Opinion
NO. 5:19-CV-328-DAE
2019-11-06
VALERO MARKETING AND SUPPLY COMPANY, Plaintiff, v. UNITED STATES of America, Defendant.
Andrew Lewis Howlett, George A. Hani, Adam P. Feinberg, Miller & Chevalier Chartered, Washington, DC, for Plaintiff. Andrew L. Sobotka, Jonathan L. Blacker, Michael W. May, Steven C. Woodliff, U.S. Department of Justice, Dallas, TX, for Defendant.
Andrew Lewis Howlett, George A. Hani, Adam P. Feinberg, Miller & Chevalier Chartered, Washington, DC, for Plaintiff.
Andrew L. Sobotka, Jonathan L. Blacker, Michael W. May, Steven C. Woodliff, U.S. Department of Justice, Dallas, TX, for Defendant.
ORDER DENYING MOTION TO DISMISS
David A. Ezra, Sr. United States District Judge
The matter before the Court is Defendant United States of America's Amended Motion to Dismiss. (Dkt. #11.) A hearing was held on this matter on November 5, 2019. After careful consideration of the memoranda filed in support of and in opposition to the motion, as well as arguments of counsel at the hearing, the Court, for the following reasons, DENIES the motion.
BACKGROUND
On April 1, 2019, Valero Marketing and Supply Company ("Valero") filed suit in this Court against the Government. (Dkt. # 1.) Valero's complaint seeks a tax refund of over $121 million for the first quarter of the tax year 2015 ("disputed tax period"). (Id. ) According to Valero, on April 30, 2015, it timely filed a Quarterly Federal Excise Tax Return ("Form 720") for the disputed tax period—January 1, 2015, through March 31, 2015, with the Internal Revenue Service ("IRS"). The Form 720 reported a total 26 U.S.C. § 4081 (" section 4081") fuel excise tax in the amount of $565,025,097 for the disputed tax period, which Valero timely paid.
Several years later, on April 26, 2018, Valero filed an Amended Quarterly Federal Excise Tax Return ("Form 720X") for the disputed tax period with the IRS, claiming a refund of the section 4081 fuel excise tax in the amount of "$4.00 Plus," plus statutory interest. Valero contends this refund claim is based on Alternative Fuel Mixture Credits that it had not previously claimed on its original Form 720 for the disputed tax period.
On April 1, 2019, Valero filed this suit on the basis that more than six months have passed since it filed the Form 720X seeking the refund, and that the IRS has neither paid nor denied the refund request for the disputed tax period. (Dkt. # 1.) Valero contends that it is entitled to a refund for the overpayment it made to the IRS, but the Government has refused to recognize that several substances qualify as "alternative fuels" for tax credit purposes. (Id. )
On July 22, 2019, the Government filed an Amended Motion to Dismiss Valero's claims pursuant to both Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. (Dkt. #11.) Valero filed a response in opposition on August 5, 2019 (Dkt. # 12); the Government filed a reply on August 16, 2019 (Dkt. # 15).
The amended motion corrected "minor spacing and grammatical errors in the original pleading." (Dkt. # 11 at 1 n. 1.)
APPLICABLE LAW
A. Rule 12(b)(1)
A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges a federal court's subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). Under Rule 12(b)(1), a claim is properly dismissed for lack of subject matter jurisdiction when a court lacks statutory or constitutional authority to adjudicate the claim. Home Builders Assoc. of Mississippi, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998). When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, courts should consider the "jurisdictional attack before addressing any attack on the merits." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). The Court must first address subject matter jurisdiction because, without it, the case can proceed no further. Ruhrgas Ag v. Marathon Oil Co., 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ; Ramming, 281 F.3d at 161.
In considering a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, "a court may evaluate (1) the complaint alone, (2) the complaint supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001) (citation omitted).
