Vir v. United States, 15-73T

• Decision Date: 22 February 2016
• Docket Number: No. 15-73T,15-73T
• Parties: JAY R. VIR, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

JAY R. VIR, Plaintiff, v. UNITED STATES, Defendant.

No. 15-73T

United States Court of Federal Claims

February 22, 2016

Tax; Motion to Dismiss; RCFC 12(b)(1); 26 U.S.C. § 6672; Trust Fund Recovery Penalty; Full Payment Rule; Divisible Taxes.

Joyce Rebhun, Beverly Hills, CA for the plaintiff.

Matthew D. Lucey, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C. for the defendant. With him were Caroline D. Ciraolo, Acting Assistant Attorney General, David I. Pincus, Chief, Court of Federal Claims Section, and G. Robson Steward, Assistant Chief, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C.

OPINION

HORN, J.

FINDINGS OF FACTS

This is a tax refund case involving the trust fund recovery penalty assessed under 26 U.S.C. § 6672 (2012).¹ Plaintiff Jay R. Vir was formerly an officer of his employerNGTV.² While plaintiff was an officer, NGTV did not pay its employment taxes for the quarters ending December 31, 2008, March 31, 2009, June 30, 2009, and September 30, 2009. Based on the failure to pay these taxes, on April 19, 2012, the Internal Revenue Service (IRS) assessed trust fund recovery penalties in the amount of $130,437.41 against plaintiff personally, pursuant to 26 U.S.C. § 6672. Plaintiff alleges that, on or about May 7, 2012, plaintiff paid the IRS $400.00, which he alleges in his complaint, without further elaboration or naming the employee, "represents employment and withholding taxes for one employee for each of the four quarters." Plaintiff also alleges that, on May 7, 2012, he filed four claims, one for each of the periods at issue, seeking a refund and an abatement of the entire amount of the employment taxes assessed by the IRS. Plaintiff has included, as exhibits to his complaint, what he alleges are the claims he submitted to the IRS using IRS Form 843. The "Explanation" portion of each of plaintiff's Forms 843 states, in language which is identical except for the date given:

Taxpayer was erroneously assessed the Trust Fund Recovery Penalty (fka 100% penalty) for the period the period [sic] ended [sic]: 12/31/08 [or 03/30/09 [sic] or 6/30/09 or 9/30/09]. Taxpayer was not responsible for collecting accounting and paying over employment taxes. Mr. Vir is making a nominal payment on the withheld tax for one employee for one quarter of liability and requests an abatement for reasons explained in attached memorandum/affidavit.

Notably, the Forms 843 nowhere provide the name of the employee whose withheld tax the "nominal payment" that was being made allegedly represented. Four identical "Memorand[a] of Law" are attached to the four Forms 843, which plaintiff included with his complaint.³ In the memoranda, plaintiff's attorney describes how NGTV suffered a number of financial setbacks in 2009 which prevented NGTV and plaintiff from paying NGTV's employment taxes to the IRS. The memoranda then argue that 26 U.S.C. § 6672 is inapplicable to plaintiff.

The IRS notified plaintiff that his claims had been denied in a letter dated August 29, 2012 and that his appeal had been denied in a letter dated June 6, 2013. In the June 6, 2013 letter, the IRS explained its reasons for denying plaintiff's appeal as follows:

You did not provide any new evidence with your claim for refund. You did not provide any new evidence during the face-to-face hearing on April 30, 2013. During the conference you indicated that you can provide evidencethat you were not responsible for non payment of taxes - a written order assigning receivership rights to a third party and proof that you were instructed by that party not to pay the payroll taxes. You were given 10 days to provide that information, however as of today, May 23, 2013, I have not received that evidence.

The June 6, 2013 letter to plaintiff from the IRS also states that the "Claim Amount(s)" involved in plaintiff's appeal was $129,308.41. (emphasis in original). No explanation is provided in plaintiff's complaint, the June 6, 2013 letter, or any of the other documents attached to plaintiff's complaint as to why this amount is less than the $130,437.41 the IRS originally assessed against plaintiff on April 9, 2012.

