Channaveerappa v. United States of America, on behalf of Internal Revenue Service

E.D. California

Channaveerappa v. United States of America, on behalf of Internal Revenue Service

DecidedOctober 27, 2021

Docket1:20-cv-01732

StatusUnknown

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Channaveerappa v. United States of America, on behalf of Internal Revenue Service, (E.D. Cal. 2021).

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 NARESH CHANNAVEERAPPA, et al., CASE NO. 1:20-CV-1732 AWI BAM

10 Plaintiff ORDER ON DEFENDANT’S MOTION 11 v. TO DISMISS

12 UNITED STATES OF AMERICA, (Doc. No. 18) 13 Defendant

14 15 16 This is a tax refund case brought by husband and wife Plaintiffs Nareshh Channaveerappa 17 and Anitha Channabasavaiah (“Plaintiffs”) against the United States. The operative complaint is 18 the First Amended Complaint (“FAC”). Currently pending before the Court is the United States’ 19 Rule 12(b)(1) motion to dismiss. Hearing on the motion is set for November 1, 2021. However, 20 Plaintiffs have not filed an opposition or response of any kind to the Rule 12(b)(1) motion. For 21 the reasons that follow, the Court will vacate the November 1, 2021 hearing date pursuant to Local 22 Rule 230(g) and issue this order, which grants the United States’ motion and closes this case. 23 24 LEGAL FRAMEWORK 25 Federal Rules of Civil Procedure 12(b)(1) allows for a motion to dismiss based on lack of 26 subject matter jurisdiction. See Fed. R. Civ. Pro. 12(b)(1). It is a fundamental precept that federal 27 courts are courts of limited jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 28 374 (1978); K2 Am. Corp. v. Roland Oil & Gas, 653 F.3d 1024, 1027 (9th Cir. 2011). Limits 1 upon federal jurisdiction must not be disregarded or evaded. Owen Equip., 437 U.S. 365, 374 2 (1978); Jones v. Giles, 741 F.2d 245, 248 (9th Cir. 1984). “It is presumed that a cause lies outside 3 this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting 4 jurisdiction.” Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); K2 Am., 653 F.3d 5 at 1027. Rule 12(b)(1) motions may be either facial, where the inquiry is confined to the 6 allegations in the complaint, or factual, where the court is permitted to look beyond the complaint 7 to extrinsic evidence. See Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014); Safe Air For 8 Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). When a defendant challenges 9 jurisdiction “facially,” all material allegations in the complaint are assumed true, and the court 10 determines whether the factual allegations are sufficient to invoke the court’s subject matter 11 jurisdiction. See Leite, 392 F.3d at 362; Meyer, 373 F.3d at 1039. When a defendant makes a 12 factual challenge “by presenting affidavits or other evidence properly brought before the court, the 13 party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden 14 of establishing subject matter jurisdiction.” Meyer, 373 F.3d at 1039; see Leite, 749 F.3d at 1121. 15 The court need not presume the truthfulness of the plaintiff’s allegations under a factual attack. 16 Wood v. City of San Diego, 678 F.3d 1075, 1083 n.2 (9th Cir. 2011). The plaintiff must show by 17 a preponderance of the evidence each requirement for subject-matter jurisdiction, and as long as 18 the dispute is not intertwined an element of the plaintiff’s cause of action, the court may resolve 19 any factual disputes itself. Leite, 749 F.3d at 1121. 20 21 DEFENDANT’S MOTION 22 Defendant’s Argument 23 The United States argues that in order for a taxpayer to pursue a refund claim in federal 24 court where the taxpayer paid his taxes on a Form 1040 or 1040A, then the taxpayer must submit a 25 Form 1040X and submit written refund claim that is signed under penalty of perjury. This 26 procedure is jurisdictional. A review of IRS records demonstrates that Plaintiffs did not submit 27 any Form 1040X or any writing signed under penalty of perjury. Because the jurisdictional 28 requirements have not been met, this case should be dismissed for lack of jurisdiction. 1 Plaintiff’s Opposition 2 Plaintiffs have filed no response or opposition of any kind.1 3 Legal Standard 4 A taxpayer’s ability to bring a civil suit for a tax refund is conditioned on the taxpayer’s 5 filing of the claim for refund or credit with the IRS “according to the provisions of law in that 6 regard, and the regulations of the Secretary established in pursuance thereof.” 26 U.S.C. § 7422; 7 see Quarty v. United States, 170 F.3d 961, 972 (9th Cir. 1999); Boyd v. United States, 762 F.2d 8 1369, 1371 (9th Cir. 1985). When a taxpayer originally files his taxes on a Form 1040 or 1040A, 9 regulations require that a claim for refund be made on a Form 1040X and that the claim be written 10 and signed under penalty of perjury. 26 C.F.R. § 301.6402-2(b)(1); 26 C.F.R. § 301.6402-3(a)(2). 11 “A claim which does not comply with [these regulations] will not be considered for any purpose 12 as a claim for refund or credit.” 26 C.F.R. §§ 301.6402-2(b)(1); Quarty, 170 F.3d at 972. 13 Moreover, the failure to meet the requirements of 26 U.S.C. § 7422 and its associated regulations 14 deprives federal courts of subject matter jurisdiction. See Quarty, 170 F.3d at 972; Boyd, 762 15 F.2d at 1371. 16 Discussion 17 Here, the Complaint indicates that Plaintiffs originally filed their taxes through a Form 18 1040. See FAC ¶¶ 10, 16. While the FAC invokes § 7422, it does not indicate that a Form 1040X 19 was submitted or that any claim for a refund was written and signed under penalty of perjury. 20 Further, a declaration from an IRS employee indicates that the IRS has no records of a refund 21 claim being received pursuant to § 7422. See Harris Dec.¶¶ 4-6. Rather, there are only two letters 22 dated 2018 in which checks were submitted to the IRS by Plaintiffs’ counsel with an indication 23 that the taxpayer disputes the obligation and is paying at that time to avoid further interest and 24 1 The United States represents that it spoke with Plaintiffs’ counsel about this motion. Plaintiffs’ counsel purportedly 25 stated that he was suspended and ineligible to practice law in California as of September 23, 2021, but should be eligible as of November 21, 2021. Plaintiffs’ counsel also purportedly said that another attorney would appear and 26 respond to the motion to dismiss “if appropriate.” To date, no other attorney has appeared on behalf of Plaintiffs. However, the FAC indicates that Mr. Channaveerappa is an attorney admitted to practice law in California, and the 27 United States has represented that it sent copies of the motion directly to the Plaintiffs.

