Opinion
Civil Action No. H-05-1204.
November 22, 2005
MEMORANDUM AND ORDER
Pending are Defendant United States of America's Motion to Dismiss or for Summary Judgment (Document No. 8) and Plaintiff David B. Freeman's Motion to Strike United States' Motion to Dismiss or for Summary Judgment (Document No. 10) and Motion to Strike United States' Reply to Plaintiff's Response to United States' Motion to Dismiss or for Summary Judgment (Document No. 18). After having reviewed the motions, responses, reply, and the applicable law, the Court concludes as follows:
I. Background
This is a dispute over a tax refund in the amount of $2,441, claimed by Plaintiff David B. Freeman ("Plaintiff"). The Government does not dispute that Plaintiff overpaid his taxes by this amount for the 1998 tax year but contends that the period for recovering the refund has expired.
According to the Government, Plaintiff made several tax payments for the 1998 year, the latest of which ($1,400) was made on April 15, 1999. Document No. 8 ex. 1. That payment was included with Plaintiff's request for an extension of time to file his 1998 tax return, which was granted. Later, Plaintiff requested and received a second extension until October 15, 1999. Id. Plaintiff, however, did not file his 1998 tax return by the October 15, 1999 deadline, and the IRS sent to Plaintiff Taxpayer Delinquency Notices on June 5, 2000 and July 31, 2000. Id. In May, 2002, the IRS sent to Plaintiff a notice that he might be entitled to a refund, that the statute of limitations for claiming the refund was about to expire, and that the IRS cannot refund any overpayments once the statute of limitations has run. Id. ex. 3. According to Plaintiff, he placed his 1998 tax return — in which he claimed to be entitled to a $2,441 refund — in the mail on or about October 15, 2002. Document No. 11 ¶ 6. IRS records show receipt of Plaintiff's 1998 tax return on October 21, 2002. Document No. 8 ex. 1. Thereafter, the IRS denied Plaintiff's refund claim as untimely.
The Government contends that this Court lacks subject matter jurisdiction over Plaintiff's complaint because Plaintiff's refund claim is untimely, and the Government therefore seeks dismissal of the case pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and/or 56. The Government points out that IRC § 6511(b)(2)(A) limits the amount of Plaintiff's refund to overpayments made during the three years, plus six months' extension period allowed for filing his return, preceding the actual filing of his 1998 tax return, which the Government contends was filed on October 21, 2002. Because Plaintiff did not pay any part of the claimed refund within that 42 months' period, the Government argues, Plaintiff is barred from recovering any refund.
The Government suggests that the limitation set forth in § 6511(b)(2)(A) is a statute of limitations that is jurisdictional in nature. Although filing a timely claim for refund is a jurisdictional prerequisite to maintaining a tax refund suit, see United States v. Dalm, 110 S. Ct. 1361, 1364-65 (1990), the Government concedes that Plaintiff timely filed his refund claim within the meaning of IRC § 6511(a). Accordingly, the Court has jurisdiction to award a refund of any taxes paid within the applicable "look-back" period set forth in § 6511(b)(2)(A). See, e.g., Weisbart v. United States Dep't of Treasury, 222 F.3d 93, 96 (2d Cir. 2000) (holding that the district court properly exercised jurisdiction over plaintiff's refund suit, which was filed within the three-year deadline established by § 6511(a)). The Court will therefore analyze the Government's motion under the standard applicable to a Rule 56 summary judgment motion.
II. Standard of Review
Rule 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The moving party must "demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2553 (1986). Once the movant carries this burden, the burden shifts to the nonmovant to show that summary judgment should not be granted. See id. at 2553-54. A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials in a pleading, and unsubstantiated assertions that a fact issue exists will not suffice. See Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2514-15 (1986)). "[T]he nonmoving party must set forth specific facts showing the existence of a `genuine' issue concerning every essential component of its case." Id.In considering a motion for summary judgment, the district court must view the evidence through the prism of the substantive evidentiary burden. See Anderson, 106 S. Ct. at 2513-14. All justifiable inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986). "If the record, viewed in this light, could not lead a rational trier of fact to find" for the nonmovant, then summary judgment is proper. Kelley v. Price-Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir. 1993) (citing Matsushita, 106 S. Ct. at 1351). On the other hand, if "the factfinder could reasonably find in [the nonmovant's] favor, then summary judgment is improper." Id. (citing Anderson, 106 S. Ct. at 2511). Even if the standards of Rule 56 are met, a court has discretion to deny a motion for summary judgment if it believes that "the better course would be to proceed to a full trial." Anderson, 106 S. Ct. at 2513.