Federal Rules of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." When analyzing a motion to dismiss for failure to state a claim, the court "accept[s] ‘all well pleaded facts as true, viewing them in the light most favorable to the plaintiff.’ " United States ex rel. Vavra v. Kellogg Brown & Root, Inc., 727 F.3d 343, 346 (5th Cir. 2013) (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) ). The court "must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a Court may take judicial notice." Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ).
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, a court reviewing a complaint "[is] not bound to accept as true a legal conclusion couched as a factual allegation." Id. "A Rule 12(b)(6) motion to dismiss for failure to state a claim is an appropriate method for raising a statute of limitations defense." Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977).
ANALYSIS
The Government moves to dismiss Valero's claims on the basis that the Court lacks subject matter jurisdiction because the suit is barred by several defenses including sovereign immunity and the doctrine of variance. (Dkt. #11.) The Government contends that Valero has not duly filed a document that qualifies as the requisite administrative claim for refund. (Id. ) The Government also moves to dismiss Valero's claims on the basis that Valero has failed to state a plausible claim for relief. (Id. )
I. Rule 12(b)(1) Motion
A. Sovereign Immunity
"The United States, as sovereign, is immune from suit save as it consents to be sued." Schaeffler v. United States, 889 F.3d 238, 242 (5th Cir. 2018) (quoting United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941) ). The United States has consented to be sued for "erroneously or illegally assessed or collected" taxes. 28 U.S.C. § 1346(a)(1). However, a plaintiff must comply with the requirements in 26 U.S.C. §§ 7422, 6532, and 6511. See id.; United States v. Dalm, 494 U.S. 596, 601, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990) ("Despite its spacious terms, § 1346(a)(1) must be read in conformity with other statutory provisions which qualify a taxpayer's right to bring a refund suit upon compliance with certain conditions. The first is § 7422(a), which ... limits a taxpayer's right to bring a refund suit."); see also 26 U.S.C. § 6532(a) (imposing additional conditions on suits brought under § 7422(a) ).
Under § 7422(a), before a taxpayer can bring a refund suit, the taxpayer must first fully pay the assessed tax and file an administrative claim for refund with the IRS. See 26 U.S.C. § 7422 ; see also United States v. Williams, 514 U.S. 527, 532-33, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995). A claim for refund "must set forth in detail each ground upon which a credit or refund is claimed and the facts sufficient to apprise the Commissioner of the exact basis thereof." Treas. Reg. § 301.6402-2(b)(1).
Pursuant to 26 U.S.C. § 6532(a)(1), "no suit or proceeding under section 7422(a) for the recovery of any internal revenue tax, penalty, or other sum, shall be begun before the expiration of 6 months from the date of filing the claim required under [ section 7422 ] unless ... a decision [is rendered] within that time." In other words, only after the IRS has rendered a decision, or has not acted upon the claim for six months, does the federal district court have subject matter jurisdiction. See 26 U.S.C. §§ 6532(a), 7422 ; see also Flora v. United States, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960). Under § 6511(a), a claim for a tax refund "shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid," whichever is later. 26 U.S.C. § 6511(a). A taxpayer's failure to comply with time limitations deprives the Court of subject matter jurisdiction. See Duffie v. United States, 600 F.3d 362, 384 (5th Cir. 2010).
