Taha v. United States
| Decision Date | 07 March 2022 |
| Docket Number | 2020-2061 |
| Citation | 28 F.4th 233 |
| Parties | Ali M. TAHA, on Behalf of his Deceased Brother and his Brother's Wife, Plaintiff-Appellant v. UNITED STATES, Defendant-Appellee |
| Court | U.S. Court of Appeals — Federal Circuit |
Kara Rollins, New Civil Liberties Alliance, Washington, DC, argued for plaintiff-appellant. Also represented by Richard Abbott Samp.
Matthew Steven Johnshoy, Tax Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by David A. Hubbert, Joan I. Oppenheimer.
Before Prost, Reyna, and Hughes, Circuit Judges.
Appellant Ali M. Taha1 appeals a decision by the United States Court of Federal Claims, dismissing his lawsuit seeking refunds for taxes paid for the 2003 tax year. This is the second time we entertain this action on appeal. Previously, we remanded to the Court of Federal Claims for resolution of a factual issue on whether Appellant filed a timely refund claim for the 2003 tax year. The Court of Federal Claims held a trial on remand and dismissed the action for lack of subject-matter jurisdiction on grounds that Appellant failed to establish that a 2003 refund claim was filed. The Court of Federal Claims further determined that even if a 2003 tax refund claim were filed in November 2007, as Appellant alleges, the filing would have been untimely. We affirm.
From 2002 to 2004, Mohamad Taha was a 10% shareholder of Atek Construction, Inc. ("Atek") but had no direct role in its operations. J.A. 199, 305–08, 317–19. Mohamad reportedly earned shareholder income of $85,010 in 2002 and $77,813 in 2003. J.A. 150, 581–82. He filed 2002 and 2003 tax returns with the Internal Revenue Service ("IRS") on April 3, 2003, and April 14, 2004, respectively, paying the taxes due on the full amount of reported shareholder income for each year. J.A. 581–82. He did not file a return for the 2004 tax year by the due date because he allegedly had no income to report. See J.A. 589–90.
Appellant claims that Mohamad did not receive the full amount of reported shareholder income on which he paid taxes. Instead, he received only $20,000 from Atek before the company was taken over and shut down by bonding insurance companies in 2004. See J.A. 96, 122, 150, 1187. In 2007, Mohamad (with Appellant's help) sought a refund for overpaid taxes by filing amended tax returns and deducting the unpaid income as bad debt. J.A. 202, 263–64.
The parties dispute whether Taha filed an amended tax return (i.e., tax refund claim) for the 2003 tax year. They agree that the IRS received amended tax returns for the 2002 and 2004 tax years and disallowed both refund claims. Appellant alleges that an amended 2003 tax return was also mailed to the IRS around the same time the amended 2002 tax return was mailed. J.A. 202, 212–13, 264–65. The IRS maintains that it never received an amended tax return for the 2003 tax year and, consequently, there is no record of the IRS disallowing the 2003 refund claim. See J.A. 983–85.
In May 2017, Appellant filed the underlying action in the U.S. District Court for the Middle District of Florida seeking a refund of taxes paid by Mohamad for the 2002 and 2003 tax years, based on tax refund claims from 2002, 2003, and 2004. See Taha v. United States , 137 Fed. Cl. 462, 464–65 (2018). In September 2017, the case was transferred to the United States Court of Federal Claims. Id. at 463. In April 2018, the Court of Federal Claims dismissed the action for lack of subject-matter jurisdiction. Id. at 469.
In December 2018, we affirmed the judgment of the Court of Federal Claims to dismiss the causes of action based on the 2002 and 2004 refund claims. Taha v. United States , 757 F. App'x 947, 951–52 (Fed. Cir. 2018). We vacated the dismissal of the action as to the 2003 refund claim and remanded to the Court of Federal Claims to resolve three factual questions: (1) whether Appellants filed a 2003 claim, and, if so, (2) whether the 2003 claim was timely, and (3) whether the IRS disallowed the 2003 claim. Id. at 952.
