Opinion
No. CV 00-09916 RSWL (CWx)
April 11, 2001
ALEJANDRO N. MAYORKAS United States Attorney, EDWARD M. ROBBINS, JR. Assistant United States Attorney Chief, Tax Division, ROBERT N. KWAN Assistant United States Attorney, Los Angeles, CA 90012, Attorneys for Defendants.
STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW RE: DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
This case came before the undersigned United States District Judge for consideration upon the motion of defendants U.S. Attorney General and Commissioner of Internal Revenue Service for summary judgment.
After carefully considering the moving and opposing papers, the declarations, exhibits and other evidence relating thereto, the other papers and pleadings filed in this case and the and oral arguments of the parties,
The Court hereby finds the following uncontroverted facts and renders the following conclusions of law:
UNCONTROVERTED FACTS
1. Plaintiff William H. Pritchett, Sr.'s federal income tax return for taxable year 1990 was due on April 15, 1991. See 26 U.S.C. § 6012, 6013 and 6072(a) (federal income tax returns of individual taxpayers and married taxpayers filing jointly are normally due on April 15 following the close of the calendar year).
2. Plaintiff filed his 1990 federal income tax return with the Internal Revenue Service (IRS) on June 3, 1991. See IRS Form 4340, Certificate of Assessments, Payments and Other Specified Matters for William H. Pritchett, SSN: 535-56-6723, for U.S. Individual Income Tax Return (1040), for tax period December 31, 1990, Exhibit 1 to Declaration of Robert N. Kwan, Defendants' Notice of Motion and Motion for Summary Judgment, Points and Authorities; Declaration of Robert N. Kwan, filed on March 15, 2001 (hereinafter referred to as "Defendants' Moving Papers").
3. On April 15, 1991, plaintiff was granted an extension to file his 1990 income tax return to August 15, 1991. Ibid.
4. For taxable year 1990, on July 25, 1994, the IRS assessed against plaintiff an agreed audit deficiency in the amount of $12,529.00, an accuracy related penalty under Section 6662(e) of the Internal Revenue Code, 26 U.S.C. in the amount of $2,300.00, and a penalty for filing a late return under Section 6651(a)(1) of the Internal Revenue Code in the amount of $1,015.00. Ibid.
Some of the additional tax in the amount of $10,615.00 was abated. See Exhibit 1 to Kwan Declaration.
5. On or about May 22, 1995, plaintiff submitted to the IRS an IRS Form 1040X, Amended U.S. Income Tax Return, for 1990, which asserted that he had a reduced tax liability for that year due to a net operating loss carryback from taxable year 1993 to reduce his 1990 tax liability to $8,456, but showed an amount owed of $900 and did not claim a refund of tax. See Exhibit 2 to Kwan Declaration.
6. On or about May 13, 1999, plaintiff submitted a second IRS Form 1040X, Amended U.S. Individual Income Tax Return, for 1990, which stated that the correct amount of the tax was $12,529 and the amount of the tax overpayment was that amount, but did not claim any refund of tax. See Exhibit 6 to Kwan Declaration.
7. On or about April 15, 1992, plaintiff filed a timely federal income tax return for taxable year 1991. See IRS Form 4340, Certificate of Assessments, Payments and Other Specified Matters for William H. Pritchett, SSN: 535-56-6723, for U.S. Individual Income Tax Return (1040), for tax period December 31, 1991, Exhibit, 3 to Kwan Declaration.
8. For taxable year 1991, on June 8, 1992, the IRS assessed against plaintiff a dishonored check penalty under 26 U.S.C. § 6657 in the amount of $15.00. Ibid. For taxable year 1991, on July 20, 1992, the IRS assessed against plaintiff a penalty for failure to pay taxes under 26 U.S.C. § 6651 (a)(3) in the amount of $5.08. Ibid.
9. For taxable year 1991, on July 25, 1994, the IRS assessed against plaintiff an agreed audit deficiency in the amount of $26,476.00, and an accuracy related penalty under Section 6662(e) of the Internal Revenue Code, 26 U.S.C. in the amount of $5,153.00. For taxable year 1991, on September 25, 1995, the IRS assessed against Plaintiff a penalty for failure to pay tax under Section 6651(a)(3) of the Internal Revenue Code in the amount of $2,993.73. Ibid.
10. Plaintiff's federal income tax return for taxable year 1992 was due on April 15, 1993. See 26 U.S.C. § 6012, 6013 and 6072(a)
11. Plaintiff filed his 1992 federal income tax return on December 6, 1993. See IRS Form 4340, Certificate of Assessments, Payments and Other Specified Matters for William H. Pritchett, SSN: 535-56-6723, for U.S. Individual Income Tax Return (1040), for tax period December 31, 1992, Exhibit 4 to Kwan Declaration.