B. Whether Valero's Claim for Refund was a Formal Claim
The Government's main basis for relief in its motion to dismiss is that Valero's amended return—Form 720X—was not a formal claim for refund because it was never perfected. Thus, the Government argues that the claim is not properly before the Court, and the Court therefore lacks subject matter jurisdiction. (Dkt. # 11 at 10.) While acknowledging that the Form 720X was the correct form for Valero to seek a refund for an alternative fuel mixture credit, the Government argues that the form was incomplete and inadequate because it did not have the numbers of gallons of products allegedly blended and the amount of the refund being sought. (Id. )
Indeed, Valero's amended return does not state that Valero seeks a $121,999,109 Alternative Fuel Mixture Credit; instead, the form states only that it seeks an adjusted credit for "$1.00 Plus" on four different lines. (Id.; see Dkt. # 11-1 at 4.) Thereafter, the amount for "Total adjustments" states "$4.00 Plus." (Dkt. # 11-1 at 4.) However, the amended return has an attached "Explanation of Adjustments" which explains that the "adjustment is made to claim alternative fuel mixture credit under Internal Revenue Code (‘IRC’) Sections 6426(a) and (e) for butane and other forms of liquified petroleum gas used in producing alternative fuel mixtures for sale or use in a trade or business of the taxpayer." (Id. at 6.) Regarding the refund amount it seeks in the four lines of the amended return, the Explanation of Adjustments states that
For the quarter ended March 31, 2015, [Valero] originally reported $0.00 of alternative fuel mixture credits on its Form 720. [Valero] is currently performing an analysis to verify the amount of credit to which it is entitled. Accordingly, [Valero] hereby adjusts the credit on each of the Lines 426, 431, 432 and 436 of Schedule C (Form 720) in the amounts of "$1.00 Plus" until [Valero] has determined the amount of the credit, at which time [Valero] will supplement this claim.
(Id. )
In its motion, the Government takes issue with Valero's use of "$1.00 Plus" as a placeholder on four lines of the amended return until Valero could determine the amount of its refund claim and supplement that information on a later date. (Dkt. # 11 at 2.) The Government also points out that the amended return fails to reference any amount of butane or other product that Valero allegedly used or mixed in creating alternative fuel. (Id. at 3.) Additionally, the Government contends that Valero failed to supplement its amended return, despite stating such in its Explanation of Adjustments. (Id. ) Instead, according to the Government, Valero simply waited eleven months and filed this suit which states for the first time the actual amount of total refund Valero seeks based on 239,945,595 gallons of butane, 1,035,529 gallons of liquified gas derived from biomass, and 3,017,093 gallons of liquid fuel derived from biomass. (Id. ) The Government therefore argues that Valero's Form 720X does not contain sufficient information to qualify as a timely and duly filed claim for refund. (Id. at 10.)
The Government further maintains that the amended return cannot qualify as an informal claim in order to temporarily preserve an incomplete claim for refund. (Dkt. # 11 at 10.) The Government argues that informal claims must eventually be supplemented and perfected before a party can file suit. (Id. ) Therefore, according to the Government, even if the amended return could have initially qualified as an informal claim, that temporary status ended when Valero filed suit without first supplementing its claim. (Id. at 11.)
In response, Valero argues that the Form 720X was timely and complied with all applicable requirements, including those applicable under Treasury Regulation § 301.6402-2. Pursuant to this regulation, the "claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof. The statement of the grounds and facts must be verified by a written declaration that it is made under the penalties of perjury. A claim which does not comply with this paragraph will not be considered for any purpose as a claim for refund or credit." Treas. Reg. § 301.6402-2.
Specifically, Valero contends that it complied with the Treasury Regulations when it specified on the "Explanation of Adjustments" attached to its Form 720X that its claim was for "alternative fuel mixture credit under ... [s]ections 6426(a) and (e) for butane and other alternative fuels used in producing alternative fuel mixtures for sale or use in a trade or business of the taxpayer." (Dkt. # 12 at 3-4.) Additionally, Valero asserts that it detailed other pertinent facts, including listing the taxable fuel (gasoline) and the alternative fuels as "butane and other liquified petroleum gases (‘LPG’), ... compressed or liquified gas derived from biomass, [and] liquid fuel derived from biomass." (Id. at 4 (quoting Dkt. # 11-1 at 6).) Valero also explained that it "is entitled to the alternative fuel mixture credit because it blended [those] alternative fuels with taxable fuel," citing the applicable IRS codes, Treasury Regulations, and other IRS guidance. (Id. )
Regarding its notation of "$1.00 Plus" on the four lines of Form 720X, Valero maintains that this is an invalid basis for the Government to argue that its amended return was deficient. (Dkt. # 12 at 4.) According to Valero, there is no requirement that an excise tax refund claim set forth any amount. (Id. at 5.) Valero contends that the Government misrelies on a provision of the Treasury Regulation pertaining only to income tax refunds. (Id. at 7.) Indeed, Treasury Regulation § 301.6402-3, entitled "Special rules applicable to income tax," requires that "[a] return or amended return shall constitute a claim for refund or credit if it contains a statement setting forth the amount determined as an overpayment and advising whether such amount shall be refunded to the taxpayer or shall be applied as a credit against the taxpayer's estimated income tax for the taxable year immediately succeeding the taxable year for which such return (or amended return) is filed." Treas. Reg. § 301.6402-3 (emphasis added).
