Opinion
CASE NO. 01-7426-CIV-GOLD/SIMONTON
September 17, 2003
THIS CAUSE is before the Court upon Defendant's Motion to Dismiss (DE #17, filed January 10, 2002), Plaintiffs' Motion for Summary Judgment (DE #23, filed February 27, 2002), and Defendant United States' Cross Motion for Summary Judgment (DE #29, filed March 11, 2002). The parties argued these motions at a hearing on September 12, 2003 before this Court.
On August 28, 2001, Plaintiffs filed their Complaint to Recover Tax Deposits, or Alternatively for a Refund of Overpayments (DE #1). Plaintiffs Raymond C. Parker, Robert Brennan, and Else V. Peacock bring this action as personal representatives of the Estate of Louis W. Parker ("Estate"). They seek the return of $421,336.86 from the Internal Revenue Service ("IRS"). Defendant subsequently filed its Motion to Dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). Defendant argues that Plaintiffs' Complaint should be dismissed because it fails to allege a waiver of sovereign immunity, thereby depriving this Court of subject matter jurisdiction.
Upon careful consideration of Plaintiffs' allegations in the Complaint, the parties' briefs and oral arguments, and applicable case and statutory law, the Court GRANTS Defendant's Motion to Dismiss. The case is DISMISSED WITH PREJUDICE. Because Plaintiffs' Complaint is dismissed, the Motion and Cross Motion for Summary Judgment are DENIED AS MOOT. Defendant's request for costs and attorney's fees is REFERRED to United States Magistrate Judge Andrea M. Simonton to take all necessary and proper action as required by law.
For reasons set forth more fully later in this Opinion, the Court concludes that even if Plaintiffs tried to amend their allegations, such an amendment would be futile because they would still be unable to allege a waiver of sovereign immunity. See Boda v. United States, 698 F.2d 1174 (11th Cir. 1983) (denying as futile an amendment that would have resulted in dismissal due to a lack of a sovereign immunity waiver).
I. Factual Background
In their Complaint, Plaintiffs allege jurisdiction under 28 U.S.C, §§ 1340, 1346(a)(1) "because this is a civil action against the United States for the recovery of an internal revenue tax wrongfully collected." (Complaint ¶ 3). Section 1340 provides, "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue" 28 U.S.C. § 1340 (1993). Section 1346(a)(1) gives district courts original jurisdiction of the following:
[a]ny civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws. . . .28 U.S.C. § 1346(a)(1) (1993).
Plaintiffs state that on September 12, 1997, Defendant, through the IRS, issued notices of deficiency in gift and estate taxes Plaintiffs had paid following the decedent's death. ( Id. at ¶¶ 5-6). Plaintiffs filed a petition with the Tax Court on December 4, 1997 for redetermination of the Estate's gift and estate tax liabilities. ( Id. at ¶ 7). On September 3, 1998, Plaintiffs remitted $700,000 to the IRS, and on December 3, 1998, Plaintiffs remitted an additional $300,000. ( Id. at ¶¶ 8-9). Plaintiffs allege that they informed the IRS that these remittances were to be treated as deposits in the nature of cash bonds pursuant to the Internal Revenue Manual and that the IRS at all times treated the remittances accordingly. ( Id. at ¶¶ 8-10). Revenue Procedure 84-58 allows remittances to be treated as deposits. Rev. Proc. 84-58.1984-2 C.B. 501. It provides, "if a taxpayer who has made a deposit . . . agrees to the full amount of the deficiency, an assessment will be made and any deposit will be applied against the assessed liability as a payment of tax as of the date the assessment was made." Id.
Plaintiffs state that on April 13, 1999, the Tax Court entered stipulated decisions reflecting tax deficiency amounts agreed upon by the parties. ( Id. at ¶ 12). The IRS assessed the gift tax deficiency in a timely manner on May 6, 1999 and applied $578,663 of the $700,000 remittance in payment of this deficiency assessment. ( Id. at ¶ 14). With respect to the estate tax deficiency, however, the IRS failed to make an assessment before the applicable statute of limitations expired. ( Id. at ¶ 17).