III. Discussion
A. Plaintiff's Motions to Strike
In his motions to strike, Plaintiff sets forth eleven "special exceptions" to the Government's motion and supporting evidence. The motions to strike are denied for the reasons set forth below.
1. Special Exception No. 1 (Document No. 10) is OVERRULED. Plaintiff argues that the Government's motion should be stricken in its entirety because it asserts an affirmative defense, which Plaintiff contends the Government has waived. According to Plaintiff, the Government should have raised the affirmative defense by answering Plaintiff's Complaint rather than by filing a motion to dismiss or for summary judgment. Because the Government set forth its argument in its first responsive pleading, i.e. the Rule 56 motion, the Government has preserved its defense. See United States v. Burzynski Cancer Research Institute, 819 F.2d 1301, 1307 (5th Cir. 1987).
2. Special Exception No. 2 (Document No. 10) is OVERRULED. Plaintiff argues that the Government's motion cannot be treated as a motion for summary judgment because the Government filed the motion before filing an answer. Pursuant to Federal Rule of Civil Procedure 56, however, a motion for summary judgment can be brought at any time. Plaintiff also argues that "if the court lacks subject matter jurisdiction, it lacks power to grant summary judgment." The Court agrees that granting summary judgment is an inappropriate way to effect a dismissal for lack of subject matter jurisdiction, see Bank One Tex. v. United States, 157 F.3d 397, 403 n. 12 (5th Cir. 1998), but as explained above in footnote one, the Court has jurisdiction over this case, see Weisbart, 222 F.3d at 96.
3. Special Exception No. 3 (Document No. 10) is OVERRULED. Plaintiff objects to the Declaration of Michelle Johns, the Government's lawyer, because it "attempts to establish facts in the case in violation of Texas Disciplinary Rules DR5-101 or DR5-102" and because she does not aver that she is the custodian of records. Ms. John's declaration merely states that she submitted true and correct copies of the original Form 4340, Form 1040, and refund notice, which came out of the IRS administrative files. An attorney's declaration may be submitted with a motion for summary judgment under these circumstances. See Stepard v. United States, 60 F.3d 834, at *3 (9th Cir. 1995) (unpublished); Jarvis v. Commissioner, 1982 WL 11081 (T.C. Apr. 22, 1982).
4. Special Exception Nos. 4, 5, and 6 (Document No. 10) are OVERRULED. Plaintiff objects to Government exhibit 1, contending that the Form 2866 Certificate of Assessment is not notarized or sworn under penalty of perjury and is hearsay. This document is admissible as a self-authenticating domestic public document under Federal Rule of Evidence 902(1) because it is a certified under seal. See FED. R. EVID. 803(8), 902(1), (4); see also Hughes v. United States, 953 F.2d 531, 539-40 (9th Cir. 1992); In re Barber, 236 B.R. 655, 661 (N.D. Ind. 1998). Moreover, the Form 2866 properly certifies the attached Form 4340, which is itself admissible. See, e.g., Perez v. United States, 312 F.3d 191, 195 (5th Cir. 2002) (citing McCarty v. United States, 929 F.2d 1085, 1089 (5th Cir. 1991) ("[Forms 4340] are admissible under the Federal Rules of Evidence.")). Finally, Federal Rule of Evidence 1006 does not render the Form 4340 inadmissible. See Hughes, 953 F.2d at 540.
5. Special Exception Nos. 7 and 8 (Document No. 10) are OVERRULED. Plaintiff objects to Government's exhibits 2 (Plaintiff's Form 1040) and 3 (notice of refund) on the grounds that they are hearsay and are not competent summary judgment evidence. However, the Government avers that these are true and correct copies from the IRS administrative files, Plaintiff presents no evidence that would call into question their validity or trustworthiness, and the documents either are not hearsay or fall within an applicable exception. See FED. R. EVID. 801(d)(2); 803(8); 901(b)(1), (4).
6. Special Exception No. 1 (Document No. 18) is OVERRULED. Plaintiff moves to strike the United States's reply as untimely, but the Local Rules set no submission deadline for a reply.
7. Special Exception Nos. 2 and 3 (Document No. 18) are OVERRULED AS MOOT. In reaching its decision, the Court does not rely on the documents about which Plaintiff complains.