Here, there is no dispute that Valero has claimed a refund of excise taxes and not income taxes. Given this, Valero contends that it complied with the regulation applicable to the excise taxes claimed here— Treas. Reg. § 301.6402-2, quoted above, which does not contain any requirement that a refund request specifically state an amount claimed. (Dkt. # 12 at 7.) Valero argues therefore that since § 301.6402-3 has a specific requirement that income tax refund requests have an amount listed on the request and § 301.6402-2 has no such requirement, the absence of such language indicates that the excise tax refund Valero claims here does not need to state an amount. (Dkt. # 12 at 7.)
As Valero points out, Treasury Regulation § 301.6402-2 specifically states that "[f]or special rules applicable to refunds of income taxes, see § 301.6402-3."
Additionally, Valero points to the Government's differing treatment of its earlier request for a similar refund on Form 720X covering the second quarter of the 2014 tax period, which asked on one line for a refund amount of "$1.00 Plus." (Dkt. # 12 at 15; Dkt. # 12-1 at 9.) Regarding that earlier request, the IRS made an "Information Document Request" to Valero which sought "workpapers used to calculate the claim amount," documentation of "the amount of alternative fuel mixture that was sold or used," and the "beginning and ending inventory of the alternative fuel, ... blending percentages," as well as other information relating to the amount of fuel at issue. (Dkt. # 12-1 at 14-15.) Valero contends that the IRS could have made the same request in this case but chose not to because the IRS "suspended" such claims until a similar lawsuit as this case, but filed prior—Vitol. Inc. v. United States, 4:18-cv-2275 (S.D. Tex. July 3, 2018)—is resolved. (Dkt. # 12 at 16; Dkt. # 12-1 at 17, 19, 22.) Indeed, Valero attached as evidence the letters from the IRS which state that several of Valero's other requests for refunds have been suspended until the complaint in Vitol is resolved. (Dkt. # 12-1 at 17, 19, 22.)
According to Valero, the plaintiff in Vitol was the first taxpayer to file suit for the Alternative Fuel Mixture Credit on the basis of blending butane and gasoline as in this case. (Dkt. # 12 at 16.) The court in Vitol has not made a final ruling. See Vitol, Inc. v. United States, 4:18-cv-2275 (S.D. Tex. July 3, 2018).
Valero posits several other theories for why the IRS has not acted on its refund request for the disputed tax period in this case. (See Dkt. # 12 at 16–17.) These arguments, however, appear directed at the merits of this case; thus, the Court will not consider them at this time.
Upon close and careful review of the Government's argument that Valero failed to submit a formal claim that meets the requirements in §§ 7422, 6511, and 6632, as well as the applicable Treasury Regulations, the Court finds this argument without merit. First, as Valero points out, the Government relies on Treasury Regulation 26 C.F.R. § 301.6402-3, which specifically states that a refund claim for income taxes must include the amount. As noted above, there is no similar requirement to include the amount for the excise tax refund request here as addressed in Treasury Regulation 26 C.F.R. § 301.6402-2. Cf. Treas. Reg. § 301.6402-2 ; see Hamdan v. Rumsfeld, 548 U.S. 557, 578, 126 S.Ct. 2749, 165 L.Ed.2d 723 (2006) ("[A] negative inference may be drawn from the exclusion of language from one statutory provision that is included in other provisions of the same statute."); Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) ("[W]here Congress includes particular language in one section of a statute but omits it in another...., it is presumed that Congress acts intentionally and purposely."); Chamber of Commerce of United States of Am. v. United States Dep't of Labor, 885 F.3d 360, 372-73 (5th Cir. 2018) ("That Congress did not say ‘any investment advice’ signals the intentional omission of this adjective.").