Plaintiffs demanded that the IRS return $496,336.86, the amount of the deposits remitted for payment of the estate tax deficiency. ( Id. at ¶ 18). This amount included a $75,000 remittance the Estate made on November 12, 1999. ( Id. at ¶ 15). The IRS refused the demand, allegedly stating that the deposits "constituted, or were converted to, `tax payments' that could only be returned pursuant to a timely filed claim for refund," ( Id. at ¶ 19). Plaintiffs allege that the deposits "could not have been converted to payments of the estate tax deficiencies unless and until the deficiencies were timely and properly assessed." ( Id. at ¶ 22). Plaintiffs, however, filed a tax refund claim on April 9, 2001. (d. at ¶ 22). On June 20, 2001, the IRS returned $75,000 plus interest but denied the balance of the claim, $421,336.86. ( Id. at ¶ 21).
Based on these allegations, Plaintiffs seek to recover deposits, or alternatively, a refund of tax overpayments. Plaintiffs allege that because the IRS failed to assess the estate tax, the remittances to be applied towards the estate tax deficiency retained their character as deposits, and the Estate is "entitled to interest on the amount of the deposits from October 13, 2000, when the ESTATE demanded the return of the deposits." ( Id. at ¶¶ 23-25). Plaintiffs alternatively allege that if the Court finds that the deposits were converted to tax payments, the Estate is entitled to a tax refund because such tax payments would constitute "overpayments" within the meaning of 26 U.S.C. § 6401 (a), (Id. at ¶ 26).
II. Standard of Review for a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1)
Under Federal Rule of Civil Procedure 12(b)(1), the "plaintiff bears the burden of establishing that the court has jurisdiction." Rosner v. United States, 231 F. Supp.2d 1202, 1205 (S.D. FIa. 2002) (citing Menchaca v. Chrysler Credit Corp., 613 F.2d 507 (5th Cir. 1980)) (citation omitted). The Eleventh Circuit has stated that "because a federal court is powerless to act beyond its statutory grant of subject matter jurisdiction, a court must zealously insure that jurisdiction exists over a case." Smith v. GTE Corp., 236 F.3d 1292, 1299 (11th Cir. 2001) (citations omitted).
All Fifth Circuit decisions prior to October 1, 1981 are binding precedent on the Eleventh Circuit. See Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981).
Motions to dismiss under Rule 12(b)(1) fall into two categories: `"facial" or "factual attacks." Morrison v. Amway Corp., 323 F.3d 920, 925 n. 5 (11th Cir. 2003) (citation omitted). Facial attacks are based on the allegations in the complaint, and the court takes these allegations as true in deciding whether to grant the motion. Id. Factual attacks rely on evidence outside the pleadings. Id. In the case before the Court, Defendant has asserted a lack of subject matter jurisdiction on the basis of the pleadings, making this jurisdictional attack a facial one. Cf id. Because Defendant has made a "facial attack" upon the complaint rather than a factual attack, "the plaintiff is afforded safeguards similar to those provided in opposing a Rule 12(b)(6) motion — the court must consider the allegations of the complaint to be true." Broward Garden Tenants Ass'n v. EPA, 157 F. Supp.2d 1329, 1336 (S.D. FIa. 2001) (citation omitted).
III. Analysis
In the Complaint, Plaintiffs state that the Court has jurisdiction under 28 U.S.C. § 1340, 1346(a)(1). ( Id. at ¶ 3). Citing these statutes does not sufficiently allege subject matter jurisdiction because the statutes do not provide a waiver of Defendant's sovereign immunity in cases in which a Tax Court petition has been filed. 26 U.S.C. § 6512(a) includes exceptions which provide for a limited waiver when petitions in the Tax Court have been filed. Even if Plaintiffs had alleged any of these exceptions, none of them would have applied. Because there is no waiver of sovereign immunity in this case, the Court does not have subject matter jurisdiction.
