Austin v. Internal Revenue Service (IRS)

• Court: District Court, N.D. California
• Decided: February 9, 2022
• Docket: 3:21-cv-02637
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 GEORGE JARVIS AUSTIN, Case No. 21-cv-02637-HSG 8 Plaintiff, ORDER GRANTING MOTION TO DISMISS AND DENYING AS MOOT 9 v. MOTION FOR LEAVE TO FILE AMENDED COMPLAINT 10 INTERNAL REVENUE SERVICE (IRS) ET. AL., Re: Dkt. Nos. 29, 54 11 Defendant. 12 13 Pending before the Court is a motion filed by Defendant United States to dismiss pro se 14 Plaintiff George Jarvis Austin’s Complaint. Dkt. No. 29.1 Because the Court agrees with 15 Defendant that Plaintiff fails to establish a waiver of the United States’ sovereign immunity or 16 state a claim upon which relief can be granted, the Court GRANTS Defendant’s motion to dismiss 17 with leave to amend. 18 I. BACKGROUND 19 On April 9, 2021, Plaintiff filed the Complaint alleging that he is owed a tax refund for 20 2019 which Defendant has failed to pay. See Dkt. No. 1 (“Complaint”).2 Plaintiff alleges that he 21 22 1 Though Plaintiff did not file an opposition to the motion to dismiss, he did file an “Affidavit” five days after Defendant filed the motion. See Dkt. No. 32. Plaintiff’s Affidavit compares the 23 actions he has taken with the “IRS’s publicly accessible ‘Taxpayer Bill of Rights #5.’” Even if Plaintiff intended for this Affidavit to serve as his opposition to the motion to dismiss, the Court 24 finds that it would not change the result. 2 On January 26, 2022, after the Rule 15 deadline to amend as a matter of right had passed and 25 well after the Court had taken Defendant’s motion to dismiss under submission, Plaintiff filed an amended complaint. Dkt. No. 52. Plaintiff then filed a motion for leave to file the amended 26 complaint. Dkt. No. 54. Plaintiff’s proposed amended complaint suffers from the same defects as his original Complaint. Because the Court grants leave to amend in this order, Plaintiff’s motion 27 for leave is DENIED AS MOOT. Plaintiff is advised that he will get one more opportunity to file 1 filed a tax return in June 2020 for the 2019 tax year and paid his 2019 taxes in full “via 2 paychecks.” Id. at 2-3, 5. Plaintiff states that he “timely filed [his] refund claim with the IRS” 3 within the three-year statute of limitations and at least six months prior to filing this suit. Id. at 6. 4 Plaintiff alleges that despite numerous attempts to follow up through a variety of channels, such as 5 telephone calls and letters, Plaintiff has yet to receive the refund he is owed for his 2019 taxes. Id. 6 at 3. 7 While the majority of Plaintiff’s Complaint concerns the 2019 tax refund, Plaintiff also 8 alleges that he “has yet to receive the most recent Stimulus.” Id. at 4. 9 II. LEGAL STANDARD 10 A defendant may move for dismissal on grounds that the court lacks subject matter 11 jurisdiction over the action. Fed. R. Civ. P. 12(b)(1). It is the plaintiff’s burden to establish 12 subject matter jurisdiction. See Ass’n of Am. Med. Colls. v. U.S., 217 F.3d 770, 778-79 (9th Cir. 13 2000); Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 376-78 (1994). In establishing a 14 federal court’s subject-matter jurisdiction, “[t]he plaintiff must allege facts, not mere legal 15 conclusions, in compliance with the pleading standards established by Bell Atlantic Corp. v. 16 Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009).” Leite v. Crane Co., 17 749 F.3d 1117, 1121 (9th Cir. 2014). “A Rule 12(b)(1) jurisdictional attack may be facial or 18 factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (citing White v. 19 Lee, 227 F.3d 1214, 1242 (9th Cir. 2000)). A facial attack “asserts that the allegations contained 20 in a complaint are insufficient on their face to invoke federal jurisdiction.” Id. A factual attack 21 “disputes the truth of the allegations that, by themselves, would otherwise invoke federal 22 jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. 