Video Training Source, Inc. v. U.S., Civ.A. 96-B-2820.

• Decision Date: 28 January 1998
• Docket Number: No. Civ.A. 96-B-2820.,Civ.A. 96-B-2820.
• Citation: 991 F.Supp. 1256
• Parties: VIDEO TRAINING SOURCE, INC., a Colorado Corporation, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Colorado

991 F.Supp. 1256

VIDEO TRAINING SOURCE, INC., a Colorado Corporation, Plaintiff, v. UNITED STATES of America, Defendant.

No. Civ.A. 96-B-2820.

United States District Court, D. Colorado.

January 28, 1998.

COPYRIGHT MATERIAL OMITTED

James F. Frost, Wheat Ridge, CO, for Plaintiff.

Arthur P. Yoon, Trial Attorney, Tax Division, U.S. Department of Justice, Washington, DC, William G. Pharo, Assistant U.S. Attorney, Denver, CO, for Defendant.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

The United States of America (the government) moves to dismiss this case for lack of subject matter jurisdiction pursuant to Fed. R.Civ.P. 12(b)(1). The motion is inadequately briefed but oral argument would only confuse its resolution. For the reasons set forth below, which state a case for a simple tax code, I grant the government's motion to dismiss.

I. FACTS

The record reflects the following undisputed facts. Plaintiff, Video Training Source, Inc. (VTS), lost all of its records relating to the tax year ending on December 31, 1990 (tax year 1990). The loss of these records prevented VTS from filing its corporate income tax return for tax year 1990 in a timely manner. VTS filed an application for an automatic extension with the Internal Revenue Service (the IRS) on March 18, 1991. (Compl.¶¶ 6-7.)

Simultaneously, on March 18, 1991, VTS paid $4,000.00 to the IRS, which amount the IRS deemed an "initial installment payment" for tax year 1990. On April 22, 1991, the IRS granted VTS's application for an extension of time in which to file its 1990 corporate tax return, up to and including September 15, 1991. However, VTS failed to file its 1990 return until October 26, 1994. (Compl. ¶ 7; Def.'s Brf. in Supp. of Mot. Dismiss ¶ 4.) The record does not disclose what occurred between September 15, 1991 and October 26, 1994.

The 1990 return reported VTS incurred no income tax liability for tax year 1990. The 1990 return also requests a credit or refund for the overpayment of $4,000.00. (1990 Return, Decl. of Yoon in Supp. of Mot. Dismiss, Ex. A.) Shortly after VTS filed its 1990 return, the IRS sent a letter to VTS denying VTS's refund claim as untimely.

VTS commenced this action on December 6, 1996, seeking a refund of $4,000 from the government. VTS alleges that the Internal Revenue Code (the Code) excuses late filing of a refund claim "for good cause shown." VTS avers that jurisdiction is proper pursuant to 28 U.S.C. § 1346(a)(1).

II. LEGAL STANDARDS APPLICABLE TO MOTIONS TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

As courts of limited jurisdiction, federal courts may only adjudicate cases that the Constitution and Congress have granted them authority to hear. Todd Holding Co., Inc. v. Super Valu Stores, Inc., 744 F.Supp. 1025, 1026 (D.Colo.1990). When a party moves to dismiss a pleading because the pleading does not establish sufficient grounds for the court's jurisdiction, whether the district court has jurisdiction "must be determined from the allegations of fact in the complaint, without regard to mere conclusory allegations of jurisdiction." Groundhog v. Keeler, 442 F.2d 674, 677 (10th Cir.1971). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. See Basso v. Utah Power and Light Co., 495 F.2d 906, 909 (10th Cir.1974). A party may attack the factual assertions regarding subject matter jurisdiction through affidavits and other documents. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). Though the district court may consider evidence outside the pleadings, the motion is not converted to a motion for summary judgment under Fed.R.Civ.P. 56. Holt at 1003.

III. JURISDICTION

The United States may not be sued without its consent. See Fostvedt v. United States, 978 F.2d 1201, 1202 (10th Cir.1992). A waiver of sovereign immunity must be strictly construed in favor of the sovereign and may not extend beyond the explicit language of the statute. Fostvedt at 1203. Consequently, a taxpayer must show an express waiver or sovereign immunity authorizing an action against the government. Lonsdale v. United States, 919 F.2d 1440, 1444 (10th Cir.1990). If waiver does not exist, the district court must dismiss the action for lack of subject matter jurisdiction. Atkinson v. O'Neill, 867 F.2d 589, 590 (10th Cir.1989).