Regarding the Treasury Regulation applicable here, § 301.6402-2, Valero's Form 720X sufficiently sets forth detailed grounds and factual bases for its refund, which is all that is required under that regulation. The Explanation of Adjustments sets forth the basis for its claim for refund, explaining that it requests the refund in order "to claim alternative fuel mixture credit under Internal Revenue Code (‘IRC’) Sections 6426(a) and (e) for butane and other forms of liquified petroleum gas used in producing alternative fuel mixtures for sale or use in a trade or business of the taxpayer." (Dkt. # 11-1 at 6.) Valero further details relevant facts, listing the taxable fuel involved (gasoline) and the alternative fuels it blended with gasoline. (Id. ) The Explanation of Adjustments also includes the legal bases for Valero's refund request, including the relevant Internal Revenue Code sections, Treasury Regulations, and other IRS guidance. (Id. ) Among others, the Explanation includes details regarding its mixtures which form the basis of its claim for the alternative fuel mixture credit. (Id. at 6-7.) Therefore, despite the Government's argument to the contrary, the Court finds Valero's Form 720X and its attached Explanation of Adjustments adequately satisfy the requirement in Treasury Regulation § 301.6402-2 that the "claim set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof." Treas. Reg. § 301.6402-2(b)(1).
The Government's cases cited in support of its position do not directly stand for the first proposition that a refund request, such as the one here, must state a specific amount. (See Dkt. # 11 at 5-7.) As an initial matter, the Court notes that the main cases relied on by the Government are at least 60 years old. See United States v. Felt & Tarrant Mfg. Co., 283 U.S. 269, 51 S.Ct. 376, 75 L.Ed. 1025 (1931) ; Alabama By-Prod. Corp. v. Patterson, 258 F.2d 892 (5th Cir. 1958) ; United States ex rel. Endicott v. Mellon, 39 F.2d 505 (D.C. Cir. 1930). Second, none of these cases require the refund request to state only the exact amount of refund requested; instead, the cases require that an amount be stated in combination with other requirements like that the facts and circumstances surrounding the refund request must be included. See Felt & Tarrant Mfg. Co., 283 U.S. at 269, 51 S.Ct. 376 ; Alabama By-Prod. Corp., 258 F.2d at 892 ; Mellon, 39 F.2d at 505 (involving only income tax refund request); Beckwith Realty, Inc. v. United States, 896 F.2d 860, 863 (4th Cir. 1990) (involving only income tax refund request).
The Court further notes that these cases mainly discuss requests for both income and excise tax refunds, or only income tax refunds. See, e.g., Felt & Tarrant Mfg. Co., 283 U.S. at 269, 51 S.Ct. 376 ; Alabama By-Prod. Corp., 258 F.2d at 892 ; Mellon, 39 F.2d at 505 ; Beckwith Realty, 896 F.2d at 860.
Instead, as the Fifth Circuit noted in an equally old case, it is the basis of the claim, not the exact amount to which the taxpayer is entitled, that must be established in the refund request. Burrell v. Fahs, 232 F.2d 163, 166 (5th Cir. 1956) (determining that even in an income tax case that "[i]t is the basis of the [refund] claim that must be stated with exactitude"); see also Christie v. United States, 179 F. Supp. 709 (D.C. Or. 1959) (determining in a suit for excise tax refund that an exact amount for refund need not be stated because "[t]he defendant had at all pertinent times during the course of this action, and prior to the bringing of this action, the means of calculating and determining the amount to which plaintiff would be entitled as a refund" and "[u]nder all the circumstances here, the amount of the demand for refund is immaterial or surplusage.").
