980)); see also Oropallo v. United States, 994 F.2d 25, 30 (1st Cir. 1993) . The look-back provisions of I.R.C. § 6511(b)(2), however, limit refunds to taxes paid within the pertinent look-back window. See Baral v. United States, 528 U.S. 431, 436 (2000) (); Minehan v. United States, 75 Fed. Cl. 249, 254 n.7 (2007).4
The government has not specified whether it seeks dismissal based upon RCFC 12(b)(1) () or RCFC 12(b)(6) (). The distinction may seem academic, especially in terms of the immediate effect in a case. Indeed, "[c]ourts frequently confuse or conflate the distinction between subject matter jurisdiction and the essential elements of a claim for relief." Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1353 (Fed. Cir. 2011) (citing Arbaugh v. Y & HCorp., 546 U.S. 500, 503, 511 (2006); Moden v. United States, 404 F.3d 1335, 1340 (Fed. Cir. 2005)); see also Binderup v. Pathe Exch. Inc., 263 U.S. 291, 307 (1923) (). However, for two reasons, "[m]astering the distinction between a dismissal for lack of jurisdiction and a dismissal on the merits 'is not merely an intellectual exercise without practical utility.'" Engage Learning, 660 F.3d at 1355 (quoting Do-Well Mach. Shop, Inc. v. United States, 870 F.2d 637, 640 (Fed. Cir.1989)). First, a dismissal on the merits, unlike a dismissal for lack of jurisdiction, typically carries res judicata effect. See id. Second, disputed facts are reviewed differently under the two regimes. See id.
The Supreme Court and the Federal Circuit have not squarely addressed this issue as it pertains to I.R.C. § 6511(b)(2). The Supreme Court has twice dismissed suits under Section 6511 for lack of subject matter jurisdiction, but it did so in both instances in light of the provisions of Subsection 6511(a). In each case, the taxpayer had filed a claim more than three years after filing a return or more than two years after submitting a payment. See Brockamp, 519 U.S. at 348-49, 354 (1997);5 United States v. Dalm, 494 U.S. 596, 602 (1990); cf. Clintwood Elkhorn Mining, 553 U.S. at 8-9, 14. The Supreme Court has also dismissed for lack of subject matter jurisdiction a suit that had been filed in Tax Court, presenting circumstances similar to those of the instant case. There, however, the Supreme Court relied upon the Tax Court's unique jurisdictional scheme. See Lundy, 516 U.S. at 240-41 & n.2, 245.6 Additionally, in Baral, the Supreme Court merely held that, for purposes of the look-back periods in I.R.C. § 6511(b)(2)(A), withheld taxes are deemed paid on April 15 of the following year. See Baral, 528 U.S. at 435-36.7
Decisions by judges of this court have diverged over consideration of motions to dismiss tax-refund suits when the government contends recovery is precluded by I.R.C. § 6511(b)(2). In some instances, the issue has been treated as bearing on subject matter jurisdiction. See Plati v. United States, 99 Fed. Cl. 634, 639 (2011); Doyle v. United States, 88 Fed. Cl. 314, 322 (2009); Musungayi v. United States, 86 Fed. Cl. 121, 125 (2009). In other cases, the matter has been treated as relating to whether the claim should be dismissed for failure to state a claim upon which relief can be granted. See Wertz, 51 Fed. Cl. at 447; Rinaldi v. United States, 30 Fed. Cl. 164, 165 n.2 (1993).
The better view is that a defense based upon I.R.C. § 6511(b)(2) should be considered as a motion for dismissal for failure to state a claim. This understanding of I.R.C. § 6511(b)(2) stems from established principles of juridical power, which distinguish between a court's ability to hear a case and to provide relief. As the Supreme Court has noted,...
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