Tiernan v. United States
| Decision Date | 12 November 2013 |
| Docket Number | No. 12-850T,12-850T |
| Parties | TERESA TIERNAN, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Claims for refund of income tax;
application of I.R.C. § 7422(a), the full
payment rule, and the "look back"
provisions of I.R.C. § 6511(b); penalties
imposed under I.R.C. § 6702
Teresa Tiernan, pro se, Centredale, Rhode Island.
Karen Servidea, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C., for defendant. With her on the briefs were Kathryn Keneally, Assistant Attorney General, David I. Pincus, Chief, and G. Robson Stewart, Assistant Chief, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C.
In this tax case, plaintiff, Teresa Tiernan, requests a refund of income taxes that were collected by levy against her assets, including her house, as well as damages for the allegedly wrongful imposition of liens and levies instituted against her.1 Pending before the court is the government's motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Rules of the Court of Federal Claims ("RCFC") or, alternatively, for failure to state a claim upon which relief can be granted pursuant to RCFC 12(b)(6).
Ms. Tiernan did not timely submit an income tax return for a number of the pertinent tax years, and the Internal Revenue Service ("IRS") for those years prepared substitute tax returns for her. Based upon the IRS's Certificates of Assessments and Payments and administrative files, the following charts describe Ms. Tiernan's tax and penalty activity for the relevant tax years. The first chart shows the dates (1) of the IRS's completion of substitute returns, (2) of Ms. Tiernan's submission of returns or amended returns, (3) of the full payment, if applicable, of tax liability, and (4) of the most recent part payment if Ms. Tiernan has not fully paid the resulting tax liability:
Tax Year
Date IRS completed substitute returns2
Date Ms. Tiernan filed return(s)3
Date of full
payment
Date of last part payment
2002
1/28/2005
None
12/14/2010
—
20034
1/28/2005
9/11/2009, 11/23/20105
12/13/2011
—
2004
—
11/25/2008, 11/28/2010
—
12/10/2012
2005
6/27/2007
11/23/2010
9/11/2012
—
2006
2/27/2008
2/3/2011
—
9/11/2012
2007
10/21/2009
11/28/2010
—
—
2008
9/30/2010
11/13/2010
—
10/15/2012
2009
—
2/2/2011
—
See Def.'s Mot. at 4-8 & App. B, Ex. 1-8.
Shown in the following chart is a summary of penalties imposed by the IRS, the date each penalty was imposed, the authority cited for imposing the penalties, and the amount of each penalty:
Year
Penalty Type
Date Imposed
Authority Cited
Amount
2002
Filing Frivolous Return
11/23/2009
5,000
2003
Filing Frivolous Return
2/8/2010
5,000
2005
Filing Frivolous Return
3/29/2010
5,000
2007
Filing Frivolous Return
1/4/2010
5,000
2007
Filing Frivolous Return
10/18/2010
5,000
2007
Filing Frivolous Return
8/1/2011
See Def.'s Mot. at 4-8 & App. B, Ex. 11-14. Ms. Tiernan has made no payments toward any of the penalties except for part of the penalty assessed in 2009, for the 2002 tax year, amounting to $1,265.42. Id., App. B at B-62.
This court derives its jurisdiction over federal tax refund cases from the Tucker Act, 28 U.S.C. § 1491(a)(1). See Ledford v. United States, 297 F.3d 1378, 1382 (Fed. Cir. 2002); Heger v. United States, 103 Fed. Cl. 261, 263 (2012). In such cases, the plaintiff bears the burden to prove that each claim falls within this jurisdictional grant. See Barrett v. Nicolson, 466 F.3d 1038, 1041 (Fed. Cir. 2006) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 188-89 (1936)). When deciding a motion to dismiss, the court will construe all unchallenged allegations in the complaint in favor of the pleader, but disputed jurisdictional facts must be proved by a preponderance of the evidence. See Hamlet v. United States, 873 F.2d 1414, 1416 (Fed. Cir. 1989) (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)); see also Nez Perce Tribe v. United States, 83 Fed. Cl. 186, 188 (2008). In this instance, the court will construe Ms. Tiernan's pro se pleadings liberally, but this leniency cannot relieve the plaintiff of her burden to prove jurisdiction. See Heger, 103 Fed. Cl. at 263 (citing Jackson v. United States, 100 Fed. Cl. 34, 39 (2011)). Ms. Tiernan's complaint engenders three jurisdictional questions.