23 A defendant may also move for dismissal on grounds that the plaintiff has failed to state a 24 claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). Under 25 Federal Rule of Civil Procedure 8(a), a plaintiff’s complaint must contain “a short and plain 26 statement of the claim showing that the pleader is entitled to relief[.]” “Dismissal under Rule 27 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts 1 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to 2 state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 3 (2007). A claim is facially plausible when a plaintiff pleads “factual content that allows the court 4 to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 5 v. Iqbal, 556 U.S. 662, 678 (2009). 6 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 7 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 8 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, 9 Courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 10 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 11 2008). 12 “Pleadings must be construed so as to do justice.” Fed. R. Civ. P. 8(e). For that reason, “a 13 pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal 14 pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quotations marks and 15 citations omitted). If dismissal is still appropriate, a court “should grant leave to amend even if no 16 request to amend the pleading was made, unless it determines that the pleading could not possibly 17 be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) 18 (quotation marks and citation omitted). Where leave to amend is appropriate, “before dismissing a 19 pro se complaint the district court must provide the litigant with notice of the deficiencies in his 20 complaint in order to ensure that the litigant uses the opportunity to amend effectively.” Ferdik v. 21 Bonzelet, 963 F.2d 1258, 1261 (9th Cir. 1992). 22 III. ANALYSIS 23 A. Tax Refund 24 “It is well settled that the United States is a sovereign, and, as such, is immune from suit 25 unless it has expressly waived such immunity and consented to be sued.” Gilbert v. DaGrossa, 26 756 F.2d 1455, 1458 (9th Cir. 1985). Such waiver must be unequivocally expressed, and the 27 Supreme Court has “frequently held . . . that a waiver of sovereign immunity is to be strictly 1 1084, 1088 (9th Cir. 2007) (citation omitted). “The waiver of sovereign immunity is a 2 prerequisite to federal-court jurisdiction.” Tobar v. U.S., 639 F.3d 1191, 1195 (9th Cir. 2011). If 3 a plaintiff cannot establish that its action against the United States falls within a waiver of 4 sovereign immunity, the action must be dismissed. See Dunn & Black, 492 F.3d at 1088. 5 Congress has waived the United States’ sovereign immunity with respect to civil actions 6 seeking a refund or credit on overpaid taxes. See 28 U.S.C. § 1346(a)(1); see also Imperial Plan, 7 Inc. v. United States, 95 F.3d 25, 26 (9th Cir. 1996). However, individuals bringing such suits 8 must meet a number of requirements for the waiver of sovereign immunity to apply. Congress has 9 specified that: “[n]o suit or proceeding shall be maintained in any court for the 10 recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have 11 been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for 12 refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the 13 Secretary established in pursuance thereof.” 26 U.S.C. § 7422(a). 14 For the waiver of sovereign immunity to apply, the taxpayer must pay “the full amount of 15 the contested penalty assessment” and file a claim for refund, which the Internal Revenue Service 16 then either rejects or does not act upon within six months. Thomas v. U.S., 755 F.2d 728, 729 (9th 17 Cir. 1985) (citations omitted). “[T]he filing of a claim with the Internal Revenue Service is a 18 jurisdictional prerequisite to a suit for refund, and, in the absence of a waiver by the government, 19 the taxpayer cannot recover in its suit for refund on a different ground than that set forth in the 20 claim for refund.” Dunn & Black, 492 F.3d at 1091 (emphasis in Dunn & Black) (citation 21 omitted). 