A. The Parties' Arguments
1. Defendant's Motion to Dismiss and the Parties' Briefs
Defendant moves to dismiss the Complaint based on a lack of subject matter jurisdiction. Defendant cites Supreme Court precedent for the proposition that the United States is immune from suit under the doctrine of sovereign immunity unless it has explicitly waived its immunity. United States v. Mitchell, 445 U.S. 535, 538 (1990). Defendant states that the statutes cited by Plaintiffs, 28 U.S.C. § 1340, 1346(a)(1), provide for jurisdiction in United States District Courts, but they do not explicitly waive sovereign immunity. Defendant argues that 26 U.S.C. § 7422 and 26 U.S.C. § 6512(a) provide a limited waiver in tax refund actions, but not when the taxpayer has already filed a petition with the Tax Court. Section 7422(a) provides,
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 assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.26 U.S.C. § 7422(a) (2002). When "the Secretary has mailed to the taxpayer a notice of deficiency" and when "the taxpayer files a [timely] petition with the Tax Court," § 6512(a) bars jurisdiction:
no credit or refund of income tax for the same taxable year, of gift tax for the same calendar year or calendar quarter, of estate tax in respect of the taxable estate of the same decedent . . . in respect of which the Secretary has determined the deficiency shall be allowed or made and no suit by the taxpayer for the recovery of any part of the tax shall be instituted in any court26 U.S.C. § 6512(a) (2002).
Defendant cites Eleventh Circuit precedent to support its argument that § 6512(a)'s jurisdictional bar applies to any action involving taxes for the taxpayer's estate and that it applies even when the issues involved depend upon facts that occurred subsequent to the Tax Court's decision. Solitron Devices, Inc. v. United States, 862 F.2d 846,848-849 (11th Cir. 1989). Accordingly, Defendant argues that Plaintiffs have not sufficiently alleged subject matter jurisdiction.
Defendant states that although § 6512(a) provides six exceptions to the jurisdictional bar against actions involving a taxpayer who has filed a petition with the Tax Court, Plaintiffs neither alleged any of these exceptions nor would they fall within any of them even if they had been alleged. The first exception is for "overpayments determined by a decision of the Tax Court, which has become final." § 6512(a)(1). There was no Tax Court determination of overpayment in this case. The second exception is for "any amount collected in excess of an amount computed in accordance with the decision of the Tax Court which has become final." § 6512(a)(2). Defendant states that Plaintiffs have not alleged that the IRS collected more than the amount required by the Tax Court decision. The third exception allows district court actions for amounts collected after the period of limitations upon levying or beginning a collection proceeding in court has expired. § 6512(a)(3). This period does not expire until 10 years after the tax assessment. § 6502. Defendant states that because Plaintiffs did not allege that a formal assessment or collection occurred, this exception does not apply. Defendant argues that the fourth exception is also inapplicable; it relates to partnership items and therefore does not allow jurisdiction in this estate tax case. See § 6512(a)(4). The fifth exception is for "any amount collected within the period during which the Secretary is prohibited from making the assessment or from collecting by levy or through a proceeding in court under the provisions of section 6213(a)" § 6512(a)(5). Defendant again argues that Plaintiffs have not alleged that a collection was made, so this exception does not apply. Finally, the sixth exception applies "to overpayments the Secretary is authorized to refund or credit pending appeal" when overpayment has been determined by the Tax Court. § 6512(a)(6). Defendant again states that no Tax Court determination of overpayment was made, so the sixth exception does not apply to allow jurisdiction in this case.
In Plaintiffs' Opposition to Defendant's Motion to Dismiss (DE #19, filed January 28, 2002), Plaintiffs argue that § 6512(a) only bars actions brought to determine the Estate's substantive tax liability and that the statute only applies to tax payment recovery actions as opposed to actions involving deposits. According to Plaintiffs, even if the remittances were converted to tax payments, § 6512(a)(5)'s exception to the jurisdictional prohibition applies. Section 6512(a)(5) allows jurisdiction over actions regarding any amount collected or assessed during a prohibited period. Plaintiffs argue that under § 6213(a), the prohibited period for assessment in this case was before the entry of the Tax Court decision on April 13, 1999 and after the statute of limitations for the assessment had run in September 1999. They state that the dates the deposits were made and the dates Defendant argues that they were converted to tax payments occurred before the Tax Court decision was entered. Thus, Plaintiffs allege, even if the deposits have been converted to tax payments and this action is one for tax recovery, § 6512(a)(5) applies as an exception to § 6512(a)'s prohibition against jurisdiction.