12. Plaintiff did not file an extension of time to file his 1992 return. Ibid.
13. For taxable year 1992, on July 10, 1995, the IRS assessed against plaintiff an agreed audit deficiency for 1991 in the amount of $866.00, an accuracy related penalty under Section 6662(e) of the Internal Revenue Code, 26 U.S.C. in the amount of $173.00, and a penalty for filing a late tax return under Section 6651(a)(1) of the Internal Revenue Code in the amount of $217.00. Ibid.
14. According to the IRS certificate of assessments and payments for 1990, the payments and credits made by the plaintiff were as follows:
Date TYPE Amount Paid
06/03/1991 Credit $7,896.00
05/22/1991 Payment $3,000.00
04/15/1991 Credit $1,029.00
05/01/1995 Credit $14.00
05/01/1995 Credit $26.00
07/25/1994 Credit $326.82
04/15/1993 Credit $4,287.72
05/17/1995 Credit $2,764.67
05/01/1995 Credit $5.90
07/25/1994 Credit $27.89
07/28/1995 Payment $663.93
Exhibit 1 to Kwan Declaration.
15. According to the IRS certificate of assessments and payments for 1991, plaintiff paid his 1991 income tax liability, including penalties, and the payments made by the plaintiff were as follows:
Date Type Amount Paid
04/15/1992 Credit $494.00
The credit from this payment was reversed due to a dishonored check. See Exhibit 3 to Kwan Declaration.
Date Type Amount Paid
07/24/1992 Payment $279.61
05/22/1995 Payment $3,702.00
06/30/1995 Payment $7,000.00
07/28/1995 Payment $6,336.07
09/01/1995 Payment $26,817.57
See Exhibit 3 to Kwan Declaration.
16. According to the IRS certificate of assessments and payments for 1992, plaintiff paid his 1992 income tax liability, including penalties, and the payments made by the plaintiff were as follows:
Date Type Amount Paid
09/01/1995 Payment $1,521.92
09/01/1995 Payment $6.24
See Exhibit 4 to Kwan Declaration.
17. By letter to the IRS dated May 8, 1999, plaintiff submitted an informal claim for refund for penalties relating to taxable year 1991, which was received by the IRS Service Center in Ogden, Utah, on May 12, 1999. See Exhibit 5 to Kwan Declaration.
A claim for refund of income taxes for an individual taxpayer is required to be filed on an IRS Form 1040X, Amended U.S. Income Tax Return. 26 C.F.R. § 301.6402-3. Plaintiff's letter requesting a refund of income taxes may be considered to be an informal refund claim.
18. Plaintiff apparently filed with the IRS Forms 843, Claims for Refund and Request for Abatement, dated June 1, 1999, for tax years 1990, 1991 and 1992, requesting refunds of penalties imposed under Section 6651 and 6662 of the Internal Revenue Code in the amounts of $3,015.00, $5,153.00 and $1,291.00. See Exhibits 7, 8 and 9 to Kwan Declaration.
Although not material to this case, on September 2, 1999, plaintiff filed a petition with the United States Tax Court, seeking a refund of penalties and interest for the taxable years 1990, 1991 and 1992 and seeking abatement of these amounts. See Exhibit 10 to Kwan Declaration. The Tax Court dismissed this action for lack of jurisdiction. See Exhibit 11 to Kwan Declaration.
19. By letter from plaintiff to the IRS Appeals Office, Glendale, California, dated October 6, 1999, invoking Section 6404 of the Internal Revenue Code, 26 U.S.C. plaintiff submitted a protest and appeal of the IRS's denial of his Forms 843 on or about August 24, 1999. See Exhibit 12 to Kwan Declaration.
20. By letters from the IRS to plaintiff dated March 9, 2000, the IRS denied plaintiff's claims invoking Section 6404 of the Internal Revenue Code. See Exhibit 13 to Kwan Declaration.
21. Plaintiff's protest and appeal of the IRS denial of the Forms 843 was apparently referred to an IRS Appeals Office for review and consideration. See Letters from the IRS Appeals office to plaintiff dated April 24, 2000, May 4, 2000 and May 17, 2000, Exhibits 14, 16 and 17 to Kwan Declaration.
22. By letters from plaintiff to the IRS Appeals Office dated May 2, 2000 and May 17, 2000, plaintiff requested an abatement and refund of penalties paid by him with respect to taxable years 1990, 1991 and 1992, asserting that the statute of limitations for filing a refund claim was tolled due to financial disability. See Exhibits 15 and 18 to Kwan Declaration.