26 U.S.C. § 7422(a). Consequently, Ms. Tiernan, in seeking to establish subject matter jurisdiction in this court for a tax refund claim, must demonstrate that she has first filed her claim with the Secretary of the Treasury as required by Section 7422. Clintwood Elkhorn, 553 U.S. at 7-8; Diamond, 107 Fed. Cl. at 705.
Second, Ms. Tiernan must demonstrate compliance with the "full payment rule," i.e., to seek a refund she must first have fully paid the pertinent tax liability. Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993) (citing Flora v. United States, 362 U.S. 145, 150 (1960)); see also Brach v. United States, 98 Fed. Cl. 60, 65-66 (2011), aff'd on other grounds, 443 Fed. Appx. 543 (Fed. Cir. 2011).
Finally, the court's jurisdiction over tax refund claims is subject to the statute of limitations expressed in I.R.C. § 6511. Section 6511(a) requires that a refund claim must "be filed . . . 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); see Dumont, 85 Fed. Cl. at 428. Under the relevant Treasury regulations, the filing of a tax return seeking a refund "constitute[s] a claim for refund or credit . . . for the amount of the overpayment disclosed by such return." 26 C.F.R. § 301.6402-3(a)(5).
Ms. Tiernan has never filed a tax return for the tax year 2002, nor has she filed any other documentation which could be construed as a claim for a tax refund for this particular year. The government asserts that Ms. Tiernan has not established jurisdiction over any claims for a tax refund for that year because she has not complied with the requirements of Section 7422 by filing a claim with the IRS. Def.'s Reply to Pl.'s Resp. to Mot. to Dismiss ("Def.'s Reply") at 3. That contention is well taken. Ms. Tiernan has failed to establish that the court has jurisdiction over her claim for the tax year 2002.
The "variance doctrine" is a corollary derived from Section 7422 that "bars a taxpayer from presenting claims in a tax refund suit that 'substantially vary' the legal theories and factual bases set forth in the tax refund claim presented to the I.R.S." Lockheed Martin Corp. v. United States, 210 F.3d 1366, 1371 (Fed. Cir. 2000) (citing Cook v. United States, 599 F.2d 400, 406 (Cl. Ct. 1979)); see also Heger, 103 Fed. Cl. at 263-64. A Treasury Regulation requires ataxpayer who seeks a refund to "set forth in detail each ground upon which a . . . refund is claimed and facts sufficient to apprise the [IRS] of the exact basis thereof." 26 C.F.R. § 301.6402-2(b)(1). In essence, Ms. Tiernan cannot present theories or factual bases for refund claims in this court that have not previously been presented to the IRS. Ms. Tiernan alleges that she is not subject to federal tax laws because she is not a citizen of the United States but rather is an "American National." Compl. at 1.6 This contention does not appear in any of her tax return filings. See Def.'s Reply, Ex. A. Consequently, the court finds, as an alternative ground for dismissal of all of Ms. Tiernan's claims, that she has presented her claims for refund in this court on a ground that varies from those in the returns she filed, and therefore the court cannot exercise jurisdiction over any of her claims.
The government argues that the court cannot exercise jurisdiction over Ms. Tiernan's tax refund claims for the tax years 2004, 2006, 2007, 2008, and 2009 because the tax liability for those years has not been paid in full. Def.'s Mot. at 13-14. Ms. Tiernan does not contest this point, and the tax records provided to the court for those years show balances that have not been paid. The court accordingly concurs that subject matter jurisdiction for Ms. Tiernan's refund claims has not been established for tax years 2004, 2006, 2007, 2008, and 2009.
For the 2003 and 2005 tax years, Ms. Tiernan has fully paid her tax liability. The government argues that her claims for these tax years should be dismissed for failure to state a claim because her recovery would be limited to $0 under the "look back" provisions of Section 6511(b). Def.'s Mot. at 14; Def.'s Reply at 6.7 Section 6511(b) contains two look-back provisions which limit recovery of a refund. If a claim is filed within three years of the taxreturn, then the taxpayer is...
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