In its Reply (DE #21, filed January 31, 2002), Defendant argues that § 6512(a) bars any action for taxes, not only redeterminations of substantive tax liability. Regarding Plaintiffs' argument that § 6512(a) is inapplicable to deposit recovery actions, Defendant states that if that is indeed the case, Plaintiffs needed to cite a statute in the Complaint that provides a sovereign immunity waiver with respect to actions to recover deposits, which they failed to do. Finally, Defendant states that § 6512(a)(5) only applies when the Secretary has collected the amounts at issue. Defendant, however, cites Supreme Court precedent concluding that deposits are not considered amounts collected. Rosenman v. United States, 323 U.S. 658, 662 (1945). Because Plaintiffs are alleging that the remittances are deposits, the amounts at issue were never collected by the government, and therefore never collected during the prohibited period.
2. Summary Judgment Motions and Briefs
Both parties filed motions seeking summary judgment. In their Motion, Plaintiffs argue that they are entitled as a matter of law to the return of all deposits that were not applied to the deficiency assessments. They cite Thomas v. Mercantile National Bank at Dallas for the proposition that a remittance cannot be a considered a tax payment until a deficiency is assessed. 204 F.2d 943 (5th Cir. 1953).
Plaintiffs' next argument is that the deposits to be applied to the estate tax deficiency were never converted to tax payments. They state that they sent the IRS a letter informing it that they were remitting the $700,000 "to be treated as a deposit in the nature of a cash bond" and that if the Tax Court determined tax deficiencies, "all or a portion of this cash bond should be applied to pay the same and the balance should be refunded to the estate," It cites Rev. Proc. 84-58, which reads, "any deposit will be applied against the assessed liability as a payment of tax as of the date the assessment was made." According to Plaintiffs, this language makes it clear that a deposit is not converted to a tax payment until the date of assessment. Plaintiffs cite Federal Circuit precedent to support their argument that a taxpayer's intent is an important factor in determining whether a remittance is a deposit or payment. Cohen v. United States, 995 F.2d 205 (Fed. Cir. 1993). They also cite a case in which the Court of Claims concluded that the remittance in question was a deposit even though it was designated by the IRS as an advance payment. New York Life Ins. Co. v. United States, No. 94-960T, 1995 WL 817955 (Cl.Ct. Nov. 14, 1995), aff'd, New York Life Ins. Co. v. United States, 118 F.3d 1553 (Fed. Cir. 1997).
In the alternative, Plaintiffs argue that even if the deposits were converted to tax payments, the converted tax payments would qualify as an overpayment. It cites 26 U.S.C. § 6401 (a), which includes in its definition of overpayment a tax that is assessed or collected after the applicable period of limitations expires. Plaintiffs argue that even if the remittance were considered a tax payment, it would constitute an overpayment because the IRS did not timely assess the estate tax.
The United States filed a Cross Motion for Summary Judgment on March 11, 2002. In the Motion's statement of facts, Defendant states that the estate tax deficiency was not assessed prior to the expiration of the statute of limitations. It argues, however, that the remittances are no longer cash bonds returnable on demand. Defendant states that on February 10, 1999, the attorney for the Estate requested that the "advance payments" be applied to the specific liabilities set forth in the letter. According to Defendant, this letter "constituted a conversion from a deposit to payment." Defendant also argues that the payments were not overpayments. Defendant states that the Estate agreed an estate tax deficiency existed, and the Tax Court entered a stipulated decision to that effect. According to Defendant, Plaintiffs are barred from now alleging that their estate tax liability is different than the amount set forth in the Tax Court decision. It cites Supreme Court precedent to defend its position:
[a]lthough the statute of limitations may have barred the assessment and collection of any additional sum, it does not obliterate the right of the United States to retain payments already received when they do not exceed the amount which may have been properly assessed and demanded.Lewis v. Reynolds, 284 U.S. 281, 283 (1932).