23. By letters dated September 6, 2000 and September 18, 2000, the IRS Appeals Office notified plaintiff that his claim could not be allowed since it was not timely and Section 6511(h) of the Internal Revenue Code was inapplicable because the time within which he could file an administrative claim for refund had expired before the effective date of Code Section 6511(h). See Exhibits 19 and 20 to Kwan Declaration.
24. On September 22, 2000, plaintiff William H. Pritchett, Sr., initiated this action by filing his complaint for refund of tax penalties assessed against him for the taxable years 1990, 1991 and 1992 in the amounts of $3,315.00, $8,166.81 and $402.99 respectively. See Complaint, filed Sept. 22, 2000, at 1 and 6.
25. On January 9, 2001, defendants U.S. Attorney General and Commissioner of Internal Revenue Service filed and served their answer essentially denying plaintiff's entitlement to recovery on these claims.
26. Any finding of fact deemed to be a conclusion of law is incorporated herein as a conclusion of law.
CONCLUSIONS OF LAW
1. Plaintiff in his complaint essentially asserts two claims for relief: (1) a claim for refund of tax penalties paid for 1990, 1991 and 1992 in the amount of $11,805.00, plus 10% interest since 1995 in the amount of $5,675.00; and (2) a claim for unspecified relief under the "American[s] with Disabilities Act", 42 U.S.C. § 12101 et seq. Complaint at 1 and 6.
2. Although not expressly alleged in the complaint, plaintiff apparently asserts that subject matter jurisdiction exists under 28 U.S.C. § 1346 (a)(1) and 26 U.S.C. § 7422 with respect to his claim for refund of tax penalties and under 28 U.S.C. § 1343 (3) with respect to his claim under the Americans with Disabilities Act. In their answer, defendants disputed that subject matter jurisdiction existed over plaintiff's claim for refund of tax penalties.
3. Defendants U.S. Attorney General and Commissioner of Internal Revenue Service now move for summary judgment.
The U.S. Attorney General and Commissioner of Internal Revenue Service are not the proper parties defendant in a tax refund suit, such as this case. 26 U.S.C. § 7422. The proper party defendant is the United States of America, and the United States should be considered the defendant in this case. Ibid.
4. Plaintiff's first claim is that the Internal Revenue Service (IRS) wrongfully denied him relief for refund of tax penalties for which he is entitled under Section 6511(h) of the Internal Revenue Code, 26 U.S.C. Complaint at 1. In his prayer for relief on this claim, plaintiff seeks a judgment in the amount of $11,805, plus 10% interest since 1995 in the amount of $5,675. Complaint at 1 and 6.
5. In referring to Code Section 6511(h), plaintiff apparently asserts that he qualifies for the tolling of the statute of limitations on filing administrative tax refund claims on grounds that he was disabled by mental impairment since 1991 and that the tax penalties should be abated under the law because he was not negligent in filing late tax returns and making late tax payments for the taxable years in question. See Exhibit C to Complaint.
6. In response, defendants contend that subject matter jurisdiction is lacking over the complaint and action because plaintiff failed to file a timely claim for refund pursuant to 26 U.S.C. § 6511. Defendants further contend that plaintiff does not qualify for any tolling of the statute of limitations allowed under 26 U.S.C. § 6511 (h) because it does not apply to any claim for credit or refund which is barred by the operation of any law or rule of law as of July 22, 1998. As discussed below, the Court concludes that there is no genuine issue of material fact that plaintiff did not file a timely refund claim within two years of payment or three years of the filing of the return, defendants are entitled to judgment as a matter of law, and plaintiff's tax refund claim should be denied.
7. Section 6511(a) of the Internal Revenue Code, 26 U.S.C. provides that a claim for credit or refund of any overpayment of any tax must be filed within three years from the time the return was filed or two years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within two years from the time the tax was paid. See Yuen v. United States, 825 F.2d 244, 245 (9th Cir. 1987) Code Section 6511(b)(1) provides that no credit or refund shall be allowed after the expiration of the period of limitations prescribed in Section 6511(a), unless a claim therefore is timely filed. 26 U.S.C. § 6511 (b). "Unless a taxpayer has duly filed a claim for refund of federal taxes with the IRS, a district court is without jurisdiction to entertain a suit for refund, and a claim is not duly filed unless it is timely." Yuen v. United States, supra, 825 F.2d at 245.