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 NARESH CHANNAVEERAPPA, et al., CASE NO. 1:20-CV-1732 AWI BAM

10 Plaintiff ORDER ON DEFENDANT’S MOTION 11 v. TO DISMISS

12 UNITED STATES OF AMERICA, (Doc. No. 18) 13 Defendant

14 15 16 This is a tax refund case brought by husband and wife Plaintiffs Nareshh Channaveerappa 17 and Anitha Channabasavaiah (“Plaintiffs”) against the United States. The operative complaint is 18 the First Amended Complaint (“FAC”). Currently pending before the Court is the United States’ 19 Rule 12(b)(1) motion to dismiss. Hearing on the motion is set for November 1, 2021. However, 20 Plaintiffs have not filed an opposition or response of any kind to the Rule 12(b)(1) motion. For 21 the reasons that follow, the Court will vacate the November 1, 2021 hearing date pursuant to Local 22 Rule 230(g) and issue this order, which grants the United States’ motion and closes this case. 23 24 LEGAL FRAMEWORK 25 Federal Rules of Civil Procedure 12(b)(1) allows for a motion to dismiss based on lack of 26 subject matter jurisdiction. See Fed. R. Civ. Pro. 12(b)(1). It is a fundamental precept that federal 27 courts are courts of limited jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 28 374 (1978); K2 Am. Corp. v. Roland Oil & Gas, 653 F.3d 1024, 1027 (9th Cir. 2011). Limits 1 upon federal jurisdiction must not be disregarded or evaded. Owen Equip., 437 U.S. 365, 374 2 (1978); Jones v. Giles, 741 F.2d 245, 248 (9th Cir. 1984). “It is presumed that a cause lies outside 3 this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting 4 jurisdiction.” Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); K2 Am., 653 F.3d 5 at 1027. Rule 12(b)(1) motions may be either facial, where the inquiry is confined to the 6 allegations in the complaint, or factual, where the court is permitted to look beyond the complaint 7 to extrinsic evidence. See Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014); Safe Air For 8 Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). When a defendant challenges 9 jurisdiction “facially,” all material allegations in the complaint are assumed true, and the court 10 determines whether the factual allegations are sufficient to invoke the court’s subject matter 11 jurisdiction. See Leite, 392 F.3d at 362; Meyer, 373 F.3d at 1039. When a defendant makes a 12 factual challenge “by presenting affidavits or other evidence properly brought before the court, the 13 party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden 14 of establishing subject matter jurisdiction.” Meyer, 373 F.3d at 1039; see Leite, 749 F.3d at 1121. 15 The court need not presume the truthfulness of the plaintiff’s allegations under a factual attack. 16 Wood v. City of San Diego, 678 F.3d 1075, 1083 n.2 (9th Cir. 2011). The plaintiff must show by 17 a preponderance of the evidence each requirement for subject-matter jurisdiction, and as long as 18 the dispute is not intertwined an element of the plaintiff’s cause of action, the court may resolve 19 any factual disputes itself. Leite, 749 F.3d at 1121. 20 21 DEFENDANT’S MOTION 22 Defendant’s Argument 23 The United States argues that in order for a taxpayer to pursue a refund claim in federal 24 court where the taxpayer paid his taxes on a Form 1040 or 1040A, then the taxpayer must submit a 25 Form 1040X and submit written refund claim that is signed under penalty of perjury. This 26 procedure is jurisdictional. A review of IRS records demonstrates that Plaintiffs did not submit 27 any Form 1040X or any writing signed under penalty of perjury. Because the jurisdictional 28 requirements have not been met, this case should be dismissed for lack of jurisdiction. 