Miranda v. Department of Treasury Internal Revenue Service

• Court: District Court, E.D. California
• Decided: January 6, 2023
• Docket: 1:21-cv-01763
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10

11 RAYMOND MIRANDA, ) Case No.: 1:21-cv-1763 JLT HBK ) 12 Plaintiff, ) ORDER DISMISSING PLAINTIFF’S ) COMPLAINT WITH LEAVE TO AMEND TO 13 v. ) CLARIFY THE MATTER OF THIS COURT’S ) JURISDICTION 14 DEPARTMENT OF THE TREASURY ) INTERNAL REVENUE SERVICE, ) 15 ) Defendant. ) 16 )

17 Raymond Miranda is incarcerated at Corcoran State Prison. He asserts that he did not receive 18 economic impact payments to which he was entitled under the Coronavirus Aid, Relief, and Economic 19 Security Act; the Consolidated Appropriations Act; and the American Rescue Plan Act of 2021. (See 20 Doc. 1 at 3-4.) For the following reasons, it appears the Court is unable to grant the relief requested, 21 and the complaint is dismissed with leave to amend. 22 I. Screening Requirement 23 When an individual proceed in forma pauperis, as Plaintiff was authorized to do here, the 24 Court is required to review the complaint and shall dismiss a complaint, or portion of the complaint, if 25 it is “frivolous, malicious or fails to state a claim upon which relief may be granted; or . . . seeks 26 monetary relief from a defendant who is immune from such relief.” 28 U.S.C. § 1915A(b); 28 U.S.C. 27 § 1915(e)(2). Further, the complaint must be dismissed “[n]otwithstanding any filing fee, or any 28 portion thereof, that may have been paid…” 28 U.S.C. § 1915(e)(2)(B)(ii). 1 II. Pleading Requirements 2 General rules for pleading complaints are governed by the Federal Rules of Civil Procedure. A 3 pleading must include a statement affirming the court’s jurisdiction, “a short and plain statement of the 4 claim showing the pleader is entitled to relief; and... a demand for the relief sought, which may include 5 relief in the alternative or different types of relief.” Fed. R. Civ. P. 8(a). 6 A complaint must state the elements of the plaintiff’s claim in a plain and succinct manner. 7 Jones v. Cmty Redevelopment Agency, 733 F.2d 646, 649 (9th Cir. 1984). The purpose of the complaint 8 is to give the defendant fair notice of the claims against him, and the grounds upon which the complaint 9 stands. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). The Supreme Court explained, 10 Rule 8 does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A 11 pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if 12 it tenders naked assertions devoid of further factual enhancement.

13 Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (internal quotation marks and citations omitted). 14 Conclusory and vague allegations do not support a cause of action. Ivey v. Board of Regents, 673 F.2d 15 266, 268 (9th Cir. 1982). The Court clarified further, 16 [A] complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” [Citation]. A claim has 17 facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the 18 misconduct alleged. [Citation]. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that 19 a defendant has acted unlawfully. [Citation]. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short 20 of the line between possibility and plausibility of ‘entitlement to relief.’”