On remand, Appellant proffered circumstantial evidence to show that he had filed a 2003 refund claim in November 2007. Taha v. United States , 148 Fed. Cl. 37, 42 (2020). Appellant relied on the common-law mailbox rule, which provides that evidence of proper mailing, even testimonial or circumstantial evidence, can create a rebuttable presumption that a document was mailed, and that the mailed document was delivered in the time it would ordinarily take to arrive. See id. at 42–43 ; Phila. Marine Trade Ass'n-Int'l Longshoremen's Ass'n Pension Fund v. Comm'r of Internal Revenue Serv. , 523 F.3d 140, 147 (3d Cir. 2008) (citing Rosenthal v. Walker , 111 U.S. 185, 193, 4 S.Ct. 382, 28 L.Ed. 395 (1884) ; Hagner v. United States , 285 U.S. 427, 430, 52 S.Ct. 417, 76 L.Ed. 861 (1932) ). Appellant further maintained that, apart from the common law-mailbox rule, a November 2007 filing would have been timely because it was submitted within the seven-year deadline for seeking a refund for bad business debt, pursuant to IRC §§ 6511(d)(1) and 166. Taha , 148 Fed. Cl. at 44.
The Court of Federal Claims determined that Appellant's reliance on the common-law mailbox rule to establish proof of mailing was misplaced. Id. at 42–44. The Court of Federal Claims determined that IRC § 7502, as interpreted by Treasury Regulation § 301.7502–1(e)(2)(i), displaced the common-law mailbox rule for determining IRS filing dates. On that basis, the Court of Federal Claims found that Appellant could not avail himself of the common-law mailbox rule to satisfy the burden of showing that a 2003 tax refund claim was filed in November 2007.
The Court of Federal Claims alternatively concluded that dismissal of Taha's action was appropriate because even if Appellant filed a tax refund claim in November 2007, he failed to show that the tax refund claim was filed within the three-year limitations period set by IRC § 6511. Id. at 44–45. In addition, the Court of Federal Claims concluded that the money at issue was not "business debt" and, thereby, Taha was not entitled to a longer, seven-year limitations period. Id.
Because filing a timely refund claim is a prerequisite for bringing a refund action, the Court of Federal Claims on remand dismissed the action for lack of subject-matter jurisdiction. Id. Appellant challenges the dismissal on remand. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
We review the Court of Federal Claims' legal conclusions de novo and its factual findings for clear error. Casitas Mun. Water Dist. v. United States , 708 F.3d 1340, 1351 (Fed. Cir. 2013) (citing Est. of Hage v. United States , 687 F.3d 1281, 1285 (Fed. Cir. 2012) ). Whether a document was actually mailed on a given date is a question of fact. See Rosenthal , 111 U.S. at 193–94, 4 S.Ct. 382. The ultimate conclusion of whether the Court of Federal Claims properly dismissed an action for lack of jurisdiction is a question of law, which we review de novo. Walby v. United States , 957 F.3d 1295, 1298 (Fed. Cir. 2020).
Appellant argues that the Court of Federal Claims erred with respect to both of its alternative rulings. First, Appellant contends that the Court of Federal Claims erred when it rejected testimonial evidence that a tax refund claim was filed in November 2007 on grounds that the common-law mailbox rule did not apply in this case. Appellant argues that the Court of Federal Claims should have accepted his evidence of filing because IRC § 7502 does not displace the common-law mailbox rule. He also maintains that a November 2007 filing date would have been timely because it falls within the seven-year extension applicable to tax refund claims involving bad business debt. We first address Appellant's bad debt argument.
A taxpayer can bring a tax refund action against the government only after filing a timely refund claim with the IRS. 26 U.S.C. § 7422(a) ; United States v. Clintwood Elkhorn Min. Co. , 553 U.S. 1, 4–5, 128 S.Ct. 1511, 170 L.Ed.2d 392 (2008). To be considered timely, a refund claim must ordinarily be filed "within 3 years from the time the return was filed or 2 years from the time the tax was paid," whichever is longer. 26 U.S.C. § 6511(a). It is undisputed that the 2003 refund claim was not filed within the general three-year deadline for filing set forth in § 6511(a). Mohamad filed his 2003 tax return on April 14, 2004, and Appellant alleges that the 2003 refund claim was filed on November 29, 2007, more than three years after the tax return was filed and more than two years after the tax was paid. See Taha , 137 Fed. Cl. at 464.
There are exceptions to the general three-year rule. IRC § 6511(d)(1)(A) provides two instances in which a seven-year limitations period may apply:
26 U.S.C. § 6511(d)(1) (emphases added). This provision extends the time for filing a refund claim from three years to seven years from the date the tax return was due: (1) where the refund relates to "bad debt" that became worthless and therefore subject to deduction under IRC § 166 or IRC § 832(c) (); or (2) where the refund relates to a "loss from worthlessness of a security" that is subject to deduction under IRC § 165(g).
IRC § 6511(d)(2) also provides an extended filing period for a refund claim that "relates to an overpayment attributable to a net operating loss carryback or a capital loss...
To continue reading
Request your trial