Opinion
Civil Action No. 02-10399-RBC.
The government correctly argues that plaintiffs should have sued the United States as opposed to the Internal Revenue Service and the former Commissioner of the Internal Revenue Service. See 26 U.S.C. § 7422(f)(1) (provides that "[a] suit or proceeding referred to in [ 26 U.S.C. § 7422(a)] may be maintained only against the United States and not against any officer or employee of the United States (or former officer or employee) . . ."). Accordingly, an Order Substituting the United States of America as Sole Defendant entered on March 17, 2004.
March 22, 2004.
MEMORANDUM AND ORDER ON DEFENDANTS' [sic] MOTION TO DISMISS THE COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION(# 18)
I. INTRODUCTION
On March 7, 2002, pro se plaintiffs Edward F. O'Connell and Catherine C. O'Connell ("the O'Connells" or "plaintiffs") filed a one-count complaint (#1) naming as parties defendant the Internal Revenue Service of the Department of Treasury ("IRS") and Charles O. Rossotti, IRS Commissioner. The plaintiffs' claim arises from the refusal of the IRS to honor the O'Connells' tax refund request premised upon an alleged overpayment of federal taxes during the tax year of 1995. (#1 ¶¶ 6,7)
Following several extensions of time, the O'Connells finally perfected service. On October 15, 2002 and June 3, 2003 respectively, an answer (#7) and a motion to dismiss for lack of jurisdiction were filed. (#18) After seeking and receiving two extensions of time, on November 17, 2003, the plaintiffs filed their opposition to the motion to dismiss (#24) together with an affidavit of plaintiff Edward F. O'Connell. (#25)
With the record on the motion to dismiss now complete, the dispositive motion stands ready to be resolved.
II. FACTS
Plaintiffs claim to have overpaid their joint federal income taxes to the IRS by $3,933.00 during the 1995 tax year. (#1 ¶ 6) During 1995, $8,486 in federal income tax was withheld. On January 14, 2000, the O'Connells mailed their 1995 tax return in which they requested that the IRS refund their federal tax overpayment, the amount having been withheld exceeding the tax actually owed. On January 19, 2000, the IRS in the Andover, Massachusetts Center stamped received the return. (Affidavit of David M. Steiner #18 ¶ 2) On March 10, 2000, the IRS sent the O'Connells a letter indicating their claim had been denied on the basis that the refund request was untimely given that the tax return was filed more than three years after it was due. (#1, Appendix A)
The plaintiffs allege that the refusal by the IRS to honor the O'Connells' tax refund request impermissibly violated due process as "an unconstitutional taking of property and an abuse of authority". (#1 ¶¶ 7,8) The O'Connells seek damages in the amount originally requested "with interest, costs and reasonable attorneys' fees". (#1)
III. DISCUSSION A. Standard Under Rule 12(b)(1)
Pursuant to Rule 12(b)(1), Fed.R.Civ.P., a defendant may move to dismiss an action based on lack of federal subject matter jurisdiction. Because federal courts are considered courts of limited jurisdiction, "federal jurisdiction is never presumed." Viquiera v. First Bank, 140 F.3d 12, 16 (1 Cir., 1998). Instead, "`the party invoking the jurisdiction of a federal court carries the burden of proving its existence.'" Murphy v. United States, 45 F.3d 520, 522 (1 Cir.), cert. denied, 515 U.S. 1144 (1995) (quoting Taber Partners, I v. Merit Builders, Inc., 987 F.2d 57, 60 (1 Cir.), cert. denied, 510 U.S. 823 (1993)).
Once a defendant challenges the jurisdictional basis for a claim under Rule 12(b)(1), the plaintiff bears the burden of proof in establishing that jurisdiction, in fact, exists. Thomson v. Gaskill, 315 U.S. 442, 446 (1942); Aversa v. United States, 99 F.3d 1200, 1209 (1 Cir., 1996); Murphy, 45 F.3d at 522. Accordingly, the First Circuit has held that the proponent must clearly indicate the grounds upon which the court may properly exercise jurisdiction. "[I]t is black-letter law that jurisdiction must be apparent from the face of the plaintiffs' pleading." LP v. Romulus Telecomms., Inc., 148 F.3d 32, 35 (1 Cir., 1998) (quoting Viquiera, 140 F.3d at 18). Hence, if the plaintiffs fail to show a basis for either diversity or federal question jurisdiction, the District Court must grant the motion to dismiss for lack of federal subject matter jurisdiction.
In ruling on a motion to dismiss for lack of subject matter jurisdiction, "the district court must construe the complaint liberally, treating all well-pleaded facts as true and indulging all reasonable inferences in favor of the plaintiff." Aversa, 99 F.3d at 1210; Murphy, 45 F.3d at 522. Furthermore, the Court treats pro se complaints under a more lenient standard than pleadings drafted by licensed attorneys. Haines v. Kerner, 404 U.S. 519, 520 (1972). That having been said, the fact that plaintiffs have not retained legal representation does not eliminate their burden of proving the existence of a jurisdictional basis for their suit. A pro se plaintiff cannot assert a proper jurisdictional basis "merely on `unsupported conclusions or interpretations of law.'" Murphy, 45 F.3d at 422 (quoting Washington Legal Foundation v. Massachusetts Bar Foundation, 993 F.2d 962, 971 (1 Cir., 1993)). When it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," Haines, 404 U.S. at 521 (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)), even a pro se complaint must be dismissed.