8. As discussed below, the uncontroverted evidence in the case at bar indicates that: (1) plaintiff's earliest claim for refund, the informal claim for refund, was dated May 8, 1999 and received by the IRS on May 12, 1999; (2) the date of the filing of the refund claim was more than three years from the dates of filing of the plaintiff's returns for 1990, 1991 and 1992 which were June 3, 1991, April 15, 1992 and December 6, 1993, respectively, and (3) the date of filing was also more than two years from the dates of the last payments of penalties with respect to those years, which were July 28, 1995, September 1, 1995 and September 1, 1995, respectively. Accordingly, plaintiff failed to file a timely refund claim pursuant to Section 6511(a) of the Internal Revenue Code, 26 U.S.C. See Yuen v. United States, supra.
9. In his complaint, plaintiff alleged that he was entitled to a refund of the tax penalties under Section 6511(h) of the Internal Revenue Code, 26 U.S.C. Code Section 6511(h) was enacted and added to the Internal Revenue Code in 1998 as part of the 1998 IRS Restructuring and Reform Act, and it makes equitable tolling available regarding the statute of limitations of Code Section 6511(a), (b) and (c) for filing tax refund claims by taxpayers who are deemed financially disabled. Pub.L. No. 105-206, 95th Cong., 2nd Sess., § 3202(a), 112 Stat. 740 (1998). Code Section 6511(h)(1) provides that in the case of an individual, the running of the period of limitations shall be suspended during any period of such individual's life that such individual is financially disabled. 26 U.S.C. § 6511 (h)(2)(A) states that an individual is financially disabled if such individual is unable to manage his financial affairs by reason of a medically determinable physical or mental impairment of the individual which can be expected to last for a continuous period of not less than 12 months.
10. However, Code Section 6511(h) does not apply to plaintiff's refund claim because that statute only applies to periods of disability before, on, or after the date of enactment of the 1998 IRS Restructuring and Reform Act on July 22, 1998, but it does not apply to any claim for credit or refund which is barred by the operation of any law or rule of law as of July 22, 1998. Pub.L. 105-206, Sec. 3202(b), 112 Stat. 741 (1998).
11. The time period for plaintiff to file a timely claim for refund of any of the tax penalties had expired before the date of enactment of Code Section 6511(h) on July 22, 1998, and therefore, plaintiff may not rely upon that provision. As decided by the Supreme Court in the case of United States v. Brockamp, the doctrine of equitable tolling is not available to expand the time limits for filing tax refund claims in 26 U.S.C. § 6511. United States v. Brockamp, 519 U.S. 347, 117 S.Ct. 849 (1997), rev'g, 67 F.3d 260 (9th Cir. 1995), rev'g, 859 F. Supp. 1283 (C.D. Cal. 1993) (Lew, J.). Thus, plaintiff may not otherwise rely on equitable tolling based on any disability to extend the statute of limitations under 26 U.S.C. § 6511 for filing a tax refund claim here.
12. For taxable year 1990, the uncontroverted evidence in this case indicates that plaintiff filed his income tax return for 1990 on June 3, 1991 and the last payment towards the 1990 income tax liability was made on July 28, 1995. See Exhibit 1 to Kwan Declaration. Under 26 U.S.C. § 6511 (a), plaintiff's claim for refund of any payments towards his 1990 income tax liability, including penalties, would be timely if it were filed by the latter of (1) three years of the filing of his 1990 income tax return on June 3, 1991, or June 3, 1994; or (2) two years of the last payment on July 28, 1995, or July 28, 1997. Accordingly, the last day for filing a refund claim for 1990 was July 28, 1997. Plaintiff's refund claim dated May 8, 1999 and received by the IRS on May 12, 1999 was late, and because the statute of limitations for filing a refund claim for 1990 expired before the date of enactment of Code Section 6511(h) on July 28, 1998, that provision does not apply.
13. For taxable year 1991, the uncontroverted evidence in this case indicates that plaintiff filed his income tax return for 1991 on or about April 15, 1992 and the last payment towards the 1991 income tax liability was made on September 1, 1995. See Exhibit 3 to Kwan Declaration. Under 26 U.S.C. § 6511 (a), plaintiff's claim for refund of any payments towards his 1991 income tax liability, including penalties, would be timely if it were filed by the latter of (1) three years of the filing of his 1991 income tax return on or about April 15, 1992, or April 15, 1995; or (2) two years of the last payment on September 1, 1995, or September 1, 1997. Accordingly, the last day for filing a refund claim for 1991 was September 1, 1997. Plaintiff's refund claim dated May 8, 1999 and received by the IRS on May 12, 1999 was late, and because the statute of limitations for filing a refund claim for 1991 expired before the date of enactment of Code Section 6511(h) on July 28, 1998, that provision does not apply.