21 Iqbal, 556 U.S. at 679 (citations omitted). When factual allegations are well-pled, a court should 22 assume the truth and determine whether the facts would make the plaintiff entitled to relief; conclusions 23 in the pleading are not entitled to the same assumption of truth. Id. The Court may grant leave to 24 amend a complaint to the extent deficiencies of the complaint can be cured by amendment. Lopez v. 25 Smith, 203 F.3d 1122, 1127-28 (9th Cir. 2000) (en banc). 26 III. Discussion and Analysis 27 Plaintiff asserts he has not received the EIPs to which he is entitled, and requests the Court 28 intercede for him to receive the stimulus payments. (See Doc. 1 at 4.) 1 A. Economic Impact Payments 2 In response to the COVID-19 pandemic, three federal acts provided economic impact 3 payments (“EIPs”) to eligible individuals. The government made payments in the amount of $1,200 4 per individual according to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES 5 Act”), passed on March 27, 2020, Pub. L. 116-136, 134 Stat. 281 (2020). 26 U.S.C. 23 § 6428(a)-(d). 6 The government made payments in the amount of $600.00 under the Consolidated Appropriations Act, 7 2021, passed on December 27, 2020, Pub. L. 116-260, 134 Stat. 1182 (2020). 26 U.S.C. § 6428A(a)- 8 (d). Finally, the government made payments in the amount of $1,400 under the American Rescue Plan 9 Act of 2021, passed March 11, 2021, Pub. L. 117-2, 135 Stat. 4. 26 U.S.C. § 6428B(a)-(d). Plaintiff 10 asserts he was entitled to the EIPs but did not receive them. (Doc. 1 at 4.) 11 B. Payments under the CARES Act 12 The CARES Act established a mechanism for the IRS to issue economic impact payments to 13 eligible individuals in the form of a tax credit. Scholl v. Mnuchin (Scholl I), 489 F. Supp. 3d 1008, 14 1020 (N.D. Cal. 2020), appeal dismissed, 2020 WL 9073361 (9th Cir. Nov. 20, 2020). Under Section 15 6428(a), eligible individuals could receive a tax credit in the amount of $1,200. Scholl I, 489 F. Supp. 16 3d at 1020 (citing 26 U.S.C. § 6424(a)). This amount is credited against the individual’s federal 17 income tax for the year 2020. Id. For purposes of the CARES Act, eligible individual includes “any 18 individual” other than: (1) a nonresident alien individual, (2) an individual who is allowed as a 19 dependent deduction on another taxpayer’s return, or (3) an estate or trust. Id. at 1021 (citing 26 20 U.S.C. § 6424(d)). Incarcerated persons—such as Plaintiff— were “eligible individuals” to receive 21 EIPs under the CARES Act. Scholl v. Mnuchin (Scholl II), 494 F. Supp. 3d 661, 689 (N.D. Cal. 2020). 22 The CARES Act provides that “each individual who was an eligible individual for such 23 individual’s first taxable year beginning in 2019 shall be treated as having made a payment against the 24 tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for 25 such taxable year.” Scholl II, 494 F. Supp. 3d at 670 (quoting 26 U.S.C. § 6428(f)(1)). Therefore, “if 26 an eligible individual filed a tax return in 2018 or 2019 or filed one of the enumerated Social Security 27 forms, then the Act directs the IRS to treat those taxpayers as eligible for an advance refund of the tax 28 credit.” Id. 1 Plaintiff reports he is incarcerated and alleges the defendants did not issue his EIPs. (Doc. 1 at 2 3-4.) Importantly, however, Congress provided that “[n]o refund or credit shall be made or allowed 3 under this subsection after December 31, 2020.” 26 U.S.C. § 6428(f)(3)(A). Thus, the CARES Act 4 imposed a clear deadline of December 31, 2020 for making any economic impact payments. Id; see 5 also Scholl I, 489 F. Supp. 3d at 1043 (“The CARES Act places an unambiguous deadline on advance 6 refund payments of December 31, 2020.”). That deadline expired nearly a year before Plaintiff filed 7 his complaint on December 13, 2021 (Doc. 1), and no more funds may be issued. Accordingly, the 8 Court finds Plaintiff is unable to state a cognizable claim—and the Court is unable to grant the relief 9 requested—under the CARES Act. 10 C. Jurisdictional Issues 11 The Government has waived its sovereign immunity with respect to civil actions seeking a 12 refund or credit on overpaid taxes. See 28 U.S.C. § 1346(a)(1); see also Imperial Plan, Inc. v. United 13 States, 95 F.3d 25, 26 (9th Cir. 1996). The Government’s consent to suit is limited as follows: 14 No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally 15 assessed or collected … until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, 16 and the regulations of the Secretary established in pursuance thereof.