In somewhat of a backtrack from its motion, the Government's reply argues that not only did Valero not include the exact amount of refund sought, but that its Explanation of Adjustments failed to provide sufficient details and factual bases for its refund request. (See Dkt. # 15 at 2-4.) However, as addressed above, the Court has determined that Valero adequately provided this information in accordance with both § 7422 and Treasury Regulation § 301.6402-2.
The Government's motion mainly argues that the amended return was "missing the number of gallons of products allegedly blended and the amount of the refund being sought." (Dkt. # 11 at 10.) Nowhere in the motion does the Government clearly argue that sufficient details and the factual bases are missing from Valero's Form 720X in addition to the amount of refund sought. (See Dkt. #11.)
The Government's reply further contends that Valero failed to follow Form 720X's instructions regarding Line 6 of the amended return which requires that Valero "include a detailed description of the adjustment and the computation of the amount," to include "a detailed explanation of the adjustment, including [the] registration number, and the computation of the amount." (See Dkt. # 15 at 6 (citing website to access instructions for Form 720X).) The instructions also require that the "computation [ ] include the number of gallons ... and credit rate." (Id. ) Despite the Government's argument, Valero's Explanation of Adjustments attached to the Form 720X clearly states that Valero was still making computations at the time it filed the amended return and that Valero would supplement this information at a later date. There is no indication, and the Government has not provided any, that Valero was prohibited from supplementing the form with this information. Indeed, had the Form 720X been improperly completed, the Government could have simply denied the refund request or asked for supplemental information as it did on Valero's refund request covering the second quarter of the 2014 tax period. (See Dkt. # 12-1 at 9.)
Furthermore, Valero points the Court toward the IRS's National Office Service Center Advice Number 199941039, which discusses "Amending Refund Claims after Expiration of Statute of Limitations." See Service Center Advisory, IRS SCA 199941039, 1999 WL 821694. In this document, the IRS offers field advice in contemplation of a situation where, as here, a taxpayer "specifically state[d] the legal grounds and factual basis for filing the refund claim," but had "not yet compiled his records to determine the specific claim amount," claiming only "one dollar or any amounts legally allowable." ( Id. ) In such a situation, the IRS decided that even if the claim was disallowed, the taxpayer "may file a lawsuit to recover the overpayment and at trial the taxpayer may, depending on the circumstances, be allowed to introduce evidence to show a larger overpayment than that stated in the original claim." Id.; (see Dkt. # 12 at 11-12). The document goes on to state that if the IRS "receives a claim in which the refund request is one dollar or other amounts legally allowable, the [IRS] should generally request additional information as to the actual amount of the claim, unless it is clear that the claim must be disallowed." IRS SCA 199941039, 1999 WL 821694, at *6. Given this guidance, the Court notes that the IRS has clearly contemplated refund requests claiming "$1.00 Plus" as requested here by Valero.
The Government takes issue with the IRS's Service Center Advice on grounds that the document was not intended to be relied on by taxpayers and is not precedential. (Dkt. # 11 at 12.) At the hearing, Valero's counsel countered that argument by quoting Treasury Regulation 301.6402-2(a)(2), which requires that claims using a particular form, such as the Form 720X here, "shall be filed in a manner consistent with such form, form instructions, publications, or other guidance found on the IRS.gov Web site." Treas. Reg. § 301.6402-2(a)(2). Because the Service Center Advice Number 199941039 can be found at IRS.gov, the Court agrees with Valero's counsel.
Accordingly, after careful review of the record, the Court has determined that Valero complied with the applicable statutory and regulatory requirements for filing a formal administrative claim for refund. See 26 U.S.C. §§ 7422, 6511, 6532 ; Treas. Reg. §§ 301.6402-2. Therefore, the Court will not dismiss the case for lack of subject matter jurisdiction on this basis.
Given this finding, the Court need not address the Government's additional argument that Valero's claim was not a proper informal claim for refund. Nor will the Court discuss the merits of Valero's argument raised at the hearing that the Government waived any rights or formal requirements that Valero state an exact number or amount on the Form 720X. Given that the Court has already found that Valero complied with the applicable statutory and regulatory requirements, the Court need not address Valero's waiver argument.