B. The Government's Motion to Dismiss or for Summary Judgment
The Government moves for summary judgment on the ground that IRC § 6511(b)(2)(A) bars Plaintiff from recovering a refund in this case. Although "[t]he United States must consent to be sued, and that consent is a prerequisite to federal jurisdiction," Delta Commercial Fisheries Ass'n v. Gulf of Mex. Fishery Mgmt. Council, 364 F.3d 269, 273 (5th Cir. 2004), Congress has expressly waived the Government's sovereign immunity for suits by taxpayers in the district courts for the refund of "any internal-revenue tax alleged to have been erroneously . . . collected . . . 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). In order to bring a tax refund suit in federal court, however, a taxpayer must first file a timely refund claim with the IRS. IRC § 7422(a). To be considered timely, the refund claim must be made: (1) within three years from the time the return was filed or (2) within two years from the time the tax was paid, whichever period is later. IRC § 6511(a).
It is undisputed that Plaintiff did not file a refund claim on his 1998 taxes until more than two years after he made the last overpayment on April 15, 1999. It is also undisputed that Plaintiff did not file his 1998 tax return until October, 2002, and in that return he showed he was due a refund of $2,441. This return, which disclosed the overpayment, constituted a claim for a refund. See 26 C.F.R. 301.6402-3(a)(1); see also Weisbart, 222 F.3d at 96; Mills v. United States, 805 F. Supp. 448, 450 (E.D. Tex. 1992). Because his refund claim was included in the 1998 tax return itself, it was necessarily filed within 3 years of the filing of the return and was a timely refund claim under § 6511(a).
Although Plaintiff's refund claim was timely filed, IRC § 6511(b)(2) imposes a limitation on the amount of tax that Plaintiff may recover. Specifically, § 6511(b)(2)(A) establishes a "look-back" provision that applies when the taxpayer filed his refund claim within three years of filing his tax return, as follows:
[T]he amount of the credit or refund shall not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return.Id., see Commissioner v. Lundy, 116 S. Ct. 647, 651 (1996). For purposes of § 6511(b)(2)(A), a payment of estimated tax is deemed to have been made on the due date of the tax return for that year, determined without regard to any extension of time for filing such return. IRC § 6513(b); Harrigill v. United States, 410 F.3d 786, 789 (5th Cir. 2005). Thus, the payments that Plaintiff seeks to recover were deemed paid on April 15, 1999 as a matter of law. See Baral v. United States, 120 S. Ct. 1006, 1009-10 (2000) (holding that an estimated tax payment is deemed paid on April 15th following the relevant taxable year); see also Harrigill, 410 F.3d 786, 790 n. 7 (2005) (noting that numerous circuits have agreed that a remittance made with an extension application constitutes a "payment" — as opposed to a deposit — as a matter of law). The period consisting of three years, plus the six months of extensions Plaintiff had received to file his return, from the date of his overpayment on April 15, 1999, brings one to October 15, 2002. Therefore, in order to recover the $2,441 Plaintiff is deemed to have paid on April 15, 1999, Plaintiff's refund claim must have been filed no later than October 15, 2002.
Plaintiff contends that Baral does not apply to his case because it was decided after his remittances were made and during a time when the Fifth Circuit had mistakenly held that a remittence did not constitute a "payment" until the IRS assessed the tax, which, in this case, was December 2, 2002. See Ford v. United States, 618 F.2d 357 (5th Cir. 1980), rev'd, Baral, 120 S. Ct. at 1008. This specious argument has no merit whatever. See, e.g., Harrigill, 410 F.3d at 790 n. 6 (recognizing that Baral abrogated the Ford line of cases). Plaintiff's payments were made on April 15, 1999, not December 2, 2002.
Plaintiff also argues that the $1,400 payment he made with his extension request on April 15, 1999 was not debited to his bank account until April 27, 1999, and was therefore not "paid" until April 27th. Plaintiff has cited no authority for this notion. Indeed, Plaintiff's delivery of his April 15, 1999 check to the IRS with good and sufficient funds to honor the check constitutes payment on that date, regardless of whether the IRS presents the check at Plaintiff's bank for payment on that date or chooses to use conventional banking transfers that delay its actual presentment at Plaintiff's bank.
The uncontroverted summary judgment evidence is that Plaintiff's tax return with his refund claim was not received by the IRS until October 21, 2002. See Document No. 8 ex. 1. Thus, the Government argues, the look-back period during which Plaintiff may recover any amounts paid dates back for three years and six months, from October 21, 2001 — to April 21, 1999. See Harrigill, 410 F.3d at 789 (calculating look-back period where plaintiff had received two extensions totaling six months). Because Plaintiff paid no taxes applicable to the 1998 tax year between April 21, 1999 and October 21, 2002, the Government contends that Plaintiff is barred from recovering the refund he seeks.