The Court need not and, indeed, cannot address these motions because it does not have the jurisdiction to do so. Accordingly, the Court will simply identify the additional facts which appear in the summary judgment motions and briefs that are not in dispute and that pertain to subject matter jurisdiction. One fact that remains undisputed is that the estate tax was never formally assessed. If it is a deposit, the amount remitted for payment of the estate tax deficiency is simply money in an account that has not been assessed or collected. The question is whether the IRS has the right to retain this money. The Court concludes that it is without jurisdiction to answer this question.
Noting the undisputed facts from the summary judgment motions does not transform Defendant's Motion to Dismiss for lack of subject matter jurisdiction into a factual attack. In factual attacks, "the very facts providing cause for jurisdiction are themselves challenged." Barnett v. Okeechobee Hosp., 283 F.3d 1232, 1237 (11th Cir. 2002). In this case, however, Defendant's challenges are based on the pleadings, and the facts in the summary judgment motions and briefs pertaining to jurisdiction are undisputed.
B. Waivers of Sovereign Immunity and Subject Matter Jurisdiction
Defendant correctly states that it is entitled to sovereign immunity unless an explicit waiver applies. See Mid-South Holding Co., 225 F.3d 1201, 1203 (11th Cir. 2000). Plaintiffs carry the burden of establishing that sovereign immunity has been waived, and they have failed to do so. See Earl v. Internal Revenue Serv., 02-60709-CIV, 2002 U.S. Dist. LEXIS 19477, (S.D.Fla. Aug. 13, 2002).
In their Complaint, Plaintiffs try to allege jurisdiction under two statutes, 28 U.S.C. § 1340 and § 1346(a)(1). (¶ 3). Next, in their Opposition, Plaintiffs argue that § 6512(a) only applies to substantive tax liability actions. They also argue that the statute does not apply to deposit recovery actions. Finally, they state that even if the statute did apply, the facts alleged fit within one of § 6512(a)'s exceptions, allowing jurisdiction in this case.
These attempts to allege jurisdiction are insufficient, and the Court will discuss each of them, starting with the attempt to allege jurisdiction in the complaint. First, the two statutes cited in the Complaint, 28 U.S.C. § 1340 and § 1346, do not provide a waiver of sovereign immunity in cases in which a Tax Court petition has already been filed. This fact alone is enough to grant Defendant's Motion to Dismiss. Second, 26 U.S.C. § 7422 and § 6512 are not limited in application to substantive actions. Third, even if deposit recovery actions had to be analyzed under an entirely different set of statutes, Plaintiffs have not alleged a statute that provides a waiver of sovereign immunity in such actions. They would not have been able to do so because there is no statute allowing a waiver in this Court under these circumstances. Fourth, Plaintiffs have not sufficiently alleged that this action fits within any of § 6512(a)'s exceptions to the jurisdictional bar in this case, and none of the exceptions would have applied even if they had been alleged. The fact that this Court lacks jurisdiction does not necessarily bar Plaintiffs from seeking relief. The Court of Federal Claims might have jurisdiction to hear Plaintiffs' claims.
1. Neither § 1340 nor § 1346 provide a waiver of sovereign immunity when a petition has already been filed with the Tax Court
Plaintiffs allege jurisdiction under 28 U.S.C. § 1340 because this is a civil action arising under an Act of Congress providing for internal revenue and under § 1346(a)(1) because this is an action "for the recovery of an internal revenue tax wrongfully collected." (Complaint ¶ 3). Neither of these statutes sets forth a waiver of sovereign immunity in the instant action. 28 U.S.C. § 1340 provides, "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue" Section 1346(a)(1) gives district courts original jurisdiction of the following:
[a]ny civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws. . . .28 U.S.C. § 1346(a)(1). These statutes are insufficient to confer jurisdiction upon this Court. The Supreme Court has stated, "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." United States v. Dalm, 494 U.S. 596, 601 (1990). According to the Court, the first of these other statutory provisions is 26 U.S.C. § 7422(a). Id. Because Plaintiffs already filed a petition with the Tax Court, § 6512(a) also applies in this case. See 26 U.S.C. § 6512(a) (barring jurisdiction if a taxpayer has already filed a petition with the Tax Court).