14. For taxable year 1992, the uncontroverted evidence in this case indicates that plaintiff filed his income tax return for 1992 on or about December 6, 1993 and the last payment towards the 1992 income tax liability was made on September 1, 1995. See Exhibit 4 to Kwan Declaration. Under 26 U.S.C. § 6511 (a), plaintiff's claim for refund of any payments towards his 1992 income tax liability, including penalties, would be timely if it were filed by the latter of (1) three years of the filing of his 1992 income tax return on or about December 6, 1993, or December 6, 1996; or (2) two years of the last payment on September 1, 1995, or September 1, 1997. Accordingly, the last day for filing a refund claim for 1992 was September 1, 1997. Plaintiff's refund claim dated May 8, 1999 and received by the IRS on May 12, 1999 was late, and because the statute of limitations for filing a refund claim for 1992 expired before the date of enactment of Code Section 6511(h) on July 28, 1998, that provision does not apply.
15. The Court finds that based on the above-recited evidence, there is no genuine issue of material fact that plaintiff did not file a timely claim for refund of the tax penalties, and defendants are entitled to judgment as a matter of law that absent a timely refund claim, plaintiff's suit for refund should be dismissed for lack of subject matter jurisdiction. Rule 12(b)(1) of the Federal Rules of Civil Procedure; Yuen v. United States, supra.
16. In his complaint, plaintiff asserts a second claim for relief that he was discriminated against due to disability in violation of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq. Specifically, plaintiff alleges that IRS's decision to deny his claim was discriminatory because it penalized his actions while being disabled. Complaint at 5-6.
17. In response, defendants contend that the complaint fails to state a claim upon which relief can be granted under the ADA. See Rule 12(b)(6) of the Federal Rules of Civil Procedure.
18. The purpose of the ADA as expressed in 42 U.S.C. § 12101 is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individual with disabilities," in the areas of employment, housing, public accommodations, education, transportation, communication, recreation, institutionalization, health services, voting and access to the public services. 42 U.S.C. § 12101 (a), (b). There is no mention of taxes as an area covered under the ADA under 42 U.S.C. § 12101-12213. Therefore, plaintiff cannot assert a legally cognizable tax discrimination claim under the ADA.
19. The Court concludes that plaintiff does not have a valid discrimination claim because he has not been discriminated against by the defendants. The IRS denied plaintiff's claim for refund due to his failure to meet the time limitation requirement of Section 6511 of the Internal Revenue Code. The requirement set forth in Section 6511 applies to all taxpayers equally and does not discriminate on the basis of disability.
20. The Court finds that there is no genuine issue of material fact with respect to the issue of discrimination under the ADA in this case, and defendants are entitled to judgment as a matter of law dismissing plaintiff's complaint and action for failure to state a claim upon which relief can be granted under the ADA. Rule 12(b)(6) of the Federal Rules of Civil Procedure.
21. Rule 56 of the Federal Rules of Civil Procedure authorizes entry of summary judgment if the moving party establishes that there are no genuine issues of material that it is entitled to a judgment as a matter of law.
22. The motion of defendants U.S. Attorney General and Commissioner of Internal Revenue Service for summary judgment should be granted.
23. Summary judgment should be granted in favor of defendants, and the complaint and action should be dismissed for lack of subject matter jurisdiction as to plaintiff's claim for refund of tax penalties and for failure to state a claim upon which relief can be granted as to his claim under the Americans with Disabilities Act.
24. Any finding of fact deemed to be a conclusion of law is incorporated herein as a conclusion of law.
SUMMARY JUDGMENT
The motion of defendants U.S. Attorney General and Commissioner of Internal Revenue Service for summary judgment came on for hearing on April 9, 2001 at 9:00 a.m., and Robert N. Kwan, Assistant United States Attorney, appeared on behalf of defendants. Other appearances were made as noted on record.
This Court having carefully considered the moving and opposing papers, exhibits and other evidence submitted thereof, the written arguments of the parties, and having issued its statement of uncontroverted facts and conclusions of law,
It is hereby ORDERED, ADJUDGED and DECREED that as follows:
1. Defendants U.S. Attorney General and Commissioner of Internal Revenue Service are entitled to summary judgment in their favor, dismissing plaintiff's claim for refund of tax penalties for lack of subject matter jurisdiction and dismissing plaintiff's claim under the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., for failure to state a claim upon which relief can be granted.
2. Plaintiff shall take nothing by his complaint, and the complaint and action are hereby dismissed as to his claim for refund of tax penalties for lack of subject matter jurisdiction and as to his claim under the Americans with Disabilities Act for failure to state a claim upon which relief can be granted.
IT IS SO ORDERED.