C. Doctrine of Variance
The Government also argues that Valero's suit must be dismissed based on the doctrine of variance. (Dkt. #11.) According to the Government, the Court lacks jurisdiction because the amount of refund sought by Valero in its complaint varies from the amount of refund shown in its Form 720X. (Id. )
Treasury Regulation § 301.6402-2(b)(1), discussed above, codifies the variance doctrine. El Paso CGP Co., L.L.C. v. United States, 748 F.3d 225, 228–29 (5th Cir. 2014). Under the variance doctrine, "a taxpayer is barred from raising in a refund suit grounds for recovery which had not previously been set forth in its claim for a refund." Id. (quoting Mallette Bros. Const. Co., Inc. v. United States, 695 F.2d 145, 155 (5th Cir. 1983) ). "The alleged error must be clearly and specifically set forth in the refund claim. A generalized plea of error will not suffice." Id. "All grounds upon which a taxpayer relies must be stated in the original claim for refund.... Anything not raised at that time cannot be raised later in a suit for refund." Alabama By-Products Corp., 258 F.2d at 900. Still, the Fifth Circuit permits some leeway in determining when the variance doctrine should be applied. See El Paso, 748 F.3d at 229 ("Although the variance doctrine has been expressed in uncompromising terms, courts have not always been so dogmatic in applying it.").
The Court disagrees with the Government's position. The doctrine of variance does not bar Valero's suit. Valero has not raised a different or new legal theory or factual basis for recovery of claimed excise tax refund in its complaint. Cf. Rodgers v. United States, 843 F.3d 181, 195 (5th Cir. 2016) (determining that taxpayer's addition of new expenditures as the factual basis for additional tax credits was a "substantial variance" from the grounds of recovery stated in its administrative claim for refund because they were "independent claims for refunds" that the IRS did not have opportunity to consider). Instead, Valero's factual bases for relief in this case is premised on the same theory of recovery as Valero stated in its administrative claim to the IRS on the Form 720X. "When the only factor that is changed is the amount and the factual and legal grounds remain the same, the scope of the litigation is not expanded beyond the factual and legal grounds that the IRS was able to review during its administrative review of the refund claim." Lockheed Martin Corp. v. United States, 39 Fed. Cl. 197, 204 (1997), aff'd 210 F.3d 1366 (Fed. Cir. 2000) ; see also Anderson v. United States, 468 F. Supp. 1085, 1090-91 (D. Minn. 1979), aff'd 624 F.2d 1109 (8th Cir. 1980) (granting plaintiff leave to file amended complaint which sought greater amount of tax refund recovery than was sought in administrative claim because plaintiff did not change grounds for recovery). Accordingly, the Court will not dismiss Valero's claims for lack of jurisdiction based on the doctrine of variance.
Based on the foregoing, the Court will DENY the Government's Rule 12(b)(1) motion to dismiss. (Dkt. #11.)
II. Rule 12(b)(6) Motion
The Government's Rule 12(b)(6) motion to dismiss is short and is based on its contention that Valero's complaint fails "to allege that Valero [ ] filed a satisfactory refund claim for any amount that is sufficient to waive sovereign immunity and confer jurisdiction on this Court." (Dkt. # 11 at 14.) For this reason, the Government argues that Valero's complaint is subject to dismiss for failure to state a claim under Rule 12(b)(6). (Id. )
As discussed above, the Court has determined that Valero has filed a formal administrative claim for tax excise refund sufficient to confer jurisdiction in this Court. Accordingly, the Court finds that Valero has stated a plausible claim for relief in its complaint. Whether Valero may ultimately prevail on the merits is not a proper question at this stage of the proceedings. The Court will DENY the Government's Rule 12(b)(6) motion to dismiss.
CONCLUSION
In light of the foregoing, the Court DENIES the Government's Amended Motion to Dismiss. (Dkt. # 11.)