B. Federal Question Jurisdiction
Because the amount in controversy is less than $75,000, federal jurisdiction here cannot be predicated upon diversity. See Title 28 U.S.C. § 1332. Instead, federal subject matter jurisdiction depends upon the existence of federal question jurisdiction. In their complaint, the O'Connells assert that Title 42 U.S.C. § 1331 serves as the predicate for subject matter jurisdiction over this suit. (#1 ¶ 4) However, Congress repealed this statute effective July 18, 1984, see Pub.L. 98-369, Div. B, Title VI, § 2663(f), July 18, 1984, 98 Stat. 1168.
Under Title 28 U.S.C. § 1331, "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States."
As a tax refund suit, any assertion of subject matter jurisdiction must be in accord with the Internal Revenue Code ("the Code"). Regarding jurisdictional requirements, the Code provides that:
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 . . .
Title 28 U.S.C. § 1346(a)(1).
The plaintiffs appear to contend that IRS' failure to comply with their refund request for overpayment essentially constitutes an erroneous or illegal collection of taxes by the IRS. Therefore, their claim, on its face, is governed by 28 U.S.C. § 1346(a)(1).
The inquiry does not end there. The Supreme Court ruled that in a taxpayer's suit for refund of gift taxes, asserting that Title 28 U.S.C. § 1346(a)(1) applies in the controversy at issue is not enough for jurisdictional purposes. Rather, § 1346(a)(1) may only confer jurisdiction when it specifically conforms with other statutory provisions set forth in the Code. In particular, Title 26 U.S.C. § 7422 and § 6511(a) govern a taxpayer's right to bring a tax refund suit. United States v. Dalm, 494 U.S. 596 (1990). Failure to comply with Title 26 U.S.C. § 7422 and § 6511(a) automatically results in a dismissal of a tax refund suit. Dalm, 494 U.S. at 596-7; Conlin v. United States, 2002 U.S. Dist. LEXIS 18193 (D. Mass., 2002).
Title 26 U.S.C. § 7422(a) provides that:
No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax . . . until a claim for refund or credit has been duly filed with the Secretary or his delegate, according to the provisions of law in that regard, and regulations of the Secretary or his delegate established in pursuance thereof.
Title 26 U.S.C. § 7422 (Emphasis added).
This means that the tax refund claim must be made within the period set forth in the statute of limitations. Title 26 U.S.C. § 6511(a) states: "The taxpayer must file any claim for refund within three years from the time the return was filed or two years from the time the tax was paid, whichever period expires later." The three-year statute of limitations actually begins to run the date a return is deemed filed and tax is considered paid. See Title 26 U.S.C. § 6513(a). In the present case, the O'Connells filed their claim for refund on March 7, 2002, less than three years after the IRS had received their 1995, 1040 U.S. Individual Income Tax Return, that being January 19, 2000. (#18) Thus, if all that was involved was an overpayment made on January 19, 2000 and there had been no taxes withheld during 1995, the plaintiffs' suit would be timely. The fact that taxes were withheld during 1995 mandates a different result.
According to Title 26 U.S.C. § 6513(b)(1), income tax withheld from earnings is deemed to have been paid on the "15th day of the fourth month following the close of . . . [the] taxable year." Thus, the withholding of taxes from the plaintiffs' earnings during 1995 is deemed to be a payment of those taxes on April 15, 1996. Because that date occurred more than three years before the refund claim was made, the time period allowed by the statute of limitations had expired. Joseph v. Internal Revenue Service, 637 F. Supp. 1219 (D. Mass., 1983) (citing Johnson v. United States, 48 A.F.T.R.2d 81-5672 (N.D.Ill., July 16, 1981)); Estate of Cowan v. Dept. of Treasury, Internal Revenue Service, 48 A.F.T.R.2d 81-5212 (S.D.N.Y., May 22, 1981); Mullin v. United States, 77-2 U.S.T.C., ¶ 9689 (E.D. Mo., 1977).
To summarize, the jurisdictional requirement that the refund claim be duly filed means the following: Unless the tax refund claim has been filed within the limitations period provided by § 7422 and § 6511(a) of the Internal Revenue Code, the suit cannot be maintained. The fact that the tax had been erroneously, illegally or wrongfully collected is immaterial. See Title 26 U.S.C. § 6511(a); Dalm, 494 U.S. at 602 (citing United States v. Kales, 314 U.S. 186, 193 (1941)).
In the case at bar Edward F. O'Connell claims that neither he nor his accountant had been aware of the limitations period. Any lack of knowledge, however, does not toll the running of the statute. Similarly, although this matter may be "a meritorious taxpayer proceeding," as the O'Connells contend, a dismissal of a claim for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) is not predicated upon the merits of the claim. Dubay v. Internal Revenue Service, 1997 WL 76577 (D. Conn., 1997) (citing Exchange National Bank of Chicago v. Touche Ross Co., 554 F.2d 1126, 1130-31 (2 Cir., 1976)). As the First Circuit has noted, "We doubt Congress intended a statute of limitations requiring a threshold determination that so often would resemble an inquiry into a claim's merits." Little People's School, Inc. v. United States of America, 842 F.2d 570, 574 (1 Cir., 1988).
The O'Connells' claim may be correct that they overpaid their joint income taxes for the year 1995, and, had they filed their claim within the three year period after April 15, 1996, they might have recovered the exact amount requested in the instant case. But they did not. Because compliance with the statute of limitations is a jurisdictional requirement to maintain suit, Little People's School, Inc., 842 F.2d at 574, the Court lacks subject matter jurisdiction over this matter.
IV. CONCLUSION AND ORDER
For the reasons stated, it is ORDERED that the Motion to Dismiss the Complaint for Lack of Subject Matter Jurisdiction (#18) be, and the same hereby, is ALLOWED.
Judgment shall enter for the United States of America.