2. Sections 7422 and 6512 bar jurisdiction in the instant action
Plaintiffs did not allege that they fit within 26 U.S.C. § 7422 or § 6512(a), which are prerequisites to establishing a sovereign immunity waiver when a Tax Court petition has already been filed. According to the Eleventh Circuit, § 6512(a) is a limited "exception to the general rule that the United States may not be sued in its own courts" and "generally prohibits a taxpayer from instituting an action against the government once he has petitioned to the Tax Court." Solitron Devices at 848. The Plaintiffs do not sufficiently plead that this case falls under § 6512(a)'s limited waiver of sovereign immunity, and nor would they have been able to do so. Section 6512(a) bars jurisdiction in this case. The alleged facts meet the jurisdictional prerequisites of § 7422 but do not survive § 6512(a)'s jurisdictional bar.
Section 7422(a) provides the following:
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 assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.26 U.S.C. § 7422(a). Further, when "the Secretary has mailed to the taxpayer a notice of deficiency" and when "the taxpayer files a [timely] petition with the Tax Court," jurisdiction is prohibited:
no credit or refund of income tax for the same taxable year, of gift tax for the same calendar year or calendar quarter, of estate tax in respect of the taxable estate of the same decedent . . . in respect of which the Secretary has determined the deficiency shall be allowed or made and no suit by the taxpayer for the recovery of any part of the tax shall be instituted in any court26U.S.C. § 6512(a).
Section 7422(a) prohibits any action for the recovery of an internal revenue tax until a claim for refund or credit has been filed with the Secretary. Plaintiffs state in their Complaint that this action is one "for the recovery of an internal revenue tax wrongfully collected" and that they "timely filed a claim for refund of the overpayment of the estate tax" with the Secretary. (¶¶ 3, 20).
The jurisdictional inquiry, however, does not end with § 7422. In this case, the IRS issued notices of deficiency, and the Estate filed a timely petition with the Tax Court for redetermination of its tax liabilities. (Complaint ¶¶ 6-7). Because of these circumstances, § 6512(a) applies. The exception to sovereign immunity permitted under § 6512(a) "is a limited one and generally prohibits a taxpayer from instituting an action against the government once he has petitioned to the Tax Court." Solitron Devices, 862 F.2d at 848; see also United States v. Mathewson, 839 F. Supp. 858, 860 (S.D.Fla. 1993) (concluding that § 6512(a) precludes district court actions once a taxpayer has filed a Tax Court petition). "The jurisdictional bar of section 6512(a) operates to prohibit any action for taxes for that taxable [estate]." Id. (emphasis in original). According to the Eleventh Circuit, "[t]he Tax Court's jurisdiction, once it attaches, extends to the entire subject of the correct tax for the particular year. The cause of action then before the [Tax] Court encompass[es] all phases of the taxpayer's income tax for [the year in issue]. . . ." Id. (citations omitted) (emphasis and brackets in original).
Thus, despite Plaintiffs' argument that the statute only bars actions to determine substantive tax liability, § 6512 bars any action relating to the subject of the correct tax for the particular year. This bar applies even when the facts giving rise to the claim occurred subsequent to the filing of the Tax Court Petition. Solitron Devices at 849. Accordingly, the Court lacks subject matter jurisdiction.