VTS alleges that subject matter jurisdiction exists pursuant to is 28 U.S.C. § 1346, which states in relevant part:

The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:

(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws;

28 U.S.C. § 1346(a)(1) (1994). Though VTS meets the general criteria of § 1346(a)(1), VTS must also establish that it filed a timely claim for refund or credit with the IRS in accordance with Code §§ 7422(a) and 6511(a). Sections 1346(a)(1), 7422(a), and 6511(a) together establish a limitations period for the filing of refund claims. See United States v. Dalm, 494 U.S. 596, 602, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990) ("unless a claim for refund of a tax has been filed within the time limits imposed by § 6511(a), a suit for refund ... may not be maintained in any court"); accord C.I.R. v. Lundy, 516 U.S. 235, 116 S.Ct. 647, 651, 133 L.Ed.2d 611 (1996).

I conduct a three-step analysis to determine whether VTS filed a timely refund claim. First, I determine whether the $4,000.00 paid by VTS on March 18, 1991 constitutes an "overpayment" as defined by the Code. If the amount paid by VTS does not constitute an "overpayment," then VTS may not seek a refund or credit of this amount. I.R.C. § 6511(a). Second, I consider whether VTS filed a refund claim, regardless of its timeliness. If VTS failed to file a refund claim, this court does not have jurisdiction over VTS's complaint. I.R.C. §§ 6511(a) and 7422(a). Third, I determine whether VTS filed its refund claim in a timely manner. A timely refund claim is a jurisdictional prerequisite to maintaining a tax refund suit in district court. Angle v. United States, 996 F.2d 252, 253 (10th Cir.1993); I.R.C. § 7422(a) (1994). If VTS fails to meet any of these three criteria, then the district court does not have subject matter jurisdiction over VTS's claim.

a. Existence of an "Overpayment"

A corporation that overpays its income taxes may generally obtain a refund or credit of the overpayment through administrative action or, if necessary, a refund suit. Section 6401 of the Code describes certain specific items that constitute overpayments, but there is no specific statutory definition of the term "overpayment." The only relevant provision of section 6401 states: "An amount paid as a tax shall not be considered not to constitute an overpayment solely by reason of the fact there was no tax liability in respect of which such amount was paid." I.R.C. § 6401(c) (1994); Treas.Reg. § 301.6401-1(b) (as amended 1985). Resisting temptation to editorialize about this language, I will note only that Congress' use of a double negative in section 6401(c) apparently limits the provision's scope. Section 6401(c) states what shall not constitute an "overpayment," but does not define an "overpayment." Section 6401, therefore, provides no guidance.

The Supreme Court, however, has interpreted the term "overpayment" to mean "any payment in excess of that which is properly due." Jones v. Liberty Glass Co., 332 U.S. 524, 531, 68 S.Ct. 229, 92 L.Ed. 142 (1947). "The common sense interpretation is that a tax is overpaid when a taxpayer pays more than is owed, for whatever reason or no reason at all." Dalm, 494 U.S. at 609 n. 6; see also Bachner v. C.I.R., 109 T.C. 125, 128, 1997 WL 589910 (1997) (declining to accept any argument that the term "overpayment" is specifically and narrowly defined by section 6401).

The IRS does not contend that VTS incurred any tax liability for tax year 1990. Nor does the IRS contend that VTS's $4,000.00 payment relates to another tax year. I conclude, therefore, that VTS's $4,000.00 payment constitutes an "overpayment" for tax year 1990. The overpayment entitles VTS to obtain a refund or credit if VTS filed a refund claim within the appropriate period of time.

b. Existence of a Refund "Claim"

When a taxpayer files a tax return with the IRS, the tax return constitutes a "claim" if the return references an overpayment. The Treasury Regulations state: "in the case of an overpayment of income taxes, a claim for credit or refund of such overpayment shall be made on the appropriate income tax return." Treas.Reg. § 301.6402-3(a)(1) (as amended 1985). The purpose of this regulation is to simplify the refund procedure when the tax paid exceeds tax liability. "Thus, rather than file a separate claim for refund, a taxpayer may use his tax return as the refund claim." Simmons v. United States, 29 Fed.Cl. 136, 139 (1993) (citations omitted); see also Rev.Rul. 54-469, 1954-2 C.B. 248. VTS's 1990 return, therefore, constitutes a refund claim even though VTS filed its 1990 return in 1994.

A taxpayer may also file an "informal claim." A written statement constitutes an informal claim if the statement informs the IRS of a specific amount and a basis for the refund. United States v. Kales, 314 U.S. 186, 195, 62 S.Ct. 214, 86 L.Ed. 132 (1941); Estate of Hale v. United States, 876 F.2d 1258, 1262 (6th Cir.1989); Vandamme v. United States, Dept. of Treasury, 1995 WL 452982, *3, 75 AFTR2d 95-2742 (E.D.Tenn.). Though a claim need not cite specific legal authority for a refund, a claim should set forth the grounds upon which the claim is based. Estate of Hale at 1262.

VTS's request for an extension of time in which to file its 1990 return, filed on Form 7000 and...