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Thorpe v. Department of Treasury-Internal Revenue Service

United States District Court, D. New Jersey

March 12, 2019

RHANDALL THORPE and BARBARA J. THORPE, Plaintiff,
v.
DEPARTMENT OF THE TREASURY-INTERNAL REVENUE SERVICE; PHILLIP DUN, IRS Appeals Team Manager; DEBRA HAYNER, Appeals Officer; and DENISE MURRAY, Team Manager, Defendants. Tax year Return filed Last Payment made Last possible date to file refund claim Date refund claim actually filed

          MEMORANDUM OPINION

          KEVIN MCNULTY. U.S.D.J.

         Plaintiffs Rhandall J. Thorpe and Barbara J. Thorpe, pro se, have filed this action to obtain refunds of IRA early-withdrawal penalties that they calculated and paid in connection with their tax returns for 2002, 2004, 2005, 2007, 2008, 2010, 2012, and 2013. The defendants move, pursuant to Fed.R.Civ.P. 12(b)(1), to dismiss the complaint for lack of subject matter jurisdiction, because the plaintiffs did not timely file administrative claims for refunds with the Internal Revenue Service ("IRS"). The amounts of the refunds range from $235 to $2598. For the reasons stated herein, the motion to dismiss is granted.

         I. APPLICABLE STANDARD

         Rule 12(b)(1) challenges to the court's subject matter jurisdiction may be either facial or factual attacks. See 2 Moore's Federal Practice § 12.30[4] (3d ed. 2007); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977).

The burden of establishing federal jurisdiction rests with the party asserting its existence, [citing Daimler Chrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3, 126 S.Ct. 1854 (2006).] "Challenges to subject matter jurisdiction under Rule 12(b)(1) may be facial or factual." [citing Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (quoting Talia ferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)).] A facial attack "concerns *an alleged pleading deficiency' whereas a factual attack concerns 'the actual failure of [a plaintiffs] claims to comport [factually] with the jurisdictional prerequisites.'" [citing CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008) (alterations in original) (quoting United States ex rel Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir.2007)).]
"In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." [citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000).] By contrast, in reviewing a factual attack, "the court must permit the plaintiff to respond with rebuttal evidence in support of jurisdiction, and the court then decides the jurisdictional issue by weighing the evidence. If there is a dispute of a material fact, the court must conduct a plenary hearing on the contested issues prior to determining jurisdiction." [citing McCann v. Newman Irrevocable Trust, 458 F.3d 281, 290 (3d Cir. 2006) (citations omitted).] Lincoln Ben. Life Co. v. AEILife, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (footnotes omitted; footnoted case citations [bracketed] in text).

         II. DISCUSSION

         It is axiomatic that the United States and its agencies may be sued only to the extent that they consent to waive their sovereign immunity. See United States v. Mitchell, 463 U.S. 206, 212 (1983); Lewis v. Clarke, 137 S.Ct. 1285, 1291-92 (2017). With respect to a suit for a tax refund, "that waiver is conditional: the taxpayer must pay the dispute tax or penalty, and 'duly file[]' an administrative claim with the IRS prior to filing suit." Cash v. United States, 725 Fed.Appx. 171, 173 (3d Cir. 2018) (quoting 26 U.S.C § 7422(a)). See also Mallette Bros. Constr. Co. v. United States, 695 F.2d 145, 155 (5th Cir. 1983) ("In suits for tax refunds, the United States has consented to be sued, but only when the taxpayer follows the conditions set forth in I.R.C. § 7422(a).").[1]

         To be "duly filed," an administrative claim must be timely. Philadelphia Marine Trade Ass'n etc. v. Commissioner, 523 F.3d 140, 146 (3d Cir. 2008). Under 26 U.S.C. § 6511, an administrative claim for a refund is timely if the taxpayer files it within three years after filing the relevant tax return, or within two years after paying the contested liability, whichever is later.[2]

Read together, the import of [sections 7422 and 6511] is clear: unless a claim for refund of a tax has been filed within the time limits imposed by § 6511(a), a suit for refund, regardless of whether the tax is alleged to have been 'erroneously,' 'illegally,' or Vrongfully collected,' may not be maintained in any court.

United States v. Dalm, 494 U.S. 596, 602 (1990) (citations omitted). The prior timely filing of an administrative refund claim is therefore of jurisdictional stature; it is a prerequisite to a federal court's assertion of subject matter jurisdiction. See Irvine v. United States, 729 F.3d 455, 464 (5th Cir. 2013) ("Failure to timely file a refund claim deprives the court of subject matter jurisdiction for lack of a valid waiver of sovereign immunity.").[3]

         Mr. and Mrs. Thorpe filed tax returns for the years 2002, 2004, 2005, 2007, 2008, 2010, 2012, and 2013. The returns, prepared with the aid of professionals, were duly sworn and subscribed. In those tax returns, they calculated, assessed against themselves, and paid (or had deducted from their tax refund) early withdrawal penalties for their IRA. account.

         The Thorpes, much later, determined that they had not in fact owed the early withdrawal penalty, and had therefore overpaid for the relevant years. (Cplt. Section III) They filed administrative claims for refunds with the IRS. All the claims, however, were denied as untimely. (Denial letters, DE 2) Here, in chart form, are the relevant dates.

Tax year
Return filed
Last Payment made[4]
Last possible date to file refund claim
Date refund claim actually filed
2002
4/15/2003
N/A
4/15/2006
12/15/2015
2004
4/15/2005
N/A
4/15/2008
12/15/2015
2005
4/15/2006
4/24/2006
4/15/2009
12/15/2015
2007
4/15/2008
7/27/2009
7/27/2011
12/15/2015
2008
4/15/2009
5/10/2010
5/10/2012
12/15/2015
2010
4/15/2011
6/9/2011
4/15/2014
12/15/2015
2012
4/15/2013
4/21/2013
4/15/2016
6/21/2016
2013
4/15/2014
12/5/2014
4/15/2017
5/30/2017

         As is apparent, each claim was filed well after the relevant deadline under 26 U.S.C. § 6511(a). For 2002, the claim missed the deadline by some nine years; for 2012 and 2013, they missed the deadline by only about six weeks or two months. Miss the deadline they did, however; all were filed untimely. As a result, this court lacks subject matter jurisdiction.

         In response, the Thorpes argue that the deadline for filing administrative claims was tolled, citing two theories. ...


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