1 Plaintiff’s Opposition 2 Plaintiffs have filed no response or opposition of any kind.1 3 Legal Standard 4 A taxpayer’s ability to bring a civil suit for a tax refund is conditioned on the taxpayer’s 5 filing of the claim for refund or credit with the IRS “according to the provisions of law in that 6 regard, and the regulations of the Secretary established in pursuance thereof.” 26 U.S.C. § 7422; 7 see Quarty v. United States, 170 F.3d 961, 972 (9th Cir. 1999); Boyd v. United States, 762 F.2d 8 1369, 1371 (9th Cir. 1985). When a taxpayer originally files his taxes on a Form 1040 or 1040A, 9 regulations require that a claim for refund be made on a Form 1040X and that the claim be written 10 and signed under penalty of perjury. 26 C.F.R. § 301.6402-2(b)(1); 26 C.F.R. § 301.6402-3(a)(2). 11 “A claim which does not comply with [these regulations] will not be considered for any purpose 12 as a claim for refund or credit.” 26 C.F.R. §§ 301.6402-2(b)(1); Quarty, 170 F.3d at 972. 13 Moreover, the failure to meet the requirements of 26 U.S.C. § 7422 and its associated regulations 14 deprives federal courts of subject matter jurisdiction. See Quarty, 170 F.3d at 972; Boyd, 762 15 F.2d at 1371. 16 Discussion 17 Here, the Complaint indicates that Plaintiffs originally filed their taxes through a Form 18 1040. See FAC ¶¶ 10, 16. While the FAC invokes § 7422, it does not indicate that a Form 1040X 19 was submitted or that any claim for a refund was written and signed under penalty of perjury. 20 Further, a declaration from an IRS employee indicates that the IRS has no records of a refund 21 claim being received pursuant to § 7422. See Harris Dec.¶¶ 4-6. Rather, there are only two letters 22 dated 2018 in which checks were submitted to the IRS by Plaintiffs’ counsel with an indication 23 that the taxpayer disputes the obligation and is paying at that time to avoid further interest and 24 1 The United States represents that it spoke with Plaintiffs’ counsel about this motion. Plaintiffs’ counsel purportedly 25 stated that he was suspended and ineligible to practice law in California as of September 23, 2021, but should be eligible as of November 21, 2021. Plaintiffs’ counsel also purportedly said that another attorney would appear and 26 respond to the motion to dismiss “if appropriate.” To date, no other attorney has appeared on behalf of Plaintiffs. However, the FAC indicates that Mr. Channaveerappa is an attorney admitted to practice law in California, and the 27 United States has represented that it sent copies of the motion directly to the Plaintiffs. In light of the purported statements of Plaintiffs’ counsel in terms of another attorney making an appearance if appropriate, as well as Plaintiffs 28 receiving copies of the motion and Mr. Channaveerappa’s status as a licensed attorney, the Court is satisfied at this 1 |enforced collection activity. See id. at Ex. 1,2. Inthe absence of an opposition, the Court can 2 conclude that Plaintiffs did not file a legally compliant request for a refund. Cf. Local Rule 3 230(c) (court may construe the lack of a timely opposition to be a non-opposition). Because 4 | Plaintiffs have failed to show compliance with the requirements of § 7422, this Court is without 5 ||jurisdiction and must dismiss this case. See Quarty, 170 F.3d at 972; Boyd, 762 F.2d at 1371; see 6 Trakhter v. United States, 2020 U.S. Dist. LEXIS 123657, *5-*6 (N.D. Cal. July 14, 2020). 7 8 ORDER 9 Accordingly, IT IS HEREBY ORDERED that: 10 11. The November 1, 2021 hearing is VACATED; 11 2. Defendant’s Rule 12(b)(1) motion to dismiss is GRANTED and this case is DISMISSED 12 without prejudice for lack of subject matter jurisdiction; and 13 The Clerk is directed to CLOSE this case. 14 15 ITIS SO ORDERED. thle 16 | Dated: _ October 26, 2021 xn □□ TRICn UDGE 17 18 19 20 21 22 23 24 25 26 27 28

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