22 Treasury Regulations establish a number of additional requirements for claims for tax 23 refunds. “If the refund claim does not meet the requirements of the Code and the regulations, the 24 suit must be dismissed because filing pursuant to the rules is a jurisdictional prerequisite.” Boyd v. 25 U.S., 762 F.2d 1369, 1371 (9th Cir. 1985) (citations omitted); see Washington v. U.S., No. 20-cv- 26 5801-TSH, 2021 WL 199279, at *5-8 (N.D. Cal. Jan. 20, 2021) (dismissing refund-related cause 27 of action for failure to show plaintiff made a proper administrative claim with the IRS); Trakhter 1 for failure to comply with jurisdictional prerequisites); Catholic Answers, Inc. v. U.S., No. 09-cv- 2 670-IEG (AJB), 2009 WL 3320498, at *6 (S.D. Cal. Oct. 14, 2009) (“Filing a claim for refund in 3 compliance with 26 U.S.C. § 7422(a) and Treasury Regulation § 301.6402-2(b)(1) is a 4 jurisdictional prerequisite to a suit for a refund.”) (citation omitted). 3 A refund claim “must set 5 forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise 6 the Commissioner of the exact basis thereof.” 26 C.F.R. § 301.6402-2(b); see also Provenzano v. 7 U.S., 123 F. Supp. 2d 554, 557-58 (S.D. Cal. 2020) (dismissing plaintiff’s suit for refund for 8 failure to comply with jurisdictional prerequisites, including a failure to “provide sufficient detail” 9 in the claim submitted to the IRS). “The statement of the grounds and facts must be verified by a 10 written declaration that it is made under the penalties of perjury,” or it “will not be considered for 11 any purpose as a claim for refund or credit.” 26 C.F.R. § 301.6402-2(b). The claim must also be 12 filed within three years from the time the return was filed or two years from the time the tax was 13 paid, whichever expires later. See 26 U.S.C. § 6511(a); 26 C.F.R. § 301.6402-2(a). For some 14 claims, Treasury Regulations require that the refund claim be made on a specific, prescribed form. 15 26 C.F.R. § 301.6402-2(b). For example, individuals can claim an income tax refund on the 16 individual’s income tax return or, if the individual has already filed a Form 1040 or 1040A, on 17 Form 1040X. 26 C.F.R. § 301.6402-3. 18 These requirements were “devised, not as traps for the unwary, but for the convenience of 19 government officials in passing upon claims for refund and in preparing for trial.” Tucker v. 20 Alexander, 275 U.S. 228, 231 (1927). So when assessing suits for refund, courts remain “mindful 21 that the basic purpose of § 7422(a) and the accompanying regulations are ‘to afford the Service an 22 3 Plaintiff argues that courts have accepted taxpayers’ refund claims that do not comply with all 23 statutory and regulatory requirements. See Dkt. No. 1 at 7. In support of his argument, Plaintiff cites an unpublished case from the United States District Court for the District of New Jersey, 24 Purciello v. U.S., Dept. of the Treasury, I.R.S., 2:11-cv-4181 (DMC)(MF), 2013 WL 6448108 (D.N.J. Dec. 9, 2013), and a Supreme Court case, U.S. v. Kales, 314 U.S. 186, 194 (1941). The 25 Court finds Plaintiff’s citations unpersuasive. An unpublished opinion from a trial court in a different Circuit does not control here, and U.S. v. Kales is not applicable to the case at hand. The 26 court in U.S. v. Kales determined that where a formal refund claim complying with statutory and regulatory requirements is not filed until after the statutory period has expired, an earlier-filed 27 informal claim that gave proper notice can satisfy the statutory period requirement. Kales, 314 1 opportunity to consider and dispose of the claim without the expense and time which would be 2 consumed if every claim had to be litigated’ . . . and ‘to prevent surprise on the facts.’” Lemoge v. 3 U.S., 378 F. Supp. 228, 232 (N.D. Cal. 1974) (citations omitted). 4 Plaintiff alleges that he meets the requirements for bringing a suit for refund. Compl. at 7. 5 Plaintiff states that he “paid disputed taxes in full via paychecks” and that he “timely” filed a 6 refund claim within the three-year statute of limitations. Id. at 5-6. Plaintiff also notes that he 7 waited at least six months between filing his refund claim and bringing this case. Id. at 6. 