17 26 U.S.C. § 7422(a). Consequently, before filing suit in federal court for a tax credit or refund, a 18 taxpayer must file an administrative claim with the IRS. United States v. Clintwood Elkhorn Min. Co., 19 553 U.S. 1, 4 (2008); Omohundro v. United States, 300 F.3d 1065, 1066 (9th Cir. 2002); see also 26 20 U.S.C. § 7422(a). 21 Further, a taxpayer must file a refund claim with the IRS within the time limits established by 22 the Internal Revenue Code. Northern Life Ins. Co. v. United States, 685 F.2d 277, 279 (9th Cir. 1982) 23 (“filing of a timely claim is jurisdictional for a refund suit and cannot be waived”); Crimson v. United 24 States, 550 F.2d 1205, 1206 (9th Cir. 1977) (affirming dismissal for lack of jurisdiction where the 25 plaintiffs did “not file[] a proper claim for a refund within the statuary time period”). Thus, “[a] 26 taxpayer’s failure to file an administrative claim within the time periods imposed by statute divests the 27 district court of jurisdiction over an action for a refund or credit.” Omohundro, 300 F.3d at 1066-67; 28 Danoff v. United States, 324 F. Supp. 2d 1086, 1092 (C.D. Cal. 2004). The IRS has six months to 1 either reject or elect to not act upon the claim. Thomas v. United States, 755 F.2d 728, 729 (9th Cir. 2 1985) (citations omitted). 3 Plaintiff alleges he mailed a 1040 form to the IRS more than 180 days prior to filing his 4 complaint in December 2021. (Doc. 1 at 4) However, Plaintiff does not allege any details asserted in 5 his 1040 tax form, such that the Court may determine filing the forms satisfied the administrative claim 6 requirement. For example, Plaintiff does not indicate whether he verified by written declaration that his 7 tax claims were submitted under penalty of perjury; he does not attach any documents to support his 8 assertion of submitting an administratively-compliant claim; and he does not identify what evidence, if 9 any, he submitted to the IRS to support his request the payment of EIPs. See 26 C.F.R. § 301.6402- 10 2(b); Provenzano v. United States, 123 F. Supp. 2d 554, 557-58 (S.D. Cal. 2020); Dunn & Black, P.S. 11 v. United States, 492 F.3d 1084, 1088 (9th Cir. 2007). This is significant because a taxpayer cannot 12 recover in a lawsuit “for refund on a different ground than that set forth in the claim for refund.” Dunn 13 & Black, P.S., 492 F.3d at 1091 (emphasis, citation omitted). Based upon the limited information 14 alleged, it also appears the 1040 tax forms Plaintiff submitted could not encompass the EIPs paid under 15 the American Rescue Plan Act, which passed on March 11, 2021. 26 U.S.C. § 6428B(a)-(d). Thus, the 16 Court is unable to find Plaintiff complied with the administrative claim requirements to bring suit under 17 Section 7422(a). 18 Moreover, the allegations are insufficient to determine Plaintiff complied with the requirements 19 of Section 6532(a), which provides: “No suit or proceeding under section 7422(a) for the recovery of 20 any internal revenue tax, penalty, or other sum, shall be begun before the expiration of 6 months from 21 the date of filing the claim required under such section unless the Secretary renders a decision thereon 22 within that time…” 26 U.S.C. § 6532(a). Because the facts alleged are insufficient to determine 23 Plaintiff complied with the requirements of Sections 7422(a) and 6532(a), it appears the Court lacks 24 jurisdiction over any claim for EIPs in the form of a tax refund. 25 D. Proper Defendant 26 Pursuant to Section 7422, a suit for refund “may be maintained only against the United States.” 27 26 U.S.C. § 7422(f)(1); see also Zinda v. Johnson, 463 F. Supp. 2d 45, 48 (D.D.C. 2006) (“suits for 28 tax refunds or damages should be brought against the United States”). Consequently, the United 1 States is the proper defendant—to the extent Plaintiff seeks a EIPs in the form of a tax refund—rather 2 than the Department of Treasury or the IRS. 3 IV. Leave to Amend 4 Pursuant to Rule 15 of the Federal Rules of Civil Procedure, leave to amend “shall be freely 5 given when justice so requires,” bearing in mind “the underlying purpose of Rule 15 to facilitate 6 decisions on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 7 1127 (9th Cir. 2000) (alterations, internal quotation marks omitted). Dismissal of a pro se complaint 8 without leave to amend for failure to state a claim is proper only where it is obvious that the plaintiff 9 cannot prevail on the facts alleged, and that an opportunity to amend would be futile. See id. at 1128. 10 Due to the sparsity of allegations in the complaint, the Court has insufficient information to 11 conclude that amendment is futile. Plaintiff has not alleged he submitted an administrative claim 12 related to the EIPs, but the Court is unable to conclude this did not occur. Amendment would allow 13 Plaintiff to identify the contents of his submissions to the IRS and allow the Court to clarify whether he 14 complied with the jurisdictional requirements. Thus, leave to amend is appropriate, and Plaintiff will 15 be granted one opportunity to allege facts sufficient to state a cognizable claim and support a 16 conclusion that this Court has jurisdiction over the matter. See Strojnik v. Wickstrom Hospitality, LLC, 17 2020 WL 1467067, at *7 (E.D. Cal. Mar. 25, 2020) (granting leave to amend for the plaintiff to address 18 jurisdictional deficiencies); see also Cook, 911 F.2d at 247. 19 The amended complaint shall be titled “First Amended Complaint.” Plaintiff is advised that an 20 amended complaint supersedes the original complaint. Forsyth v. Humana, Inc., 114 F.3d 1467, 1474 21 (9th Cir. 1997); King v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987). The amended complaint must be 22 “complete in itself without reference to the prior or superseded pleading.” Local Rule 220. 23 V. Conclusion and Order 24 For the reasons set forth above, the Court ORDERS: 25 1. The complaint is DISMISSED with leave to amend. 26 2. Plaintiff SHALL file any First Amended Complaint within thirty days of the date of 27 service of this order. 28 /// 1 || If Plaintiff fails to file an amended complaint, the action may be dismissed without prejudice fo 2 || failure to prosecute and failure to obey the Court’s order. 3 4 IT ISSO ORDERED. 5 Dated: _ January 6, 2023 Cerin | Tower 6 TED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28