In the three page complaint filed in this court, plaintiff alleges that he "is not a person responsible for collecting, according [sic] for, and paying over employment and withholding taxes" and that the trust fund recovery penalty was assessed against him by the IRS "erroneously and illegally." Plaintiff requests a judgment against the United States "in the amount of $129,308.41 (the amount of the trust fund penalty assessed against his account pursuant to Internal Revenue Code Section 6672) and the refund of $400.00 in employment taxes paid on Forms 843 or such larger amount as is legally refundable, plus interest and costs." (emphasis in original). Defendant filed an answer along with a counterclaim. In its counterclaim, defendant alleges that plaintiff was required to collect, truthfully account for, and pay over employment taxes for NGTV for the tax periods ending December 31, 2008, March 31, 2009, June 30, 2009, and September 30, 2009, but willfully failed to do so. Defendant alleges that, on April 9, 2012, plaintiff was assessed trust fund recovery penalties pursuant to 26 U.S.C. § 6672 in the total amount of $130,437.41 and requests judgment in this amount and assessed interest minus the payments that defendant has already made.⁴

After a status conference with the attorneys for both plaintiff and defendant, the court issued an order setting a briefing schedule and ordering plaintiff and plaintiff's attorney to "provide defendant and the court with a copy of the pay stubs relating to the employee identified as the individual for whom tax was paid in order to allow plaintiff to potentially satisfy the jurisdictional requirements for filing suit in this court." No such pay stubs were provided to the court nor was an explanation for failing to do so provided by plaintiff or his attorney. Defendant ultimately filed a motion to dismiss plaintiff's complaint under Rule 12(b)(1) (2015) of the Court of Federal Claims (RCFC) for lack of subject matter jurisdiction. Plaintiff filed an opposition to defendant's motion to dismiss and an answer to defendant's counterclaim, and defendant filed a reply to plaintiff's opposition.

DISCUSSION

It is well established that "'subject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived.'" Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006) (quoting United States v. Cotton, 535 U.S. 625, 630 (2002)). "[F]ederal courts have an independent obligation to ensure that they do not exceed the scope of their jurisdiction, and therefore they must raise and decide jurisdictional questions that the parties either overlook or elect not to press." Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197, 1202 (2011); see also Gonzalez v. Thaler, 132 S. Ct. 641, 648 (2012) ("When a requirement goes to subject-matter jurisdiction, courts are obligated to consider sua sponte issues that the parties have disclaimed or have not presented."); Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010) ("Courts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it." (citing Arbaugh v. Y & H Corp., 546 U.S. at 514)); Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1342 (Fed. Cir. 2001) ("[A] court has a duty to inquire into its jurisdiction to hear and decide a case." (citing Johannsen v. Pay Less Drug Stores N.W., Inc., 918 F.2d 160, 161 (Fed. Cir. 1990))); View Eng'g, Inc. v. Robotic Vision Sys., Inc., 115 F.3d 962, 963 (Fed. Cir. 1997) ("[C]ourts must always look to their jurisdiction, whether the parties raise the issue or not."). "Objections to a tribunal's jurisdiction can be raised at any time, even by a party that once conceded the tribunal's subject-matter jurisdiction over the controversy." Sebelius v. Auburn Reg'l Med. Ctr., 133 S. Ct. 817, 824 (2013); see also Arbaugh v. Y & H Corp., 546 U.S. at 506 ("The objection that a federal court lacks subject-matter jurisdiction . . . may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment."); Cent. Pines Land Co., L.L.C. v. United States, 697 F.3d 1360, 1364 n.1 (Fed. Cir. 2012) ("An objection to a court's subject matter jurisdiction can be raised by any party or the court at any stage of litigation, including after trial and the entry of judgment." (citing Arbaugh v. Y & H Corp., 546 U.S. at 506-07)); Rick's Mushroom Serv., Inc. v. United States, 521 F.3d 1338, 1346 (Fed. Cir. 2008) ("[A]ny party may challenge, or the court may raise sua sponte, subject matter jurisdiction at any time." (citing Arbaugh v. Y & H Corp., 546 U.S. at 506; Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir.), reh'g and reh'g en banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1127 (2005); and Fanning, Phillips & Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998))); Pikulin v. United States, 97 Fed. Cl. 71, 76, appeal dismissed, 425 F. App'x 902 (Fed. Cir. 2011).

A plaintiff need only state in the complaint "a short and plain statement of the grounds for the court's jurisdiction," and "a short and plain statement of the claim showing that the pleader is entitled to relief." RCFC 8(a)(1), (2) (2015); Fed. R. Civ. P. 8(a)(1), (2) (2016); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-57, 570 (2007)). "Determination of jurisdiction starts with the complaint, which must be well-pleaded in that it must state the necessary elements of the plaintiff's claim, independent of any defense that may be interposed." Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir.) (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1 (1983)), reh'g denied (Fed. Cir. 1997); see...