8 While Plaintiff identifies many of the major prerequisites to bringing a tax refund suit, 9 Plaintiff’s statements of legal conclusions do not provide the factual allegations necessary to 10 establish subject matter jurisdiction or state a claim. First, the Complaint lacks necessary detail 11 regarding his refund claim. For example, Plaintiff alleges that he filed a refund claim, see id. at 6, 12 and that he filed a tax return in June 2020, see id. at 2-3. It is unclear, however, whether 13 Plaintiff’s refund claim and tax return are one and the same, or if Plaintiff filed a refund claim 14 separate from his tax return. Not only do Treasury Regulations require that refund claims for 15 income tax be submitted on particular forms, but Treasury Regulations also require that, in 16 submitting a refund claim, individuals “set forth in detail each ground upon which a . . . refund is 17 claimed.” See 26 C.F.R. § 301.6402-2(b); Provenzano, 123 F. Supp. 2d at 557-58. This is 18 significant because a taxpayer cannot recover in a lawsuit “for refund on a different ground than 19 that set forth in the claim for refund.” Dunn & Black, 492 F.3d at 1091 (emphasis in Dunn & 20 Black) (citation omitted). In other words, Plaintiff can only sue in this Court based on 21 substantially the same claim presented to the IRS. See Catholic Answers, 2009 WL 3320498, at 22 *6 (“If the grounds raised in a refund suit are at ‘variance’ with those presented to the IRS in a 23 claim for refund, the added grounds must be disregarded.”) (citations omitted). Plaintiff has not 24 provided any information regarding the content of his refund claim, and so he has provided no 25 plausible basis to conclude that the case falls within the waiver of sovereign immunity necessary 26 to establish jurisdiction. Moreover, without knowing what information Plaintiff provided in his 27 refund claim, the Court cannot conclude that he satisfied the basic purpose of § 7422(a), which is 1 Lemoge, 378 F. Supp. at 232. 2 Second, Plaintiff’s Complaint lacks sufficient detail regarding his cause of action. Plaintiff 3 must do more than allege the legal conclusion that the United States failed to issue a refund 4 Plaintiff was owed. Plaintiff needs to allege “enough facts to state a claim to relief that is 5 plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. at 570. Nowhere in his Complaint 6 does Plaintiff specify the amount he alleges he is owed or the reasons why he is owed a refund. 7 More information is needed both to establish jurisdiction and to state a claim upon which relief 8 can be granted. 9 B. Stimulus 10 In his Complaint, Plaintiff also appears to allege that a stimulus payment was improperly 11 withheld from him. Plaintiff states that “his stimulus check has not been received by him,” Dkt. 12 No. 1 at 2, and that he “has yet to receive the most recent Stimulus, either”, id. at 4. Beyond these 13 two bare allegations, Plaintiff provides no further information. The Court cannot assess Plaintiff’s 14 claim without basic facts about his claim, such as what “the most recent Stimulus” means and why 15 Plaintiff believes he is owed money. 16 With regard to his stimulus payment allegations, Plaintiff has not established that the Court 17 has jurisdiction, nor has he stated a claim upon which relief can be granted. 18 IV. CONCLUSION 19 For the foregoing reasons, the Court GRANTS WITH LEAVE TO AMEND Defendant’s 20 motion to dismiss Plaintiff’s Complaint. Should Plaintiff wish to amend his Complaint, he must 21 do so by filing a new complaint by March 7, 2022. If Plaintiff does not file an amended complaint 22 by that date, the Court may dismiss the action with prejudice without further notice. Plaintiff is 23 reminded that he must plead specific and particular facts to support his claims, and the Court 24 cautions Plaintiff to carefully consider the above analysis if he chooses to amend his Complaint. 25 Because the Court grants leave to amend, Plaintiff’s motion for leave, Dkt. No. 54, is DENIED 26 AS MOOT. 27 The Court advises Plaintiff that the Legal Help Center at both the San Francisco and 1 litigants in civil cases. Services are provided by appointment only. An appointment may be 2 scheduled by either: (1) signing up in the appointment book located outside the door of the Legal 3 Help Center in San Francisco or Oakland, or (2) calling (415)782-8982 or emailing 4 || federalprobonoproject@ sfbar.org. 5 IT IS SO ORDERED. 6 || Dated: 2/9/2022 Atarpurerd 3. Sb □□ HAYWOOD S. GILLIAM, JR. 8 United States District Judge 9 10 11 12

© 15 16

= 17

Z 18 19 20 21 22 23 24 25 26 27 28