Plaintiff asserts in his response brief, however, that he "mailed his 1998 Tax Return and claim for refund via first-class mail on October 15, 2002." Document No. 12 ¶ 11. Plaintiff points out that the tax code contains a "mailbox rule," which provides that a submission that is postmarked on or before the "prescribed date for the filing" of that submission is deemed filed on the date it is postmarked, rather than the date it is received by the IRS. See IRC § 7502. Plaintiff concedes that his 1998 tax return, which he mailed three years after the October 15, 1999 "prescribed date for [its] filing," was untimely and does not enjoy the benefit of the mailbox rule. Plaintiff argues, however, that the refund claim should be analyzed under the mailbox rule independently of the timeliness of the tax return itself, even though they are in the same document. Because he filed a timely refund claim, Plaintiff argues, it was timely filed for purposes of § 7502 and should have the benefit of the mailbox rule. See Weisbart, 222 F.3d at 97 (holding that "even though [plaintiff]'s tax return was untimely filed, his refund claim [included in the tax return] enjoys the benefit of the mailbox rule"); accord Treas. Reg. § 301.7502-1(f)(1) (2001).
Plaintiff's assertion in his brief slightly but materially embellishes the allegation in his First Amended Complaint, filed on the same day, that "On or about October 15, 2002, Plaintiff filed the return. . . ." Document No. 11, ¶ 6.
Accepting that Plaintiff is correct on the application of the mailbox rule to his refund claim, Plaintiff still bears the burden on summary judgment to come forward at least with some evidence that his refund claim was in fact postmarked on or before October 15, 2002. He has presented no such evidence. A postmarked envelope is not included in the summary judgment record, nor is there any postmarked registered or certified mail receipt. See, e.g., Weisman v. IRS, 972 F. Supp. 185, 188 (S.D.N.Y. 1997) (holding that where IRS discarded the original postmarked envelope and plaintiff's only evidence of date of mailing was testimony of plaintiff's accountant, filing of refund claim occurred upon actual receipt by IRS); cf. Spencer v. Med. Assocs. v. Comm'r, 155 F.3d 268, 271-72 (4th Cir. 1998) (explaining that postmarked envelope or registered or certified mail receipt are the only forms of proof of mailing accepted by the Second and Sixth Circuits for purposes of IRC § 7502, and even the more lenient Eighth and Ninth Circuits require direct proof of the date of mailing in order to obtain the benefit of the filed-when-mailed rule) (citations omitted). With no summary judgment evidence to the contrary, the refund claim is deemed filed when it was actually received by the IRS on October 21, 2002. Because Plaintiff paid no taxes on his 1998 tax year during the look-back period from October 21, 2002 to April 21, 1999, he is not entitled to recover any refund.
Plaintiff also argues that he is entitled to application of the equitable tolling provision set forth in § 6511(h), under which the running of the recovery period set forth in § 6511(b) is "suspended during any period of such individual's life that such individual is financially disabled." See IRC § 6511(h). The taxpayer is deemed financially disabled if he is "unable to manage his financial affairs by reason of a medically determinable physical or mental impairment . . . which . . . can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." Id. § 6511(h)(2). In order to toll the limitations period, an individual must furnish proof of the existence of the impairment in such form and manner as required by the Secretary. Id. According to Revenue Procedure 99-21, 1999-1 C.B. 960, the taxpayer must provide a physician's written statement that includes: (1) the name and description of the taxpayer's physical or mental impairment, (2) the physician's medical opinion that the impairment prevented the taxpayer from managing his financial affairs, and (3) the physician's medical opinion that the impairment was or can be expected to result in death, or lasted or can be expected to last for 12 months or more. Rev. Proc. 99-21, Sec. 4, 1999-1 C.B. 960. The physician's statements must be submitted with the refund claim. Id.
Here, Plaintiff asserts, without supporting evidence, that he is financially disabled because he is afflicted with obsessive compulsive disorder (OCD). Because Plaintiff did not submit the requisite information with his refund claim in accordance with the Revenue Procedure, and because he has presented no evidence of such on summary judgment, Plaintiff is not entitled to a tolling of the limitations period applicable to his refund claim. Plaintiff's recovery of the refund is barred by § 6511(b)(2)(A) and the Government is therefore entitled to summary judgment.
IV. Order
For the reasons set forth, it is herebyORDERED that Plaintiff David B. Freeman's Motion to Strike United States' Motion to Dismiss or for Summary Judgment (Document No. 10) and Motion to Strike United States' Reply to Plaintiff's Response to United States' Motion to Dismiss or for Summary Judgment (Document No. 18) are DENIED. It is further
ORDERED that Defendant the United States of America's Motion to Dismiss or for Summary Judgment (Document No. 8) is GRANTED, and Plaintiff Freeman's case is DISMISSED on the merits.
The Clerk shall notify all parties and provide them with a true copy of this Order.