3. No statute has been alleged as a basis for waiving sovereign immunity in deposit recovery actions
Plaintiffs' state in their Opposition that § 6512 does not apply because they seek to recover "deposits" as opposed to tax payments. Even if the tax recovery statutes did not apply, however, Plaintiffs still need to allege a waiver of sovereign immunity to establish subject matter jurisdiction. See Mitchell, 445 U.S. at 538. Defendant correctly states in its Reply that Plaintiffs have cited no statute providing for a waiver of sovereign immunity with respect to deposit recovery actions. There is no such waiver in this Court. As explained more fully below, the court with jurisdiction over actions seeking to recover a deposit is the Court of Claims. Because there is no waiver of sovereign immunity in this Court, the Complaint must be dismissed due to a lack of subject matter jurisdiction.
4. None of § 6512(a)'s exceptions to the bar against jurisdiction apply to this case
Plaintiffs argue that even if § 6512(a) applies, a statutory exception allows jurisdiction in this case. According to § 6512(a)(5), district courts have jurisdiction when the amount at issue was "collected within the period during which the Secretary is prohibited from making the assessment or from collecting by levy or through a proceeding in court under the provisions of section 6213(a). . . ." Plaintiffs argue in their Opposition that any conversion of the deposits to tax payments occurred before the entry of the Tax Court decision on April 13, 1999, and therefore, amounts were "collected" during a prohibited period. According to the Complaint, there was only one assessment (¶ 14), and no other assessments took place. The IRS agrees in its Cross Motion for Summary Judgment that it never assessed the estate tax deficiency. It is a matter of law in this circuit that there can be no payment of taxes before an assessment. Thomas, 204 F.2d 943. Accordingly, because the estate tax remittance was not assessed, it was never paid, and therefore could neither have been overpaid nor collected during the prohibited period.
Although Plaintiffs did not attempt to argue any of § 6512(a)'s other exceptions, none of the exceptions would have applied in this case even if they had been alleged. The remaining exceptions apply when (1) the Tax Court has determined that there is an overpayment, (2) an amount is collected in excess of the amount computed in accordance with a Tax Court decision, (3) the amount is collected after the period of limitation upon the making of levy or beginning a proceeding for collection in court has expired, or (4) an overpayment is attributable to partnership items. The fifth exception was discussed in the preceding paragraph, and the sixth and final exception relates to Tax Court determinations of overpayments. In this case, there was no Tax Court determination of overpayment, nor was an amount collected in excess of an amount calculated in accordance with a Tax Court decision. Thus, the first, second, and sixth exceptions do not apply. For the reasons set forth in the preceding paragraph, namely, that the estate tax was never collected, the period of limitations on collection never began to run, so the third exception does not apply. Finally, the tax in question is an estate tax, not a partnership one, so the fourth exception does not apply.
5. Plaintiffs May Be Able to Seek Relief in the United States Court of Federal Claims
The lack of subject matter jurisdiction in this Court does not necessarily preclude the Estate from seeking any avenue for relief. The primary thrust of Plaintiffs' allegations is that the remittances in question were deposits, and because these deposits were not timely assessed, they should be returned. They rely on Court of Claims and Federal Circuit decisions such as New York Life Insurance Company and Cohen to defend their arguments. When the Federal Circuit affirmed New York Life Insurance Company, it explained that the court with jurisdiction over cases such as these is the Court of Claims. See 118 F.3d 1553 (Fed. Cir. 1997). If the remittances were indeed a deposit, which is not for this Court to decide, then the Court of Claims is the court where jurisdiction lies, if at all.
In New York Life Insurance Company, the plaintiff invoked the jurisdiction of the Court of Federal Claims under the Tucker Act, 28 U.S.C. § 1491. 118 F.3d at 1555. The Act provides the following:
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.
§ 1491. Under this statute, jurisdiction is allowed in cases in which a plaintiff has paid money to the government and seeks return of part or all of that sum. New York Life Ins. Co., 118 F.3d at 1556 (citation omitted). The plaintiff's claim must allege that the sum was improperly paid, exacted, or taken in contravention of the Constitution, a statute, or a regulation. Id. The Federal Circuit has stated that Supreme Court precedent "appear[s] to reflect [the Court's approval] that the Court of Claims [has] jurisdiction over suits seeking the return of money improperly paid to, exacted, or retained by the government." Id. The Federal Circuit found Tucker Act jurisdiction in the case before it, which involved a taxpayer who received a notice of deficiency and remitted money to the IRS but protested the proposed deficiency. Id. at 1559. The IRS failed to make a timely assessment. Id. The court found that under these circumstances, the money was a deposit as a matter of law. Id. Because the money was a deposit, not a tax payment, it was not money the taxpayer owed the government, and therefore the money was improperly paid, exacted or retained in contravention of a statute, and the court concluded that it had jurisdiction. Id. at 1557. Accordingly, based on the particular allegations of this case, the entity which might have jurisdiction is the Court of Claims under the Tucker Act, not this Court. 6. Conclusion
In an unreported Central District of Illinois decision, the court concluded that the IRS was not entitled to retain the taxpayer's deposit that had not been timely assessed. Becker Bros., Inc. v. United States, Nos. 85-1085, 85-1086, 85-1087, 85-1088, 1988 U.S. Dist. LEXIS 17140 (C.D.III. Feb. 3, 1998). The court rendered its decision despite the fact that Tax Court petitions had already been filed and that the parties had negotiated settlements of each of the Tax Court cases. Id. The court did not address subject matter jurisdiction. In similar circumstances in another unreported case, however, the Court of Appeals for the Seventh Circuit vacated and remanded the case to the Northern District of Illinois for dismissal for a lack of subject matter jurisdiction. Hand v. United States, No. 93-1203, 1994 U.S. App. LEXIS 6928 (7th Cir. Apr. 5, 1994).
Plaintiffs have failed to allege any waiver of sovereign immunity. Section 6512(a) operates as a jurisdictional bar, and Plaintiffs' Complaint does not make sufficient allegations that any of § 6512(a)'s exceptions apply. None of the exceptions would have applied even if they had been alleged. If the amounts at issue are considered deposits, subject matter jurisdiction is still lacking because Plaintiffs have alleged no statute that provides a waiver of sovereign immunity in deposit recovery actions, and nor would they have been able to do so. The sovereign immunity waiver in such actions comes from the Tucker Act, which allows the Court of Claims to assert jurisdiction, not this Court.
Because no exceptions to sovereign immunity would have applied to this case, an attempt to amend the Complaint would be futile. See Soda, 698 F.2d 1174 (denying as futile an amendment that would have resulted in dismissal due to a lack of a sovereign immunity waiver). The action would simply be dismissed again for the same reason, a lack of subject matter jurisdiction due to sovereign immunity. See Galindo v. ARI Mut. Ins. Co., 203 F.3d 771, 777 n. 10 (11th Cir. 2000) ("A proposed amendment is futile if the complaint, as amended, would be subject to dismissal.") (quotation omitted). Therefore, the Complaint is DISMISSED WITH PREJUDICE. Id. ("Among the reasons the Supreme Court has recognized as warranting the denial of a motion to amend is `futility of amendment.") (quotation omitted).
Because the Complaint is dismissed, Plaintiffs' Motion for Summary Judgment and Defendant's Cross Motion for Summary Judgment are denied as moot. Despite the lack of subject matter jurisdiction, the Court may consider collateral issues, such as costs and attorney's fees. Cooter Gel v. Hartmarx Corp., 496 U.S. 384, 395 (1990) (citing 28 US.C. § 1919). Therefore, pursuant to 28 U.S.C. § 636 and the Magistrate Rules of the Local Rules for the Southern District of Florida, Defendant's request for attorney's fees and costs, mentioned in its Motion to Dismiss, are referred to United States Magistrate Judge Andrea M. Simonton. Accordingly, it is hereby:
ORDERED AND ADJUDGED:
1. Defendant's Motion to Dismiss (DE #17) is GRANTED. This case is DISMISSED WITH PREJUDICE.
2. The Motion and Cross Motion for Summary Judgment (DE #s 23, 29) are DENIED AS MOOT.
3. The request for attorney's fees and costs (DE #17) is referred to United States Magistrate Judge Andrea M. Simonton to take all necessary and proper action as required by law.
DONE AND ORDERED in chambers at Miami, Florida, this day of September, 2003.